SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. _________) (1)
dELiA*s Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
246885107
(CUSIP Number)
William Siegel
American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(516) 867-6200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 10, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
Page 1 of 20 Pages
Exhibit Index Found on Page 20
- -----------
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
13D
===============================
CUSIP No. 246885107
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
American Retail Enterprises, L.P.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
812,501
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
812,501
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
812,501
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5 %
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
PN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 20 Pages
<PAGE>
13D
===============================
CUSIP No. 246885107
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
The Pants Set, Inc.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
812,501
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
812,501
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
812,501
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5 %
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
CO
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 20 Pages
<PAGE>
13D
===============================
CUSIP No. 246885107
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Landmark Pants Corp.
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
812,501
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
812,501
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
812,501
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5 %
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
CO
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 20 Pages
<PAGE>
13D
===============================
CUSIP No. 246885107
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
William Siegel
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
812,501
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
812,501
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
812,501
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5%
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 20 Pages
<PAGE>
13D
===============================
CUSIP No. 246885107
===============================
- ---------======================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Ronald Lubel
- ---------======================================================================
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ X ]
- ---------======================================================================
3 SEC USE ONLY
- ---------======================================================================
4 SOURCE OF FUNDS*
OO
- ---------======================================================================
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ---------======================================================================
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ----------------------=========================================================
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
------=========================================================
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
812,501
------=========================================================
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
------=========================================================
PERSON WITH 10 SHARED DISPOSITIVE POWER
812,501
- ----------------------=========================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
812,501
- ---------======================================================================
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ---------======================================================================
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5 %
- ---------======================================================================
14 TYPE OF REPORTING PERSON*
IN
- ---------======================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 20 Pages
<PAGE>
Preliminary Note: The Reporting Persons (as defined below) have previously filed
a report on Schedule 13G dated July 17, 1998, with respect to the shares of
common stock, par value $.01 per share, of dELiA*s Inc. (the "Company") owned by
American Retail Enterprises, L.P. The Reporting Persons are filing this Schedule
13D to disclose certain transactions entered into among the Reporting Persons
and the Company and the entering into of an Amendment (as defined below in Item
4) among the Reporting Persons and the Company. The Amendment and such
transactions are described below in Item 4 hereto.
Item 1. Security and Issuer.
This statement relates to shares of common stock, par value $.01 per share
(the "Shares"), of the Company. The Company's principal offices are located at
435 Hudson Street, New York, New York 10014.
Item 2. Identity and Background.
(a) This statement is filed by: (i) American Retail Enterprises, L.P., a
New York limited partnership ("ARE"), with respect to the Shares held by it;
(ii) The Pants Set, Inc., a Delaware corporation ("Pants Set"), with respect to
the Shares held by ARE; (iii) Landmark Pants Corp., a New York corporation
("Landmark" and, together with Pants Set, the "General Partners"), with respect
to the Shares held by ARE; and (iv) each of William Siegel ("Siegel") and Ronald
Lubel ("Lubel"), with respect to the Shares held by ARE (ARE, Pants Set,
Landmark, Siegel and Lubel shall collectively be referred to hereafter as the
"Reporting Persons").
The name, address, principal business, citizenship or state of
organization, executive officers, directors and controlling persons of Landmark
and Pants Set are set forth on Annex 1 hereto. The Shares reported hereby for
ARE are owned directly by ARE. Each of Pants Set and Landmark may be deemed, as
General Partners of ARE, to be the beneficial owner of all such
Page 7 of 20 Pages
<PAGE>
Shares. Siegel may be deemed, as President of Pants Set and Vice President of
Landmark, to be the beneficial owner of all such Shares. Lubel may be deemed, as
President of Landmark, to be the beneficial owner of all such Shares. Each of
Pants Set, Landmark, Siegel and Lubel hereby disclaims any beneficial ownership
of such Shares.
(b) The address of the principal business and principal office of ARE, the
General Partners, Siegel and Lubel is 1620 Grand Avenue, Baldwin, New York
11510.
(c) The principal business of ARE is that of an operator of retail
clothing stores. The principal business of each of Pants Set and Landmark is to
act as the general partner of ARE.
(d) None of ARE, Pants Set, Landmark or any of the persons listed on Annex
1 hereto has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of ARE, Pants Set, Landmark or any of the persons listed on Annex
1 hereto has, during the last five years, been party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and, as a result of
such proceeding, was, or is subject to, a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds and Other Consideration.
The Shares were acquired by the Reporting Persons in connection with a
sale of certain assets by ARE and certain of ARE's affiliates to the Company
(the "Acquisition") as more fully described in Item 4 of this Schedule 13D. The
price received for such assets consisted of $10,025,000 in cash and the 812,501
Shares reported herein. For further information regarding the Acquisition and
the Asset Purchase Agreement, see the Company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on July 27, 1998.
Page 8 of 20 Pages
<PAGE>
Item 4. Purpose of the Transaction.
The Shares were acquired by the Reporting Persons in connection with the
Acquisition. On July 10, 1998, ARE and certain of its affiliates sold assets
located in 20 retail stores operated under the Screeem! and Jean Country names,
as well as the leases for such stores, to two wholly-owned subsidiaries of the
Company. In subsequent closings held on July 17 and July 24, 1998, ARE and
certain of its affiliates sold assets located in six additional Screeem! and
Jean Country stores, as well as the leases for those stores, to the same two
wholly-owned subsidiaries of the Company. ARE and certain of its affiliates also
sold the Screeem!, Jean Country and American Rocket trademarks to the Company.
The acquired stores include 11 stores operating under the Screeem! name and
concept, as well as 15 stores currently operating under the Jean Country name.
All of the stores are located in major regional shopping malls in New York, New
Jersey, Connecticut, Pennsylvania, New Jersey and Massachusetts.
The Acquisition was completed pursuant to an Asset Purchase Agreement
dated June 1, 1998, as amended (the "Asset Purchase Agreement") (a copy of which
is attached to the Company's filing on Form 8-K filed with the Securities and
Exchange Commission on July 27, 1998). The purchase price for the Acquisition
consisted of $10,025,000 in cash and the 812,501 Shares reported herein. The
Company agreed to register such 812,501 Shares for resale under the Securities
Act of 1933. The Company has registered 604,167 of the Shares, and the remaining
208,334 Shares must be registered by January 10, 2000.
In addition, pursuant to the Asset Purchase Agreement, in the event that
the mean of the intraday high and low bid prices for the Company's common stock
for the 20 consecutive trading days immediately preceding January 10, 1999 (the
"18-Month Price") is less than $18.00, the
Page 9 of 20 Pages
<PAGE>
Company has agreed to issue to the Reporting Persons that number of additional
Shares that is equal to (i) the excess of (x) the product of 208,334 shares
(subject to adjustment) multiplied by $18.00 over (y) the product of 208,334
(subject to adjustment) shares multiplied by the greater of the 18-Month Price
or $10.00 divided by (ii) the 18-Month Price.
Pursuant to Article XII of the Asset Purchase Agreement, the Reporting
Persons agreed not to participate in the junior or young men's retail clothing
business which is competitive with the business sold in the Acquisition under
any name during the period from 210 days following July 10, 1998, through July
10, 2001 (the "Non-Compete Provision").
In addition, as part of the Acquisition, the Company and ARE entered into
a Transitional Services Agreement, dated as of July 10, 1998 (a copy of which is
attached to this Schedule 13D as Exhibit A) (the "Transitional Services
Agreement"), pursuant to which ARE provides certain administrative services to
the Company until December 31, 1998, provided that such agreement can be
extended by mutual agreement of the parties until March 31, 1999. Pursuant to
the Transitional Services Agreement, the Company will pay to ARE $33,333 per
month for such administrative services. In addition, under the Transitional
Services Agreement, ARE provides certain warehousing and distribution services
to the Company until March 31, 1999, provided that such agreement can be
extended by mutual agreement of the parties until July 10, 1999. Pursuant to the
Transitional Services Agreement, the Company will pay to ARE the fees set forth
on Schedule II to the Transitional Services Agreement for such warehousing and
distribution services (the "Distribution Fees").
Finally, as part of the Acquisition, the Company, ARE and Chase Manhattan
Bank (the "Escrow Agent") entered into an Escrow Agreement, dated as of July 10,
1998 (a copy of which is attached to this Schedule 13D as Exhibit B) (the
"Escrow Agreement"), pursuant to which an
Page 10 of 20 Pages
<PAGE>
aggregate of 208,334 of the 812,501 Shares reported herein were deposited with
the Escrow Agent to secure the performance by ARE and certain of its affiliates
of their obligations under the Asset Purchase Agreement, the Transitional
Services Agreement and the Amendment.
