________________________________________________________________________________
________________________________________________________________________________
ASSET PURCHASE, LICENSE & AGENCY AGREEMENT
for
THE PURCHASE OF
CERTAIN ASSETS OF
LECHMERE, INC.
AND
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & CO., INCORPORATED
by
SCHOTTENSTEIN ▇▇▇▇▇▇▇▇▇ CAPITAL GROUP LLC
August 14, 1997
________________________________________________________________________________
________________________________________________________________________________
-1-
TABLE OF CONTENTS
PAGE
ARTICLE 1 CERTAIN DEFINITIONS.................................................................... 5
ARTICLE 2 THE TRANSACTIONS....................................................................... 9
2.1 ........................................................................................... 9
Purchase and Sale of Purchased Assets.......................................................... 9
-------------------------------------
2.2 No Assumption of Liabilities........................................................... 12
----------------------------
2.3 Purchase Price......................................................................... 14
--------------
2.4 Closing Inventory...................................................................... 14
-----------------
2.5 PostClosing Payment.................................................................... 15
-------------------
2.6 Additional Inventory................................................................... 16
--------------------
2.7 Parent Covenant........................................................................ 16
---------------
ARTICLE 3 THE CLOSING............................................................................ 16
3.1 Time and Place of Closing.............................................................. 16
-------------------------
3.2 Deliveries by Debtors.................................................................. 17
---------------------
3.3 Deliveries by Purchaser................................................................ 17
-----------------------
3.4 Real Estate............................................................................ 18
-----------
ARTICLE 4 CONDITIONS TO THE DEBTORS' OBLIGATIONS................................................. 18
4.1 Representations, Warranties and Covenants.............................................. 18
-----------------------------------------
4.2 No Injunction.......................................................................... 18
-------------
4.3 Legal Opinion.......................................................................... 18
-------------
4.4 Certificates and Other Documents....................................................... 18
--------------------------------
4.5 Sale Order............................................................................. 18
----------
ARTICLE 5 CONDITIONS TO PURCHASER'S OBLIGATIONS.................................................. 19
5.1 Representations, Warranties and Covenants.............................................. 19
-----------------------------------------
5.2 Intentionally Omitted 5.3 ............................................................. 19
5.4 No Injunction.......................................................................... 19
-------------
5.5 Good Standing Certificates............................................................. 19
--------------------------
5.6 Licenses and Permits................................................................... 19
--------------------
5.7 Title Insurance and Surveys............................................................ 20
---------------------------
5.8 Intentionally Deleted 5.9.............................................................. 20
5.10 Certificates and Other Documents....................................................... 20
--------------------------------
5.11 Notice of Sale; Order Limiting Notice.................................................. 20
-------------------------------------
5.12 Material Adverse Change................................................................ 21
-----------------------
5.13 Board Approval......................................................................... 21
--------------
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF DEBTORS.............................................. 21
6.1 Due Incorporation, Etc................................................................. 21
----------------------
6.2 Subsidiaries........................................................................... 22
------------
6.3 Authorization, No Conflicts, Etc....................................................... 22
--------------------------------
6.4 Consents and Approvals................................................................. 23
----------------------
6.5 Absence of Violations.................................................................. 23
---------------------
6.6 Licenses and Permits................................................................... 24
--------------------
6.7 Inventories............................................................................ 24
-----------
6.8 Insurance.............................................................................. 25
---------
6.9 Assets................................................................................. 25
------
6.10 Real Properties........................................................................ 26
---------------
6.11 Tangible Personal Property............................................................. 26
--------------------------
6.12 [Intentionally omitted]................................................................ 27
6.13 Disclosure............................................................................. 27
----------
TABLE OF CONTENTS
6.14 Closing Date........................................................................... 27
------------
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................ 27
7.1 Due Incorporation, Etc................................................................. 27
----------------------
7.2 Authorization, No Conflicts, Etc....................................................... 27
--------------------------------
2
7.3 Closing Date........................................................................... 28
------------
ARTICLE 8 COVENANTS PRIOR TO CLOSING............................................................. 28
8.1 Affirmative and Negative Covenants Pending Closing..................................... 28
--------------------------------------------------
8.2 Investigation by Purchaser............................................................. 30
--------------------------
8.3 Consents and Further Actions........................................................... 30
----------------------------
ARTICLE 9 COVENANTS AFTER CLOSING................................................................ 30
9.1 Store Closing Sales.................................................................... 30
-------------------
9.1A-1. Proceeds............................................................................... 33
--------
9.1A-2. Deposit of Proceeds.................................................................... 33
-------------------
9.1A-3. Credit Card Proceeds................................................................... 34
--------------------
9.1A-4........................................................................................... 34
9.2 Services............................................................................... 34
--------
9.3 Payments by the Purchaser.............................................................. 36
-------------------------
9.4 Further Transfers and Assurances....................................................... 37
-------------------------------
9.5 Communications......................................................................... 37
--------------
9.6 Taxes; Recording Charges; Escrow Fee; Rent Proration................................... 38
----------------------------------------------------
9.7 License of Excluded Proprietary Rights................................................. 38
--------------------------------------
9.8 Agent.................................................................................. 38
-----
9.9 Access to Documents.................................................................... 38
-------------------
9.10 Insurance.............................................................................. 38
---------
ARTICLE 10 INTENTIONALLY DELETED ARTICLE 11 LEASES/REAL ESTATE................................... 39
11.1 Lease Assignment Election.............................................................. 39
-------------------------
11.2 Rejected Leases........................................................................ 40
---------------
11.3 Costs and Expenses..................................................................... 40
------------------
11.4 Master Lease........................................................................... 41
------------
11.5 ....................................................................................... 41
11.6 Communications......................................................................... 41
--------------
11.7 Sale of Leases......................................................................... 42
--------------
11.8 Real Estate............................................................................ 42
-----------
ARTICLE 12 INDEMNIFICATION....................................................................... 42
12.1 Indemnification........................................................................ 42
---------------
12.2 Mutual Assistance and Records.......................................................... 43
-----------------------------
ARTICLE 13 MISCELLANEOUS......................................................................... 43
13.1 Termination............................................................................ 43
-----------
13.2 Survival of Representations and Warranties............................................. 44
------------------------------------------
13.3 Equitable Remedies..................................................................... 45
------------------
13.4 Assignment............................................................................. 45
----------
13.5 Notices................................................................................ 45
-------
13.6 Expenses............................................................................... 47
--------
13.7 Public Announcements................................................................... 47
--------------------
13.8 Entire Agreement....................................................................... 47
----------------
13.9 Waiver................................................................................. 47
------
13.10 Amendment.............................................................................. 48
---------
13.11 Counterparts........................................................................... 48
------------
13.12 Invalid Provisions..................................................................... 48
------------------
13.13 Headings, Gender, Etc.................................................................. 48
---------------------
13.14 Choice of Law.......................................................................... 48
-------------
13.15 No Third Party Beneficiary............................................................. 48
--------------------------
13.16 ....................................................................................... 49
-3-
CERTAIN SCHEDULES
-----------------
Schedule 6.2 -- Subsidiaries
Schedule 6.3 -- Authorization, No Conflicts, Etc.
Schedule 6.4 -- Consents and Approvals
Schedule 6.5 -- Absence of Violations
Schedule 6.6 -- Licenses and Permits
Schedule 6.8 -- Insurance
Schedule 6.10 -- Real Properties
Schedule 6.11 -- Tangible Personal Property
EXHIBITS
--------
Exhibit 1 -- Stores and Warehouse
Exhibit 1-A -- Lease Guaranty
Exhibit 2.1 (a) -- Parent Leases
Exhibit 2.1(b) -- Excluded Assets
Exhibit 2.4 -- Inventory Procedures and Store Merchandise Condition
Report
Exhibit 5.3 -- Sale Order
Exhibit 9.2 -- Services
-4-
ASSET PURCHASE, LICENSE & AGENCY AGREEMENT
------------------------------------------
ASSET PURCHASE, LICENSE & AGENCY AGREEMENT ("Agreement"), dated as of
August 14, 1997, by and between Lechmere, Inc., a Massachusetts corporation (the
"Company"), ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Incorporated, an Illinois corporation
("Parent"), each a debtor and debtor-in-possession operating under Chapter 11 of
the Bankruptcy Code (collectively, the "Debtors") and Schottenstein ▇▇▇▇▇▇▇▇▇
Capital Group LLC, a Delaware limited liability company ("Purchaser").
RECITALS
--------
The Debtors filed for protection from their creditors under Chapter 11
of the Bankruptcy Code (as defined below) on July 7, 1997. The Debtors' Chapter
11 case is currently pending before the United States Bankruptcy Court for the
District of Delaware (the "Court") in In re ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Holding Corp., a
-----------------------------------
Delaware corporation, Case No. 97-1409 (PJW), et al (the "Bankruptcy Case").
---------------
Purchaser desires to purchase, and the Debtors desire to sell, the
Purchased Assets (as defined below) upon the terms and subject to the conditions
set forth in this Agreement. Debtors desire to retain the Purchaser as its
agent to conduct store closing sales at the Stores (as defined herein) on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in reliance upon the representations and
warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following designated meanings:
"Additional Inventory" has the meaning set forth in Section 2.6
--------------------
hereof.
"Affiliate" of another Person means any Person that directly, or
---------
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with such other Person, but not including, in the case
of the Debtors, any shareholders of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Holding Corp.
"Agreement" means this Asset Purchase, License & Agency Agreement,
---------
including the exhibits and the schedules attached hereto.
"Assigned Leases" has the meaning set forth in Section 11.1 hereof.
---------------
-5-
"Authorized Officer" of any Person means the chairman of the board,
------------------
the resident, any vice-president or any secretary of such Person.
"Bankruptcy Case" has the meaning set forth in the recitals hereof.
---------------
"Bankruptcy Code" means Title 11 and applicable portions of Titles 18
---------------
and 28 of the United States Code, as amended from time to time.
"Closing" has the meaning set forth in Section 3.1 hereof.
-------
"Closing Date" has the meaning set forth in Section 3.1 hereof.
------------
"Closing Merchandise Inventory" has the meaning set forth in Section
-----------------------------
2.5(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" has the meaning set forth in the first paragraph of this
-------
Agreement.
"Cost Value" has the meaning set forth in Section 2.4(b) hereof.
----------
"Deemed Rejection Date" has the meaning set forth in Section 11.1
---------------------
hereof.
"Defective Merchandise" means any item of merchandise that is damaged,
---------------------
defective or otherwise not salable in the ordinary course.
"Defective Merchandise Amount" means the amount payable as the
----------------------------
purchase price for the Defective Merchandise as agreed to by Purchaser and the
Company.
"Excluded Assets" has the meaning set forth in Section 2.1 (b) hereof.
---------------
"Excluded Liabilities" has the meaning set forth in Section 2.2(b)
--------------------
hereof.
"Final Order" shall mean an order of the Court which (a) has not been
-----------
reversed or stayed and as to which the time to appeal has expired and as to
which no appeal or petition for review, rehearing or certiorari is pending; or
(b) with respect to which any appeal has been finally decided and no further
appeal or petition for certiorari can be taken or granted.
"Financed Store Fixtures" means Store Fixtures and equipment located
-----------------------
at the Stores under the heading "Financed Store Fixtures" set forth on Exhibit
-------
1.
-
"Gross Rings" has the meaning set forth in Section 2.4(c) hereof.
-----------
"Home Image Business" means the business conducted under the name
-------------------
"Home
-6-
Image."
"Initial Settlement Date" has the meaning set forth in Section 2.5
-----------------------
hereof.
"Inventory Date" has the meaning set forth in Section 2.4(a) hereof.
--------------
"Inventory Taking" has the meaning set forth in Section 2.4(a) hereof.
----------------
"Layaway, Repair, and Special Order Merchandise" means all items of
----------------------------------------------
merchandise held by the Company on layaway or for repair, or customer-specific
special orders, in each case pursuant to binding agreements, invoices or other
legal documentation, where (A) the documentation is clear as to the name,
address, telephone number, date of last payment and balance due from the
customer, and (B) the goods subject to layaway are fully described in the
documentation.
"Lease Assignment Order" has the meaning set forth in Section 11.1
----------------------
hereof.
"Lease Guaranty" shall mean the Guaranty between Purchaser and Company
--------------
substantially in the form attached hereto as Exhibit 1-A.
"Leases" means the leasehold interest of the Debtors in the Stores and
------
Warehouses under the heading "Leased Stores and Warehouses" on Exhibit 1.
---------
"Liens" has the meaning set forth in Section 6.10 hereof.
-----
"Master Lease" means the Indenture of Lease dated October 30, 1989, by
------------
and between Lechmere Realty Limited Partnership and the Company, with respect to
certain stores located in the Northeastern United States including amendments
one through six.
"Master Lease Deemed Rejection Date" has the meaning set forth in
----------------------------------
Section 11.4.
"Master Lease Premises" has the meaning set forth in Section 11.4
---------------------
hereof
"Merchandise" means all merchandise located at the Stores or in the
-----------
Warehouses or in transit between the Stores and the Warehouses, including: (a)
Layaway, Repair and Special Order Merchandise; and (b) Defective Merchandise.
Notwithstanding the foregoing, "Merchandise" shall not include: (i) goods which
belong to sublessees, licensees or concessionaires of the Debtors; (ii) goods
held by the Debtors on memo, on consignment, or as bailee; and (iii)
furnishings, trade fixtures and improvements to real property which are located
in the Stores or the Warehouse.
"Notice of Disagreement" has the meaning set forth in Section 2.5(a)
----------------------
hereof.
"Person" means any natural person, corporation, general partnership,
------
limited partnership, limited liability partnership, limited liability company,
trust, union, association, court, agency, government, tribunal, instrumentality,
or other entity or authority.
-7-
"Post-Closing Payment" has the meaning set forth in Section 2.3
--------------------
hereof.
"Proceeds" shall have the meaning set forth in Section 9.1A-1 hereof.
--------
"Proprietary Rights" means all patents, patent applications, patent
------------------
disclosures and inventions (whether or not patentable and whether or not reduced
to practice); all trademarks, service marks, trade names, trade dress logos and
corporate names (including "Lechmere" and "Home Image" or derivatives thereof);
all registered and unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the foregoing; all trade
secrets, confidential information, ideas, formulae, compositions, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, improvements, proposals,
technical and computer data, financial, business and marketing plans, and
customer and supplier lists and related information; all license agreements and
sublicense agreements to and from third parties relating to any of the
foregoing; all other proprietary rights (including, without limitation, all
computer software and documentation); and all copies and tangible embodiments of
the foregoing (in whatever form or medium), in each case including, without
limitation, the items set forth on the Schedule 6.12 attached hereto, all
income, royalties, damages and payments due at Closing or thereafter with
respect thereto and all other rights thereunder (including, without limitation,
damages and payments for past, present or future infringements or
misappropriations thereof, the right to sue and recover for past, present or
future infringements or misappropriations thereof); all rights to use all of the
foregoing forever and all other rights in, to, and under the foregoing in all
countries; all goodwill related to the foregoing.
"Purchase Orders" means all commitments and orders for the purchase
---------------
and sale of Merchandise and supplies.
"Purchase Price" has the meaning set forth in Section 2.3 hereof.
--------------
"Purchased Assets" has the meaning set forth in Section 2.l(a)
----------------
hereof.
"Real Estate" means those Warehouses and Stores under the heading
-----------
"Owned Stores and Warehouses" on Exhibit 1.
---------
"Retained Employee" has the meaning set forth in Section 9.2(e)
-----------------
hereof.
"Returned Merchandise" has the meaning set forth in Section 9.1 (g)
--------------------
hereof.
"Saleable Inventory" means all Merchandise that is first quality
------------------
inventory and all Merchandise located at the Stores (but not the Warehouses)
that is less than first quality inventory but that is on the selling floor and
is salable in the ordinary course, including samples and displays that are not
Defective Merchandise.
"Sale Commencement Date" has the meaning set forth in Section 9.1(b)
----------------------
hereof.
-8-
"Sale Term" has the meaning set forth in Section 9.1(b) hereof.
---------
"Sale Termination Date" has the meaning set forth in Section 9.1(b)
---------------------
hereof.
"Sales Taxes" means all sales, excise, gross receipts and other taxes
-----------
attributable to sales of Merchandise payable to any taxing authority having
jurisdiction.
"Sale Order" has the meaning set forth in Section 5.3 hereof.
----------
"Services" has the meaning set forth in Section 9.2 hereof.
--------
"Store Closing Sales" has the meaning set forth in Section 9.1 hereof.
-------------------
"Store Fixtures" has the meaning set forth in Section 2.1(a) hereof.
--------------
"Stores" means the retail stores of the Company and the Parent set
------
forth on Exhibit 1.
---------
"Survey" has the meaning given to such term in Section 5.7(b) hereof.
------
"Tax"or "Taxes" shall mean any federal, state, local or foreign
--- -----
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall, profits, environmental, customs,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative or add-on minimum or
other similar tax, governmental fee, governmental assessment or governmental
charge of any kind whatsoever, including interest, penalty or addition thereto,
whether disputed or not.
"Title Insurer" has the meaning set forth in Section 5.7(a) hereof.
-------------
"Warehouses" means the merchandise storage facilities of the Company
----------
and Parent set forth on Exhibit 1.
