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EXHIBIT 10.15(d)
FORM OF
CONSIGNMENT AGREEMENT
This Agreement made as of the_________th day of___________, 1997, is by and
between SUPPLIER ("Consignor"), with its principal offices at and Barry's
Jewelers, Inc., a California corporation ("Consignee") with its principal
offices at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH:
A. RECITALS.
WHEREAS, on May 11, 1997 ("Petition Date"), Consignee filed a petition for
relief before the United States Bankruptcy Court for the Central District of
California ("Bankruptcy Court") under title 11, chapter 11 of the Bankruptcy
Code, ▇▇▇▇ ▇▇. ▇▇ ▇▇-▇▇▇▇▇-▇▇ ("Chapter 11 Case");
WHEREAS, Consignee utilizes (DESCRIBE MERCH) and other merchandise in its
operations;
WHEREAS, Consignee desires to obtain goods on consignment from Consignor
following the Petition Date in accordance with the terms of this Agreement;
WHEREAS, Consignor is willing to consign (DESCRIBE MERCH) and such other
merchandise as is delivered pursuant to this Agreement from time to time
following the Petition Date (the "Consigned Merchandise") to Consignee for sale
or return by Consignee constituting a true consignment, on the terms and
conditions in this Agreement; and
WHEREAS, the effectiveness of this Agreement is subject to entry of the
Consignment Order (as specified below).
NOW, THEREFORE, in consideration of the promises and of the mutual
promises hereinafter contained, the parties do hereby agree as follows:
B. CONSIGNMENT ARRANGEMENTS.
1. Consignor shall from time to time deliver to Consignee on consignment
such amounts of Consigned Merchandise as may be mutually agreed upon,
upon the terms and conditions set forth herein and, to the extent not
inconsistent, in the Memo accompanying Consigned Merchandise. The
delivery date shall be as reasonably specified by Consignee in its
orders for Consigned Merchandise. Such Consigned Merchandise provided by
Consignor shall bear the appropriate trademark designated by Consignor.
Schedule A hereto, prepared by Consignor, lists all such trademarks.
Consignor shall promptly update
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Schedule A to add new trademarks or delete trademarks, and provide such
updated Schedule to Consignee.
2. The Consigned Merchandise shall be maintained at all times at
Consignee's distribution center(s) or held for sale by Consignee to
Consignee's customers in the stores Consignee operates, which
distribution center(s) and stores are listed on Schedule B hereto.
Schedule B shall include any trade names and the name and state of
incorporation of any affiliated corporation operating the stores
referred to therein. Consignee shall promptly update Schedule B to add
new trade names and states of incorporation and new stores or
distribution center(s) or delete trade names and states of incorporation
and stores or distribution centers, and provide such updated Schedule to
Consignor.
3. Title to the Consigned Merchandise delivered to Consignee shall at all
times remain with Consignor until purchased by Consignee at the time of
its sale to its customer. Consignee may only sell the Consigned
Merchandise in the ordinary course of its business, and may not sell
Consigned Merchandise in bulk. Nothing in this Agreement prohibits
Consignee from selling merchandise other than Consigned Merchandise out
of the ordinary course of its business or in bulk.
4. Consignor commits to maintain a minimum amount of $000,000 of Consigned
Merchandise with Consignee (which minimum level of Consigned Merchandise
hereinafter is referred to as the "Minimum Commitment") for a period of
two years from the date of this Agreement; provided that such two-year
period shall be automatically extended thereafter in one-year increments
after the expiration of such initial two-year period unless Consignee or
Consignor in their respective sole discretion provides written notice of
termination on or before ninety (90) calendar days prior to the
expiration of such two-year period or ninety (90) calendar days prior to
the expiration of any one-year extension. The foregoing commitment and
any obligation of Consignor thereafter to ship Consigned Merchandise
shall terminate earlier as specified in Paragraph 13 hereof or upon a
Default by Consignee (as defined in Paragraph 15 hereof). Any consigned
goods delivered to Consignee prior to the Petition Date and on hand with
Consignee on the Petition Date (hereinafter "Prepetition Consigned
Merchandise") shall not be included in determining the Minimum
Commitment. For all purposes, as used in this Agreement, the term
Consigned Merchandise does not include Prepetition Consigned
Merchandise.