ARE and the Company entered into an Amendment No. 1 to Transitional
Services and Asset Purchase Agreements (a copy of which is attached to this
Schedule 13D as Exhibit E) (the "Amendment"), dated December 10, 1998, pursuant
to which (a) ARE agreed to (i) pay an aggregate of $825,000 to the Company in
two installments, (ii) provide administrative services to the Company under the
Transitional Services Agreement for the month of January 1999 at no additional
cost, and (iii) give the Company a $50,000 credit against Distribution Fees due
or to become due under the Transitional Services Agreement, and (b) in exchange
for the items set forth in (a) above, the Company agreed to (i) transfer certain
inventory to ARE (such inventory having a cost basis of approximately $900,00),
and (ii) waive compliance with, and release the Reporting Persons from any and
all obligations under, the Non-Compete Provision as of January 1, 1999.
As previously stated, the Shares were acquired as part of the Acquisition.
As such, the purpose of the acquisition of the Shares was for investment, and
the acquisition of the Shares by the Reporting Persons was not made for the
purpose of acquiring control of the Company.
The Reporting Persons currently intend to sell a portion of their Shares
over the next few days and, subject to an ongoing evaluation of the investment
in the Shares, prevailing market conditions, other investment opportunities,
liquidity requirements of the Reporting Persons and/or other investment
considerations, ultimately intend to sell, over a longer period (which has not
yet been determined) additional Shares. The Reporting Persons have not made a
determination regarding a maximum or minimum number of Shares which they may
hold at any point in time.
Page 11 of 20 Pages
<PAGE>
Also, the Reporting Persons may engage in communications with one or more
shareholders of the Company, one or more officers of the Company, and/or one or
more members of the board of directors of the Company regarding the Company,
including but not limited to its operations, matters related to the Acquisition
and the agreements entered into in connection therewith.
Except to the extent the foregoing may be deemed a plan or proposal, none
of the Reporting Persons has any plans or proposals which relate to, or could
result in, any of the matters referred to in paragraphs (a) through (j),
inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons
may, at any time and from time to time, review or reconsider their position
and/or change their purpose and/or formulate plans or proposals with respect
thereto.
Item 5. Interest in Securities of the Issuer.
A. American Retail Enterprises, L.P. ("ARE")
(a),(b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for ARE is incorporated herein by
reference. The percentage amount set forth in Row 13 of such
cover page and of each other cover page filed herewith is
calculated based upon the 14,735,000 Shares outstanding as of
October 31, 1998, as publicly reported by the Company in its
Third Quarter Earnings Release which was publicly disclosed on
December 9, 1998.
(c) There have been no transactions in the Shares in the past 60
days.
(d) Pants Set and Landmark, as General Partners, have the power to
direct the affairs of ARE, including the disposition of the
proceeds of the sale of the Shares. Siegel is the President of
Pants Set and Vice President of Landmark and Lubel is the
President of Landmark.
(e) Not applicable.
B. The Pants Set, Inc. ("Pants Set")
(a),(b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Pants Set is incorporated herein by
reference.
Page 12 of 20 Pages
<PAGE>
(c) Not applicable.
(d) Pants Set, as General Partner of ARE, has the power to direct
the affairs of ARE, including the disposition of the proceeds
of the sale of the Shares. Siegel is the President of Pants
Set.
(e) Not applicable.
C. Landmark Pants Corp. ("Landmark")
(a),(b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Landmark is incorporated herein by
reference.
(c) Not applicable.
(d) Landmark, as General Partner of ARE, has the power to direct
the affairs of ARE, including the disposition of the proceeds
of the sale of the Shares. Lubel is the President of Landmark
and Siegel is the Vice President of Landmark.
(e) Not applicable.
D. William Siegel ("Siegel")
(a),(b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Siegel is incorporated herein by
reference.
(c) Not applicable.
(d) Pants Set and Landmark, as General Partners of ARE, have the
power to direct the affairs of ARE, including the disposition
of the proceeds of the sale of the Shares. Siegel is the
President of Pants Set and Vice President of Landmark.
(e) Not applicable.
Page 13 of 20 Pages
<PAGE>
E. Ronald Lubel ("Lubel")
(a),(b) The information set forth in Rows 7, 8, 9, 10, 11 and 13 of
the cover page hereto for Lubel is incorporated herein by
reference.
(c) Not applicable.
(d) Landmark, as General Partner of ARE, has the power to direct
the affairs of ARE, including the disposition of the proceeds
of the sale of the Shares. Lubel is the President of Landmark.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
As discussed above in Item 4, in connection with the Acquisition, the
Reporting Persons have entered into an Asset Purchase Agreement, pursuant to
which the Reporting Persons acquired the Shares reported herein in connection
with a sale of assets to the Company and pursuant to which the Reporting Persons
may be entitled to receive additional Shares as described in Item 4. In
addition, in connection with the Acquisition, the Reporting Persons have entered
into an Escrow Agreement, pursuant to which an aggregate of 208,334 Shares were
deposited with the Escrow Agent to secure the performance by certain of the
Reporting Persons of their obligations under the Asset Purchase Agreement, the
Transitional Services Agreement and the Amendment.
Except as described above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Persons
or between such persons and any other person with respect to any securities of
the Company, including but not limited to transfer or voting of any securities
of the Company, finder's fees, joint ventures, loan or option arrangements,
Page 14 of 20 Pages
<PAGE>
puts or calls, guarantees of profits, divisions of profits or loss, or the
giving or withholding of proxies.
Item 7. Materials to be Filed as Exhibits.
There is filed herewith as Exhibit 1 a written agreement relating to the
filing of joint acquisition statements as required by Rule 13d-1(f)(1) under the
Securities Exchange Act of 1934, as amended. In addition, filed herewith as
Exhibit A is a copy of the Transitional Services Agreement. Filed herewith as
Exhibit B is a copy of the Escrow Agreement. Filed herewith as Exhibit C is
Amendment No. 1 to the Escrow Agreement. Filed herewith as Exhibit D is
Amendment No. 2 to the Escrow Agreement. Filed herewith as Exhibit E is the
Amendment. The Asset Purchase Agreement filed by the Company as an Exhibit to
its Form 8-K filed with the Securities and Exchange Commission on July 27, 1998,
is hereby incorporated by reference.
Page 15 of 20 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: December 10, 1998
AMERICAN RETAIL ENTERPRISES, L.P.
By: LANDMARK PANTS CORP.
its General Partner
/s/ Ronald Lubel
--------------------------------
Name: Ronald Lubel
Title : President
By: THE PANTS SET, INC.
its General Partner
/s/ William R. Siegel
--------------------------------
Name: William Siegel
Title : President
LANDMARK PANTS CORP.
By: /s/ Ronald Lubel
________________________________
Name: Ronald Lubel
Title : President
THE PANTS SET, INC.
By: /s/ William R. Siegel
________________________________
Name: William Siegel
Title : President
[Signatures continued on following page]
Page 16 of 20 Pages
<PAGE>
[Signatures continued from prior page]
/s/ William R. Siegel
----------------------------------------
William Siegel
/s/ Ronald Lubel
----------------------------------------
Ronald Lubel
Page 17 of 20 Pages
<PAGE>
ANNEX 1
to
SCHEDULE 13D
Set forth below with respect to Landmark and Pants Set are the following:
(a) name; (b) address; (c) principal business; (d) state of organization; and
(e) controlling persons. Set forth below with respect to each executive officer,
director and controlling person of Landmark and Pants Set are the following: (a)
name; (b) address; (c) principal occupation; and (d) citizenship.
1. (a) Landmark Pants Corp.
(b) 1620 Grand Avenue
Baldwin, New York 11510
(c) Serves as general partner to limited partnership.
(d) New York corporation
(e) Controlling persons: Ronald Lubel, President and Director; William
Siegel, Vice President.
2. (a) The Pants Set, Inc.
(b) 1620 Grand Avenue
Baldwin, New York 11510
(c) Serves as general partner to limited partnership.
(d) Delaware corporation
(e) Controlling person: William Siegel, President and Director.