---------
ARTICLE 2
THE TRANSACTIONS
2.1 Purchase and Sale of Purchased Assets.
-------------------------------------
(a) Purchased Assets. On the terms and subject to the conditions
----------------
contained in this Agreement, on the Closing Date, Purchaser shall purchase from
the Debtors, and the Debtors shall sell, convey, assign, transfer and deliver to
Purchaser, free and clear of all Liens, all of the Debtors' right, title and
interest in, to and under the following assets, properties, rights, titles and
interests of every kind and nature owned by the Debtors as of the Closing Date,
in each case, which are used in, useful for or otherwise associated with the
ownership and operation of the
-9-
stores and the Warehouses, whether tangible, intangible, real or personal and
wherever located and by whomever possessed, but excluding all Excluded Assets
(the "Purchased Assets"); it being understood that with respect to Parent the
following shall apply only to the extent such assets, properties, rights, titles
or interests are located at the Stores or the Warehouses or to the extent such
assets, properties, rights, titles or interests are related to a Lease set forth
on Exhibit 2.1(a):
(i) The right to the Proceeds from the sale of all Merchandise
and on-order inventory, which Proceeds shall be free and clear of any Liens;
(ii) the right to control the disposition of the Leases in
accordance with Article 9;
(iii) all interests in the Real Estate (including, without
limitation, land, buildings and improvements thereon, fixtures and easements,
licenses, rights of way, permits, and other appurtenants thereto, including
rights in and to public streets, whether or not vacated) and all escrow accounts
and warranties relating to the Real Estate provided, however, that (x) the
Debtors shall automatically, and without the necessity of any other or further
act or instrument or Court approval, transfer and convey the Real Estate (or
cause the same to be transferred and conveyed) to Purchaser upon the one hundred
eightieth (180th) day following the Closing Date, or (y) subject to Section
11.8, the Debtors shall transfer and convey the Real Estate (or cause the same
to be transferred and conveyed) to Purchaser or any one or more nominees,
assignees or designees of Purchaser promptly following (and in no event later
than two (2) business days thereafter) the delivery of written notice by
Purchaser, at any time and from time to time, requesting that the Real Estate or
any portion thereof be transferred and conveyed to Purchaser or its nominee,
assignee or designee, and in the case of (x) and (y), without the imposition or
payment of any transfer taxes of any kind or nature, which transfer taxes are
exempt pursuant to section 1146(c) of the Bankruptcy Code; it hereby being
understood and agreed by Purchaser that Purchaser shall be responsible for all
costs associated with the Real Estate after the Closing Date;
(iv) all equipment, tools, furniture, furnishings, trade
fixtures, trucks and other vehicles, spare parts and supplies, computers and all
related equipment, telephones and all related equipment and all other tangible
personal property (other than Financed Store Fixtures);
(v) all claims, deposits (whether held on behalf of any Person
by the Debtors or made by the Debtors with any Person), prepayments (excluding
prepaid rent and paper account), warranties, refunds (other than income tax
refunds), causes of action, rights of recovery, rights of set-off and rights of
recoupment of every kind and nature, other than those relating exclusively to
Excluded Assets or Excluded Liabilities and those described in Section
2.1(b)(ii);
(vi) tax, insurance and other escrow accounts relating to the
Real Estate and Leases;
-10-
(vii) all permits, licenses, franchises, orders, registrations,
certificates, variances, approvals and similar rights obtained from governments
and governmental agencies, and all data and records pertaining thereto;
(viii) all insurance, warranty and condemnation proceeds received
after the Closing Date with respect to damage, non-conformance of or loss to the
Purchased Assets (excluding insurance proceeds from credit insurance policies);
(ix) all rights under insurance policies to the extent related
to or payable in connection with any of the Purchased Assets (excluding
insurance proceeds from credit insurance policies);
(x) all rights to receive mail and other communications
addressed to the Company and relating to the Purchased Assets other than
privileged communications;
(xi) Purchaser's rights under Section 11.1;
(xii) all supplies, including, without limitation, boxes, bags,
paper, twine, and similar sales materials located at the Stores and Warehouses;
(xiii) all manufacturers and third party warranties or guarantees
in respect of any item of property falling within the scope of the Purchased
Assets and all indemnification rights against third parties related to the
Purchased Assets, to the extent legally transferable; and
(xiv) all of Debtors' other assets located on or around the
premises of, used in, or necessary to the unimpaired continual operation of, or
related to, the Stores or the Warehouses it hereby being understood and agreed
that the Purchased Assets together with the other rights granted Purchaser under
this Agreement shall enable Purchaser to conduct business in the Stores and the
Warehouses as contemplated by this Agreement, and to the extent that the right
to use any of the Excluded Assets or any other asset which is necessary to the
operation of the Stores and the Warehouses as contemplated by this Agreement,
such right is hereby granted to Purchaser until the conclusion of the Sale Term.
(b) Excluded Assets. Notwithstanding the foregoing, the following
---------------
assets are expressly excluded from the purchase and sale contemplated hereby
(the "Excluded Assets") and, as such, are not included in the Purchased Assets:
---------------
(i) all cash and cash equivalents (other than escrow accounts
set forth in Section 2.l(a)(vii)) and accounts receivable;
(ii) all causes of action and claims (A) under (S)544-550 of
the Bankruptcy Code, (B) against vendors and third party suppliers (except
warranty claims) and (c) not relating to the Purchased Assets or the Leases;
-11-
(iii) the Company's minute books, stockholder and stock transfer
records and corporate seal;
(iv) any right to receive mail and other communications
addressed to the Debtors relating exclusively to the Excluded Assets or the
Excluded Liabilities;
(v) any assets relating to any program, plan, policy or
arrangement (whether or not terminated) (A) which is or has been maintained,
established, or offered by the Debtors, (B) to which the Debtors contribute or
has contributed, (C) to which the Debtors have or have had any obligation to
contribute, or (D) to which the Debtors have or had any liability or potential
liability, and under which current or former employees, retirees, individual
contractors of the Debtors or its predecessors (or their spouses, dependents or
other beneficiaries) may receive benefits or have received benefits;
(vi) all contracts, agreements and arrangements except that to
the extent that the rights granted to the Debtors under any contract, agreement
or arrangement are necessary or useful in connection with the conduct of the
Store Closing Sales, then Purchaser shall be granted and afforded such rights
for the duration of the Sale Term;
(vii) any other assets (or portion thereof) which the Purchaser
elects in its sole discretion not to purchase hereunder, by delivering written
notice to the Debtors at any time prior to the Closing Date;
(viii) all Proprietary Rights;
(ix) the Financed Store Fixtures;
(x) all books, ledgers, files, documents, correspondence and
business records necessary for the operation of the Stores and the Warehouses or
related to the Purchased Assets except such books, ledgers, files, documents,
correspondence or business records related solely to the Real Estate;
(xi) all stock of subsidiaries of the Company, if any; and
(xii) all assets listed on Exhibit 2.l(b).
2.2 No Assumption of Liabilities. Purchaser will not assume or in any way
----------------------------
be responsible for any liabilities or obligations of the Debtors, including any
liabilities or obligations whatsoever related to the ownership or operation of
the Stores, the Warehouses and/or the Purchased Assets at any time, whether
prior to, on or after the Closing Date except in connection with any Assigned
Leases assigned to Purchaser or its nominees, assignees or designees in
accordance with Section 11.1. Nothing in this Section 2.2 shall limit
Purchaser's obligations to make payments to the Debtors as set forth in Sections
9.3 and 11.2.
-12-
(a) Excluded Liabilities. Notwithstanding anything to the contrary
--------------------
contained in this Agreement and regardless of whether such liability is
disclosed herein or on any schedule hereto, Purchaser will not assume or be
liable for any liabilities or obligations of the Debtors not described in
Section 2.2(a) hereof (the "Excluded Liabilities"), including, without
-------------- --------------------
limitation, the following liabilities and obligations of the Company:
(i) liabilities or obligations for any contracts, agreements,
leases or other arrangements except to the extent Purchaser or its nominees,
assignees or designees is an assignee of an Assigned Lease;
(ii) liabilities or obligations for accounts payable, accrued
liabilities or indebtedness (including indebtedness to Parent), or any
undisclosed or contingent liabilities;
(iii) liabilities or obligations under Purchase Orders;
(iv) liabilities or obligations with respect to all Taxes,
including without limitation, all Taxes of the Debtors relating to the ownership
or operation of the Stores and/or the Purchased Assets on or prior to the
Closing Date and all Taxes arising out of or relating to any of the transactions
contemplated hereby;
(v) liabilities of the Debtors for costs and expenses incurred
in connection with this Agreement and the consummation of the transactions
contemplated hereby;
(vi) liabilities or obligations of the Debtors under this
Agreement or the agreements contemplated hereby;
(vii) liabilities or obligations arising out of or relating to
the Excluded Assets;
(viii) liabilities or obligations for any claims (whenever made)
or proceedings arising out of, relating to, resulting from or caused by any
products manufactured, serviced, distributed or sold by the Debtors or any of
its Affiliates (or any predecessor) at any time on or prior to the Closing Date;
(ix) liabilities or obligations for any claims (whenever made)
arising out of, relating to, resulting from or caused by any transaction,
status, event, condition, occurrence or situation existing, arising or occurring
(A) in connection with the ownership or operation of the Stores, the Warehouses
and/or the Purchased Assets on or prior to the Closing Date or (B) in connection
with the Debtors or any of their affiliates' businesses or activities at any
time prior to, on or after the Closing Date; or
(x) any liabilities or obligations (including but not limited
to any claim of any governmental agency, any trustee, any fiduciary, any plan
administrator, any other person dealing with any employee benefit or other plan,
any employee or any beneficiary and without
-13-
regard to whether such liability or obligation arises prior to, on or after the
Closing Date or results from an event, prior to, on or after the Closing Date)
including in connection with provision of the Services which relate to (A) any
program, plan, policy or arrangement (whether or not terminated) (i) which is or
has been maintained, established, or offered by the Company or Parent, (ii) to
which the Company or Parent contributes or has contributed, (iii) to which the
Company or Parent has or has had any obligation to contribute or (iv) to which
the Company or Parent has or has had any liability or potential liability, and
under which current or former employees, retirees, individual contractors (or
their spouses, dependents or other beneficiaries) of the Company or its
predecessors may receive benefits or have received benefits, (B) any Tax,
penalty, assessment, fine or other liability relating to any such program, plan
or policy, which may result as a violation of law, including any violation of
the Code, ERISA or any proposed, temporary or final regulation thereunder, (c)
any liability, including any potential or actual liability, relating to any
failure to comply with the requirements of the Code and/or ERISA with respect to
the foregoing or (D) any other payments to Debtors' employees.
2.3 Purchase Price. The aggregate purchase price for all of the Purchased
--------------
Assets (the "Purchase Price"), shall be 81.6% of the Cost Value of all Saleable
--------------
Inventory included in the Closing Merchandise Inventory (determined in
accordance with Sections 2.4 and 2.5 below), plus the Defective Merchandise
Amount, plus $16,400,000. Subject to the conditions set forth herein,
$100,000,000 shall be payable by Purchaser at Closing by wire transfer of
immediately available funds to the account designated by the Debtors no later
than five days prior to the Closing Date for such purpose. An amount equal to
the Purchase Price less $100,000,000 (the "Post-Closing Payment") shall be paid
--------------------
as provided in Section 2.5(b). The Purchase Price payable hereunder shall be
subject to prorations as provided in Section 9.6.
2.4 Closing Inventory.
-----------------
(a) Inventory Taking. As soon as practicable after the Sale
----------------
Commencement Date, the Purchaser and the Debtors shall jointly take a retail and
SKU inventory of the Saleable Inventory located at each Store and Warehouse in
accordance with the inventory procedures set forth on Exhibit 2.4 hereto to
-----------
obtain the cost of the Saleable Inventory located thereat (the "Inventory
---------
Taking") (the date of the Inventory Taking at each Store or Warehouse being the
"Inventory Date" for such Store or Warehouse). Purchaser and the Debtors shall
--------------
jointly employ RGIS or another mutually acceptable inventory taking service to
conduct the Inventory Taking. Purchaser and the Debtors shall each be
responsible for 50% of the costs and fees of such inventory taking service.
Except as provided in the immediately preceding sentence, the Purchaser and the
Debtors shall each bear their respective costs and expenses relative to the
Inventory Taking. Once the Inventory Taking commences in any Store or Warehouse
and until the completion of the Inventory Taking in such Store or Warehouse,
neither Debtors nor Purchaser shall enter such Store or Warehouse without each
having a representative present; provided, however, that until the completion of
the Inventory Taking, Debtors and Purchaser shall each be entitled to enter any
Store or Warehouse at any time after providing notice to the other party in the
event of an emergency at such Store or Warehouse. Following the completion of
the Inventory Taking in each Store or Warehouse, Debtors shall not enter any
Store or Warehouse, except (i) during ordinary Store/Warehouse hours upon notice
to the managers of
-14-
such Store or Warehouse, or (ii) after providing notice to Purchaser in the
event of an emergency at such Store or Warehouse. The Purchaser and the Debtors
shall each have representatives present during the Inventory Taking, and shall
each have the right to review and verify the listing and tabulation of the
inventory taking service. During the Inventory Taking, Purchaser and the Debtors
shall work in good faith to agree on the Defective Merchandise Amount. The
parties agree that during the conduct of the Inventory Taking at each Store such
Store shall be closed to the public and no sales or other transactions shall be
conducted.
(b) Valuation. For purposes of this Agreement, "Cost Value" shall
--------- ----------
mean, with respect to each item of Saleable Inventory, the Debtors' cost
therefor as provided in that certain Store Merchandise Condition Report for the
end of month/July, 1997 included as Exhibit 2.4 hereof, except for Layaway,
-----------
Repair and Special Order Merchandise, where "Cost Value" shall mean the Cost
----------
Value as described above less amounts received by the Debtors from customers
prior to Closing.
(c) Gross Rings. In the event that sales occur at any Store prior to
-----------
the completion of the Inventory Taking at such Store, then for the period from
and including the Closing Date until the Inventory Date for such Store,
Purchaser or Debtors, as the case may be, shall keep a strict count of units of
Merchandise sold (by SKU, if possible) ("Gross Rings"). All such records and
-----------
reports shall be made available to Purchaser and the Company during regular
business hours upon reasonable notice.
2.5 Post-Closing Payment.
--------------------
(a) Within 10 business days after the delivery of the certified
inventory report by the inventory service, Debtors shall deliver to Purchasers a
statement of the aggregate amount of the Cost Value of all Saleable Inventory
included in the Inventory Taking determined in accordance with Section 2.4 plus
----
the Cost Value of all Saleable Inventory subject to Gross Rings at each Store
between the Closing Date and the Inventory Date at such Store (the "Closing
-------
Merchandise Inventory"), together with Debtors' good faith determination of the
---------------------
Post-Closing Payment. During the period immediately following the Purchaser's
receipt of such Closing Merchandise Inventory and until the Post-Closing Payment
is finally determined pursuant to this Section 2.5, the representatives and
agents designated by the Purchaser shall be permitted to review Debtors' books
and records and working papers related to the preparation of the Closing
Merchandise Inventory and determination of the Post-Closing Payment. The
Closing Merchandise Inventory and Debtors' determination of the Post-Closing
Payment shall become final and binding upon the parties five days after the
Purchaser's receipt thereof (the "Initial Settlement Date"), unless the
-----------------------
Purchaser gives written notice to Debtors of its disagreement ("Notice of
---------
Disagreement") prior to such date. Any Notice of Disagreement shall specify in
------------
reasonable detail the nature of any disagreement so asserted. If a timely
Notice of Disagreement is received by Debtors, then the Closing Merchandise
Inventory and the determination of the Post-Closing Payment (as revised in
accordance with clause (i) or (ii) below) shall become final and binding upon
the parties on the earliest of (i) the date the parties hereto resolve in
writing any differences they have with respect to the matters specified in the
Notice of Disagreement or (ii) the date all matters in dispute are finally
resolved in writing by the Court. During the 10 days
-15-
following delivery of a Notice of Disagreement, Debtors and the Purchaser shall
seek in good faith to resolve in writing any differences which they may have
with respect to the matters specified in the Notice of Disagreement. During such
period, a representative appointed by the Debtors shall be permitted to review
the Purchaser's working papers relating to the Notice of Disagreement. At the
end of such 10-day period, Purchaser and the Debtors shall submit to the Court
for review and resolution all matters which remain in dispute which were
included in the Notice of Disagreement, and the Court shall make a final
determination of Closing Merchandise Inventory and the Post-Closing Payment. The
Closing Merchandise Inventory and the Post-Closing Payment as determined in
accordance with this Section 2.5 shall become final and binding on the parties
on the date the Court delivers its final resolution to the parties. Purchaser
and the Debtors shall each bear their own fees and expenses in connection with
the Court's resolution.
(b) Within two business days after the Initial Settlement Date, the
Purchaser shall pay the Debtors by wire transfer of immediately available funds
to the account designated for such purposes by the Debtors any portion of the
Post-Closing Payment that is not subject to the Notice of Disagreement.
Purchaser shall pay the Debtors any disputed portions of the Post-Closing
Payment by wire transfer of immediately available funds to the account
designated for such purposes by the Debtors as soon as practicable after
resolution of such dispute, but no later than 2 business days after such
resolution.
2.6 Additional Inventory. (a) Within 21 days after the Closing Date, the
--------------------
Purchaser shall deliver to the Company a statement setting out any Merchandise
ordered by the Debtors prior to the Closing Date and received by Purchaser
within 14 days after the Closing Date and not included in the Inventory Taking
(the "First Phase Additional Inventory"). With such statement, Purchaser shall
--------------------------------
include a check in an amount equal to 81.6% of the Cost Value for all First
Phase Additional Inventory.
(b) Within 40 days after the Closing Date, Purchaser shall deliver to
the Company a statement setting out any Merchandise ordered by the Debtors prior
to the Closing Date and received by Purchaser during the period commencing 15
days after the Closing Date and ending 30 days after the Closing Date and not
included in the Inventory Taking (the "Second Phase Additional Inventory").
---------------------------------
With such statement, Purchaser shall include a check in an amount equal to 81.6%
of the Cost Value for all Second Phase Additional Inventory times the complement
of the then prevailing Store Closing sale discount.
