UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 1996
//TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-1394
Edison Brothers Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43-0254900
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 N. Broadway, St. Louis, Missouri 63102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-331-6000
Not applicable
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report:
Common Stock, $1 par value - 22,201,778
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Condensed Consolidated Balance Sheets as of
August 3, 1996; February 3,1996; and
July 29, 1995 1
Condensed Consolidated Statements of Income for
the 13 weeks and 26 weeks ended August 3,1996, and
for the 13 weeks and 26 weeks ended July 29, 1995 2
Condensed Consolidated Statements of Cash Flows
for the 26 weeks ended August 3,1996, and
for the 26 weeks ended July 29, 1995 3
Notes to Condensed Consolidated
Financial Statements 4
Management's Discussion and Analysis of Operating
Results and Financial Condition 9
Part II. Other Information 11
Signatures 11
<TABLE>
PART I FINANCIAL INFORMATION
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
August 3, February 3, July 29,
1996 1996 1995
(In Millions)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $123.2 $139.6 $ 49.7
Short-term investments 54.1
Merchandise inventories 243.2 250.5 369.2
Income tax receivable .6 42.8 16.3
Deferred income taxes 14.5
Prepaid expenses 5.9 10.2 9.9
Other current assets 7.2 9.4 6.5
Total Current Assets 434.2 452.5 466.1
Property and Equipment, net 190.5 209.0 287.8
Intangible Assets, net 45.7 50.3 97.0
Prepaid Pension Expense 38.1 38.4 40.8
Deferred Income Taxes 5.5
Other Assets 14.1 11.3 25.5
Total Assets $722.6 $761.5 $922.7
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ $ .2 $130.9
Current portion of long-term debt 233.5
Accounts payable, trade 70.9 64.8 101.1
Payroll and vacations 12.3 13.4 16.2
Other taxes 6.7 6.9 8.2
Other current liabilities 17.8 25.8 46.3
Total Current Liabilities 107.7 111.1 536.2
Liabilities Subject to Settlement under
Reorganization Proceedings 497.4 489.8
Postretirement Benefits 40.5
Other Liabilities 19.7 20.2 32.0
Common Stockholders' Equity:
Common stock, par value $1 per share 22.2 22.1 22.1
Capital in excess of par value 76.8 76.7 76.7
Retained earnings (deficit) (1.2) 41.6 231.5
Foreign currency translation
adjustment and other (16.3)
Total Common Stockholders' Equity 97.8 140.4 314.0
Total Liabilities and Equity $722.6 $761.5 $922.7
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
13 weeks Ended 26 weeks Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
(In millions, except per share data)
<S> <C> <C> <C> <C>
Net Sales $268.8 $334.7 $526.9 $652.8
Cost of goods sold, occupancy,
and buying expenses 207.3 244.2 391.0 463.1
Store operating and administrative
expenses 69.1 86.3 138.4 173.5
Depreciation and amortization 10.1 16.7 20.5 33.7
Interest expense, net .5 6.3 .9 11.8
Restructuring and reorganization
expenses 7.0 20.9 18.6 20.9
Total Costs and Expenses 294.0 374.4 569.4 703.0
Loss before Income Taxes (25.2) (39.7) (42.5) (50.2)
Income tax provision (benefit) (14.0) .4 (18.1)
Net Loss $(25.2) $(25.7) $(42.9) $(32.1)
Per Common Share:
Net Loss $(1.14) $(1.17) $(1.93) $(1.46)
Cash dividends declared $ .11 $ .42
Weighted average common shares
outstanding (in thousands) 22,202 22,074 22,168 22,051
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
26 weeks Ended
August 3, 1996 July 29,1995
(In Millions)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (42.9) $(32.1)
Adjustments to reconcile net loss to
net cash provided (used)by operating
activities:
Depreciation and amortization 20.5 33.7
Deferred income taxes, net of valuation
allowance (12.0)
Restructuring and reorganization expenses,
noncash portion 9.3 20.9
Changes in assets and liabilities, net of
effects from acquisitions and divestitures:
Merchandise inventories 8.8 (46.5)
Other assets 45.6 3.8
Accounts payable, accrued expenses,
and other liabilities 2.0 20.9
Other 1.6 2.2
Total Operating Activities 44.9 (9.1)
Cash Flows from Investing Activities:
Payments for companies and assets purchased,
net of cash acquired (10.9)
Capital expenditures (7.9) (27.4)
Increase in short-term investments (54.1)
Net proceeds from disposal of subsidiary 3.8
Other .7 .9
Total Investing Activities (61.3) (33.6)
Cash Flows from Financing Activities:
Prepetition long-term debt payments (.1)
Net prepetition short-term debt borrowings 75.0
Net postpetition payments under short-term
credit facility (.2)
Dividends on common stock (9.3)
Other .9 .2
Total Financing Activities .7 65.8
Effect of exchange rate changes on cash (.7) (.4)
Cash Provided (Used) (16.4) 22.7
Beginning cash and cash equivalents 139.6 27.0
Ending cash and cash equuivalents $ 123.2 $ 49.7
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. On November 3, 1995 (the Petition Date),Edison Brothers Stores, Inc.