3. (a) William R. Siegel
(b) c/o American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(c) President and Director of Pants Set; Vice President of Landmark
(d) United States Citizen
Page 18 of 20 Pages
<PAGE>
4. (a) Alice Lubel
(b) c/o American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(c) Secretary, Treasurer and Director of Pants Set
(d) United States Citizen
5. (a) Andrea Drucker
(b) c/o American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(c) Assistant Secretary of Pants Set and Director of Landmark
(d) United States Citizen
6. (a) Ronald Lubel
(b) c/o American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(c) President and Director of Landmark
(d) United States Citizen
7. (a) Carol Karp
(b) c/o American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(c) Secretary, Treasurer and Director of Landmark
(d) United States Citizen
8. (a) Tammy Sugarman
(b) c/o American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
(c) Director of Pants Set
(d) United States Citizen
Page 19 of 20 Pages
<PAGE>
EXHIBIT INDEX
EXHIBIT 1 Joint Acquisition Statement Pursuant to Rule 13D-
(f)(1)
EXHIBIT A Transitional Services Agreement
EXHIBIT B Escrow Agreement
EXHIBIT C Amendment No. 1 to Escrow Agreement
EXHIBIT D Amendment No. 2 to Escrow Agreement
EXHIBIT E Amendment
Page 20 of 20 Pages
EXHIBIT 1
to
SCHEDULE 13D
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13D-(f)(1)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on
behalf of each of the undersigned without the necessity of filing additional
joint acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the
completeness and accuracy of the information concerning him, her or it
contained therein, but shall not be responsible for the completeness and
accuracy of the information concerning the other entities or persons, except
to the extent that he, she or it knows or has reason to believe that such
information is inaccurate.
Dated: December 10, 1998
AMERICAN RETAIL ENTERPRISES, L.P.
By: LANDMARK PANTS CORP.
its General Partner
/s/ Ronald Lubel
________________________________
Name: Ronald Lubel
Title : President
By: THE PANTS SET, INC.
its General Partner
/s/ William R. Siegel
________________________________
Name: William Siegel
Title : President
[Signatures continued on following page]
<PAGE>
[Signatures continued from prior page]
LANDMARK PANTS CORP.
By: /s/ Ronald Lubel
________________________________
Name: Ronald Lubel
Title : President
THE PANTS SET, INC.
By: /s/ William R. Siegel
________________________________
Name: William Siegel
Title : President
/s/ William R. Siegel
________________________________________
William Siegel
/s/ Ronald Lubel
________________________________________
Ronald Lubel
EXHIBIT A
to
SCHEDULE 13D
EXECUTION COPY
TRANSITIONAL SERVICES AGREEMENT
TRANSITIONAL SERVICES AGREEMENT, dated as of July 10, 1998, among
AMERICAN RETAIL ENTERPRISES, L.P. (the "Seller"), SCREEEM! INC. (the
"Purchaser") and DELIA'S INC. (the "Parent").
RECITALS
A. Seller, Purchaser, Parent and certain affiliates of the Seller are
parties to that certain Asset Purchase Agreement, dated as of June 1, 1998 (the
"Purchase Agreement"), pursuant to which the Seller and certain of its
affiliates are selling certain retail stores to the Purchaser. Capitalized terms
used but not defined herein have the meanings assigned to them in the Purchase
Agreement.
B. Pursuant to Section 9.7 and Section 10.9 of the Purchase Agreement, it
is a condition to the obligations of the parties under the Purchase Agreement
that the Seller, Purchaser and Parent enter into this Transitional Services
Agreement.
C. The parties hereto wish to set forth certain matters concerning the
provision of certain transitional services by the Seller and certain of its
Affiliates to the Purchaser after Closing.
AGREEMENT
Now therefore, in consideration of the premises and the mutual agreements
contained herein, the Seller, the Purchaser and the Parent agree as follows:
Section 1. Transitional Services to be Provided. During the Term (as
defined in Section 4 below), Seller hereby agrees to provide to the Purchaser,
through personnel of Seller, or at Seller's discretion, the personnel of
Affiliates of Seller, the distribution, warehouse and other administrative
services substantially similar to those services that the Seller provided to the
Purchased Stores in the ordinary course of business immediately prior to the
Closing (other than the services provided by the Persons set forth on Schedule
2.4-A and Schedule 2.4-D to the Purchase Agreement), including the services set
forth on Schedule I to this Agreement (the "Transitional Services"); provided,
however, that the Seller may change the exact manner in which it provides such
services so long as the Seller makes such change with respect to all of the
retail stores that its owns, provided, further, however, that in no event shall
the Seller be required to provide such Transitional Services to any stores other
than (a) the Purchased Stores, and (b) up to ten other retail stores operated by
the Purchaser under the SCREEEM! or JEAN COUNTRY names, which stores are located
within New York, New
<PAGE>
Jersey, Connecticut, Pennsylvania and/or Massachusetts; and provided, further,
that the Seller shall not be required to provide any greater level of service
under this Agreement than the Seller provided to the Purchased Stores
immediately prior to the Closing (except with respect to control and accounting
procedures reasonably necessary for the operation of separately-operated and
controlled entities). Under no circumstances shall the Seller (or any of its
Affiliates) be required or obligated to provide the Purchaser the services of
outside professionals or consultants in fulfilling the obligations of the Seller
set forth herein except to the extent that such outside professionals or
consultants provided services to the Seller with respect to the Purchased
Business prior to the Closing.
Section 2. Fees for Transitional Services; Payment. In consideration for
the Transitional Services provided by the Seller to the Purchaser, the Purchaser
shall pay to the Seller the fees set forth on Schedule II, which payments shall
be made by the Purchaser to the Seller within 30 days of delivery of invoices
therefor by Seller to Purchaser.
Section 3. Purchase and Sale of Merchandise.
(a) Purchase and Sale of Merchandise. In addition to the Transitional
Services to be provided by the Seller to the Purchaser, the Purchaser agrees to
purchase from the Seller, and the Seller agrees to sell to the Purchaser, at
Seller's cost, current merchandise that (i) is the subject of purchase orders
with respect to the Purchased Stores which have been placed in the ordinary
course of the Seller's business but as to which delivery has not been made as of
the Closing Date, and (ii) has been purchased for the Purchased Stores in the
ordinary course of business that is in the Seller's warehouse as of the Closing
Date and has not yet been shipped to the Purchased Stores (such merchandise
referred to in (i) and (ii) being the "Merchandise").
(b) Payment for Merchandise. The Seller shall invoice the Purchaser for
such Merchandise. Purchaser shall pay the Seller for such Merchandise within 15
days of receipt of the invoice therefor from Seller; provided, however, that if
the Purchaser is not satisfied with the quality of the Merchandise, the Seller
and the Purchaser will use their respective commercially reasonable efforts to
obtain a return authorization with respect to such Merchandise from the vendor.
(c) Assignment of Rights. In connection with any sale of Merchandise
pursuant to this Section 3, Seller shall, to the extent permitted, assign to
Purchaser its rights under the contracts, warranties, representations and
guarantees made by suppliers, manufacturers and contractors pursuant to which
the Seller purchased such Merchandise. In the event any such contract is not
assignable, Seller shall cooperate with the Purchaser, to the extent reasonably
practicable, to ensure that the Purchaser enjoys the benefits of the
representations, warranties and covenants made by the vendor under such
contract.
<PAGE>
Section 4. Term; Termination.
(a) Term. The term of this Agreement shall commence on the Closing Date,
and shall continue until March 31, 1999; provided, however, that the Purchaser
may extend this Agreement until the first anniversary of the Closing Date by
providing the Seller with written notice at least 60 days prior to March 31,
1999 of the Purchaser's intention to extend the term; and provided, further,
that the parties may extend the term of this Agreement beyond the first
anniversary of the Closing Date if the parties mutually agree to do so at least
60 days prior to the first anniversary of the Closing Date (such term, as so
extended, being the "Term"). Notwithstanding anything to the contrary contained
herein, the Seller shall not be obligated to perform any of the services set
forth under the heading "Administrative Services" on Schedule I after December
31, 1998; provided, however, that the Purchaser and Seller may mutually agree to
extend such period until March 31, 1999 if the Purchaser and the Seller mutually
agree (after negotiating reasonably in good faith) on the fee to be paid by the
Purchaser to the Seller for such Administrative Services during such 3 month
period; and provided, further, however, that the Seller shall not be required to
agree to such an extension to the extent the Seller is unable (in accordance
with the terms of the lease agreement or other agreement governing the use of
the Seller's Long Island Facility, or such successor headquarters facility of
the Seller) to reasonably accommodate the Purchaser's employees as required
pursuant to Section 10(a) hereof.
(b) Termination. Notwithstanding any provision of this Agreement to the
contrary, either the Seller or the Purchaser may immediately terminate this
Agreement upon the material breach of this Agreement by the other party hereto,
which breach is not cured after 10 days notice thereof. The Purchaser may
terminate this Agreement at any time and for any reason upon 30 days prior
notice to the Seller.