5. Consignee shall insure the Consigned Merchandise for its full value for
and against all risks of loss. Consignee accepts all risks of loss to
the Consigned Merchandise from the time accepted by it until returned to
Consignor. Consignee warrants that it shall promptly pursue on
Consignor's behalf all remedies and payments in the event of a loss and
will immediately notify Consignor of any loss.
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6. Consignor and Consignee may mutually agree that Consignee shall return
to Consignor slow moving or obsolete Consigned Merchandise, that
Consignor shall cease automatic replenishment of such slow moving or
obsolete Consigned Merchandise, and/or that Consignee shall select
replacement Consignment Merchandise. Consignor and Consignee shall
cooperate in good faith regarding all such matters.
7. Every ninety (90) calendar days, or such other time as mutually agreed
by Consignor and Consignee, Consignor shall submit to Consignee a
detailed statement ("Consignor Statement") specifying Consignor's
records with respect to shipments, returns, credits, invoices and
balances regarding Consigned Merchandised. Promptly following
Consignee's receipt of such Consignor Statement, Consignee shall prepare
and submit to Consignor a report reconciling the Consignor Statement to
Consignee's records ("Reconciliation Report"). Consignor and Consignee
shall cooperate in good faith regarding the Reconciliation Report and to
resolve any differences between the Reconciliation Report and the
Consignor Statement. Any shrinkage evidenced by the Reconciliation
Report (as modified to resolve any differences) shall be deemed to
reflect sales of such Consigned Merchandise as of the date of the
Reconciliation Report to be paid for by Consignee in accordance with
Paragraph 8 hereof. In addition to the forgoing, at least once each year
Consignee shall conduct a physical inventory or other agreed upon method
for taking inventory, and a Reconciliation Report based thereon shall be
prepared and any payment due as a result thereof shall be made in
accordance with the provisions of this Paragraph and Paragraph 8 hereof.
8. a. Consignor shall prepare a document, labeled "Memo," which will
accompany each shipment of Consigned Merchandise to Consignee.
The Memo shall generally describe and identify the items of
Consigned Merchandise contained in that shipment.
b. Consignee shall, no later than five (5) business days after the
end of each week, send to Consignor, by fax, a sales report
listing the piece(s) of Consigned Merchandise sold, transferred
to layaway or otherwise disposed of during that week (the
"Consignee Sales Report").
c. Upon receipt of the Consignee Sales Report, Consignor shall
promptly prepare an invoice, setting forth the payment due from
Consignee based upon the Consignee Sales Report. Consignee shall
remit payment to Consignor in the amount of such invoice within
thirty (30) calendar days of Consignee's date of such invoice.
d. The prices to be charged by Consignor and to be paid by
Consignee for the Consigned Merchandise shall be set forth on
the "Memo" accompanying the goods.
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e. Consignor may at its sole discretion from time to time announce
a price change for the Consigned Merchandise. Consignor shall
give Consignee sixty (60) calendar days' prior written or verbal
notice of any price changes for Consigned Merchandise (new
prices shall not be materially different than prices charged to
Consignor's other customers for similar goods sold under similar
terms and conditions); during this sixty (60) calendar day
period Consignee may buy Consigned Merchandise from Consignor at
the old price. New orders by the Consignee after the date of
notification of a price change shall be made at the new price.
If Consignee in its sole discretion does not agree to any such
price change Consignee may promptly return to Consignor all
unsold Consigned Merchandise subject to such price change, or
otherwise terminate this Agreement on ten (10) calendar days'
written notice to Consignor and, in such event, all sold
Consigned Merchandise shall be paid for and all unsold Consigned
Merchandise shall be promptly returned to Consignor.
f. The terms for reporting sales under Paragraph 8(b) and for
paying invoices under Paragraph 8(c) may be altered only by the
prior written consent of Consignor and Consignee.
g. Consignee shall be entitled to credit against any outstanding
amounts otherwise due or thereafter due under a Consignee Sales
Report, or if no amounts are thereafter due, receive payment
from Consignor, for any bona fide returns of Consigned
Merchandise actually returned to Consignee at the store on or
before thirty (30) calendar days from the date of sale.
Consignee shall not be entitled to any such credit or payment,
as the case may be, for any returns after such thirty (30)
calendar days.
C. SECURITY INTEREST IN CONSIGNED MERCHANDISE.
9. Consignor understands that Consignee commingles all proceeds from the
sale of inventory, including merchandise on consignment, and that no
identifiable cash or noncash proceeds now or hereinafter exist in
Consignee's business.