2.7 Parent Covenant. Parent hereby agrees that it shall cause the Company
---------------
to perform all of its agreements, covenants and other obligations under this
Agreement and the other agreements and instruments contemplated hereby and
thereby.
ARTICLE 3
THE CLOSING
3.1 Time and Place of Closing. The consummation of the transactions
-------------------------
provided for in
-16-
this Agreement (the "Closing") shall take place at the offices of Battle ▇▇▇▇▇▇
-------
LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as soon as practicable after
the Sale Order is issued (the date of the Closing, the "Closing Date"), but,
------------
subject to satisfaction of all the conditions to Closing set forth in Article 5,
in no event later than 3:00 p.m. New York time August 15, 1997. The sale of the
Real Estate shall be closed through escrow with the Title Insurer in accordance
with the general provisions of the usual form of escrow agreement used in
similar transactions by the Title Insurer with special provisions inserted as
may be required to conform with this Agreement; provided, however, that the Real
Estate shall be delivered out of escrow by the Title Insurer as provided in
section 2.1(a)(iii).
3.2 Deliveries by Debtors. At the Closing, the Debtors shall deliver to
---------------------
Purchaser the following:
(a) The special warranty deeds, warranty bills of sale, assignments
and other instruments for the due transfer of the Purchased Assets to Purchaser,
free and clear of all Liens, each in form and substance reasonably satisfactory
to Purchaser; provided, however, that the instruments to effectuate the transfer
of the Real Estate to Purchaser or its nominees, assignees or designees shall be
deposited in escrow with the Title Insurer, who shall be instructed to deliver
such instruments out of escrow as and when set forth in section 2.1(a)(iii); and
provided, further, however, that all of the documents and instruments referred
to in this section 3.2(a) shall be reasonably acceptable to Purchaser.
(b) The certificate contemplated by Article 5 hereof; and
(c) All other documents, instruments and writings required to be
delivered by the Debtors at or prior to the Closing Date pursuant to this
Agreement or otherwise required, or reasonably requested by Purchaser, in
connection herewith; it hereby being understood and agreed that all such
documents, instruments and writings shall be reasonably acceptable to Purchaser.
3.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver the
-----------------------
following:
(a) the sum of $100,000,000 (subject to prorations as provided in
Section 9.6) as described in Section 2.3;
(b) the certificate contemplated by Article 6 hereof;
(c) all other documents, instruments and writings required to be
delivered by Purchaser at or prior to the Closing Date pursuant to this
Agreement or otherwise required, or reasonably requested by the Debtors, in
connection herewith; and
(d) the Lease Guaranty; and
(e) the letter of credit to be delivered pursuant to the Lease
Guaranty; provided, however, that such letter of credit may be delivered by
Purchaser up to one week
-17-
following the Closing.
3.4 Real Estate. Purchaser shall have the right to take possession of all
-----------
real property which constitute Purchased Assets immediately upon the Closing.
ARTICLE 4
CONDITIONS TO THE DEBTORS' OBLIGATIONS
The Debtors' obligations to consummate the transactions contemplated
by this Agreement are subject, in the Debtors' discretion, to the satisfaction
at or prior to the Closing Date of each of the following conditions.
4.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Purchaser contained in this Agreement shall be true and correct at
and as of the Closing Date as if such representations and warranties were made
at and as of the Closing Date and Purchaser shall have performed all agreements
and covenants required by this Agreement to be performed by it prior to or at
the Closing Date. On the Closing Date, there shall be delivered to the Company
a certificate (dated as of the Closing Date and signed by an Authorized Officer
of Purchaser) as to the matters set forth in this Section 4.1.
4.2 No Injunction. No injunction,. stay or restraining order shall be in
-------------
effect prohibiting the consummation of the transactions contemplated by this
Agreement.
4.3 Legal Opinion. Purchaser shall have furnished the Debtors with an
-------------
opinion of counsel dated as of the Closing Date that Purchaser is a limited
liability company in good standing in the State of Delaware and that execution
of this Agreement has been duly authorized by the Purchaser's members.
4.4 Certificates and Other Documents. Purchaser shall have furnished the
--------------------------------
Debtors with (a) such certificates of an Authorized Officer of Purchaser to
evidence compliance with the conditions set forth in this Article 4 as may be
reasonably requested by the Debtors, (b) each of the deliveries required under
Section 3.3 above and (c) all other documents and certificates reasonably
requested by the Debtors.
4.5 Sale Order. On or before August 15, 1997, the Court shall have
----------
entered an order approving the sale of the Purchased Assets to Purchaser
pursuant to the terms of this Agreement and pursuant to Sections 363 and 365 and
1146(c) of the Bankruptcy Code.
Each of the preceding conditions shall be satisfied in the sole
discretion of the Company and may be waived only if such waiver is set forth in
a writing executed by the Company, which may be done without further order of
the Court and without notice to any other entity.
-18-
ARTICLE 5
CONDITIONS TO PURCHASER'S OBLIGATIONS
Purchaser's obligation to consummate the transactions contemplated by
this Agreement is subject, in the discretion of Purchaser, to the satisfaction
at or prior to the Closing Date of each of the following conditions.
5.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of the Debtors contained in this Agreement shall be true and correct
at and as of the Closing Date as if such representations and warranties were
made at and as of the Closing Date and the Debtors shall have performed all
agreements and covenants required by this Agreement to be performed by each of
them prior to or at the Closing Date. On the Closing Date, there shall be
delivered to Purchaser a certificate (dated as of the Closing Date and signed by
an Authorized Officer of each of the Company and Parent) as to the matters set
forth in this Section 5.1.
5.2 Intentionally Omitted.
5.3 Sale Order. On or before August 15, 1997, the Court shall have
----------
entered an order pursuant to Sections 105, 363 and 365 and 1146(c) of the
Bankruptcy Code substantially in the form of the order attached hereto as
Exhibit 5.3 with such changes as shall be satisfactory to the Purchaser in its
-----------
sole discretion (the "Sale Order"). Purchaser shall be entitled to, and is not
----------
waiving, the protection of section 363(m) of the Bankruptcy Code, the mootness
doctrine or any similar statute or body of law if the Closing occurs in the
absence of the Sale Order having become a Final Order.
5.4 No Injunction. No suit, action or other proceeding, or injunction or
-------------
final judgment relating thereto, shall be threatened or pending before any court
or governmental or regulatory official, body or authority in which it is sought
to restrain or prohibit or to obtain damages or other relief in connection with
the transactions contemplated hereby, or that would have a material adverse
effect on the business, financial condition, operating results, assets,
operations or business prospects of the Company or materially adversely affect
the right of Purchaser to own the Purchased Assets, and no investigation that
would result in any such suit, action or proceeding shall be pending or
threatened.
5.5 Good Standing Certificates. The Company shall have furnished to
--------------------------
Purchaser certificates as to the good standing of the Company in its
jurisdiction of incorporation and in each jurisdiction in which it conducts
business, in each case certified by the Secretary of State of the applicable
jurisdiction; provided, however, no such certificate shall be necessary so long
as the failure to so furnish would not impair or impede the ability of Purchaser
to conduct Store Closing Sales at any Store located in a state for which the
Debtors fail to provide such certificate. Parent shall have furnished to
Purchaser a certificate as to the good standing of Parent in its jurisdiction of
incorporation certified by the Secretary of State of such jurisdiction.
5.6 Licenses and Permits. All licenses, permits and authorizations that
--------------------
are required
-19-
by Purchaser to own and operate the Stores, the Warehouses and the Purchased
Assets will have been transferred to or obtained by (or, if not required at
Closing, applied for by) Purchaser on terms and conditions no less favorable to
Purchaser than they are to the Debtors to the extent transferable by Debtors or
ordered by the Court.
5.7 Title Insurance and Surveys.
---------------------------
(a) Upon the transfer or conveyance to Purchaser or its nominee,
assignee or designee of any parcel of owned Real Estate included in the
Purchased Assets, the Company shall deliver to Purchaser an ALTA Form B - 1987
Owner's Policy of Title Insurance (or equivalent policy reasonably acceptable
Purchaser if the owned real property is located in a state in which an ALTA Form
B - 1987 Owner's Policy of Title Insurance is not customarily issued), issued by
Chicago Title Insurance Corporation (the "Title Insurer"), in an amount equal to
the fair market value of such real property (including all improvements located
thereon) reasonably determined by Purchaser, insuring title to such real
property to be in Purchaser as of the Closing, subject only to liens for current
Taxes not yet delinquent and such other matters described in Schedule 6.10 and
such other title exceptions caused by, through or under Purchaser. The costs
and expenses of each of the title insurance policies to be delivered hereunder
shall be borne by ▇▇▇▇▇▇▇▇▇.
(b) With respect to each parcel of real property as to which a title
insurance policy is to be issued at the Closing, the Debtors shall have
delivered to Purchaser a current survey of such real property, prepared by a
licensed surveyor and conforming to current ALTA standards for land title
surveys, disclosing the location of all improvements, easements, party walls,
sidewalks, roadways, utility lines and other matters customarily shown on such
surveys, and affirmatively showing access to public streets and roads (the
"Survey") Purchaser hereby acknowledges receipt of a Survey with respect to
------
each parcel of real property that is a part of the Real Estate and that such
Survey is acceptable to Purchaser.
5.8 Intentionally Deleted.
5.9 Leases. Purchaser shall have been furnished with complete and
------
accurate copies of all Leases, including all amendments thereto, certified by an
Authorized Officer of the applicable Debtor.
5.10 Certificates and Other Documents. Purchaser shall have been furnished
--------------------------------
with (a) such certificates of Parent's and the Company's officers to evidence
compliance with the conditions set forth in this Article 5 as may be reasonably
requested by Purchaser, (b) each of the deliveries required under Section 3.2
above, and (c) all other documents and certificates reasonably requested by
Purchaser, including without limitation, certified copies of the resolutions of
the Company's and Parent's boards of directors approving the transactions
contemplated by this Agreement.
5.11 Notice of Sale; Order Limiting Notice. No later than August 6, 1997,
-------------------------------------
(a) the Debtors shall have served written notice of the time, date and location
of the hearing on approval
-20-
of the Sale Order and the deadline and other requirements for the filing of
objections to the motion seeking entry of the Sale Order to (i) each known
creditor of the Debtors holding or asserting a lien against the Purchased
Assets, including, without limitation, the persons and entities appearing on the
results of the Debtors' tax, lien and judgment searches conducted on behalf of
the Debtors; (ii) each known creditor or party in interest holding or asserting
of record an interest in the Real Estate, including, without limitation, the
person and entities appearing on the title searches conducted on behalf of the
Debtors; (iii) each of the potential bidders with respect to the Purchased
Assets; (iv) each party that has filed a notice of appearance or requested
service in the Bankruptcy Case; (v) counsel to the Committee; (vi) counsel to
Purchaser; and (vii) the Office of the United States Trustee; and (b) the Court
shall have entered an order (i) providing that the foregoing notice (as to the
manner, the amount of notice and the list of the recipients thereof) is adequate
and sufficient under the circumstances of the Bankruptcy Case and satisfies the
provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and
the due process requirements of the United States Constitution; and (ii)
reducing, pursuant to Rule 9006 of the Federal Rules of Bankruptcy Procedure,
the requisite notice period on the Debtors' motion seeking entry of the Sale
Order to the period commencing the date the Debtors serve such notice though and
including August 14, 1997.
5.12 Material Adverse Change. From August 6, 1997, there shall have been
-----------------------
no material adverse change in any of the Purchased Assets or the Leases,
business, financial condition, results of operation or prospects of the business
conducted at the Stores.
5.13 Board Approval. The approval by the Debtors' respective boards of
--------------
directors for the transactions contemplated hereby shall not have been revoked,
amended or varied.
Each of the preceding conditions shall be satisfied in the sole
discretion of Purchaser and may be waived only if such waiver is set forth in a
writing executed by Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF DEBTORS
The Company and Parent hereby represent and warrant to Purchaser as
follows:
6.1 Due Incorporation, Etc.
-----------------------
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Massachusetts. The Company
has all requisite corporate power and authority to own and operate its business
as it is presently being conducted and to own and lease the properties and
assets owned or leased by it. The Company is duly licensed and qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased or the operation of its business makes such licensing or
qualification to do business necessary except where the failure to be so
qualified would not have a material adverse effect on the transactions
contemplated by this Agreement.
-21-
(b) Parent is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Illinois. Parent has all
requisite corporate power and authority to own and operate its business as it is
presently being conducted and to own and lease the properties and assets owned
or leased by it. Parent is duly licensed and qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased or
the operation of its business makes such licensing or qualification to do
business necessary except where the failure to be so qualified would not have a
material adverse effect on the transactions contemplated by this Agreement.
6.2 Subsidiaries. Except as set forth on Schedule 6.2 hereto, the Company
------------
does not own any stock, partnership interest, joint venture interest or other
security or interest in any other Person.
6.3 Authorization, No Conflicts, Etc. Subject to and as contemplated by
---------------------------------
the Sale Order:
(a) The Company has full power and authority to execute and deliver
this Agreement, and all other agreements and instruments contemplated hereby or
thereby to which the Company is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by the Company of this
Agreement, the other agreements and instruments contemplated hereby and thereby
and the transactions contemplated hereby and thereby have been duly and validly
authorized by the Company and no other corporate act or proceeding on the part
of the Company, its Board of Directors or its stockholders is necessary to
authorize the execution, delivery or performance by the Company of this
Agreement, or any other agreement or instrument contemplated hereby or thereby
or the consummation of the transactions contemplated hereby or thereby. This
Agreement, as of the Closing, the other agreements and instruments contemplated
hereby or thereby to which the Company is a party will have been duly executed
and delivered by the Company and will constitute the valid and binding
agreements of the Company, enforceable against the Company in accordance with
their terms. Except as set forth in Schedule 6.3 hereto, the execution,
delivery and performance of this Agreement, and the other agreements
contemplated hereby or thereby and the consummation of the transactions
contemplated hereby and thereby by the Company will not: (i) violate any
provisions of law applicable to the Company; (ii) with or without the giving of
notice and/or the passage of time, conflict with, result in the breach of any
provision of, give any third party the right to terminate or to accelerate any
obligation under, or result in the creation of any Lien on the Purchased Assets
under, the Certificate of Incorporation or Bylaws of the Company or any
instrument, license, agreement, lease arrangement, indenture, mortgage, loan
agreement, commitment or order to which the Company is a party. or by which any
of its assets or properties are bound; or (iii) constitute a violation of any
order, judgment or decree to which the Company or any of its Affiliates which
are party hereto or thereto, is a party or by which any of its assets or
properties are bound.
(b) Parent has full power and authority to execute and deliver this
Agreement and all other agreements and instruments contemplated hereby or
thereby to which Parent is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions
-22-
contemplated hereby and thereby. The execution, delivery and performance by
Parent of this Agreement, the other agreements and instruments contemplated
hereby and thereby and the transactions contemplated hereby and thereby have
been duly and validly authorized by Parent and no other corporate act or
proceeding on the part of Parent, its Board of Directors or its stockholders is
necessary to authorize the execution, delivery or performance by Parent of this
Agreement, or any other agreement or instrument contemplated hereby or thereby
or the consummation of the transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered by ▇▇▇▇▇▇ and constitutes the
valid and binding agreement of Parent, enforceable against Parent in accordance
with its terms, as of the Closing, the other agreements and instruments
contemplated hereby or thereby to which Parent is a party will have been duly
executed and delivered by Parent and will constitute the valid and binding
agreements of Parent, enforceable against Parent in accordance with their terms.
Except as set forth in Schedule 6.3 hereto, neither the execution, delivery or
performance of this Agreement, and the other documents contemplated hereby or
thereby to which Parent is a party, nor the consummation of the transactions
contemplated hereby and thereby, will (i) conflict with or result in a breach of
any of the provisions of, (ii) constitute a default under, (iii) result in the
violation of, (iv) give any third party the right to terminate or to accelerate
any obligation under, (v) result in the creation of any Lien on the Purchased
Assets under, or (vi) require any authorization, consent, approval, execution or
other action by or notice of any court or other governmental body, under the
provisions of Parent's certificate of incorporation or bylaws or any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which Parent
is bound or affected, or any statute, regulation, rule, judgment, order, decree
or other restriction of any government, governmental agency or court to which
Parent is subject.
6.4 Consents and Approvals. Other than the Sale Order and Final Orders
----------------------
relating to Lease Assignments, the execution and delivery by the Debtors of this
Agreement and the other agreements and instruments contemplated hereby and
thereby does not, and compliance by the Debtors with the terms hereof and
thereof and consummation of the transactions contemplated hereby and thereby
will not, require Purchaser, the Debtors to obtain any authorization, consent,
approval, exemption or action of, or make any filing with or give any notice to,
any court or administrative or governmental body or any other Person pursuant to
the Certificate of Incorporation or Bylaws of the Debtors or any law, statute,
rule, regulation, agreement, permit, license, instrument, order, judgment or
decree to which the Debtors or any of their assets is subject, except as
disclosed in Schedule 6.4 hereto or except as would not have a material adverse
effect on the transactions contemplated by this Agreement.
6.5 Absence of Violations. Except as disclosed in Schedule 6.5 hereto or
---------------------
except as would not have a material adverse effect on the transactions
contemplated by this Agreement, the Debtors are not in violation of its
Certificate of Incorporation or Bylaws, or in violation (or with or without
notice or lapse of time or both would be in violation), in any way with any term
or provision of (a) any law, statute, ordinance, rule, regulation, order, writ,
judgment, injunction, permit or decree applicable to the Debtors or any of its
assets, operations or properties or (b) any agreement, lease, or other document
by which it or any of them or any of its assets or properties is bound.