(the company) and 65 of its subsidiaries and affiliates (the Debtors)
filed petitions for relief under Chapter 11 of the United States
Bankruptcy Code (Chapter 11) in the United States Bankruptcy Court in
Wilmington, Delaware. The Debtors are presently operating their
respective businesses as debtors-in-possession. A statutory
Creditors' Committee has been appointed in the Chapter 11 cases. The
Chapter 11 cases of the Debtors are being jointly administered for
procedural purposes only.
Certain foreign subsidiaries were not included in the Chapter 11
filing. The results of their operations and financial position are
not material to the condensed consolidated financial statements.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles applicable to
a going concern, which principles, except as otherwise disclosed,
assume that assets will be realized and liabilities will be discharged
in the normal course of business. As a result of the Chapter 11 cases
and circumstances relating to this event, including the company's debt
structure, its recurring losses, and current economic conditions, such
realization of assets and liquidation of liabilities are subject to
significant uncertainty. Additionally, the amounts reported on the
condensed consolidated balance sheet could materially change because
of a plan of reorganization, since such reported amounts do not give
effect to adjustments to the carrying value of the underlying assets
or amounts of liabilities that may ultimately result.
The accompanying unaudited financial statements and notes have been
condensed and, therefore, do not contain all disclosures required by
generally accepted accounting principles. Reference should be made to
the annual financial statements, including the notes thereto, included
in the company's Annual Report to Stockholders for the year ended
February 3,1996. Interim operating results are not necessarily
indicative of those for a full fiscal year because of the seasonal
nature of the business.
With respect to the accompanying unaudited financial statements for
the 26 weeks ended August 3, 1996, it is the company's opinion that
all necessary adjustments (consisting of normal and recurring
adjustments) have been included to present a fair statement of results
for the interim period. Certain prior year items have been
reclassified to conform to the current year presentation.
2. In the Chapter 11 cases, substantially all liabilities as of the
Petition Date are subject to compromise or other treatment under a
plan of reorganization to be confirmed by the Bankruptcy Court after
submission to any required vote by affeced parties. The Debtors have
the exclusive right to propose and file plans of reorganization and
the exclusive right to solicit acceptances to such plans until
February 28, 1997, and April 28, 1997, respectively, provided that
they furnish their long-term business plan to the statutory Creditors'
Committee on or before November 1, 1996. For financial reporting
purposes, those liabilities and obligations whose treatment and
satisfaction is dependent on the outcome of the Chapter 11 cases have
been segregated and classified as liabilities subject to settlement
under reorganization proceedings in the condensed consolidated balance
sheet. Generally, all actions to enforce or otherwise effect
repayment of all pre-Chapter 11 liabilities as well as all pending
litigation against the Debtors are stayed while the Debtors continue
their business operations as debtors-in-possession. Schedules have
been filed by the Debtors with the Bankruptcy Court setting forth the
assets and liabilities of the Debtors as of the Petition Date as
reflected in the Debtors' accounting records. The Bankruptcy Court
established a bar date of August 1, 1996, for all prepetition claims
against the company. A bar date is the date by which claims against
the company must be filed if the claimants wish to receive any
distribution in the Chapter 11 cases. The company notified all known
or potential claimants subject to the August 1, 1996, bar date of
their need to file a proof of claim with the Bankruptcy Court.
Differences between amounts shown by the Debtors and claims filed by
creditors will be investigated and either amicably resolved or
adjudicated before the Bankruptcy Court. The ultimate amount of and
settlement terms for such liabilities are subject to a plan of
reorganization and accordingly are not presently determinable.
Under the Bankruptcy Code, the company may elect to assume or reject
real estate leases, employment contracts, personal property leases,
service contracts and other repetition executory contracts, subject to
Bankruptcy Court approval. The liabilities subject to settlement
under reorganization proceedings include a provision for the estimated
amount that may be claimed by lessors and allowed in connection with
the rejection of unexpired real estate leases. The company will
continue to analyze its executory contracts and may assume or reject
additional contracts.