10. The parties hereto agree that this Agreement creates a true consignment
and that all transactions hereunder shall constitute true consignments
of the Consigned Merchandise and not the purchase and sale of
merchandise by Consignee. However, in the event that there is a final
determination by a court of competent jurisdiction that this Agreement
and the Memos for any reason do not create a true consignment, then in
such event, Consignee hereby grants to Consignor a continuing security
interest in the Consigned Merchandise, but not to the cash or noncash
proceeds thereof now or hereafter existing. Without expressly or
impliedly limiting the phrase "cash or noncash proceeds now or hereafter
existing," such phrase includes: (a) any accounts, chattel paper,
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general intangibles, or receivables of Consignee created upon the sale
of the Consigned Merchandise, or (b) any rights in and to any pooling,
securitization, structured or similar or other financing (including
without limitation the issuance of asset-backed securities) involving
any accounts, chattel paper, general intangibles, receivables, or other
property of Consignee or any of its affiliates, including any
special-purpose entity organized by or on behalf of Consignee. Consignee
shall sign and deliver to Consignor such financing statements (UCC-1's)
and other documents as Consignor may reasonably request to perfect its
interest as a consignor in accordance with the provisions of the Uniform
Commercial Code. Such UCC-1 financing statements will expressly exclude
proceeds (as broadly illustrated herein) from the description of
collateral and shall be in a form reasonably acceptable to Consignee.
11. Consignee warrants that except with respect to the security interests of
the parties identified on Schedule C, Consignor's security interest in
Consigned Merchandise created under Paragraph 10 hereof, and any other
security interest given in goods on consignment, Consignee will not
hereafter permit any other security interest or other lien or
encumbrance to attach to Consigned Merchandise (excluding proceeds, as
broadly defined herein) at any time.
D. TERM OF AGREEMENT; ASSIGNABILITY.
12. This Agreement and the Minimum Commitment thereunder shall remain in
full force and effect for a minimum term of two years from the date
hereof and shall be automatically extended thereafter in one-year
increments in accordance with the provisions of Paragraph 4 hereof
regarding the automatic extension of the Minimum Commitment unless
terminated earlier in accordance with this Agreement, including, without
limitation, a termination resulting from Default by Consignee.
Notwithstanding any expiration or termination of this Agreement for any
reason, except for the Minimum Commitment and Consignor's obligation
thereafter to ship Consigned Merchandise, upon any such termination or
expiration the remaining provisions of this Agreement shall remain in
full force and effect until all Consigned Merchandise delivered to
Consignee is purchased and paid for by Consignee or returned to
Consignor, and, in such event, upon written demand of Consignor the
following shall promptly occur: (a) Consignee shall return to Consignor
all remaining Consigned Merchandise, (b) Consignee shall issue a final
Consignee Sales Report, (c) payment thereon shall be made in accordance
with Paragraph 8 hereof, and (d) the parties shall undertake to
reconcile any differences in their respective records in accordance with
Paragraph 7 hereof.
13. Notwithstanding anything to the contrary in this Agreement, the Minimum
Commitment and any obligation of Consignor to continue to ship Consigned
Merchandise shall terminate unless either (a) or (b) timely occurs: (a)
on or before November 3, 1997, an order is entered in the Chapter 11
Case approving debtor in possession financing or otherwise authorizing
Consignee to use cash
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and proceeds constituting cash collateral within the meaning of the
Bankruptcy Code sufficient to pay all postpetition obligations of
Consignee when due and payable through no earlier than February 28,
1998; or (b)(i) on or before December 1, 1997, Consignor and Consignee
-- enter into a written agreement (which agreement is binding on
Consignor and its estate) mutually acceptable to the parties pursuant to
which Consignee shall place in a deposit account (for Consignor's sole
benefit) funds sufficient to satisfy Consignee's obligations hereunder
for Consigned Merchandise estimated to be sold in December 1997 and (ii)
Consignee actually places such funds in such account (for ---
Consignor's sole benefit) on or before December 8, 1997. If event (a)
above does not occur by November 3, 1997, then the Minimum Commitment
and any obligation of Consignor to continue to ship Consigned
Merchandise shall terminate on December 1, 1997 unless event (b)(i)
above timely occurs on that date. If event (b)(i) above timely occurs on
December 1, 1997, then the Minimum Commitment and any obligation of
Consignor to continue to ship Consigned Merchandise shall terminate on
December 8, 1997 if event (b)(ii) above does not timely occur on that
date. In the event of any termination of the Minimum Commitment and any
obligation thereunder to ship Consigned Merchandise, the remaining
provisions of this Agreement shall otherwise remain in full force and
effect until all Consigned Merchandise delivered to Consignee is
purchased and paid for by Consignee or returned to Consignor, and, in
such event, upon written demand of Consignor the following shall
promptly occur: (a) Consignee shall return to Consignor all remaining
Consigned Merchandise; (b) Consignee shall issue a final Consignee Sales
Report, (c) payment thereon shall be made in accordance with Paragraph 8
above, and (d) the parties shall undertake to reconcile any differences
in their respective records in accordance with Paragraph 7 hereof.