-23-
6.6 Licenses and Permits. Except as indicated on Schedule 6.6 or except
--------------------
as would not have a material adverse effect on the transactions contemplated by
this Agreement, the Debtors own or possess all right, title and interest in and
to all permits, licenses, certificates, approvals and other authorizations of
federal, state and local governments or other similar rights (collectively, the
"Licenses") that are necessary to own and operate the Stores, the Warehouses
--------
and/or Purchased Assets, including, without limitation, all Licenses required
under any federal, state or local law relating to public health and safety,
employee health and safety, pollution or protection of the environment. The
Debtors are in compliance with the terms and conditions of such Licenses and has
received no notices that it is in violation of any of the terms or conditions of
such Licenses. The Debtors have taken all necessary action to maintain such
Licenses. No loss or expiration of any such License is threatened, pending or
reasonably foreseeable other than expiration in accordance with the terms
thereof.
6.7 Inventories.
-----------
(a) The Debtors own and will own at all times prior to the Closing
good and marketable title to all of the Merchandise included in the Purchased
Assets and other Purchased Assets, free and clear of all Liens, other than Liens
that, pursuant to the Sale Order, will attach only to the proceeds of the sale
of the Purchased Assets pursuant to this Agreement.
(b) The Cost Value of the Saleable Inventory included in the
Purchased Assets shall be at least $140 million at Closing.
(c) Since July 1, 1997 and through the Closing Date, all normal
course permanent markdowns on Merchandise located at the Stores will have been
taken on a basis consistent with the Company's customary practices and policies.
(d) The Debtors have not since July 1, 1997, and shall not up to the
Closing Date, marked up or raised the price of any items of Merchandise, or
removed or altered any tickets or any indicia of clearance merchandise, except
in the ordinary course of business.
(e) Since July 1, 1997 and through the Closing Date, the Debtors
shall have ticketed or marked all items of inventory received at the Stores
prior to the Closing Date in a manner consistent with similar inventory located
at the Stores and in accordance with the Debtors' customary practices and
policies relative to pricing and marking inventory. The ticketed price of all
items of inventory do not include Sales Taxes.
(f) Since July 1, 1997, all point of sale activity at the Stores has
occurred and will occur up to the Closing Date in the ordinary course of
business.
(g) The Debtors have not since July 1, 1997 and shall not up to the
Closing Date purchase or transfer to or from the Stores any inventory outside
the ordinary course, including, without limitation, transfers in anticipation of
the Store Closing Sales or the Inventory Taking. The Debtors have not and shall
not move inventory or Merchandise to or from the Stores so as to alter the
inventory mix, quantities or categories, except in the ordinary course.
-24-
(h) Supplies (e.g. boxes, bags, twine) have not been since July 1,
1997, and shall not be prior to the Closing Date, transferred by Parent from the
Company or between or from the Stores, so as to alter the mix or quantity of
supplies at the Stores from that existing on July 1, 1997, other than in the
ordinary course of business. '
(i) The Debtors have maintained their pricing files in the ordinary
course of business, and prices charged to the public for Merchandise (whether
in-Store, by advertisement or otherwise) are the same in all material respects
as set forth in such pricing files for the periods indicated therein. All
pricing files and records, which include the Merchandise Condition Report, since
April, 1997 relative to the Merchandise have been made available to Purchaser.
All such pricing files and records are true and accurate in all material
respects as to the actual cost to Debtors for purchasing the goods referred to
therein and as to the selling price to the public for such goods as of the dates
and for the periods indicated therein.
(j) To the best of the Debtors' knowledge, all Merchandise is in
compliance with all applicable federal, state or local product safety laws,
rules and standards. The Debtors have provided Purchaser with their historic
policies and practices regarding product recalls prior to the Inventory Taking.
(k) Since July 1, 1997, through the Closing Date, Debtors have not
taken any actions the result of which is to materially increase the cost of
operating the Store Closing Sales, including, without limitation, increasing
salaries or other amounts payable to employees.
(l) With respect to the Purchased Assets or the Leases, as of the
date of hereof, the Debtors are current in the payment of all post-petition
rent, telephone, utilities, taxes, insurance and advertising liabilities.
6.8 Insurance. The insurance coverage for the Company is customary for
---------
well-insured businesses of similar size engaged in similar lines of business.
Except as set forth on Schedule 6.8 hereto, to the knowledge of the Company and
Parent, all insurance policies which cover the Company prior to Closing Date
will continue to provide coverage after the Closing Date in amounts with
deductibles consistent with those currently in effect for all occurrences
(regardless of when the claim is made) prior to the Closing Date.
6.9 Assets. To the knowledge of the Debtors, the Purchased Assets are in
------
good working condition, subject to ordinary wear and tear resulting from
continued operations in the ordinary course of business, have been properly
maintained, are suitable for their present and intended uses and, in the case of
any improvements, are structurally sound, and there is no defect in any of the
Purchased Assets which individually or in the aggregate reasonably could have a
material adverse effect on the use, condition, value, or operations of its
business.
-25-
6.10 Real Properties.
---------------
(a) Schedule 6.10 hereto identifies all stores and warehouses used in
the conduct of the Lechmere and Home Image businesses.
(b) Except as set forth in Schedule 6.10, each Debtor has (i)(A) with
respect to the Real Estate, good and indefeasible fee simple title to such
properties, free and clear of all liens, leases, security interests, charges,
restrictions and encumbrances, including, without limitation, encumbrances
relating to financial arrangements (including, without limitation, guarantees,
pledges, collateral assignments and other similar arrangements) (collectively
"Liens"), except for Liens if any, for real property taxes not yet due and
------
payable and Liens which, individually or in the aggregate, do not materially
detract from the value, or interfere with the present or intended use, of the
property subject thereto and (B) with respect to such real properties leased by
it, valid and subsiding leases for the term set forth with respect to each such
lease on Schedule 6.10 and (ii) all easements and rights, including but not
limited to easements for power lines, water lines, sewers and roadways,
necessary to conduct the business conducted on such properties. There are no
leases, subleases, licenses, concessions or other agreements, written or oral,
granting to any person the right of use or occupancy of the Real Estate or any
portion thereof and, other than the right of Purchaser pursuant to this
Agreement, there are no outstanding options or rights of first refusal to
purchase any such properties or any portion thereof or interest therein.
(c) Schedule 6.10 identifies all leases (including all amendments
thereto). Complete and correct copies of all leases referred to in Schedule
6.10 have been delivered to or made available for inspection by Purchaser and
none of such leases or policies have been modified in any material respect
except to the extent that such modifications are disclosed by the copies
delivered to or made available for inspection by Purchaser.
(d) Except as otherwise disclosed in Schedule 6.10 hereto or as a
result of the filing of the Bankruptcy Case, to the best of the Company's and
Parent's knowledge, neither the Company, nor any other party thereto, is in
material default or breach of any leases identified on Schedule 6.10, no fact or
circumstance exists which, with the passage of time or the giving of notice,
could become a material default or breach of any such lease and all such leases
shall remain in full force and effect notwithstanding the transactions
contemplated hereby.
(e) All such real properties have access to public roads.
(f) To the knowledge of the Debtors, all Stores and Warehouses,
including buildings and improvements located thereon conform in all material
respects to all applicable subdivision, building code, health, safety and zoning
ordinances, and other laws, regulations and requirements relating to the use and
operation thereof.
6.11 Tangible Personal Property. Except as set forth on Schedule 6.11
--------------------------
hereto: (a) the Debtors have and as of the Closing will have good and
marketable title to all of the items of tangible personal property included in
the Purchased Assets and the other Purchased Assets; and
-26-
(b) all such tangible personal property together with the other Purchased Assets
is owned free and clear of any Liens, other than Liens that, pursuant to the
Sale Order, will attach only to the proceeds of the sale of the Purchased Assets
pursuant to this Agreement, including without limitation, Liens in connection
with financial arrangements such as guarantees, pledges, collateral assignments
and other similar arrangements. The Purchased Assets, together with the Excluded
Assets, constitute all of the assets used by the Debtors in the conduct of its
business at the Stores and Warehouses.
6.12 [Intentionally omitted]
6.13 Disclosure. No representation or warranty of the Company or Parent
----------
contained in this Agreement nor any schedule, attachment or exhibit hereto, and
no statement contained herein or in any certificate or document furnished to
Purchaser pursuant to the transactions contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact or condition known to the Company or Parent which has not been
disclosed to Purchaser and which materially affects adversely, or could
reasonably be expected to materially affect adversely, the financial condition,
operating results, assets, supplier relations or business prospects of the
Company or the Purchased Assets.
6.14 Closing Date. The representations and warranties of the Company and
------------
Parent contained in this Article 6 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
writing delivered by, or on behalf of, the Company or Parent to Purchaser will
be true and correct in all material respects on the Closing Date as though then
made.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Debtors as follows:
7.1 Due Incorporation, Etc. Purchaser is a limited liability company duly
-----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware.
7.2 Authorization, No Conflicts, Etc. Purchaser has all requisite
---------------------------------
corporate power and authority to enter into this Agreement and the other
agreements and instruments contemplated hereby and thereby to which it is a
party and to carry out the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement the other agreements and
instruments contemplated hereby and thereby and the consummation of the
transactions contemplated hereby and thereby by Purchaser have been or prior to
the Closing will be duly authorized by all requisite corporate action of
Purchaser. This Agreement has been duly executed and delivered by Purchaser and
constitutes the valid and binding obligations of Purchaser, enforceable against
it in accordance with its terms. As of the Closing Date, the other agreements
contemplated hereby and thereby to which Purchaser is a party will have been
duly
-27-
executed and delivered by Purchaser and will constitute the valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
terms. The execution, delivery or performance of this Agreement and the other
documents contemplated hereby to which Purchaser is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (i)
conflict with or result in a breach of any of the provisions of, (ii) constitute
a default under, (iii) result in the violation of, (iv) give any third party the
right to terminate or to accelerate any obligation under, or (v) require any
authorization, consent, approval, execution or other action by or notice of any
court or other governmental body, under the provisions of Purchaser's
Certificate of Incorporation or Bylaws or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which Purchaser is bound or
affected, or any statute, regulation, rule, judgment, order, decree or other
restriction of any government, governmental agency or court to which Purchaser
is subject.
7.3 Closing Date. The representations and warranties of Purchaser
------------
contained in this Article 7 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any writing
delivered by, or on behalf of, Purchaser to the Debtors will be true and correct
in all material respects on the Closing Date as though then made.
ARTICLE 8
COVENANTS PRIOR TO CLOSING
8.1 Affirmative and Negative Covenants Pending Closing. Except as
--------------------------------------------------
expressly set forth below, during the period from August 6, 1997 to the Closing
Date, the Company and the Parent covenant and agree that they each shall, unless
otherwise agreed with Purchaser:
(a) Affirmative Covenants Pending Closing.
-------------------------------------
(i) Preservation of Personnel. Use commercially reasonable
-------------------------
efforts to preserve intact and keep available the services of the Debtors'
present employees usually employed at the Stores and Warehouses;
(ii) Insurance. Use commercially reasonable efforts to keep in
---------
effect all insurance policies described in Section 6.8 and other customary
casualty, public liability, product liability, worker's compensation and
other insurance policies through the Closing Date, in coverage amounts not
less than those in effect at the date of this Agreement;
(iii) Preservation and Advancement of the Business; Maintenance
---------------------------------------------------------
of Properties, Contracts. Continuously operate the business conducted at
------------------------
the Stores during normal operating hours, keep its properties intact,
perform its agreements and obligations, pay its post-petition payables
promptly as they become due (without extension) in accordance with the
terms thereof, maintain all of its physical properties in good repair and
operating condition, subject only to ordinary wear and tear, and in
accordance with the terms and provisions of the Leases;
-28-
(iv) Ordinary Course of Business. Except with respect to
---------------------------
replenishment which Purchaser acknowledges has not occurred and will not
occur in the ordinary course, operate the business conducted at the Stores
and Warehouses solely in the ordinary course and in the normal, usual and
customary manner. Without limiting the foregoing:
(A) no prices have been or will be raised and no pricing
files altered since July 1, 1997, other than prices for items put on
and taken off sale in the ordinary course of business;
(B) all ticketing, including ticketing of on-order
inventory received, has been and will be done in accordance with
Debtors customary ticketing practices;
(C) all normal course hard markdowns have been and will
be taken consistent with customary practices, including, without
limitation, markdowns on defective and unsalable inventory;
(D) Debtors have not and shall not transfer to or from
the Stores and Warehouses any inventory outside the ordinary course of
business, including, without limitation, transfers in anticipation of
the Store Closing Sales or the inventory taking. No movement of
inventory to or from the Stores and Warehouses so as to alter
inventory mixes, quantities or categories, except in the ordinary
course has occurred or will occur from and after July 1, 1997;
(E) no sales or in-store promotions (including POS
promotions) to the public have been or will be promoted or advertised,
except for the Debtors' historic and customary promotions for all of
their locations.
(b) Negative Covenants Pending Closing. Except as expressly set forth
----------------------------------
below, the Company and the Parent each shall not, without the consent of
Purchaser:
(i) Disposition of Assets. Sell or transfer, or mortgage,
---------------------
pledge or create or permit to be created any Lien on any of the Purchased
Assets other than the sale
of
inventory in the ordinary course of business consistent with past practice;
(ii) Contracts. Reject any contract relating to the Purchased
---------
Assets or the Stores or seek or obtain an order approving such rejection in
which the reference date of the rejection is prior to the final day of the
Store Closing Sale at the Store at which the Purchased Assets are situated.
(iii) Leases. Renew or amend Leases, enter into leases or grant
------
or terminate any other interests in the Stores; or
-29-
(iv) Disclosures. Take any action which would require
-----------
disclosure under Section 6.13 hereof.
(v) Inventory Level. Have less than $140 million of Saleable
---------------
Inventory at Cost Value.
(vi) Encumbrances. Encumber, sublease or otherwise grant any
------------
rights with respect to the Real Estate and Leases.
8.2 Investigation by Purchaser. The Debtors shall allow Purchaser and its
--------------------------
representatives and financing sources, during regular business hours, to make
such investigation of the business, properties, employees, auditors, books and
records of the Company and the Parent to the extent such investigation relates
to the Stores or Purchased Assets, and to conduct such examination of the
financial condition of the Company, as Purchaser deems necessary or advisable to
familiarize itself with such business, properties, books, records, financial
condition and other matters, including with respect to all operating and
environmental matters. The Debtors shall cooperate in providing all information
reasonably requested by Purchaser relating to the Purchased Assets, the Leases
or the transactions contemplated hereby, including with respect to insurance and
Licenses.
8.3 Consents and Further Actions. Subject to the terms and conditions
----------------------------
herein provided, Parent, the Company and Purchaser covenant and agree to use
their best efforts to take, or cause to be taken, all action, or do, or cause to
be done, all things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including all closing conditions to be satisfied.
ARTICLE 9
COVENANTS AFTER CLOSING
9.1 Store Closing Sales.
-------------------
(a) Debtors hereby grant and convey to the Purchaser an irrevocable
nonexclusive license to occupy and operate the Stores as Debtors' agent, for the
purpose of conducting store closing sales or other sales (the "Store Closing
-------------
Sales") in accordance with the provisions of this Section 9.1.
-----
(b) The Store Closing Sales shall commence after the Closing (the
time of such commencement, the "Sale Commencement Date"). The Store Closing
----------------------
Sales shall terminate no later than twelve (12) complete weeks after the Closing
Date or as may be extended by Purchaser on a Store by Store basis (including for
purposes of calculation the Sale Commencement Date) (the "Sale Termination
----------------
Date"). "Sale Term" shall mean the period between the Sale Commencement Date and
---- ---------
Sale Termination Date at each respective Store. Purchaser may, at its sole
discretion, terminate the Store Closing Sales at any Store prior to the Sale
Termination Date; provided, however, that in no event may the Store Closing
-------- -------
Sales at any of
-30-
the Stores be conducted after the Sale Termination Date unless mutually agreed
by Debtors and Purchaser in writing and in such event no further Court approval
or order or notice to third parties is required. Purchaser's representatives,
supervisors and employees shall have the right to enter any Store and the use of
one office in the Debtors' corporate offices during normal business hours on or
after the date hereof to prepare for the Store Closing Sales, and the Debtors
shall cooperate reasonably with Purchaser in such preparation.
(c) Purchaser shall conduct the Store Closing Sales under the name of
"Lechmere" and "Home Image" and derivatives thereof and, subject to the Sale
Order, shall have the right to conduct the Store Closing Sales in the manner
which Purchaser deems appropriate, including by advertising, posting signs or
otherwise promoting the Store Closing Sales as a "store closing" or a "going out
of business" or similar type sale without further consent of any person
notwithstanding the terms of any Lease that purport to restrict the conduct of
such Store Closing Sales. In addition to any other rights granted to Purchaser
hereunder and subject to entry of the Sale Order, in conducting the Sales, the
Purchaser, in the exercise of its sole discretion, shall have the right:
(i) to establish and implement advertising, signage, and promotion
programs consistent with the "store closing" or "going out of
business" theme (including without limitation, by means of media
advertising, banners, A-frame, and similar interior and exterior
signs);
(ii) to establish sale prices and Store hours;
(iii) to use without charge during the Sale Term all furniture,
fixtures and equipment in the Stores and Warehouses, motor
vehicles, advertising materials, bank accounts, Store-level
customer lists and mailing lists, computer hardware and
software, intangible assets (including Company's name, logo and
tax identification numbers), Store keys, case keys, security
codes and safe and lock combinations required to gain access to
and operate the Stores, and any other assets of Company located
at the Stores or the Warehouses (whether owned, leased, or
licensed);
(iv) to transfer Merchandise between Stores and/or between the
Stores, the Warehouses and other stores of Merchant and its
affiliates; and
(v) to use (i) Company's central office facilities, central and
administrative services and personnel to process payroll,
perform MIS services and cash reconciliation, and provide other
central office services necessary for the Sale, and (ii) one
office located at Company's central office facility.