The principal categories of claims classified as liabilities subject
to settlement under reorganization proceedings are identified below.
The amounts below in total are significantly less than the aggregate
stated amounts of proofs of claim that have been filed with the
Bankruptcy Court and may be subject to future adjustment depending on
Bankruptcy Court action, further developments with respect to disputed
claims, determination as to the value of any collateral securing
claims, or other events. Additional claims may arise from the
rejection of additional executory contracts by the company.
<TABLE>
<CAPTION>
August 3, February 3,
1996 1996
(In Millions)
<S> <C> <C>
Notes payable - banks $205.9 $205.9
Long-term senior notes payable 150.0 150.0
Cash set-off applied to debt (3.6) (3.6)
Deferred debt costs (6.3) (6.7)
Capital lease obligations 8.4 8.4
Accrued interest payable 3.5 3.5
Postretirement benefit accrual 41.8 41.1
Accounts payable 37.3 38.5
Lease termination claims 40.6 38.6
Taxes 4.0 4.3
Other 15.8 9.8
Total liabilities subject to settlement
under reorganization proceedings $497.4 $489.8
</TABLE>
During the first quarter of 1996, workers' compensation reserves
totaling $6.4 million were reclassified to liabilities subject to
settlement under reorganization proceedings. The reserves represent
unpaid claims and an estimate of incurred but not reported claims
existing as of the Petition Date. These reserves were classified as
other current liabilities as of February 3, 1996.
As a result of the Chapter 11 filing, no principal or interest
payments will be made on any repetition debt without Bankruptcy Court
approval or until a plan of reorganization providing for the repayment
terms has been confirmed by the court and becomes effective. Interest
on repetition obligations has not been accrued after the Petition
Date. Contractual interest expense not recorded on certain repetition
debt totalled $17.5 million for the 26 weeks ended August 3, 1996.
Cumulative contractual interest expense totaled $26.6 million as of
August 3,1996.
Prior to the Chapter 11 filing and certain agreements discussed below,
the company's debt consisted of senior notes held by various
institutional lenders amounting to $150.0 million. The unsecured
senior notes, having maturities from 7 to 15 years, were to bear
interest at rates of 7.09% to 8.04%. The company also had outstanding
borrowings under a $125.0 million revolving credit facility as well as
short-term and demand notes under uncommitted bank lines with varying
interest rates and maturity dates. In addition, the company had $8.4
million in capital lease obligations relating to its Washington,
Missouri, distribution center which are characterized as capital
leases for financial reporting purposes.
As a result of its operating loss for second quarter 1995, the company
was in violation of certain financial covenants under its bank and
senior note agreements. During the third quarter 1995, the company
and its subsidiary, Edison Brothers Apparel Stores, Inc., entered into
an agreement for a $75.0 million secured revolving line of credit
facility with BankAmerica Business Credit, Inc. Extending through
February 29, 1996. In addition, the company entered into override
agreements with its existing lenders through February 29, 1996. The
override agreements covered existing 1995 financial covenants and
deferred principal repayments otherwise due December 1, 1995.
Furthermore, the company's primary existing letter of credit bank
agreed to continue to provide international letters of credit through
the override period. In exchange for these concessions, the company
paid a one-time forbearance fee of $3.6 million and agreed to increase
the interest rate on the outstanding debt to 9.75%.
As of the Petition Date, the company had outstanding $150.0 million of
senior notes, $125.0 million under its $125.0 million revolving credit
facility, $80.9 million of short-term and demand notes under its
uncommitted bank lines, $8.4 million of capital lease obligations, and
$21.6 million under its $75.0 million secured revolving line of credit
facility. The company received authorization from the Bankruptcy
Court to make a $21.6 million payment in satisfaction of the secured
revolving line of credit facility. In addition, $3.6 million of cash
was set-off by the banks against outstanding principal and accrued
interest balances.
3. The company and Edison Brothers Apparel Stores, Inc., as debtors-
in-possession, are parties to a Loan Agreement dated effective November
9, 1995, (the DIP facility) with BankAmerica Business Credit, Inc., as
Agent and Lender, under which the company may borrow up to $200.0
million to fund ongoing working capital needs. The DIP facility,
which has been approved by the Bankruptcy Court, has a sublimit of
$150.0 million, subject to collateral restrictions, for the issuance
of letters of credit. The DIP facility is intended to provide the
company with the cash and liquidity to conduct its operations and pay
for merchandise shipments at normal levels during the course of the
Chapter 11 cases.