(c) Effect of Termination. Any termination of this Agreement under this
Section 3 shall not affect the obligations of (i) the Purchaser to pay fees and
expenses accrued prior to the effective date of such termination to the full
extent provided herein, (ii) the Purchaser to purchase Merchandise under Section
3 or (iii) the parties to indemnify each other pursuant to Section 6 of this
Agreement.
Section 5. Standard of Care. The parties acknowledge and agree that (a)
the Seller is not in the business of providing any Transitional Services to
third parties and shall not be held to the standard of care of an entity which
is engaged in such business and (b) the Seller will provide the Transitional
Services to the Purchaser in the same manner and using the same standard of care
as the Seller currently provides such services to retail stores owned by the
Seller on the Closing Date. The parties further acknowledge and agree that the
Seller shall have no liability with respect to the provision of the Transitional
Services unless such liability
<PAGE>
is the direct result of the Seller's gross negligence or willful misconduct in
the performance of such Transitional Services.
Section 6. Indemnification.
(a) Indemnification by Parent and Purchaser. Parent and the Purchaser,
jointly and severally, shall indemnify, defend and hold harmless the Seller
Indemnified Parties promptly upon demand at any time and from time to time,
against any and all Losses arising in connection with (i) any breach or
nonfulfillment of any covenant or agreement made by the Parent or the Purchaser
in this Agreement or (ii) the provision by the Seller of the Transitional
Services to the Purchaser; provided, however, that for purposes of this Section
6(a), in the event that the Purchaser shall fail to make a payment hereunder
when due, the term "Losses" shall include interest on such unpaid amount at a
rate of 1% per month accruing from the date which is ten days after the date
such payment was due through the date on which such payment is actually made;
and provided, further, however, that the Parent and the Purchaser shall not be
responsible for any Losses of any Seller Indemnified Person that are the direct
result of such Seller Indemnified Person's gross negligence or willful
misconduct or any action outside the scope of the provisions of the Transitional
Services.
(b) Indemnification by Seller. Seller shall indemnify, defend and hold
harmless the Purchaser Indemnified Parties promptly upon demand at any time and
from time to time, against any and all Losses arising out of or in connection
with (i) any breach or nonfulfillment of any covenant or agreement made by the
Seller in this Agreement or (ii) the gross negligence or willful misconduct of
the Seller in connection with the provision by the Seller of the Transitional
Services to the Purchaser.
(c) Reduction for Insurance. The amount which the Seller, the Purchaser or
the Parent is required to pay to, or for the benefit, of an Indemnified Party
under this Section 6 will be reduced (including, without limitation,
retroactively) by any insurance proceeds which may reasonably be recovered by or
on behalf of the Indemnified Party in reduction of the related Loss. Amounts
required to be paid, as so reduced, are hereinafter referred to as "Transitional
Indemnity Payment". If an Indemnified Party has received, or if an Indemnifying
Party has paid on its behalf, Transitional Indemnity Payment in respect of a
Loss and subsequently receives, directly or indirectly, insurance proceeds in
respect of such Loss, then such Indemnified Party will promptly pay to the
Indemnifying Party the amount of such insurance proceeds, or, if less, the
amount of the Transitional Indemnity Payment.
Section 7. Liquidated Damages.
<PAGE>
The parties hereto agree that in the event the quality of Seller's
performance hereunder falls below the performance standards set forth in
Schedule III hereto (the "Performance Standards"), Purchaser would be damaged
and the amount of such damages would not be susceptible to calculation.
Accordingly, the parties hereto agree that the liquidated damage amounts set
forth in Schedule III, subject to the procedures and limitations set forth
therein, are fair and equitable under the circumstances, and the parties agree
to their terms as Purchaser's and Parent's sole remedy for Seller's failure to
comply with the Performance Standards; provided, however, that the provisions of
this Section 7 solely as they relate to the Receiving Standard (as defined in
Schedule III) shall not apply to shipments which the Purchaser or Seller deem to
be "problem" shipments.
Section 8. Escrow. In order to secure the obligations of the Seller to
indemnify the Purchaser Indemnified Parties under Section 6(b) of this
Agreement, Parent will deposit the Additional Shares with the Escrow Agent, to
be held by the Escrow Agent in accordance with the terms of the Escrow
Agreement. Such Additional Shares will be deposited into an account to be
managed and paid out by the Escrow Agent in accordance with the terms of the
Escrow Agreement. To the extent that an indemnification claim is made against
such account, the number of shares of Parent Common Stock to be disbursed shall
be determined by dividing the dollar amount of such claim (as finally determined
in accordance with the provisions of the Escrow Agreement) by the Current Price.
Section 9. Parent Guaranty. Parent hereby unconditionally and irrevocably
guarantees the due and prompt payment, performance and discharge of all of the
covenants, obligations and liabilities of the Purchaser under this Agreement.
This is a guarantee of payment and not merely collectibility. Parent waives any
defense to payment and performance of any kind (whether due to Purchaser's
insolvency, the modification of the obligations guaranteed or any other event,
act, omission or occurrence or legal theory which would otherwise operate to
release a guarantor or surety) and shall remain fully obligated until the Seller
has indefeasibly received payment and performance in full.
Section 10. License to Use Seller's Facilities.
(a) Management Space. Until January 1, 1999, or such earlier date as the
parties may mutually agree, to the extent permitted under the lease agreement
with respect to such property, the Seller shall permit the Purchaser to use a
portion of its Long Island, New York business headquarters (the "Long Island
Facility") as office space for Post-Closing Employees. That portion shall be the
same portion, to the extent reasonably practicable, which such Post-Closing
Employees used prior to becoming employees of the Purchaser.
(b) Distribution Space. To the extent permitted under the lease
agreement with respect to such property, the Seller shall permit the
Purchaser to use that portion of the Seller's New
<PAGE>
Jersey warehouse and distribution facility (the "New Jersey Facility") necessary
for the distribution and warehouse services described hereunder with respect to
the Purchaser's inventory.
(c) Compliance with Leases. Neither the Purchaser nor the Parent shall
take any action or fail to take any action in connection with its use of the
portions of the Long Island Facility and the New Jersey Facility which might
result in the Seller's violating any of the terms or conditions of Seller's (or
its affiliates) lease agreement with respect to such facilities. Unless required
by applicable law, or the applicable lease agreement, the Seller shall not take
any action or fail to take any action in connection with its leasehold interest
in the Long Island Facility and the New Jersey Facility which might result in
any interference with the Purchaser's right to use portions of such facilities
as provided herein.
Section 10. Books and Records. Each party shall maintain correct and
complete books and records relating to its performance hereunder and shall
provide the other party full access to such books and records at reasonable
times and upon reasonable notice.
Section 11. Miscellaneous. The provisions of Sections 15.3, 15.5, 15.6,
15.7, 15.8, 15.10 and 15.12 of the Purchase Agreement are hereby incorporated
into and made a part of this Agreement as if herein set forth.
Section 12. Force majeure. No delay or failure by a party in the
performance of any of its obligations under this Agreement shall be a deemed a
breach of this Agreement or create any penalty or liability, to the extent that
delay or failure was caused by an event or events beyond the reasonable control
of that party, including but not limited to the following events, each of which
shall be considered beyond the control of each party: (a) fire, explosion,
breakdown or failure of machinery, strike, lock-out, labor dispute, casualty or
accident, epidemic, cyclone, flood, drought or failure in whole or in part of
transportation, communication or power; (b) war, revolution, civil commotion,
blockade or embargo; or (c) any law, order, proclamation, injunction,
regulation, ordinance, demand or requirement of any Governmental Authority that
does not arise from any act or omission of the failing party. If any event
beyond the reasonable control of a party occurs, the party whose performance is
affected by that event shall promptly give notice of the event to the other
party and shall be temporarily excused from performing those obligations that
the event makes it impracticable to perform.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
AMERICAN RETAIL ENTERPRISES, L.P.
By: Landmark Pants Corp., one of its
general partners,
By: /s/ William R. Siegel
------------------------------
Name:
Title:
By: /s/ Gary Sugarman
------------------------------
Name:
Title:
SCREEEM! INC.
By: /s/ Alex Navarro
------------------------------
Alex S. Navarro
Senior Vice President
DELIA'S INC.
By: /s/ Alex Navarro
------------------------------
Alex S. Navarro
Senior Vice President
<PAGE>
SCHEDULE I
to
TRANSITIONAL SERVICES AGREEMENT
Transitional Services
A. Administrative Services
Seller shall provide the following services:
I. Services to be Provided
A. Data Processing -- This service contemplates the receipt, processing
and storage of data. It also includes the preparation and
dissemination of reports.