-31-
(d) The Sale Order shall provide that each and every federal, state
or local agency, department or governmental authority with regulatory authority
over the Store Closing Sales and all newspapers and other advertising media in
which the Store Closing Sales are advertised shall be directed to accept the
Sale Order as binding and to allow the Debtors and Purchaser to consummate the
transactions provided for in this Agreement, including, without limitation, the
conducting and advertising of the Store Closing Sales in the manner contemplated
by this Agreement, that no further approval, license or permit of any
governmental authority shall be required, and that all utilities, landlords,
creditors and all persons acting for or on their behalf shall not interfere with
or otherwise impede the conduct of the Store Closing Sales, institute any action
in any court (other than in the Court) or before any administrative body or any
other tribunal of any kind or type which in any way directly or indirectly
interferes with or obstructs or impedes the conduct of the Store Closing Sales.
(e) Debtors shall notify all customers having Layaway, Repair, and
Special Order Merchandise as disclosed to Purchaser in writing prior to the Sale
Commencement Date (the "Layaway Items") that they have seven (7) days from the
-------------
Sale Commencement Date (the "Layaway Pick-Up Date") to pick up and pay in full
--------------------
or pay off all amounts due and owing for the Layaway Items. Any amounts paid
for such Layaway Items on or before the close of business in the Stores on the
Layaway Pick-Up Date shall be the sole account of Purchaser.
(f) Debtors hereby agree that Debtors shall take no action relating
to the Stores which would disturb Purchaser's peaceful and quiet possession
thereof pursuant to the license granted in Section 9.1.
(g) During the Sale Term, Purchaser shall accept returns of goods
sold by the Debtors from the Stores prior to the Sale Commencement Date
("Returned Merchandise"), provided such goods are accompanied by the original
--------------------
Store receipt and such return is otherwise in accordance with the applicable
return policy for such Store in effect prior to the Sale Commencement Date. The
Debtors shall reimburse Purchaser in cash for the amount of any store credit or
refund given to any customer in respect of Returned Merchandise. To the extent
that Returned Merchandise is salable as first quality inventory, it shall be
included in Merchandise and for purposes of calculation of the Guaranteed
Amount, shall be valued at the Cost Value applicable to such item multiplied by
the compliment of the prevailing Sale discount at the time of the return. If the
Returned Merchandise constitutes Defective Merchandise, it shall be included in
Merchandise and assigned a Cost Value in accordance with the applicable
provisions of Section 2.4 above. Subject to the Debtors' reimbursement to
Purchaser of the amount of any store credit or refund granted for any Returned
Merchandise, the aggregate Cost Value of the Merchandise shall be increased by
the Cost Value of any Returned Merchandise included in Merchandise (determined
in accordance with this paragraph 9.l(b)), and the Guaranteed Amount shall be
adjusted accordingly. Any Returned Merchandise which is not included in
Merchandise shall be disposed of by Purchaser in accordance with instructions
received from the Debtors or, in the absence of such instructions, returned to
the Debtors at the end of the Sale Term. Any increases in the Guaranteed Amount
and any reimbursements due to Purchaser as result of Returned Merchandise shall
be accounted for and paid by Purchaser and/or the Debtors, as applicable, as
soon as practicable.
-32-
(h) Purchaser hereby agrees to accept gift certificates issued by the
Debtors prior to the Closing Date, and the Debtors agree to reimburse Purchaser
for the full amount of any such gift certificates accepted promptly upon receipt
of a statement from Purchaser detailing such gift certificates.
(i) To the extent practicable and otherwise permitted by applicable
law, Purchaser shall sell service contracts in appliances, stain protection in
furniture and product replacement warranties on behalf of and in the name of the
Debtors in other areas at the discretion of the Debtors. All proceeds of such
sales, less a sales commission of 10% to which Purchaser shall be entitled,
shall accrue for the benefit of the Debtors; provided that the Debtors reimburse
--------
Purchaser for all costs and expenses incurred by or on behalf of the Debtors in
connection with such sales. In no event shall Purchaser have any liabilities
under any such warranties or contracts.
(j) During the Sale Term, Purchaser shall have the nonexclusive right
to the quiet, peaceful and uninterrupted use of the Stores for the Store Closing
Sales and to the reasonable use of all utilities necessary for the Store Closing
Sales including, without limitation, gas, electricity and water, and all
leasehold improvements. Nothing contained in this paragraph (j) is intended to,
nor shall it constitute, Purchaser's election or direction to assume or assign
any lease under Section 11.1 or otherwise. The Debtors shall not, throughout
the Sale Term, take any actions the result of which is to materially increase
the cost to Purchaser of operating the Store Closing Sales, including, without
limitation, increasing salaries or other amounts payable to employees.
(k) At the end of the Sale Term in each Store and, in any event, not
later than the Sale Termination Date applicable thereto, Purchaser shall leave
each Store in "broom clean" condition and shall repair damage to the premises
caused by removal, if any, of the Store Fixtures by Purchaser or actions of
Purchaser, ordinary wear and tear excluded; provided however, Purchaser shall
-------- -------
not be obligated to leave in broom clean condition any Store that is the subject
of an Assigned Lease.
(l) Except as otherwise contemplated in this Agreement or the Sale
Order, including in connection with the conduct of the Store Closing Sales,
Purchaser will comply with applicable law.
9.1A-1. Proceeds. For purposes of this Section 9.1A, "Proceeds" shall
-------- --------
mean the aggregate of: (a) the total amount (in dollars) of all sales of
Merchandise under this Agreement, exclusive of (i) Sales Taxes, (ii) credit card
and bankcard fees and chargebacks, and (iii) returns, allowances and customer
credits; and (b) all proceeds of Merchant's insurance for loss or damage to
Merchandise or loss of cash arising from events occurring during the Sale Term.
Purchaser shall be entitled to retain, as its sole and exclusive property, all
Proceeds, free and clear of Liens.
9.1A-2. Deposit of Proceeds. All cash Proceeds shall be deposited by
-------------------
Purchaser in agency accounts established by Purchaser (the "Accounts").
--------
Purchaser may, in its discretion,
-33-
designate new or existing accounts of Purchaser or Company as the Accounts,
provided that such accounts are dedicated solely to the deposit of Proceeds and
the disbursement of amounts payable by Purchaser hereunder. Purchaser shall
exercise sole signatory authority and control with respect to the Accounts.
Company shall promptly upon Purchaser's request execute and deliver all
necessary documents to open and maintain the Accounts. To the extent that
Purchaser shall elect to use existing accounts of Company as the Accounts, (i)
commencing on the first business day following the Sale Commencement Date, and
on each business day thereafter, Company shall pay to Purchaser by wire funds
transfer all collected funds constituting Proceeds deposited in such Accounts,
and (ii) upon request, Company shall deliver to Purchaser copies of all bank
statements and other information relating to such Accounts. Company shall not be
responsible for and Purchaser shall pay as an expense hereunder, all bank fees
and charges, including wire transfer charges, related to the Accounts, whether
received during or after the Sale Term.
9.1A-3. Credit Card Proceeds. Purchaser shall have the right (but not the
--------------------
obligation) to use Company's credit card facilities (including Company's credit
card terminals and processor(s), credit card processor coding, merchant
identification number(s) and existing bank accounts) for credit card Proceeds.
In the event that Purchaser elects so to use Company's credit card facilities,
Company shall process credit card transactions on behalf of Purchaser and for
Purchaser's account, applying customary practices and procedures. Without
limiting the foregoing, Company shall cooperate with Purchaser to down-load data
from all credit card terminals each day during the Sale Term and to effect
settlement with Company's credit card processor(s), and shall take such other
actions necessary to process credit card transactions on behalf of Company under
Purchaser's merchant identification number(s). All credit card Proceeds will
constitute the property of the Purchaser and shall be held by Company in trust
for Purchaser. Company shall deposit all credit card Proceeds into a designated
account and shall transfer such Proceeds to Purchaser daily (on the date
received by Company if received prior to 12:00 noon, or otherwise within one
business day) by wire transfer of immediately available funds. At Purchaser's
request, Company shall cooperate with Purchaser to establish merchant
identification numbers under Purchaser's name to enable Purchaser to process all
credit card Proceeds for Purchaser's account. Company shall not be responsible
for and Purchaser shall pay as an expense hereunder, all credit card fees,
charges, and chargebacks related to the sale, whether received during or after
the Sale Term. Notwithstanding anything to the contrary contained in this
Section 9.1A-3, Purchaser shall not have the right to use Company's private
label charge cards.
9.1A-4. The Sale Order shall grant Purchaser a first priority security
interest in the Merchandise to secure the payment of the Proceeds to Purchaser
and such first priority security interest shall be effective without the
necessity of filing or recording any instrument or UCC statement.
9.2 Services.
--------
(a) (i) For the period of the Sale Term the Debtors shall, or shall
cause their affiliates to, provide to the Purchaser and its subsidiaries
services necessary for the Purchaser to conduct the Store Closing Sales and
liquidate the Purchased Assets, including without limitation those services
described on Exhibit 9.2 (the "Services"), as may be requested by the Purchaser
----------- --------
-34-
from time to time upon reasonable notice. In providing the Services, each
Debtor, as it deems necessary or appropriate in its sole discretion, may (x) use
such personnel of such Debtor or its affiliates, and (y) employ the services of
third parties to the extent such third party services can be effectively
utilized to provide similar services or are reasonably necessary for the
efficient performance of any of such services.
(ii) If the Purchaser would like Debtors to provide any
services relating to the business in addition to the Services, the Purchaser
shall so notify Debtors and during the five days following the receipt of such
notice Debtors and the Purchaser will mutually discuss the matter and negotiate
in good faith with a view toward the provision of such services.
(iii) Unless otherwise agreed by the parties hereto, the nature
and scope of the Services shall be essentially identical to the nature and scope
of the tasks involved in operating the Stores and the Warehouses prior to the
Closing, with such variance as is reasonably related to the Store Closing Sales
as conducted by the Purchaser. Unless otherwise agreed by the parties hereto,
the nature and scope of Services shall be essentially identical to the services
the Parent provided to the Company during the period prior to Closing to the
extent the Parent continues to perform such services with respect to its own
internal organization; provided that Debtors may not terminate, or reduce in any
--------
material respect the amount or scope of, the Services hereunder pursuant to the
foregoing sentence without giving reasonable advance written notice to the
Purchaser.
(b) Limited Warranty. Debtors will provide the Services hereunder in
----------------
good faith, with the care and diligence that they exercise in the performance of
such services for their operations and affiliates. The Purchaser hereby
acknowledges that Debtors do not regularly provide to third parties services
such as the Services as part of their business and that, except as set forth in
this subsection (iii), Debtors do not otherwise warrant or assume any
responsibility for their Services. The warranty stated above is in lieu of and
exclusive of all other representations and warranties of any kind whatsoever.
(c) Transition. At any time during the term of this Agreement, the
----------
Purchaser may request Debtors to discontinue performing all or any portion of
the Services upon 10 days' prior notice or as otherwise provided on Exhibit 9.2.
-----------
(d) Performance Remedy. In the event Debtors fail to provide a
------------------
Service hereunder, or the quality of a Service is not in accordance with Section
9.2(a)(iii) above, the Purchaser will give Debtors prompt written notice
thereof. Debtors will then have a reasonable period of time to cure the
defective Service. If after such period Debtors have failed to cure the
defective Service, in addition to any other remedy available to the Purchaser,
the Purchaser may seek an alternative provider for such Service and Debtors
shall promptly discontinue performing such Service at the written request of the
Purchaser.
(e) Staffing. As part of the Services, (i) Purchaser may use the
--------
Debtors' employees in the conduct of the Store Closing Sales to the extent
Purchaser in its sole discretion deems expedient, and Purchaser may select and
schedule the number and type of the Debtors'
-35-
employees required to perform such Services. Such staffing shall in any case be
reasonable staffing for the provision of the Services, including, but not
limited to, stocking, merchandising, maintenance and sales staff and
supervisors, professionals, or otherwise. Purchaser shall identify any such
employees to be used in connection with the provision of the Services (each such
employee, a "Retained Employee") prior to the Sale Commencement Date. Purchaser
-----------------
will have no responsibility whatsoever with respect to the Retained Employees
other than to pay the fees for the Services to the Debtors in accordance with
Section 9.3 hereof and nothing contained in this Agreement and none of
Purchaser's actions taken in respect of the Store Closing Sales shall be deemed
to constitute an assumption by Purchaser of any of the Debtors' obligations
relating to any of the Debtors' employees including, without limitation, Worker
Adjustment Retraining Notification Act ("WARN Act") claims and other termination
type claims and obligations, or any other amounts required to be paid by statute
or law; nor shall Purchaser become liable under any collective bargaining or
employment agreement or be deemed a joint or successor employer with respect to
such employees. Without limiting the generality of the foregoing, it is
expressly acknowledged that all Retained Employees providing Services at or with
respect to the Stores and the Warehouses remain under the sole management
control of the Debtors, subject to the Purchaser's directions to the Debtors as
provided herein, and that the Debtors are providing the Services in its capacity
as an independent contractor.
(ii) Purchaser may in its discretion stop using any Retained
Employee at any time during the Store Closing Sales. In the event Purchaser
desires to cease using any Retained Employee, Purchaser will use all reasonable
efforts to notify the Debtors at least five (5) days prior thereto, except if
such termination is "for cause" (such as dishonesty, fraud or breach of employee
duties), in which event no prior notice to the Debtors shall be required,
provided Purchaser shall notify the Debtors as soon as practicable thereafter.
--------
From and after the date of this Agreement and until the Sale Termination Date,
the Debtors shall not transfer or dismiss employees of the Stores except "for
cause" without Purchaser's prior consent.
(f) Independent Contractors. The Debtors are acting as independent
-----------------------
contractors in providing the Services. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, franchise or joint venture
relationship between the Debtors and Purchaser, except in connection with the
Store Closing Sales, where Purchaser is acting as Debtor's agent. Debtors shall
not incur any debts or make any commitments for the Purchaser, except to the
extent, if at all, specifically provided herein. Nothing in this Agreement
shall constitute or deem the Purchaser to be an employer of the Debtors'
employees used to carry out the Services.
(g) Information Assistance. Each party will provide to the other
----------------------
party, free of any charge or cost, any information, data, or documents
reasonably required for reporting or compliance obligations with any
governmental entity, agency, or authority; provided that the provision of such
--------
information, data and documents does not result in any undue burden or expense
to the providing party.
9.3 Payments by the Purchaser.
-------------------------
-36-
(a) Fees. From the date the Store Closing Sales begin up to and
----
including, for each Store, the date the Store Closing Sales conclude at each
such Store, the Purchaser shall reimburse the Debtors for all direct Store level
third party out of pocket costs and expenses incurred in connection with the
Store Closing Sales at such Store, the operation of the Warehouses (to the
extent utilized by Purchaser) and provision of the Services, including base
rent, percentage rent, utilities, common area maintenance and real estate taxes
accrued during the Store Closing Sales at such Store, payroll costs and benefits
(not to exceed 15% of gross payroll) for Store level employees and Warehouse
level employees actually accruing during the term of the Store Closing Sales at
such Store or Warehouse, as applicable, insurance, armored car services, bank
fees and charge backs, telephone expenses, trash collection, security costs and
advertising and promotional expenses. Purchaser may, in its sole discretion,
make any payment required by this Section 9.3(a) directly to a third party
vendor; provided such payment is made in a timely manner. Subject to Section
11.2, notwithstanding anything else herein the Purchaser's obligations pursuant
to this Section 9.3(a) are Store specific, and cease at each Store upon the end
of the Sale Term in each Store. The Purchaser shall pay the Debtors out-of-
pocket cost and expenses for information management services, payroll processing
and similar services included in the Services, provided that the Purchaser shall
not be liable to pay the Debtors more than $20,000 per week for all such out-of-
pocket costs and expenses for such Services.
(b) Payment of Charges. Debtors shall invoice the Purchaser for all
------------------
amounts due under this Section 9.3 weekly. Payments shall be due five (5)
business days from the date of receipt of the invoice. The Purchaser and its
agents and representatives shall have the right to examine any and all books and
records as it reasonably requests in order to confirm and verify the amount of
any invoice pursuant to this Section 9.3 and Debtors shall cooperate in any
reasonable manner in such examination as the Purchaser shall request.
(c) Disputed Charges; Claims. In the event the Purchaser disputes any
------------------------
charges invoiced by Debtors pursuant to this Agreement, the Purchaser shall
deliver a written statement describing the dispute to Debtors within 5 days
following receipt of the disputed invoice. The statement shall provide a
sufficiently detailed description of the disputed items. Fees not so disputed
shall be deemed accepted. If the parties cannot resolve the dispute in a
mutually satisfactory manner, the dispute shall be submitted within 30 days from
the date of notice, to the Court for resolution. The Purchaser and the Debtors
shall each bear their own costs and expenses in connection with such resolution
by the Court.
9.4 Further Transfers and Assurances. Parent and the Company will, and
--------------------------------
will cause their Affiliates to, execute and deliver such further instruments of
conveyance and transfer and take such additional action as Purchaser may
reasonably request to effect, consummate, confirm or evidence the transfer to
Purchaser of the Purchased Assets. Parent and the Company will execute such
documents as may be necessary to assist Purchaser in preserving or perfecting
its rights in the Purchased Assets.
9.5 Communications. All mail and other communications relating to the
--------------
Purchased Assets and the Leases received by the Company or Parent at any time
after the Closing Date shall be promptly turned over to Purchaser. All mail and
other communications relating to the
-37-
Excluded Assets or the Excluded Liabilities or the Company received by Purchaser
at any time after the Closing shall be promptly turned over to the Company..