At the company's option, the company may borrow under the DIP facility
at the Reference Rate (as defined in the DIP facility) plus .25% or at
the Eurodollar Rate (as defined in the DIP facility) plus 1.5%. The
current borrowing rate is 8.5%. The maximum borrowing, up to $200.0
million, is limited to 50% of the value of eligible inventory (as
defined in the DIP facility) plus 95% of the amount of cash deposited
with the Agent. The company is required to pay a commitment fee of
.375% per annum on the unused portion of the DIP facility. The DIP
facility contains restrictive covenants including, among other things,
a limitation on store closings of 850, limitations on the incurrence
of additional liens and indebtedness, limitations on capital
expenditures and the sale of assets, the maintenance of minimum
operating earnings (EBITDA) and inventory levels, and a prohibition on
paying dividends. At August 3,1996 the company was in compliance with
the DIP facility covenants.
The lenders under the DIP facility have a "super-priority"
administrative expense claim against the estate of the company. The
DIP facility expires on the earlier of November 9, 1997, or the
effective date of a plan of reorganization that is confirmed by the
Bankruptcy Court.
As of August 3, 1996, no borrowings were outstanding under the DIP
facility. Outstanding letters of credit were $120.8 million and
available borrowings under the DIP facility were $52.2 million.
4. Restructuring and reorganization expenses were as follows:
<TABLE>
<CAPTION>
26 Weeks Ended
August 3, July 29,
1996 1995
(In Millions)
<S> <C> <C>
Estimated costs of store closings $ 9.0 $20.9
Early retirement program 2.3
Interest income (3.8)
Other, primarily professional fees 11.1
Total restructuring and reorganization
expenses $18.6 $20.9
</TABLE>
During the first and second quarters of 1996 and the second quarter of
1995, the company recognized store closing provisions relating to
restructuring plans designed to sell or close unprofitable stores.
Store closing costs of $9.0 million and $20.9 million for the 26 week
periods ended August 3, 1996 and July 29, 1995, respectively,
represent provisions to cover early lease termination claims and the
write-off of fixtures and equipment, leasehold improvements, and
related assets associated with these plans. For the periods ended
August 3, 1996, and July 29, 1995, total charges of $7.0 million and
$7.4 million, respectively, representing the net book value of fixed
and intangible assets, had been made to the reserves.
As part of its restructuring initiatives, the company offered an early
retirement package to eligible employees, Expenses totaling $2.3
million related to the program were recorded during second quarter
1996.
Other reorganization expenses of $11.1 million relate primarily to
administrative expenses incurred as a result of the claims
reconciliation process and professional fees incurred as a result of
the Chapter 11 filing and restructuring activities. These
professional fees include accounting, legal and consulting services
provided to the company and the Creditors' Committee (which, subject
to court approval, are required to be paid by the company while it is
in Chapter 11.)
5. Net income per common share is based on the weighted average common
shares outstanding during the period. Shares issuable under the
company's stock option plans would have no material dilutive effect on
earnings per common share.
6. Common stock shares authorized total 100,000,000; at August 3, 1996,
27,554,232 shares were issued of which 5,352,454 shares were being
held in the company's treasury and 22,201,778 shares were outstanding.
7. Investments are stated at cost that approximates market and consist of
government securities having maturities ranging from September, 1996,
to January, 1997.
The company considers those investments with maturities of three
months or less to be cash equivalents for condensed consolidated
statements of cash flows.
8. Property and equipment, net is composed of the following:
<TABLE>
<CAPTION>
August 3, February 3, July 29,
1996 1996 1995
(In Millions)
<S> <C> <C> <C>
Cost $410.1 $422.3 $558.9
Accumulated depreciation and amortization (219.6) (213.3) (271.1)
Net book value $190.5 $209.0 $287.8
</TABLE>
9. Intangible assets, net is composed of the following:
<TABLE>
<S> <C> <C> <C>
Cost $ 68.3 $ 71.4 $133.5
Accumulated amortization (22.6) (21.1) (36.5)
Net book value $ 45.7 $ 50.3 $ 97.0
</TABLE>
10. The effective tax rate of (.9%) of pretax loss for the 26 weeks ended
August 3, 1996, differs from the company's customary relationship
between the income tax provision and pretax accounting income (loss).