1. Sales
a. Poll stores daily and post sales by store to sales
journals and LRMS merchandise system.
b. Follow up with stores that do not poll and post sales to
sales journal and LRMS merchandise system.
c. Prepare selling reports on a daily and weekly basis (see
Exhibits).
2. Merchandise Systems
a. Process the entry and maintenance of purchase order
files daily.
b. Download SKU files and prices daily to store systems to
maintain price look-up files.
c. Download retail price changes daily to maintain price
look-up files on store registers.
d. Post daily sales to merchandise system.
e. Process Levilink transactions as they occur.
f. Process automatic replenishment system daily to
replenish store inventories from warehouse inventory.
g. Maintain SKU files.
h. Provide files to Planning and Distribution Department
to maintain Arthur files.
i. Prepare merchandise selling reports weekly (see
Exhibits).
j. Maintain off-premises back-up computer tape daily.
k. Post relevant information to the General Ledger.
3. Help Desk
a. Provide direct phone and beeper service to handle
problems from store personnel relating to POS equipment
and software.
b. Place service calls to IBM or dispatch our own personnel
where appropriate.
<PAGE>
B. Accounts Payable
1. Maintain vendor file.
2. Receive invoices for merchandise and purchased.
3. Verify goods have been received.
4. Verify terms and amount to be paid.
5. Draw checks on Delia's check stock.
6. Audit checks prior to mailing.
7. Deliver checks and invoices to Delia's for approval.
8. Answer inquiries from vendors about status of account,
invoices and disputes.
9. Answer inquiries from factors concerning status of account,
invoices and disputes.
10. Maintain file of paid invoices and copies of checks issued.
C. Accounting
1. Maintain General Ledger.
2. Maintain Sales Journal.
3. Maintain Payable Journal.
4. Close books monthly without physical inventory.
5. Close books quarterly with physical inventory.
6. Review daily sales exception reports and make correcting
entries.
7. Transmit General Ledger information to Delia's monthly.
8. Reconcile credit card remittances.
9. Prepare sales tax remittance reports.
10. Verify rent invoices -- Rent, CAM, R/E Taxes, etc.
11. Process monthly rent payments.
12. Draw checks on Delia's check stock.
D. Human Resources
1. Maintain permanent Personnel Files on all employees.
2. Obtain necessary information on new hires such as:
a. Signed application
b. Form I-9
c. Form W-4
d. Insurance Application
e. 401(K)/Profit Sharing Plan information
3. Process payroll weekly through ADP (checks to be drawn on
Delia's account).
4. Collect time sheets and test check.
5. Handle employee inquiries.
6. Handle employee disputes.
7. Maintain files on terminated employees.
<PAGE>
8. Provide reports to Delia's to assist them in making filings
with government agencies.
E. Loss Prevention
1. Audit stores operations in accordance with Audit report shown
in Exhibits.
2. Conduct interviews of employees in connection with high shrink
or suspected theft.
3. After consultation with Delia's, prosecute suspected thieves.
4. Conduct loss prevention training for store employees.
5. Maintain electronic Loss Prevention equipment.
6. Arrange for installation of new equipment in new stores.
F. Planning & Distribution
1. Prepare seasonal merchandise plans by merchandise
classification and by store.
2. Create and maintain open-to-buys.
3. Produce weekly business reports (see Exhibits).
4. Maintain Arthur database.
5. Coordinate the transfer of merchandise between stores.
6. Work with buyers to distribute merchandise on new orders to
stores.
7. Fill in store inventories from warehouse inventory.
G. Buying Department
1. Buyer support personnel to assist buyers with
administrative functions:
a. Creating purchase orders
b. Entering purchase orders into LRMS
c. Answering vendor inquiries
d. Handling follow-up with vendors
e. Processing mark-downs/mark-ups
f. Process information for vendor ticketing
B. Distribution Services
Seller shall provide the following services:
I. Case Pack Distribution -- This service contemplates the receipt,
processing and distribution of full cases. The services include but are
not limited to the following:
H. Tasks:
1. Receive merchandise from truckers and other freight companies.
2. Refuse shipments where there are no valid purchase orders on
file or where shipments are received prior to the purchase
order start date or
<PAGE>
subsequent to the purchase order in-house cancellation date on
the applicable Purchase Order, unless authorized by Delia's,
in writing, to accept the merchandise.
3. Check in merchandise against Delia's "Receiving Worksheet."
4. Note all discrepancies on Receiving Manifest and inform
Delia's daily.
5. Verify that the number of pieces in each carton corresponds to
the applicable Purchase Order and that the merchandise matches
the description on the Purchase Order.
6. Apply Delia's price tickets where applicable to garments
pursuant to specifications contained in "Appendix A."
7. Place merchandise into stock.
8. Store merchandise.
9. Update Delia's automated Inventory Management System to show
the merchandise received.
10. Pick full cases of merchandise in accordance with work order
or pick ticket instructions.
11. Place shipping labels on cartons.
12. Prepare a Shipping Manifest to accompany each shipment.
13. Ship all outbound orders via UPS or other freight carriers
agreed to in writing by the parties.
14. Present all packing slips, invoices and receiving reports to
Delia's daily, showing verification of the actual goods
received.
II. Pick and Pack Prepacks -- This service contemplates the receipt,
processing and distribution of prepacks which will be enclosed in master
cartons. (If prepacks are broken open in carton, or broken down to ticket,
they will be reassembled into prepacks.)
A. Tasks:
1. Same as Case Pack Distribution except that Warehouser will
open cases and process individual prepacks.
III. Single SKU Pull -- This service contemplates the receipt, processing and
distribution of individual garments.
A. Tasks:
1. Same as Case Pack Distribution except merchandise will be
received in master cartons and will be picked, a single
garment at a time.
IV. Vendor Returns/Damages -- Warehouser shall, upon written instructions from
Delia's, return merchandise to vendors.
<PAGE>
A. Tasks:
1. Vendor Returns and Damages.
a. Receive written instructions from Delia's to return
merchandise to vendors.
b. Receive merchandise from stores to return to vendors, if
applicable.
c. Prepare merchandise to be returned.
d. Pack merchandise in cartons.
e. Solicit return authorizations from vendors where
applicable.
f. Ship merchandise to vendors.
2. Materials.
a. Packaging Materials will be supplied by Warehouser.
b. Ticketing equipment and materials will be supplied by
Warehouser.
c. Shipping Labels will be supplied by Warehouser.
d. Other materials will be supplied by Warehouser.
<PAGE>
SCHEDULE II
to
TRANSITIONAL SERVICES AGREEMENT
Fees
I. Fees for Administrative Services:
$200,000 for the six month period following the Closing.
II. Fees for Distribution Services:
A. From Closing until March 31, 1999 -- Monthly retail sales divided by
an assumed retail price of $35.00 per unit and the quotient
multiplied by $0.35.
B. From April 1, 1999 until the first anniversary date of the Closing
-- Monthly retail sales divided by an assumed retail price of $35.00
per unit and the quotient multiplied by $1.00.
C. After the first anniversary date of the Closing -- A price to be
negotiated by the parties.
<PAGE>
SCHEDULE III
to
TRANSITIONAL SERVICES AGREEMENT
Performance Standards and Liquidated Damages
A. Performance Standards
1. Seller shall enter the receipt of Purchaser inventory into its MIS
system on average within five (5) business days of delivery thereof to the New
Jersey facility such that the inventory is ready to be picked, packed and
shipped (e.g., inventory delivered on Monday must be entered by Friday) (the
"Receiving Standard").
2. Seller shall not lose (i.e., shrinkage) in excess of 1% (measured by
cost of inventory shipped from the warehouse) of the Purchaser's inventory (the
"Inventory Loss Standard").
3. Seller shall ship Purchaser inventory to the Purchaser's stores within
three business days of written or electronic instructions for such delivery,
that is three business days for pick, pack and ship (the "Pick/Pack/Ship
Standard").
4. With respect to payments to third parties for which Seller is
responsible for handling as part of this Agreement, Seller shall cause timely
payment of all amounts owed by the Purchaser to third parties such that no late
fees or interest charges are imposed by third parties (the "Timely and Accurate
Payment Standard").
B. Liquidated Damages.
The Seller shall be liable for the following amounts as liquidated damages
in the event of a failure to meet the Performance Standards set forth above,
provided, however, that no such damages shall become payable unless and until
the aggregate amount of liquidated damages in any Measurement Period (defined
below) exceeds $100,000:
1. For failures under the Receiving Standard: $25,000 for each day by
which the monthly average time to perform the service in A.1 exceeds five
business days. Performance under this standard shall be determined monthly.