14. The Agreement is not assignable without the prior written approval of
Consignor and Consignee in their respective sole discretion.
E. DEFAULTS.
15. As used herein, the term "Default by Consignee" shall mean the
occurrence of any one or more of the following:
a. Default in the payment or performance of any of Consignee's
obligations or agreements hereunder which continues for more
than ten (10) business days after Consignor gives Consignee
written notice thereof; or
b. Any representation or warranty made by Consignee herein or in
any certificate, statement or agreement furnished in connection
with this Agreement should prove to be false or misleading in
any material respect; or
c. An order of the Bankruptcy Court is entered (i) prohibiting
Consignee's use of cash and cash proceeds constituting cash
collateral within the meaning of the Bankruptcy Code sufficient
to timely pay all postpetition
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obligations of Consignee when due and payable; (ii) appointing a
chapter 11 trustee in the Chapter 11 Case; (iii) converting the
Chapter 11 Case to a chapter 7; or (iv) dismissing the Chapter
11 Case; or
d. Consignee moves the Bankruptcy Court for an order, or any order
is otherwise entered in the Chapter 11 Case, granting a lien on
Consigned Merchandise, other than a lien junior in all respects
to the interest of Consignor therein; or
e. The occurrence of an adverse event that materially impairs
Consignee's performance under this Agreement; or
f. Any two of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, E. ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
are no longer employed by Consignee in capacities having at
least as much responsibility as each held as of the Petition
Date.
g. An order of the Bankruptcy Court is entered authorizing the sale
of Consignee or substantially all of the assets of the
Consignee.
In the event of Default by Consignee, subject to the Consignment Order
Consignor shall have all rights and remedies available under applicable
law. In addition to Consignee's liability hereunder for the payment for,
or return of, all Consigned Merchandise, Consignee shall indemnify and
hold Consignor harmless for any costs, damages or expenses, including
reasonable attorneys' fees and expenses, resulting from any Default by
Consignee constituting a fraudulent or malicious act by Consignee.
16. As used herein, the term "Default by Consignor" shall mean the
occurrence of any one or more of the following:
a. Default in performance of any of Consignor's obligations or
agreements hereunder which continues for more than ten (10)
business days after Consignee gives Consignor written notice
thereof; or
b. Any representation or warranty made by Consignor herein or in
any certificate, statement or agreement furnished in connection
with this Agreement should prove to be false or misleading in
any material respect; or
c. The occurrence of an adverse event that materially impairs
Consignor's performance under this Agreement.
In the event of Default by Consignor, subject to the Consignment Order Consignee
shall have all rights and remedies available under applicable law.
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F. CONSIGNMENT ORDER.
17. The effectiveness of this Agreement is conditioned upon entry of the
Consignment Order: (i) authorizing Consignee to enter into and perform
under an agreement substantially in the form of this Agreement (which
agreement, including this Agreement, is referred to as a "Postpetition
Consignment Agreement"); (ii) providing that such Postpetition
Consignment Agreement shall be binding and enforceable on Consignee and
the estate and shall be in full force and effect; (iii) specifying that
a Consignor may file UCC-1's and any other documents reasonably required
by such Consignor to perfect its interest in Consigned Merchandise
(other than proceeds) under such Postpetition Consignment Agreement;
(iv) providing that all amounts payable under such Postpetition
Consignment Agreement with respect to Consigned Merchandise shall at all
times, before or after any termination thereof, constitute an allowed
administrative expense claim under Bankruptcy Code sections 503(b)(1)(A)
and 507(a)(1) against Consignee and its estate and any superseding case
of Consignee; and (v) providing that pending the effectiveness of a plan
of reorganization the Bankruptcy Court shall have exclusive jurisdiction
over any dispute or matter arising under such Postpetition Consignment
Agreement, including the allowability of and payment on any claims
entitled to priority hereunder, and that, subject to the foregoing,
Consignor shall be entitled to exercise all rights and remedies under
the Uniform Commercial Code and otherwise with respect to Consigned
Merchandise, and provide all notices authorized under such Postpetition
Consignment Agreement, including exercising rights in and to Consigned
Merchandise, notwithstanding the Chapter 11 Case and the automatic stay
otherwise in effect in the Chapter 11 Case or any superseding case of
Consignee.