9.6 Taxes; Recording Charges; Escrow Fee; Rent Proration. All Taxes
----------------------------------------------------
relating to Real Estate due and payable after the Closing which relate to
periods prior to the Closing shall be the responsibility of the Debtors and
shall be prorated at Closing. All transfer, documentary, sales, use, stamp,
registration, conveyance, income, gains, value added or other Taxes and fees
arising out of the sale of the Purchased Assets or otherwise incurred in
connection with this Agreement or the consummation of the transactions
contemplated hereby and all charges for or in connection with the recording of
any document or instrument contemplated hereby shall be the responsibility of
the Debtors when due. The Debtors will, at their expense, file all necessary
Tax returns and other documentation in connection with the Taxes and fees
encompassed in this Section 9.6. The Debtors and Purchaser shall each pay one
half of the escrow fee charged by the Title Insurer. Purchaser shall pay to the
Debtors an amount equal to the rent and all third-party out of pocket recurring
charges incident to the Leases for the period commencing on the Closing Date and
ending on August 31, 1997. At the Debtors' request, Purchaser will provide to
the Debtors at the Closing a certificate which sets forth the Purchase Price
allocated to the Real Estate; provided that in no event shall such allocation
exceed $15,000,000 in the aggregate.
9.7 License of Excluded Proprietary Rights. The Debtors hereby grant to
--------------------------------------
Purchaser a license to use all Proprietary Rights which are used in, useful for
or otherwise associated with the ownership and operation of the Purchased
Assets, the Stores and the Leases, including the use of the names "Lechmere" and
"Home Image" in connection with the Store Closing Sales, from the Closing Date
through the date which is 300 days after the Closing Date.
9.8 Agent. The Purchaser agrees to act as the Debtor's agent, and the
-----
Debtors hereby appoints the Purchaser their agent until the end of the Store
Closing Sales.
9.9 Access to Documents. For a period of 5 years from the Closing Date
-------------------
the Debtors shall permit the Purchaser reasonable access during normal business
hours, at no cost to the Purchaser, to all books, ledgers, files, documents,
correspondence and business records necessary for the operation of the Stores
and the Warehouses or related to the Purchased Assets, including, without
limitation, all telephone numbers, related sales and billing information,
manuals, files (including sales, billing, service and accounting information)
software, brochures and sales and marketing materials and all lists and records
pertaining to customers, suppliers and distributors.
9.10 Insurance. To the extent requested by ▇▇▇▇▇▇▇▇▇, the Debtors shall
---------
name Purchaser and/or its nominee(s) as an additional insured on their insurance
policies to the extent such policies relate to the Purchased Assets and the
Leases. Purchaser shall name Debtors as an additional insured on Purchaser's
general liability policies and Purchaser will not cancel such insurance policies
without Debtors' prior written consent. Without the prior written consent of
Purchaser, the Debtors will not cancel any insurance policy (i) relating to the
Real Estate prior to 30 days after the Closing Date or (ii) relating to a Lease
until the earlier of the Deemed Rejection Date with respect to such Lease or the
date of the Lease Assignment Order with respect to such Lease. Purchaser shall
be named as an additional insured on any insurance relating to the Real
-38-
Estate and the proceeds from any casualty or condemnation in whole or in part
relating to the Real Estate shall be subject to the terms and provisions of
Section 11.8. The cost of such insurance shall be borne by Purchaser.
ARTICLE 10
INTENTIONALLY DELETED
ARTICLE 11
LEASES/REAL ESTATE
11.1 Lease Assignment Election. Purchaser shall have the right to
-------------------------
designate at any time from time to time for a period of 270 days after the Sale
Order is entered (hereinafter, the "Election Period") which of the Leases it
---------------
desires to acquire or to cause any one or more of its nominees, assignees or
designees to acquire (subject to the Court's issuance of an order (a "Lease
Assignment Order") in form and substance reasonably acceptable to Purchaser
authorizing and approving Debtors' assumption and assignment to Purchaser or its
nominee, assignee or designee a Lease Assignment Order). During the Election
Period, Purchaser shall have the right, which right may be exercised at any time
and from time to time in its sole and absolute discretion, to request in writing
that Debtors, under section 365 of the Bankruptcy Code, seek authority to
assume and assign to Purchaser or a third party designated by Purchaser any or
all of the Leases at no additional cost or expense to Purchaser other than cure
amounts required under Section 365(b) of the Bankruptcy Code. As soon as
practicable, but no later than three business days following Debtors' receipt of
a written request from Purchaser, at any time and from time to time within the
Election Period, seeking the assumption and assignment of any Lease to Purchaser
or a third party designated by Purchaser, Debtors shall use their best efforts
to obtain entry of a Final Order of the Bankruptcy Court approving the
assumption of the Leases identified in writing by Purchaser and the assignment
of such Leases to Purchaser or a third party as designated in such request
(each, an "Assigned Lease"). The term "best efforts" as used in this section
shall require Debtors to act as reasonably requested by Purchaser, provided
however, that such term shall not require Debtors to pay any funds or cure any
amounts or assume any claims but shall require Debtors to pay fees, costs and
expenses of its counsel in connection with the prosecution of any motion seeking
the entry of any such Final Order. Purchaser shall be entitled to keep and
retain, at no additional fee, cost or expense to Purchaser of any nature (except
for cure amounts, if any required under Section 365(b) of the Bankruptcy Code)
as its sole and exclusive property, and free and clear of any and all Liens
(other than those caused directly by Purchaser), any and all proceeds generated
by or resulting from the assignment or subletting of any one or more Leases to
any one or more third parties. Purchaser shall pay any and all cure amounts
required under section 365(b) of the Bankruptcy Code in respect of the Leases it
elects to require Debtors to assume and assign to Purchaser or any third party.
11.2 Rejected Leases. From and after the Closing, Debtors shall not
---------------
extend, reject or
-39-
otherwise terminate (or assume and assign to a third party or reject, without
Purchaser's prior written consent) any of the Leases until the earliest to occur
of (i) ten (10) days following the delivery by Purchaser to the Debtors of
written notice indicating that Purchaser waives its right to require Debtors to
assume and assign to it or a third party any one or more of the Leases specified
therein and that such Lease is to be rejected (a "Rejected Lease"), (ii) the
entry of an order by the Bankruptcy Court approving the assumption and
assignment of any such Lease to Purchaser or a third party designated by
▇▇▇▇▇▇▇▇▇, and (iii) the conclusion of the Election Period. Upon the occurrence
of any of the events specified in (i), (ii) and (iii) of the preceding sentence,
(A) Purchaser shall have no further obligation or liability of any nature for
any amounts payable to the lessor under the applicable Lease or for any costs
associated with the Store or Warehouse to which the Lease relates, and (B)
Debtors shall be solely responsible for all amounts payable or other obligations
or liabilities that may be owed to the lessor under or in connection with such
applicable Lease, including, without limitation, any damages resulting from the
rejection of such Leases under section 365 of the Bankruptcy Code or otherwise
(subject only to the provisions of the Lease Guaranty), and for all costs
associated with the Stores to which such Leases relate. Promptly following (and
in no event later than two days thereafter) the delivery, at any time and from
time to time of the notice set forth in (i) of the first sentence of this
Section 11.2, Debtors shall seek the entry of an order approving the rejection
of the Leases identified in the notice.
11.3 Costs and Expenses. With respect to each Lease, without duplication
------------------
of amounts payable under Section 9.3, the Purchaser shall bear all third party
out of pocket recurring charges incident to such Lease from the Closing Date up
to and including (i) in the case of an Assigned Lease, the date of the related
Lease Assignment Order and (ii) in the case of a Rejected Lease, the earlier of
(x) the date that the Debtors are relieved of liability under such Lease or (y)
the Deemed Rejection Date, but not earlier than ten days from the date Purchaser
gives a designation that it wishes such Lease to be a Rejected Lease under
Section 11.2. Purchaser may, in its sole discretion, make any payment required
by this Section 11.3 directly to a third party vendor; provided such payment is
made in a timely manner. Nothing shall be deemed to require Purchaser or any
Affiliate to make any material repairs or capital expenditures with respect to
any Stores subject to any Lease and Purchaser may not compel the Debtors to make
any such material repair or capital expenditure.
11.4 Master Lease. (a) Subject to entry of the Sale Order with the
------------
provisions set forth in Section 11.4(b) hereof, notwithstanding anything
contained in this Agreement to the contrary, the Company acknowledges that the
Master Lease is a single lease for the entire premises described therein (the
"Master Lease Premises") and is not severable or divisible into separate leases
----------------------
for separate locations or subsets of locations within the Master Lease Premises.
Pursuant to the Sale Order, the Company hereby rejects the Master Lease pursuant
to Section 365 of the Bankruptcy Code, effective at the conclusion of the last
of the Store Closing Sales in the Master Lease Premises (the "Master Lease
------------
Deemed Rejection Date"). The Company acknowledges its obligation to (i) pay all
---------------------
postpetition rent and to perform all other postpetition obligations under the
Master Lease subject to the Bankruptcy Code and the Sale Order through the
Master Lease Deemed Rejection Date, subject to Purchaser's obligation to
reimburse the Company for its third party out-of-pocket recurring charges
incident to the Master Lease
-40-
Premises from the Closing Date up to and including the Master Lease Deemed
Rejection Date as provided in Section 11.3, and (ii) surrender possession of the
Master Lease Premises to Lechmere Realty Limited Partnership or its designee
within 15 days after the Master Lease Deemed Rejection Date.
(b) The Sale Order shall provide that subject to and immediately and
automatically upon (i) entry of the Sale Order approving this Agreement
(including the provisions of the foregoing paragraph), (ii) the performance of
all of the Company's material monetary obligations under the Master Lease from
the Sale Commencement Date (excluding real estate taxes for periods occurring
prior to the petition date, as to which all parties reserve their rights
hereunder) up to and including the Master Lease Deemed Rejection Date and (iii)
Lechmere Realty Limited Partnership's obtaining possession of the Master Lease
Premises, then any and all Claims (as defined in Section 101(5) of the
Bankruptcy Code) of Lechmere Realty Limited Partnership (the lessor under the
Master Lease) against the Company, any affiliate or guarantor of the Company
arising from the rejection of the Master Lease under Section 502(b)(6) of the
Bankruptcy Code or otherwise shall be waived in full without the necessity of
any other or further action on the part Lechmere Realty Limited Partnership or
any other person, party or entity.
(c) The Company shall assign to the lessor under the Master Lease, and the
Lessor under the Master Lease shall assume the obligations from and arising
after the Master Lease Deemed Rejection date, all of the Company's right, title,
and interest as sublandlord under the Sublease with Filene's Basement, Inc.
referenced in item 10 of the list of leases in Schedule 6.10(c) hereto. Such
assignment and assumption shall be effective immediately prior to the Master
Lease Deemed Rejection Date.
11.5 Prosecution, Defense and Settlement of Rejection Claims; Mediation.
------------------------------------------------------------------
The prosecution, defense and settlement of any and all rejection claims filed
with respect to the Leases shall be controlled solely by ▇▇▇▇▇▇▇▇▇, acting
reasonably. Except as provided below, any such prosecution, defense or
settlement shall be preformed by Debtors at Debtors' expense. To enable
Purchaser to control effectively the prosecution, defense and settlement of such
rejection claims, Debtors shall regularly (and in any event no less frequently
than weekly) keep Purchaser apprised of the status of the litigation of any such
claims and any settlement discussions relating thereto. In addition, Debtors
shall deliver to Purchaser a monthly listing of the allowed rejection claims.
If Debtors believe that Purchaser is not acting reasonably with respect to
Purchaser's request regarding the prosecution, defense or settlement of any
rejection claim relating to any Lease (including the expenditure of legal or
other professional fees in connection with such prosecution, defense or
settlement), then Debtors must promptly after such request is given and in no
event later than two business days thereafter, either proceed with such
prosecution, defense or settlement in accordance with Purchaser's request or
submit the issue of the reasonableness of the request regarding such
prosecution, defense or settlement (and the expenditure of such legal and other
professional fees) to the Bankruptcy Court for prompt determination.
11.6 Communications. Until the earlier of the Deemed Rejection Date of the
--------------
Lease or the date of issuance of the Lease Assignment Order with respect to any
respect to any Lease (1)
-41-
the Debtors shall not, without the prior written consent of Purchaser, and
shall, if and to the extent directed by Purchaser, (a) renew or amend such
Lease, (b) encumber, sub-lease or otherwise grant any rights with respect to
such Lease or (c) communicate with the lessor under such Lease, (2) the Debtors
shall refer any communications from any such lessor to Purchasers promptly after
receipt thereof and (3) the Debtors shall not negotiate or communicate with any
third party with respect to any such Lease.
11.7 Sale of Leases. Purchaser shall have the right to market the Leases
--------------
in the manner which Purchaser deems appropriate notwithstanding the terms of any
such Lease that purports to restrict such activities, including, without
limitation, with respect to the erection of visible signs on the premises and
access to the premises for the purpose of showing the property.
11.8 Real Estate. If and to the extent that the gross value generated from
-----------
the sale or lease of the Real Estate exceeds the aggregate of the sum of (a) $15
million and (b) the fees, costs and expenses of the Purchaser and its Affiliates
incident to the Real Estate, including, without limitation, the fees, costs and
expenses of, leasing and selling the Real Estate, then, and in such event, such
excess proceeds shall be split (i) 10% to Purchaser and (ii) 90% to the Debtors,
provided however, in the event Purchaser receives a bona fide offer to sell or
lease all or any portion of the Real Estate, Purchaser shall submit the offer to
the Debtors for approval, and if Debtors do not approve the offer within ten
(10) business days, then Debtors shall pay the carrying costs for all or such
portion, as the case may be, of the Real Estate described in the offer for a
period of six (6) months and Debtors shall have the right to sell or lease all
or such portion, as the case may be, of the Real Estate at its sole discretion
within such six (6) month period; provided, however, that if the Debtors have an
agreement with a bona fide purchaser for all or any portion, as the case may be,
of the Real Estate and Debtors are continuing to pay the carrying costs for all
or such portion, as the case may be, of the Real Estate, then Debtors shall
continue to have the right to sell or lease all or such portion, as the case may
be, of the Real Estate until such agreement is terminated or consummated.
Notwithstanding the foregoing, if the Debtors sell or lease all or any portion,
as the case may be, of the Real Estate during such six (6) month period
described above, for less than the offer submitted to Debtors by Purchaser for
such real property, Debtors shall pay the amount which is less than such offer
to Purchaser. If Debtors do not sell or lease such real property within the six
(6) month period described above, Purchaser shall again have the right to sell
or lease such property and Purchaser shall pay the carrying costs from the end
of such six (6) month period until such time as such property is sold or leased
by another offer is submitted by Purchaser and rejected by Debtors. If the
right to sell or lease the Real Estate reverts to the Purchaser, then Debtors
shall have no approval rights, but Purchaser hereby agrees to use commercially
reasonable efforts with respect to the sale of such Real Estate.
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification.
---------------
(a) By the Company and Parent. In addition to all rights and
-------------------------
remedies otherwise available to Purchaser at law or in equity, the Company and
Parent shall pay on behalf
-42-
of, and indemnify, save and hold harmless Purchaser and its employees,
representatives, officers, directors, stockholders and agents from and against
any and all costs, losses, liabilities, damages, deficiencies, claims and
expenses, including without limitation, interest, penalties, reasonable
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing, which any such party may suffer, sustain or become subject
to in connection with or arising out of or resulting from or incident to (i) any
breach or inaccuracy of any representation or warranty made by the Debtors made
in or pursuant to this Agreement, (ii) any breach or failure to perform any
covenant or other agreement made by the Debtors in or pursuant to this
Agreement, and (iii) the performance or non-performance of the Services.
(b) By Purchaser. In addition to all rights and remedies otherwise
------------
available to the Company or Parent at law or in equity, Purchaser shall
indemnify and save and hold harmless the Company, Parent and their respective
employees, representatives, officers, directors, stockholders and agents from
and against any and all costs, losses, liabilities, damages, deficiencies,
claims and expenses, including, without limitation, interest, penalties,
reasonable attorneys' fees and all amounts paid in investigation, defense or
settlement of any of the foregoing, which any such party may suffer, sustain or
become subject to in connection with or arising out of or resulting from or
incident to (i) any breach or inaccuracy of any representation or warranty made
by Purchaser in or pursuant to this Agreement, and (ii) any breach or failure to
perform any covenant or other agreement made by Purchaser in or pursuant to this
Agreement.
(c) Time Limitations. No party shall be liable to indemnify and hold
----------------
harmless any other party for any cost, loss, liability, damage, deficiency,
claim or expense pursuant to this Section 12.1 unless the claim or situation
which has given rise to or ultimately gives rise to such cost, loss, liability,
damage, deficiency, claim or expense shall have been asserted to the
indemnifying party prior to the date which is 300 days after the Closing Date.
12.2 Mutual Assistance and Records. Purchaser and the Debtors agree that
-----------------------------
they will mutually cooperate in the expeditious filing of all notices, reports
and other filings with any governmental authority required to be submitted
jointly in connection with the execution and delivery of this Agreement, the
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby or thereby. Subsequent to the Closing, Purchaser and the
Debtors, at their own cost, will assist each other (including by the retention
of records and the provision of access to relevant records) in the preparation
of their respective Tax returns and the filing and execution of Tax elections,
if required, as well as in the defense of any audits or litigation that may
ensue as a result of the filing thereof, to the extent that such assistance is
reasonably requested.