2. For failures under the Inventory Loss Standard: 100% of the cost of
such lost inventory (in excess of 1%), performance under this standard shall be
determined at the end of the term of the Agreement.
<PAGE>
3. For each day's failure to meet the Pick/Pack/Ship Standard: 5% of the
cost of such untimely delivered inventory.
4. For failures under the Timely and Accurate Payment Standard; 100% of
such late fees and interest payments which are imposed by such third parties.
C. Procedures.
1. Seller's compliance with the Performance Standards shall be reviewed by
the parties at the end of each three month period (except with respect to the
Inventory Loss Standard which shall be reviewed at the end of the term of the
Agreement) (or shorter with respect to the first such period) period ending July
31, October 31, January 31 and April 30 (each, a "Measurement Period").
2. Such review shall be based on reports generated by Seller's inventory,
distribution and accounting systems, which reports shall be presumptively
conclusive (which presumption may be rebutted by either party) of Seller's
compliance or non-compliance with the Performance Standards. Seller and the
Purchaser shall jointly prepare such reports within 30 days after the end of
each Measurement Period.
3. If Seller is liable for liquidated damages with respect to a
Measurement Period, the Purchaser may deduct such amount from its fee payments
hereunder.
4. Seller shall not be liable for any liquidated damages hereunder except
to the extent the amount of liquidated damages calculated with respect to a
Measurement Period exceeds $100,000.
5. Under no circumstances shall Seller ever be liable for any liquidated
damages with respect to a Measurement Period in excess of the aggregate fees
payable with respect to such Services provided during such Measurement Period.
EXHIBIT B
to
SCHEDULE 13D
ESCROW AGREEMENT
Escrow Agreement dated as of July 10, 1998 by and among dELiA*s Inc., a
Delaware corporation of the State of Delaware ("Parent"), American Retail
Enterprises, L.P., a New York limited partnership, as agent (the "Company"), and
The Chase Manhattan Bank, a New York State chartered bank ("Escrow Agent").
WITNESSETH
WHEREAS, pursuant to an Asset Purchase Agreement dated as of June 1, 1998
(the "Purchase Agreement") by and among Parent, Screeem! Inc., a Delaware
corporation ("Screeem"), the Company and certain affiliates of the Company (the
"Company Affiliates"), there is required to be deposited in escrow certain
securities to be held by the Escrow Agent subject to the terms and conditions
set forth herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
Parent and the Company do hereby appoint and designate the Escrow Agent as
escrow agent for the purposes set forth herein, and the Escrow Agent does hereby
accept such appointment under the terms and conditions set forth herein.
1. Certain Definitions.
"Escrow Termination Date" means the 18 month anniversary of this
Agreement.
"Parent Common Stock" means the common stock, par value $.01 per
share, of Parent.
"Trademark License Agreement" means the trademark license agreement
dated as of the date hereof by and among the Parent, Screeem, the Company and
certain affiliates of the Company.
"Transfer Agent" means the transfer agent for the Parent Common
Stock.
"Transitional Services Agreement" means the transitional services
agreement dated as of the date hereof by and among the Parent, Screeem and the
Company.
2. Deposit of Escrowed Shares. Simultaneous with the execution of this
Escrow Agreement, Parent is depositing with the Escrow Agent, and Escrow Agent
hereby acknowledges receipt of, a certificate representing 171,074 shares of
Parent Common Stock issued to the Company pursuant to Section 3.1(c) of the
Purchase Agreement (the "Initial Escrowed Shares"), accompanied by five fully
executed stock powers duly endorsed in blank and medallion guaranteed. The
Initial Escrowed Shares, together with any shares of Parent Common Stock issued
as a result of any stock dividend or stock split with respect to such shares and
such other shares of Parent Common Stock as may, from time to time, be deposited
with the Escrow Agent in accordance with the Purchase Agreement, are hereinafter
referred to as the "Escrowed Shares." The Escrow Agent shall hold, subject to
the terms and conditions hereof, the Escrowed Shares, provided, however, that it
is understood and agreed that (a) any cash dividends or distributions on the
Escrowed Shares shall be payable to the Company and shall not be held by the
Escrow Agent and (b) the Company shall retain any voting rights associated with
the Escrowed Shares.
3. Delivery of Escrowed Shares. The Escrow Agent shall not have the right
to liquidate any investments held (including, without limitation, the Escrowed
Shares), in order to provide funds necessary
<PAGE>
to make required payments under this Escrow Agreement other than payments
payable to the Escrow Agent (but shall only have the right to liquidate the
investments to the extent payments payable to the Escrow Agent are not made when
due and provided, further, the Escrow Agent shall have given the Company and the
Parent 10 days advance notice of its intent to so liquidate such investments and
the Parent and the Company have not paid the amounts payable to the Escrow
Agent). Rather, the Escrow Agent shall deliver the appropriate number of
Escrowed Shares (as determined pursuant to paragraph 4(a) or 5 hereof) to the
party entitled to them in accordance with the terms of this Agreement. Once the
appropriate number of Escrowed Shares has been determined as provided in this
Agreement, the Escrow Agent shall (if the Escrow Agent does not hold one or more
certificates in the exact amount equal to that number of Escrowed Shares)
deliver one or more certificates for the Escrowed Shares to the Transfer Agent
with instructions to: (i) issue a certificate (in the name of the party entitled
to such shares) for the appropriate amount of Escrowed Shares, (ii) issue a
certificate (in the name of the Company) for the balance of the Escrowed Shares
so delivered and (iii) return all such newly-issued certificates to the Escrow
Agent. The Parent shall, and, subject to provision of documents or instruments
reasonably requested by the transfer agent of the Company to facilitate the
foregoing, shall cause the Transfer Agent to, comply with such instructions.
4. Claims Against Escrowed Shares.
(a) Notice of Claim by Parent. Parent may, at any time until the
Escrowed Shares shall have been delivered as hereinafter provided in Section 6,
submit requests for disbursements of Escrowed Shares by making a claim
("Parent's Claim") stated to be on the basis of (1) the indemnity provided to
the Parent by the Company and the Company Affiliates pursuant to the Purchase
Agreement, (2) the purchase price adjustment provisions of the Purchase
Agreement, (3) the Transitional Services Agreement or (4) the Trademark License
Agreement by giving written notice of such claim to the Escrow Agent and the
Company, certifying to the Escrow Agent (i) that the claim is being asserted
pursuant to this Section 4, (ii) that a copy of the notice has been delivered to
the Company and its counsel as set forth in Section 14 hereof and the date of
receipt of such notice by the Company and its counsel, (iii) stating the nature,
basis and amount of the claim and the pertinent details thereof, including, with
respect to any claims asserted by a third party, the date by which any answer or
other response must be served and (iv) the number of Escrowed Shares asserted to
be payable to Parent as a result of the claim. Upon the giving of such notice,
the disposition of such claim or claims shall be governed as follows: (A) unless
within 30 days following receipt by the Escrow Agent (or if later, 30 days after
receipt by the Company and its counsel of such notice) of Parent's notice the
Company provides written notice to Parent and the Escrow Agent that the Company
disputes such claim, which notice shall set forth the nature and basis of such
dispute, the claim will be paid by Escrow Agent in accordance with Section 4(b)
hereof; or (B) if within 30 days following receipt by the Escrow Agent of
Parent's notice (or if later, 30 days after receipt by the Company and its
counsel of such notice) the Company provides written notice to Parent and the
Escrow Agent that the Company disputes such claims, such dispute will be settled
pursuant to Section 5 hereof.
(b) Delivery. Any payment of a claim by Escrow Agent pursuant to
Section 4(a) or Section 5 of this Agreement shall be made in the form of
delivery of Escrowed Shares to Parent and shall be made only in whole shares, it
being understood that the amount payable shall be rounded down to the nearest
whole share.
5. Settlement of Disputes. If the Company notifies Parent and the Escrow
Agent in accordance with Section 4(a) hereof that Company objects to the payment
of a claim made by Parent against the Escrowed Shares, any determination as to
whether the claim is valid, and the amount paid on the claim and any
reimbursable expenses applicable thereto, shall be conclusively determined by
the mutual consent of the Company and Parent (evidenced by a certificate signed
by the Company and Parent) or as set forth in a final order, decree or judgment
of a court of competent jurisdiction in the United States of America, the time
of appeal having expired and no appeal having been perfected (a "Final Order").