G. OTHER PROVISIONS.
18. This Agreement only governs the rights and obligations of the parties
regarding Consigned Merchandise and does not address the rights and
obligations of the parties in and to Prepetition Consigned Merchandise.
19. Any and all Consigned Merchandise shall be delivered and accepted
pursuant to written policies and procedures reasonably adopted by
Consignee and approved by Consignor in writing.
20. Each party to this Agreement agrees that if it hereafter commences,
joins in, or seeks relief through any suit arising out of this
Agreement, then the prevailing party shall pay to the other party all
attorneys' fees and expenses reasonably incurred by said party in
defending or otherwise responding to said suit or claim. Subject to the
foregoing, the parties shall bear their own respective attorneys' fees
and expenses in connection with the negotiation and implementation of
this Agreement.
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21. Consignee will not use the provisions of Bankruptcy Code section 1129 or
any other section of the Bankruptcy Code to alter its obligations under
this Agreement, unless any such alteration is agreed to by Consignor in
its sole discretion; provided that Consignor agrees that the
confirmation or effectiveness of a plan of reorganization shall not
cause or constitute an acceleration of the obligations under, or
termination of, this Agreement. Consignor understands that upon
confirmation of such plan, any obligations of Consignee under this
Agreement arising thereafter shall not constitute administrative
priority claims, because Consignee's ability to confer administrative
priority status in accordance with law shall cease on confirmation of
any such plan.
22. This Agreement sets forth the parties' final and entire understanding
with respect to its subject matter, cannot be changed, wavered or
terminated orally and shall be governed by and construed under the laws
of the State of California (without reference to its rules as to
conflicts of law). If any provision shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to
such provision and shall not effect or render invalid or unenforceable
any other provision of this Agreement and this Agreement shall be
construed as if such provision were drafted so as not to be invalid or
unenforceable.
23. This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all of
which taken together shall constitute but one and the same instrument.
Signatures may be exchanged by telecopy, and each party agrees to be
bound by its own telecopied signature and to accept the telecopied
signatures of the other parties.
24. All notices under this agreement will be in writing and will be
delivered by personal service or telegram, telecopy or certified mail to
such address as may be designated from time to time by the relevant
party, and which will initially be as set forth below:
If to Consignee: If to Consignor:
Barry's Jewelers, Inc. NAME
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CITY
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Attn:
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
BARRY'S JEWELERS, INC.: NAME
(Consignee) (CONSIGNOR)
Date: __________________________ DATE: ____________________________
________________________________ __________________________________
Authorized Signatory Authorized Signatory
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SCHEDULE A TO CONSIGNMENT
AGREEMENT BETWEEN BARRY'S JEWELERS, INC.,
AND CONSIGNOR
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SCHEDULE B TO CONSIGNMENT
AGREEMENT BETWEEN BARRY'S JEWELERS, INC.
AND CONSIGNOR
SEE STORE LISTING ATTACHED
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SCHEDULE C TO CONSIGNMENT AGREEMENT BETWEEN BARRY'S
JEWELERS, INC. AND CONSIGNOR
1. Bank Boston, N.A., individually and as agent ("Agent") for CIT Group/Business
Credit, Inc., Sanwa Business Credit Corporation, and ▇▇▇▇▇▇▇ National Life
Insurance Company, and each of their respective successors and assigns
(collectively, the "Lenders").
2. CIT Group/Business Credit, Inc., and its successors and assigns;
3. Sanwa Business Credit Corporation, and its successors and assigns;
4. ▇▇▇▇▇▇▇ National Life Insurance Company, and its successors and assig\ns;
5. First Trust National Association, as the trustee (the "Indenture Trustee")
for the holders of 11% Senior Secured Notes due December 22, 2000, and its
successors and assigns;
6. The holders of the 11% Senior Secured Notes due December 22, 2000, and their
successors and assigns;
7. BankBoston, N.A., as the collateral agent for itself (for the benefit of the
Lenders) and the Indenture Trustee, and its successors and assigns.
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