ARTICLE 13
MISCELLANEOUS
13.1 Termination.
-----------
(a) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time, but not later than the Closing Date:
-43-
(i) by mutual consent of Purchaser, the Company and Parent;
(ii) by Purchaser or the Debtors if the Closing Date is not on
or prior to August 15, 1997, provided, that a party will not be entitled to
terminate this Agreement pursuant to this subsection (ii) if that party or
its Affiliates are in breach of the Agreement or has failed to satisfy any
condition to Closing in Articles 4 and 5 hereof that such party or its
Affiliates was required to satisfy and provided further that, in the event
the Closing Date is not on or prior to August 15, 1997 as a result of an
injunction being entered against the transaction, the Debtors may terminate
no earlier than August 23, 1997;
(iii) by Purchaser at any time up to and including the Closing
Date if there has been, occurred or arisen a material adverse change in any
of the Purchased Assets, business, financial condition, results of
operation or prospects of the business conducted at the Stores other than
replenishment which Purchaser acknowledges has not occurred in the ordinary
course of business;
(iv) by Purchaser if there has been a material misrepresentation
or breach of warranty or covenant set forth in this Agreement by the
Company or Parent;
(v) by Parent or the Company if there has been a material
misrepresentation or breach of warranty or covenant set forth in this
Agreement by Purchaser;
(vi) by Purchaser if the Court shall not have entered the Sale
Order on or before August 15, 1997; or
(vii) automatically if an order is entered by the Court
approving a transaction with respect to the Purchased Assets or the Leases
other than the transactions contemplated by this Agreement.
(b) In the event of the termination of this Agreement as above
provided, this Agreement shall forthwith become void and no party shall have any
liability hereunder, including any liability for damages, except pursuant to
Sections 13.6 (with respect to each party bearing its own expenses) and 13.7
(with respect to public announcements), the provisions of which shall survive
any termination of this Agreement, and except for any willful breach by any
party hereto of such party's representations, warranties or covenants which
shall also survive the termination of this Agreement. In the event that a
condition precedent to its obligation is not met, nothing contained herein shall
be deemed to require any party to terminate this Agreement rather than to waive
(without further Court order or notice to any third party) such condition
precedent and proceed with the Closing.
13.2 Survival of Representations and Warranties. Each and every
------------------------------------------
representation, warranty, covenant and agreement contained in this Agreement or
any Schedule hereto, or any
-44-
certificate, document or other instrument delivered by the parties in connection
herewith, shall, survive the Closing Date and the consummation of the
transactions contemplated hereby notwithstanding any investigation or inquiries
made by or conducted on behalf of any party hereto.
13.3 Equitable Remedies. The parties hereto acknowledge that the Company
------------------
and the Purchased Assets are unique and that irreparable damage would result if
this Agreement is not specifically enforced and that, therefore, the rights and
obligations of the parties under this Agreement may be enforced by a decree of
specific performance issued by a court of competent jurisdiction and appropriate
equitable relief may be applied for and granted in connection therewith. Such
remedies shall, however, not be exclusive and shall be in addition to any other
remedies which any party may have under this Agreement or otherwise.
13.4 Assignment.
----------
(a) This Agreement will inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto and their respective
successors and assigns, except as provided in subsections (b) and (c) below.
(b) Neither the Company nor Parent may assign any of its duties or
obligations hereunder without the prior written consent of ▇▇▇▇▇▇▇▇▇, which
consent shall not be unreasonably withheld.
(c) Purchaser may not assign any of its rights, duties or obligations
hereunder in whole or in part without the Company's consent (which consent shall
not be unreasonably withheld) except Purchaser may assign its rights, duties
and/or obligations hereunder in whole or in part (without the Company's
consent), (i) to its Affiliates or wholly-owned subsidiaries, and in such event
the Debtors shall be obligated to convey all or part of the Purchased Assets to
such assignee and to the extent so directed by ▇▇▇▇▇▇▇▇▇, and (ii) to lending
institutions for the purpose of obtaining financing for the transactions
contemplated hereby and (iii) with respect to the Real Estate, and assignee or
designee at the Closing; provided that no such assignment shall (i) relieve
Purchaser of its obligations hereunder or (ii) relieve the signatories to the
Lease Guaranty dated as of the date hereof and attached hereto of their
obligations under such Lease Guaranty.
13.5 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered personally or
mailed, by certified or registered mail, return receipt requested, first class
postage prepaid, or by Federal Express or some other reputable overnight
carrier, to the parties at the following addresses:
If to Parent or the Company, addressed to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Incorporated
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Corporate Offices
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Plaza
Chicago, IL 60671
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
-45-
With copies (which shall not
constitute notice hereunder) to:
▇▇▇▇▇, Day ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Altheimer & Gray
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
If to Purchaser, addressed to:
Schottenstein ▇▇▇▇▇▇▇▇▇ Capital Group, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
Schottenstein ▇▇▇▇▇▇▇▇▇ Capital Group, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Atten: Legal Department
and
-46-
AEW Capital Management L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Atten: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
With copies (which shall not
constitute notice hereunder) to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Atten: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Atten: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
and
Hill and ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Atten: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
or to such other place and with such other copies as any party may designate by
written notice to the other party.
13.6 Expenses. Except as otherwise provided in this Agreement, each party
--------
hereto shall pay its own expenses, including attorneys', accountants' and
brokerage fees, in connection with this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby.
13.7 Public Announcements. No press release or other public statement with
--------------------
respect to this Agreement or the transactions contemplated hereby shall be
issued by any party without that party having consulted with and obtained the
consent of the other parties, which consent shall not be unreasonably withheld.
13.8 Entire Agreement. This Agreement supersedes all prior discussions and
----------------
agreements between the parties with respect to the subject matter hereof, and
this Agreement, including the schedules and exhibits hereto, and other documents
to be delivered in connection herewith (together with such confidentiality
letter), contains the sole and entire agreement between the parties hereto with
respect to the subject matter hereof.
13.9 Waiver. Any term or condition of this Agreement may be waived at any
------
time by the party which is entitled to the benefit thereof. To be effective,
each such waiver shall be in writing, shall specifically refer to this Agreement
and the term or condition being waived, and shall be executed by an Authorized
Officer of such party. A waiver on one occasion shall not be
-47-
deemed to be a waiver of the same or any other breach on a future occasion. A
waiver hereunder shall be effective without an order of the Court, or notice to
the Court or any third party, in relation to such waiver.
13.10 Amendment. This Agreement may be modified or amended only in a
---------
writing duly executed by or on behalf of each of the parties hereto.
13.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.12 Invalid Provisions. If any provision of this Agreement is held to
------------------
be illegal, invalid, or unenforceable under any present or future law, rule, or
regulation, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof. The remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance here from. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision, there shall be
added automatically as a part of this Agreement a legal, valid, and enforceable
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible. To the extent of any inconsistencies between the
Sale Order with this Agreement, the Sale Order shall control.
13.13 Headings, Gender, Etc. The headings used in this Agreement have
----------------------
been inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender shall be deemed to include
each other gender, (b) words using the singular or plural number shall also
include the plural or singular number, respectively, (c) references to "hereof,"
"herein," "hereby" and similar terms shall refer to this entire Agreement, and
(d) each reference to the Company shall be a reference to any of its
subsidiaries and predecessors and each representation, warranty, covenant and
other agreement made herein with respect to the Company shall be deemed made
with respect to all such subsidiaries and predecessors. The language used in
this Agreement shall be deemed to the language chosen by the parties hereto to
express their mutual intent and no rule of strict construction shall be applied
against any Person.
13.14 Choice of Law. This Agreement shall be construed, interpreted and
-------------
the rights of the parties determined in accordance with the laws of the State of
New York without regard to conflicts of laws principles thereof, except with
respect to matters of law concerning the internal corporate affairs of any
corporation which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction of incorporation of such corporation
shall govern.
13.15 No Third Party Beneficiary. Nothing herein expressed or implied is
--------------------------
intended or shall be construed to confer upon or give to any person, firm or
corporation, other than the parties hereto and their respective permitted
successors and assigns, any rights or remedies under or by reason of this
Agreement, other than the Company and the Persons entitled to indemnification
under Section 9.2.
-48-
13.16 Retention of Jurisdiction. The Bankruptcy Court shall retain
-------------------------
jurisdiction with respect to any matter, issue, claim or controversy arising out
of or resulting from this Agreement or any of the transactions contemplated
hereby or associated herewith, including without limitation any matter, issue,
claim or controversy relating to Purchaser's right to have received the
Purchased Assets free and clear of any and all Liens.
* * * * *
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the day and year first above written.
SCHOTTENSTEIN ▇▇▇▇▇▇▇▇▇ CAPITAL GROUP LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and Chief Operating
Officer
LECHMERE, INC., Debtor and Debtor-in-
Possession
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & CO.,
INCORPORATED, Debtor and
Debtor-in-Possession
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and General
Counsel and President, MW Properties
-49-
EXHIBIT 5 .3
-50-
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
IN RE: :
: JOINTLY ADMINISTERED
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ HOLDING CORP., : CASE NO. 97-1409 (PJW)
A DELAWARE CORPORATION, ET AL., :
-- --
: CHAPTER 11
DEBTORS. : HEARING: AUGUST 14, 1997 3:30 P.M.
ORDER AND FINDINGS OF FACT AND CONCLUSIONS OF LAW
(A) AUTHORIZING ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & CO.,
INCORPORATED AND LECHMERE, INC. TO SELL ASSETS
PURSUANT TO A PURCHASE AGREEMENT,/1/ (B) AUTHORIZING THE
CLOSING OF ALL LECHMERE AND HOME IMAGE STORES,
(C) PERMITTING THE PURCHASER TO CONDUCT STORE CLOSING SALES,
(D) APPROVING CERTAIN LEASE ASSUMPTION AND REJECTION PROCEDURES
AND (E) PERMITTING THE DEBTORS TO PAY SEVERANCE CLAIMS/2/
------------------------------------------------------
This matter is before the Court on the Motion of Debtors and Debtors
in Possession for an Order (a) Authorizing ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Incorporated
and Lechmere, Inc. to Sell Assets Pursuant to a Letter Agreement, (b)
Authorizing the', Closing of all Lechmere and Home Image Stores, (c) Permitting
the Buyer to Conduct Store Closing Sales, (d) Approving Certain Lease Assumption
and Rejection Procedures and (e) Permitting the Debtors to Pay Severance Claims
(the "Sale Motion,"), filed by the above-captioned debtors and debtors in
___________________________________
/1/ Capitalized terms used but not otherwise defined herein shall have the
meanings given to them in the Asset Purchase, License and Agency Agreement dated
as of August 6, 1997 among Lechmere, Inc., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Co., Incorporated and
MWL Acquisition L.L.C. (the "Purchase Agreement," a copy of which is attached
hereto as Exhibit A)
/2/ The Findings of Fact and Conclusions of Law contained herein constitute
the findings of fact and conclusions of law required to be entered by this Court
with respect to the Motion pursuant to Rule 52 of the Federal Rules of Civil
Procedure, as made applicable herein by Rules 7052 and 9014 of the Federal Rules
of Bankruptcy Procedure.
-51-
possession (collectively, the "Debtors"), on August 1, 1997. The Court having
reviewed the Motion and having heard the statements of counsel in support of the
relief requested therein at a hearing before the Court on August 13, 1997 (the
"Sale Hearing"); all parties in interest having been heard, or having had the
opportunity to be heard at the Sale Hearing, regarding approval of the Purchase
Agreement, and the transactions contemplated thereby (the "Transactions"), and
the Court having received evidence in support of approval of the Purchase
Agreement; and it appearing from the certificates of service and publication
dated August ___, 1997 (the "Certificates") filed with the Clerk of the Court
that sufficient notice and publication of the Motion and the relief granted by
this Order have been provided; and it further appearing that no other or further
notice hereof is required; and after due deliberation and good and sufficient
cause appearing therefor, this Court hereby makes the following Findings of Fact
and Conclusions of Law:
I. THE COURT HEREBY ENTERS THE FOLLOWING FINDINGS OF FACT/3/:
A. BASIS FOR SECTION 363 SALE
--------------------------
1. Time is of the essence in consummating the sale of the Purchased
Assets. Accordingly, to maximize the value Of the Acquired
Assets, it is essential that the sale of the Purchased Assets
occur within the time constraints set forth in the Purchase
Agreement and the Sale Motion.
________________________
/3/ The Court's statements from the bench setting forth additional
Findings of Fact and Conclusions of Law in open Court at the Sale Hearing on the
Motion are expressly incorporated by reference into this Order.
-52-
B. NOTICE OF SALE OF THE PURCHASED ASSETS
--------------------------------------
2. Written notice of the Sale Hearing in accordance with the Court's
Order entered on August 6, 1997 (the "Sale Notice Order") as
described in the Affidavit of Service of Notice of the', Sale
Hearing and Sale filed by the Debtors on August ___, 1997 with
this Court, was transmitted to (i) each known creditor of the
Debtors holding or asserting a lien against the Purchased Assets;
(ii) each known creditor or party in interest holding or
asserting of record an interest in the Real Estate; (iii) each of
the potential bidders with respect to the sale of the Purchased
Assets; (iv) each party that has filed a notice of appearance or
requested service herein; (v) counsel to the official committee
of unsecured creditors; (vi) counsel to the Debtors' debtor- in-
possession lenders, (vii) counsel to MWL Acquisition L.L.C. (the
"Purchaser"); (viii) the Office of the United States Trustee, and
(ix) the other persons and entities listed in the Certificates by
a copy of the notice in substantially the form attached hereto as
Exhibit B.
3. Notice was also published in the Wall Street Journal, National
Edition, the New York Times, the Chicago Tribune and the Boston
Globe on August 8, 1997 as described in the Certificates.
4. The Notice was adequate and sufficient under the circumstances of
these Chapter 11 cases and this proceeding and complied with the
various applicable requirements of the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure and the procedural due
process requirements of the United States Constitution. As
described in the Sale Motion, over the last
-53-
year, the deteriorating performance of Lechmere, Inc.
("Lechmere") has placed a significant cash drain on the Debtors'
businesses and there is no reasonable prospect of Lechmere
achieving profitability. These circumstances constitute good
cause pursuant to Rule 9006(c) of the Federal Rules of Bankruptcy
Procedure to reduce the twenty day notice period prescribed by
Rule 2002 of the Federal Rules of Bankruptcy Procedure.
C. GOOD FAITH OF PURCHASER
-----------------------
5. Purchaser is purchasing the Purchased Assets in good faith and is
a good faith purchaser within the meaning of 11 U.S.C. (S)363(m),
and is therefore entitled to the protection of that provision,
and otherwise has proceeded in good faith in all respects in
connection with this proceeding and the Transactions in that:
(a) Purchaser recognized that the ',Debtors were free to deal
with any other party interested in acquiring the Purchased
Assets;
(b) Purchaser agreed to provisions in the Letter Agreement dated
July 30,1997 approved in this Court's Order dated August 6,
1997 regarding competitive bidding procedures (the "Bid
----
Procedures Order") which would enable the Debtors to accept
----------
a higher and better offer for the Purchased Assets at the
Sale Heating;
(c) Purchaser in no way induced or caused the Chapter 11 filing
of any of the Debtors;
(d) All payments to be made by Purchaser and other agreements or
-54-
arrangements entered into by Purchaser in connection with
the Transactions have been disclosed;
(e) Purchaser has not violated 11 U.S.C. (S)363(n) by any action
or inaction; and,
(f) The negotiation and execution Of the Purchase Agreement, the
Letter Agreement and all other aspects of the Transactions
were in goodfaith.
D. COMPETING OFFERS
----------------
6. [No competing offers were submitted pursuant to the competitive
bidding procedures set forth in the Bid Procedures Order.]
[Although competing offers were submitted, Purchaser's offer was
higher and better than any such offers.]
E. APPROVAL OF MOTION
------------------
7. Purchaser is a third-party purchaser unrelated to the Debtors.
8. The purchase terms, as set forth in the Purchase Agreement, are
fair and reasonable under the circumstances of the Bankruptcy
Cases and this proceeding. [No objections to the Motion were
filed, [except for the objections of ___________ and, ___________
which were either withdrawn or overruled, no objections to the
Motion were filed.]
9. The Motion should be approved as it is in the best interests of
the Debtors' prepetition and post-petition creditors, the Debtors
and other parties in interest. The Purchase Agreement represents
a fair and reasonable offer to purchase the Purchased Assets
under the circumstances of the Bankruptcy
-55-
Cases and this proceeding.
F. PURCHASER IS NOT A MERE CONTINUATION OF ANY OF THE DEBTORS
----------------------------------------------------------
10. The following findings of fact relate to the conclusions of law
set forth in paragraph 11 of Section II(D) below:
(a) Purchaser is not hiring any Of the Debtors' employees after
the Closing. The Transactions contemplate that the Debtors
will make certain employees available to the Purchaser for
purposes of necessary services in connection with the
contemplated "going out of business" sales.
(b) No common identity of incorporators, officers, directors or
material stockholders exists among Purchaser and the
Debtors.
(c) Purchaser is not purchasing the Excluded Assets, including,
without limitation, the Debtors' respective names, cash or
cash equivalents (other than certain deposits); accounts
receivable and causes of action under Sections 544-550 of
the Bankruptcy Code or not relating to the Purchased Assets
or the Leases; the FF&E, contracts and leases not expressly
assumed by the Purchaser or the Debtors' Trailers.
G. CLOSING SALES
11. The business strategy and means of effecting such strategy set
forth in the Motion is based upon the sound business judgment of
the Debtors; and the implementation of that strategy as set forth
in the Motion is reasonable, necessary and in the best interest
of the Debtors' estates.
-56-
H. MISCELLANEOUS
-------------
12. To the extent any Findings of Facts set forth in Section I,
Paragraphs 1 - 11 and all sub-parts thereto, herein constitute a
Conclusion of Law, the Court so concludes.
II. CONCLUSIONS OF LAW
------------------
The Court hereby enters the following Conclusions of Law:
A. JURISDICTION, FINAL ORDER AND STATUTORY PREDICATES
--------------------------------------------------
1. The Court has jurisdiction to hear and determine the Sale Motion
and to grant the relief requested in the Sale Motion pursuant to
28 U.S.C. (S)(S) 157(b)(1) and 1334(b).
2. This Order constitutes a final and appealable order within the
meaning of 28 U.S.C. (S) 158(a). To any extent necessary under
Bankruptcy Rule 9014 and Rule 54(b) of the Federal Rules of Civil
Procedure, as made applicable by Rule 7054 of the Federal Rules
of Bankruptcy Procedure, the Court expressly finds that there is
no just reason for delay in the implementation of this Order, and
expressly directs entry of judgment as set forth herein.