Notice
<PAGE>
of any such determination shall forthwith be given to the Escrow Agent in the
form of (i) a certificate signed by Parent and the Company or (ii) a certificate
of either the Parent or the company with a certified copy of a Final Order
attached, and if such determination, as evidenced by such notice, shall allow
the claim in whole or in part, the Escrow Agent shall, within ten (10) business
days after receipt of such notice (or in the case of (ii), ten days after the
Escrow Agent has given notice to the party which did not submit the certificate
if such party has not within such 10-day period given the Escrow Agent and the
party submitting the certificate written notice of objection), deliver to the
appropriate party the number of Escrowed Shares specified in the certificate.
6. Disposition and Termination.
(a) If, at the Escrow Termination Date, no Parent's Claims are
pending, within two (2) business days after the Escrow Termination Date, the
Escrow Agent shall deliver to the Company the Escrowed Shares remaining in the
Escrow Agent's possession.
(b) If, at the Escrow Termination Date, any Parent's Claims are
pending, within two (2) business days after the Escrow Termination Date, the
Escrow Agent shall deliver to the Company the Escrowed Shares remaining in the
Escrow Agent's possession less that number of Escrowed Shares that would be
required to be paid by Escrow Agent pursuant to Section 4(b) if any pending
Parent's Claims were to become payable claims (such shares being hereinafter
referred to as "Reserved Shares").
(c) Within two (2) business days after resolution of each Parent's
Claim that was pending as of the Escrow Termination Date, the Escrow Agent shall
deliver the Reserved Shares remaining in the Escrow Agent's possession in
connection with such claim upon, and pursuant to, (i) the joint written
instructions of Parent and Company or (ii) a Final Order.
(d) Upon delivery by the Escrow Agent of all Escrowed Shares, this
Escrow Agreement shall terminate, subject to the provisions of Section 12
hereunder, which Section shall survive such termination.
7. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein.
8. The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, instruction or request furnished
to it hereunder and believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall be under no
duty to inquire into or investigate the validity, accuracy or content of any
such document. The Escrow Agent shall have no duty to solicit any payments which
may be due it hereunder.
9. The Escrow Agent shall not be liable for any action taken or omitted by
it in good faith except to the extent a court of competent jurisdiction
determines that the Escrow Agent's willful misconduct or gross negligence caused
or contributed to the Parent or the Company. In the administration of the escrow
account hereunder, the Escrow Agent may execute any of its powers and perform
its duties hereunder directly or through agents or attorneys and may consult
with counsel, accountants and other skilled persons to be selected and retained
by it, but the Escrow Agent shall nevertheless remain responsible for the
performance by such persons. The Escrow Agent shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the advice or
opinion of any such counsel, accountants or other skilled persons.
10. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice in writing of such resignation specifying
a date when such resignation shall take effect. The Escrow Agent shall have the
right to withhold an amount equal to the amount due and owing to the
<PAGE>
Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably
believe may be incurred by the Escrow Agent in connection with the termination
of the Escrow Agreement.
11. Parent and Company hereby agree to each (i) pay the Escrow Agent upon
execution of this Agreement one-half of the compensation for the services to be
rendered hereunder, as described in Schedule I attached hereto, and (ii) pay or
reimburse the Escrow Agent upon request for one-half all expenses, disbursement
and advances, including reasonable attorney's fees, incurred or made by it in
connection with the performance, modification and termination of this Agreement.
12. Parent and Company hereby agree to jointly and severally indemnify the
Escrow Agent for, and to hold it harmless against any loss, liability or expense
arising out of or in connection with this Agreement and carrying out its duties
hereunder, including the costs and expenses of defending itself against any
claim of liability, except in those cases where the Escrow Agent has been guilty
of gross negligence or willful misconduct. Anything in this agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind
whatsoever,(including but not limited to lost profits), even if the Escrow Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of action. As between Parent, on the one hand, and the Company, on the
other, all amounts to be paid pursuant to this Section 12 shall be split 50/50.
13. The duties and responsibilities of the Escrow Agent hereunder shall be
determined solely by the express provisions of this Escrow Agreement, and no
other or further duties or responsibilities shall be implied. The Escrow Agent
shall not have any liability under, nor duty to inquire into the terms and
provisions of any agreement or instructions, other than outlined in the
Agreement.
14. All notices and communications hereunder shall be in writing and shall
be deemed to be duly given if sent by registered mail, return receipt requested,
or by hand delivery or courier in each case to the following address:
(a) The Chase Manhattan Bank
Corporate Trust Group
450 West 33rd Street
New York, NY 10001
Attention: Escrow Administration, 15th Floor
(b) If to Parent to:
dELiA*s Inc.
435 Hudson Street
New York, NY 10014
Attention: Alex S. Navarro
Fax: (212) 807-9069
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Fax: (212) 969-2900
Attention: Jeffrey A. Horwitz
<PAGE>
(c) If to Company to:
American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, NY 11510
Attention: William Siegel
Fax: (516) 867-6308
with a copy to:
Richards Spears Kibbe & Orbe
One Chase Manhattan Plaza
New York, NY 10005
Fax: (212) 530-1801
Attention: William Q. Orbe
or at such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested. Any such notice
or communication given in the manner specified in this Section shall be deemed
to have been given as of the date so received, as evidenced by a receipt of
delivery provided by the United States Postal Service, hand deliverer or
courier, as the case may be.
15. This instrument contains the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof. The provisions of this
Escrow Agreement may be waived, altered, amended or supplemented, in whole or in
part, only by a writing signed by all of the parties hereto.
16. Neither this Escrow Agreement nor any right or interest hereunder may
be assigned in whole or in part by any party without the prior consent of the
other parties; provided, however, that Parent may assign its rights (but shall
not be released from its obligations) under this Agreement to one or more
affiliates of Parent without the consent of the other parties hereto. All the
terms and provisions of this Agreement shall be binding on, and shall inure to
the benefit of, the respective legal successors and permitted assigns of the
parties.
17. This Escrow 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.
18. The Escrow Agent shall not incur any liability for following the
instructions herein contained or expressly provided for, or joint written
instructions given by the parties hereto.
19. In the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions, claims or demands from any
party hereto which, in its opinions, conflict with any of the provisions of this
Agreement, it shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties hereto or by a final
order or judgment of a court of competent jurisdiction.
20. Any corporation into which the Escrow Agent in its individual capacity
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Escrow Agent in its individual capacity shall be a party, or any corporation to
which substantially all the corporate trust business of the Escrow Agent in its
individual capacity shall be a party, or any corporation to which substantially
all the corporate trust business of the Escrow Agent in its individual capacity
may be transferred, shall be the Escrow Agent under this Escrow Agreement
without further act.
<PAGE>
21. If any term, condition or provision of this Agreement shall be
declared, to any extent, invalid or unenforceable, the remainder of the
Agreement, other than the term, condition or provision held invalid or
unenforceable, shall not be affected thereby and shall be considered in full
force and effect and shall be valid and be enforced to the fullest extent
permitted by law.
22. The captions set forth in this Agreement are used solely for
convenience or reference and shall not control or affect the meaning or
interpretation of any of the provisions.
23. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and any action brought hereunder shall be
brought in the federal courts or courts of the State of New York, in each case
located in the County of New York. Each party hereto irrevocably waives any
objection on the grounds of venue, forum non-conveniens or any similar grounds
and irrevocably consents to service of process by mail or in any other manner
permitted by applicable law in connection with this Agreement and consents to
the jurisdiction of said courts.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
[SIGNATURE PAGE TO ESCROW AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date and year first above written.
dELiA*s INC.
By: /s/ Alex Navarro
------------------------------
Alex S. Navarro
Senior Vice President -
Development & Legal Affairs
AMERICAN RETAIL ENTERPRISES, L.P.
By: LANDMARK PANTS CORP.
its general partner
By: /s/ William R. Siegel
------------------------------
William Siegel
Vice President
By: /s/ Gary Sugarman
------------------------------
Gary Sugarman
Vice President
By: THE PANTS SET, INC.
its general partner
By: /s/ William R. Siegel
------------------------------
William Siegel
President
By: /s/ Gary Sugarman
------------------------------
Gary Sugarman
Vice President
<PAGE>
THE CHASE MANHATTAN BANK, as
Escrow Agent
By: /s/ Christopher Greene
------------------------------
Name: Christopher Greene
Title: Assistant Vice President
<PAGE>
SCHEDULE 1
12.5 basis points of the highest value of collateral held on deposit per annum
or any part thereof without proration for partial years, subject to a minimum of
$5,000 per annum (which shall be split 50/50 by (a) the Parent and the Company
on the one hand and (b) Chase Manhattan Bank's Middle Market division on the
other hand) or any part thereof without proration for partial years. For
purposes of this Schedule I, the value of the collateral shall be measured on
the date of this Escrow Agreement and again on each anniversary of the date
hereof using an average of the closing sales price on the ten trading days
preceding such measurement date.