3. This proceeding is a "core proceeding" within the meaning of 28
U.S.C. (S)157(b)(2)(a), (n) and (o).
4. The statutory predicates for the Motion are Sections 363(b), 365,
102(1) and 105(a) of the Bankruptcy Code and Rules 2002(a)(2),
6004(a), (b), (c)
-57-
and (e), 6006(a) and (c), 9014, and 9019(a) of the Federal Rules
of Bankruptcy Procedure.
5. The proposed sale of the Purchased, Assets constitutes a sale of
property of the Debtors' estates outside the ordinary course of
business within the meaning of Section 363(b) of the Bankruptcy
Code.
B. SECTION 363 SALE
----------------
6. The Debtors are authorized to sell property of their respective
estates, pursuant to 11 U.S.C. (S)363(b), free and clear of the
Liens (as defined in Paragraph C of the decretal portion .of this
Order on p. 11) if the applicable provisions of 11 U.S.C.
(S)363(f) have been satisfied.
7. The provisions of Section 363(f) of the Bankruptcy Code have been
satisfied.
8. [No creditor holding or asserting a superpriority claim, lien or
security interest against the Purchased Assets has objected to
the Motion.]
9. Given all of the circumstances of the Bankruptcy Cases and the
adequacy and fair value of the purchase price under the Purchase
Agreement, the proposed sale of the Purchased Assets to Purchaser
constitutes a reasonable and sound exercise of the Debtors'
business judgment and should be approved.
C. RETENTION OF JURISDICTION
-------------------------
10. It is necessary and appropriate for the Court to retain
jurisdiction to, inter alia, interpret and enforce the terms and
--
provisions of this Order and the Purchase Agreement and to
adjudicate, if necessary, any and all disputes
-58-
concerning any right, title, (alleged),property interest,
including ownership claims, relating to the Purchased Assets and
the proceeds thereof, as well as the extent, validity and
priority of all Liens relating to the Purchased Assets.
D. NO SUCCESSOR LIABILITY
----------------------
11. Purchaser does not constitute a successor to any of the Debtors
or their respective estates.
(a) The Transactions do not amount to a consolidation, merger
and/or de facto merger of Purchaser and the Debtors or
-- -----
their respective estates.
(b) Purchaser is not merely a continuation of the Debtors or
their respective estates, there is not substantial
continuity among Purchaser and the Debtors, and there is no
continuity of enterprise among the Debtors and Purchaser.
(c) The Transactions are not being entered into fraudulently.
The sale approved hereunder has been properly noticed and
all aspects thereof have been adequately disclosed.
(d) Purchaser is not hiring any of the individuals employed by
the Debtors.
(e) Purchaser is not holding itself out to the public,
suppliers, customers, creditors (whether prepetition or
post-petition), employees or governmental entities, agencies
or authorities as a continuation of the Debtors.
-59-
E. MISCELLANEOUS
-------------
12. To the extent any Conclusion of Law set forth in Section II,
Paragraphs 1-11 herein constitutes a Finding of Fact, this Court
so finds.
BASED ON THE FOREGOING FINDINGS OF FACT, AND CONCLUSIONS OF LAW, IT IS
▇▇▇▇▇▇ ORDERED, ▇▇▇▇▇▇▇▇ AND DECREED, EFFECTIVE IMMEDIATELY, AS FOLLOWS:
II. SALE OF PURCHASED ASSETS
------------------------
A. The relief requested in the Motion is granted. The Purchase Agreement,
the Transactions and the Sale are hereby approved in all respects.
B. The Debtors are authorized and directed to take any and all actions
necessary or appropriate to (i) consummate the sale of the Purchased
Assets to Purchaser and the Closing of the Transactions in accordance
with the Motion, the Purchase Agreement and this Order; and (ii)
perform, consummate, implement and close fully the Purchase Agreement
together with all additional instruments and documents that may be
reasonably necessary or desirable to implement the Purchase Agreement.
The Debtors' permits, licenses, franchises, orders, registrations,
certificates, variances, approvals and other similar rights obtained
from Governmental Authorities shall be deemed transferred to Purchaser
upon the Closing, without further Order of this Court.
C. Upon the Closing, the Purchased Assets shall be transferred, sold and
delivered to Purchaser free and clear of all encumbrances,
obligations, liabilities, contractual commitments, claims, including,
without limitation, any theory of successor liability, de facto
-- -----
merger, or substantial continuity, whether based in law or equity,
-60-
employee benefit obligations, (including, without limitation, under
ERISA, any security interest, mortgage, lien, charge against or
interest in property, adverse claim, claim of possession, right of
way, license, easement or restriction of any kind, including, but not
limited to, any restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership or any option
to purchase, option, charge, retention agreement which is intended as
security or other matters (hereinafter collectively referred to as
"Liens") of any person or entity (other than the Assumed Liabilities
and the post-closing liabilities under the Assigned Contracts,
pursuant to the express terms of the Purchase Agreement), that
encumber or relate to or purport to encumber or relate to the
Purchased Assets.
▇. ▇▇▇▇▇▇▇▇▇ is not a successor to any of the Debtors or their respective
estates by reason of any theory of law or equity and Purchaser shall
not assume or in any way be responsible for any liability or
obligation of the Debtors and/or their respective estates, except as
otherwise expressly provided in the Purchase Agreement.
E. Effective on the date of entry of this Order, all entities, including,
but not limited to, the Debtors (and/or their respective successors,
including any trustees thereof), creditors, employees, former
employees and shareholders, administrative agencies, governmental
departments, secretaries of state, federal, state and local officials,
maintaining any authority relating to Environmental, Health and Safety
Laws, and their respective successors or assigns, shall be permanently
and forever barred, restrained and enjoined from commencing or
continuing in any manner
-61-
any action or other proceeding of any kind against Purchaser as
alleged successor or otherwise with respect to any Liens arising out
of or related to the Transactions. For purposes of this Order,
"Environmental, Health, and Safety Laws" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations
and all common law concerning public health and safety, worker health
and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes;, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise or
radiation, each as amended and as now or hereafter in effect.
F. The terms and provisions of the Purchase Agreement, together with the
terms and provisions of this Order, shall be binding in all respects
upon, the Debtors, any trustees thereof, their respective estates,
their creditors and the Debtors' shareholders, all entities and third
parties, administrative agencies, governmental departments,
secretaries of state, federal, state and local officials, maintaining
any authority relating to Environmental, Health and Safety Laws, and
their respective successors or assigns, including, but not limited to
all non-Debtor parties to the Leases which may be assigned to
Purchaser or other entities under the Purchase Agreement and persons
asserting a Lien against or interest in the Debtors' estates
-62-
or any of the Purchased Assets to be sold and assigned to Purchaser,
irrespective of any action commenced which contests the Debtors'
authority to sell and assign the Purchased Assets or which seeks to
enjoin the Transactions and/or assignment.
G. All entities holding Liens of any kind and nature be and hereby are
barred from asserting such Liens against Purchaser and/or the
Purchased Assets and, effective upon the transfer of the Purchased
Assets to Purchaser at the Closing, the Liens shall attach to the
proceeds of the sale with the same force, validity, priority and
effect, if any, as the Liens formerly had against the Purchased
Assets.
H. This Order: (a) is and shall be effective as a determination that,
upon Closing, all Liens existing as to the Purchased Assets conveyed
to Purchaser have been and hereby are adjudged and declared to be
unconditionally released, discharged and terminated, and (b) shall be
binding upon and govern the acts of all entities, including, all
filing agents, filing officers, title agents, title companies,
recorders of mortgages, recorders of deeds, registrars of deeds,
administrative agencies or units, governmental departments or units,
secretaries of state, federal, state and local officials and all other
persons and entities who may be required by operation of law, the
duties of their office, or contract, to accept, file, register or
otherwise record or release any documents or instruments, or who may
be required to report or insure any title or state of title in or to
any of the Purchased Assets conveyed to Purchaser. All Liens of record
as of the date of this Order shall be forthwith removed and stricken
as against the Purchased Assets. All such Entities described above in
this Paragraph H are authorized and specifically directed to strike
all such recorded Liens against the Purchased Assets from their
records, official and
-63-
otherwise.
I. If any person or entity which has filed statements or other documents
or agreements evidencing Liens on, or interests in, the Purchased
Assets shall not have delivered to the Debtors prior to the Closing,
in proper form for filing and executed by the appropriate parties,
termination statements, instruments of satisfaction, releases of liens
and easements, and any other documents necessary for the purpose of
documenting the release of all Liens which the person or entity has or
may assert with respect to the Purchased Assets, the Debtor is hereby
authorized and directed to execute and file such statements,
instruments, releases and other documents on behalf of such person or
entity with respect to the Purchased Assets.
J. Any and all Purchased Assets in the possession or control of any
person or entity, including, without limitation, any former vendor,
supplier or employee of any of the Debtors (a) shall be transferred to
Purchaser free and clear of the Liens and (b) shall be delivered at
the Closing to Purchaser at that parties' sole cost and expense at ,
unless, pursuant to the Purchase Agreement, such person, entity,
vendor, supplier or employee may retain temporary possession or
control of any of such Purchased Assets, in which case the possession
of such item shall be delivered to Purchaser at such time as is
designated by Purchaser.
K. Nothing contained in any order of any type or find entered in the
Bankruptcy Cases, any subsequent chapter 7 case into which such
Bankruptcy Cases may be converted derogate from the provisions of the
Purchase Agreement or the terms of this Order. To the extent any
provisions of this Order conflict with the terms
-64-
and conditions of the Purchase Agreement, this Order shall govern and
control. The Order shall be binding upon and enforceable against,
among others, the Debtors, their estates and any and all Chapter 7 and
Chapter 11 Trustees thereof.
L. In the event the Debtors make the election described in Section 11.9
of the Purchase Agreement, the Debtors are hereby authorized to
deliver the Financed Store Fixtures to the Purchaser, free and clear
of all Liens, and, without further Court Order, to use the purchase
price paid by Purchaser under the Purchase Agreement to so deliver
such Financed Store Fixtures.
III. STORE CLOSING SALES
-------------------
A. The Debtors be, and hereby are authorized and empowered to close up to
all of the Stores to implement its strategy set forth in the Motion
and to maximize the value of the assets to be sold in connection with
such Store closings.
B. Purchaser, on behalf of the Debtors, is hereby authorized and
empowered to conduct going out of business sales and similar sales
(collectively, the "Store Closing Sales") on the terms and conditions
set forth in the Purchase Agreement. Without limiting the generality
of the foregoing, Purchaser shall be, and hereby is, authorized to
conduct the Store Closing Sales in the name of the Debtors and to
establish and implement advertising, signage and promotional programs
consistent and the "store closing" or "going out of business" theme
(including, without limitation, by means of media advertising,
banners, A-frame and similar interior and exterior signs).
C. Pursuant to Section 363(f) of the Bankruptcy Code, all Merchandise to
be sold by Purchaser at the GOB Sales shall be sold free and clear of
any and all Liens, if
-65-
any, with such Liens to attach to the Purchase Price paid under the
Purchase Agreement.
D. The Debtors and Purchaser are hereby authorized and empowered to
transfer inventory, equipment, furniture and fixtures to and from the
stores to be closed in accordance with the terms of the Purchase
Agreement, including, without limitation, to, from and between the
Stores, the Warehouses, any of Parent's Electric Avenue & More stores
the going out of business sales for which Purchaser is acting as
liquidation agent and any other stores and warehouses of Debtors'
affiliates.
E. All persons and entities of every nature and description, including
but not limited to landlords, utility companies, governmental
agencies, sheriffs, marshals or other public officers, creditors and
all those acting for or on their behalf, be, and they hereby are,
jointly and severally restrained and enjoined from (a) in any way
interfering with or otherwise impeding the conduct of the Store
Closing Sales at the Stores and the maintenance of Merchandise,
equipment, furniture and fixtures thereat, (b) instituting any action
or proceeding in any court or other administrative body having as its
objective the obtaining of an order or judgment which might in any way
directly or indirectly obstruct or otherwise interfere with or impair
the conduct of the Store Closing Sales thereat, and (c) taking any
action that interferes with or impedes Purchaser's receipt of all sums
due in accordance with the terms of the Purchase Agreement; provided,
--------
however, that nothing set forth in this paragraph shall be deemed to
-------
preclude parties in interest from appearing before this Court and
being heard on matters not adjudicated herein.
-66-
F. Purchaser be, and hereby is, authorized to conduct the Store Closing
Sales and take all actions related thereto or arising in connection
therewith, without complying with federal, state or local laws, rules,
statutes, ordinances, licensing requirements and procedures of any
kind or nature.
G. Purchaser be, and hereby is, authorized to conduct the Store Closing
Sales and take all actions related thereto or arising in connection
therewith, notwithstanding any provision in any lease or other
document or instrument that purports to limit, restrict or modify such
actions, and Section 365(d)(3) of the Bankruptcy Code does not
preclude the relief granted in this paragraph.
H. The Debtors and Purchaser and their respective officers, employees and
agents be, and they hereby are, authorized to execute such documents
and to do such acts as are necessary or desirable to carry out the
Store Closing Sales and related actions authorized herein.
I. The Debtors and its officers, employees and agents shall not be
required to obtain the approval of any federal, state or local
governmental agency, department or other authority (each a
"Governmental Authority"), any landlord or any other third parties to
close the Stores; and Purchaser and its officers, employees and agents
shall not be required (a) to obtain the approval of any Governmental
Authority, any landlord or any other third parties to conduct the
Store Closing Sales and to take the related actions authorized herein
or (b) to execute, obtain or file releases, termination statements,
assignments, consents or other instruments to effect, consummate and
implement the provisions hereof.
IV. UNEXPIRED LEASES
----------------
-67-
A. Pursuant to the Purchase Agreement, Purchaser is hereby granted the
authority to direct the Debtors to dispose of the leases covering the
Stores (the "Leases") as described in the Purchase Agreement and shall
have the option for 270 days after the Closing Date to direct the
applicable Debtor to assume and assign or reject such Leases.
B. The time by which the Debtor may elect to assume or reject the Leases,
pursuant to Section 365 of the Bankruptcy Code, is hereby extended to
__________,1998 (300 days after the Closing Date), subject to
Purchaser's right to direct the applicable Debtor to assume and assign
or reject any and all of such Leases prior to such date.
C. From and after the Closing Date to and including __________ ___, 1998,
Purchaser shall have the right to market the Leases in the manner it
deems reasonably necessary to maximize the value of such Leases for
the benefit of Purchaser and the Debtors' estates.
▇. ▇▇▇▇▇▇▇▇▇ PAY
-------------
A. The Debtors shall be, and hereby are, permitted to pay severance
claims in accordance with the plan set forth in the Motion.
VI. MISCELLANEOUS
-------------
A. This Court retains jurisdiction, even after the closing of the Chapter
11 cases, to:
(1) Interpret, implement and enforce the terms and provisions of this
Order (including the injunctive relief provided in this Order)
and the terms of the Purchase Agreement, all amendments thereto
and any waivers and
-68-
consents thereunder and of each of the agreements executed in
connection therewith;
(2) Protect Purchaser, or any of the Purchased Assets, against any of
the Liens;
(3) Compel compliance with the Purchase Agreement and delivery of all
Purchased Assets to Purchaser;
(4) Resolve any disputes arising under or related to the Purchase
Agreement or the Transactions, Purchaser's peaceful use and
enjoyment of the Purchased Assets;
(5) Adjudicate all issues concerning (alleged) pre-Closing Liens, the
Leases and any other (alleged) interest(s) in and to the
Purchased Assets, including the extent, validity, enforceability,
priority and nature of all such (alleged) Liens, the Leases and
any other (alleged) interest(s);
(6) Adjudicate any and all issues and/or disputes relating to the
Debtors' right, title or interest in the Purchased Assets and the
proceeds thereof, the Motion and/or the Purchase Agreement; and
(7) Re-open the Bankruptcy Cases to enforce the provisions of this
Order.
B. No bulk sales law or any similar law of any state or other
jurisdiction shall apply in any way to the Transactions.
C. Pursuant to Section 1146(c) of the Bankruptcy Code, no transfer, stamp
or similar tax shall apply to the Transactions.
D. The failure specifically to include any particular provisions of the
Purchase Agreement in this Order shall not diminish or impair the
efficacy of such
-69-
provision, it being the intent of the Court that the Purchase
Agreement and each and every provision, term, and condition thereof be
authorized and approved in its entirety.
▇. ▇▇▇▇▇▇▇▇▇ may consummate the Transactions at any time after entry of
this Order by waiving any and all closing conditions set forth in the
Purchase Agreement that have not been satisfied and by proceeding to
close the Transactions without any notice to the Court, any pre- or
post-petition creditor of the Debtors and/or any other party in
interest.
F. This Order and the judgment Order entered contemporaneously in
connection herewith shall be effective immediately upon entry pursuant
to Rule 7062 and 9014 of the Federal Rules of Bankruptcy Procedure,
and no automatic stay of execution, pursuant to Rule 62(a) of the
Federal Rules of Civil Procedure, applies with respect to this Order
and/or the Judgment Order entered in connection herewith.
▇. ▇▇▇▇▇▇▇▇ to Rule 58 of the Federal Rules of Civil Procedure, as made
applicable herein by Rule 9021 of the Federal Rules of Bankruptcy
Procedure, a separate document in the form of a Judgment Order shall
be entered contemporaneously herewith approving the Sale Motion.
Dated: Wilmington, Delaware
August 14, 1997
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: United States Bankruptcy Judge
-70-