EXHIBIT C
to
SCHEDULE 13D
dELiA*s Inc.
435 Hudson Street
New York, New York 10014
July 17, 1998
American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
Attention: Mr. William Siegel
The Chase Manhattan Bank
Corporate Trust Group
450 West 33rd Street
New York, New York 10001
Attention: Escrow Administration, 15th Floor
Re: Amendment No.1
Ladies and Gentlemen:
We refer you to that certain Escrow Agreement dated July 10, 1998 (the "Escrow
Agreement") among dELiA*s Inc., a Delaware corporation, American Retail
Enterprises, L.P., a New York limited partnership, and The Chase Manhattan Bank,
a New York State chartered bank. Capitalized terms used but not otherwise
defined herein have the meanings ascribed to them in the Escrow Agreement.
This is to confirm that Section 2 of the Escrow Agreement is hereby amended by
replacing the words "a certificate representing 171,074 shares" in the first
sentence thereof with the words "certificates representing 201,122 shares".
Please confirm your agreement to the foregoing by signing and returning to us a
copy of this letter.
<PAGE>
Very truly yours,
DELIA*S INC.
By: /s/ Alex Navarro
------------------------------
Alex Navarro, Senior Vice President
AGREED AND ACKNOWLEDGED:
AMERICAN RETAIL ENTERPRISES, L.P.
By: LANDMARK PANTS CORP.
General Partner
By: /s/ William R. Siegel
------------------------------
William Siegel, Vice President
By: /s/ Gary Sugarman
------------------------------
Gary Sugarman, Vice President
By: THE PANTS SET, INC.
General Partner
By: /s/ William R. Siegel
------------------------------
William Siegel, President
By: /s/ Gary Sugarman
------------------------------
Gary Sugarman, Vice President
THE CHASE MANHATTAN BANK
By: /s/ Christopher Greene
------------------------------
Name: Christopher Greene
Title: Assistant Vice President
EXHIBIT D
to
SCHEDULE 13D
dELiA*s Inc.
435 Hudson Street
New York, New York 10014
July 24, 1998
American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
Attention: Mr. William Siegel
The Chase Manhattan Bank
Corporate Trust Group
450 West 33rd Street
New York, New York 10001
Attention: Escrow Administration, 15th Floor
Re: Amendment No.2
Ladies and Gentlemen:
We refer you to that certain Escrow Agreement dated July 10, 1998, as amended
(the "Escrow Agreement"), among dELiA*s Inc., a Delaware corporation, American
Retail Enterprises, L.P., a New York limited partnership, and The Chase
Manhattan Bank, a New York State chartered bank. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to them in the Escrow
Agreement.
This is to confirm that Section 2 of the Escrow Agreement is hereby amended by
replacing the words "a certificate representing 201,122 shares" in the first
sentence thereof with the words "certificates representing 208,334 shares".
Please confirm your agreement to the foregoing by signing and returning to us a
copy of this letter.
<PAGE>
Very truly yours,
DELIA*S INC.
By: /s/ Alex Navarro
------------------------------
Alex Navarro, Senior Vice President
AGREED AND ACKNOWLEDGED:
AMERICAN RETAIL ENTERPRISES, L.P.
By: LANDMARK PANTS CORP.
General Partner
By: /s/ William R. Siegel
------------------------------
William Siegel, Vice President
By: /s/ Gary Sugarman
------------------------------
Gary Sugarman, Vice President
By: THE PANTS SET, INC.
General Partner
By: /s/ William R. Siegel
------------------------------
William Siegel, President
By: /s/ Gary Sugarman
------------------------------
Gary Sugarman, Vice President
THE CHASE MANHATTAN BANK
By: /s/ J. Morales
------------------------------
Name:
Title: Senior Trust Officer
EXHIBIT E
to
SCHEDULE 13D
SCREEEM! INC.
435 HUDSON STREET
NEW YORK, NY 10014
December 10, 1998
American Retail Enterprises, L.P.
1620 Grand Avenue
Baldwin, New York 11510
Attention: Mr. William Siegel
Re: Amendment No. 1 to Transitional Services and Purchase Agreement
Ladies and Gentlemen:
We refer you to that certain Transitional Services Agreement dated July 10, 1998
(the "Agreement") among Screeem! Inc., a Delaware corporation ("Screeem!"), a
Delaware corporation [sic], dELiA*s Inc., a Delaware corporation, and American
Retail Enterprises, L.P., a New York limited partnership ("ARE"). Capitalized
terms used but not otherwise defined herein have the meanings ascribed to them
in the Agreement.
We hereby agree as follows:
1. Purchase and Sale of Inventory
a. ARE agrees to purchase from Screeem! and Screeem! agrees to sell
to ARE: (i) spring season inventory designated by Gary Sugarman in an amount
equal to $500,000, valued at original cost, and (ii) fall season inventory
designated by Gary Sugarman in an amount equal to $400,000, valued at original
cost (collectively, the "Inventory"). Screeem! shall deliver the Inventory to
ARE's New Jersey warehouse within twenty-one (21) days following the date
hereof.
2. ARE shall pay to Screeem! an amount equal to Eight Hundred Twenty-Five
Thousand Dollars ($825,000) in cash, as follows: (i) $275,000 by June 8, 1999;
and (ii) the remaining $550,000 by December 8, 1999.
3. The Transitional Services Agreement is amended in the following
respects (and otherwise shall continue in full force and effect):
a. Notwithstanding Section 4 of the Transitional Services Agreement, ARE
shall continue to provide the services set forth under the heading
"Administrative Services" on Schedule I thereof through January 31, 1999,
provided, however, that no fee shall be due under Section 2 of the Transitional
Services Agreement for services rendered during the month of January 1999.
b. Section 8 of the Transitional Service Agreement is amended by deleting
the first sentence thereof and replacing it in its entire [sic] with the
following:
"In order to secure the obligations of the Seller under Section 6(b) of
this transitional Services Agreement and under Sections 1 and 2 of this
Amendment No. 1 to the Transitional Services Agreement to indemnify the
Purchaser Indemnified Parties, parent will deposit the Additional Shares with
the Escrow Agent, to be held by the Escrow Agent in accordance with the terms of
the Escrow Agreement."
c. Distribution Services. ARE grants to Screeem! an immediate credit of
Fifty Thousand Dollars ($50,000) applicable to Screeem!'s obligation under
Section 2 of the Transitional Services Agreement relating to the fees set forth
on Schedule II thereof, such that Screeem! shall have no obligation to pay the
next $50,000 invoiced by ARE to Screeem! with respect to Distribution Services
thereunder.
<PAGE>
4. Personnel. As of January 1, 1999, Screeem! shall hire four (4)
employees of ARE or its affiliates designated by Gary Sugarman who are currently
on the ARE payroll and are involved in the provision of Administrative Services
under the Transitional Services Agreement and shall assume all obligations
relating to such employees arising from and after January 1, 1998 [sic].
5. Waiver. Effective as of January 1, 1999, dELiA*s and Screeem! hereby
waive the obligations of the Company, the Lessees and each of their Affiliates
(as such terms are defined in the Purchase Agreement) under Article XII and such
Article XII shall be of no further force or effect as of such date; provided,
however, that ARE ands [sic] Affiliates agree not to use the names "SCREEEM!" or
"JEAN COUNTRY."
6. No Duty of ARE. ARE and its Affiliates shall have no duty to dELiA*s
(or to any of dELiA*s affiliates) with respect to investing in, and buying and
selling securities of dELiA*s and this Agreement shall not be interpreted to
limit or restrict such activities.
7. Acknowledgement. dELiA*s acknowledges that it has no objection to ARE
and/or its affiliates disclosing this transaction in filings with the Securities
and Exchange Commission, subject to our approval, not to be unreasonably
withheld, the description thereof, which approval shall be a condition to the
effectiveness of this agreement.
Please confirm your agreement to the foregoing by signing and returning to us a
copy of this letter.
Very truly yours,
dELiA*s INC.
By: /s/ Alex Navarro
------------------------------
Alex Navarro, Senior VP
SCREEEM! INC.
By: /s/ Alex Navarro
------------------------------
Alex Navarro, Senior VP
AGREED AND ACKNOWLEDGED:
AMERICAN RETAIL ENTERPRISES, L.P.
By: LANDMARK PANTS CORP.
General Partner
By: /s/ William Siegel
------------------------------
William Siegel, Vice President
By: THE PANTS SET, INC.
General Partner
By: /s/ William Siegel
------------------------------
William Siegel, President