Due to the uncertainty of the company producing future income which
will be available to absorb net operating loss carryforwards, no tax
benefit relative to current operating results has been recorded. In
addition, the company has concluded that it is likely it will not be
able to realize its deferred tax assets. Accordingly, an allowance
against the net deferred tax asset balance of $.8 million and a charge
to income tax expense are reflected in the condensed consolidated
financial statements as of August 3, 1996.
The provision of $.4 million on the 1996 condensed consolidated income
statement consists of a charge of $.3 million related to operations in
Puerto Rico, Canada, Taiwan, Hong Kong, and the Philippines, a $.3
million charge related to state minimum taxes, a $1.0 million deferred
tax benefit and the $.8 million deferred tax valuation allowance
charge referred to above.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Net sales for the 13 weeks and 26 weeks ended August 3, 1996,
decreased by 19.7% and 19.3%, respectively, from the comparable
periods of 1995. The decrease was primarily due to the 29.0%
decline in the number of stores between the end of second quarter
1995 and the end of second quarter 1996 from 2,735 stores to
1,943 stores, respectively. Same-store sales decreased 2.9% and
3.8% for the 13 week and 26 week periods, respectively. All
chains reported same-store sales decreases except for Size 5-7-9
which reported increases of 11.0% and 13.9% for the 13 week and
26 week periods, respectively.
Cost of goods sold , occupancy, and buying expenses as a
percentage of sales were 77.1% and 74.2% for the 13 weeks and 26
weeks of 1996, respectively, compared with 73.0% and 70.9% for
the comparable periods in 1995. For both periods of 1996 the
increased percentages resulted from higher cost of goods sold,
primarily from increased markdowns.
In first quarter 1996, the closing of the Zeidler & Zeidler
division was announced. At the beginning of August 1996, the
remaining 70 stores in that division began their liquidation
process. A significant markdown accrual of $6.3 million was
recorded in the second quarter 1996 in connection with the
liquidation of the remaining inventory of this chain. The
liquidation process is expected to be completed by the end of
third quarter 1996.
The company's big and tall menswear division, Repp Ltd., also
recorded a special markdown accrual of $6.1 million during the
second quarter 1996 to substantially reduce its inventory of
tailored clothing in an effort to move away from the suit and
sportcoat categories and to increase its focus on casual
components.
Higher merchandise costs also contributed to the increase in cost
of goods sold, continuing the trend noted in first quarter 1996.
Size 5-7-9 continued to use more domestic sourcing, Repp Ltd.
focused more on branded merchandise versus private label, and
Wild Pair changed its product mix, focusing more on footwear than
accessories.
Improvements were seen in cost of goods sold in both Size 5-7-9
and J. Riggings. Lower initial retail prices and lower, fresher
inventory levels in both Size 5-7-9 and J. Riggings resulted in
reduced markdowns for both the 13 week and 26 week periods of
1996 compared to 1995.
The increase in the company's cost of goods sold was offset
slightly by decreased occupancy and buying costs. As a
percentage of sales, occupancy and buying costs decreased 1.6%
and 1.3% for the 13 week and 26 week periods, respectively,
compared to the comparable periods in 1995. The decrease was
attributable to an increase in average sales per store primarily
in Size 5-7-9 and JW/Jeans West.
Store operating and administrative expenses decreased 20.2% for
the 26 week period in 1996 compared to the same period in 1995.
As a percentage of sales, store operating and administrative
expenses were 26.3% and 26.6% for the 26 week periods in 1996 and
1995, respectively. The same trend was experienced in the 13
week period with expenses at 25.7% of sales in 1996 compared to
25.8% of sales in 1995. For the 26 week period, store expenses
decreased $29.4 million to 19.6% of sales in 1996 compared to
20.3% of sales in 1995. For the 13 week period, store expenses
decreased $15.0 million to 19.2% of sales in 1996 compared to
19.9% of sales in 1995. Administrative expenses decreased $2.2
million and $5.7 million for the 13 week and 26 week periods,
respectively, but increased slightly as a percentage of sales.
Depreciation and amortization continued to decrease between years
due to the number of store closings and reduced capital
expenditures. Net interest expense decreased $5.8 million and
$10.9 million for the 13 week and 26 week periods, respectively.
Interest expense on prepetition liabilities of $8.7 million and
$17.5 million was not recorded for the 13 week and 26 week
periods in 1996, respectively.
Restructuring and reorganization expenses of $18.6 million for
the 26 week period in 1996 consisted of $9.0 million for store
closing costs, $2.3 million related to an early retirement
program, and $11.1 million of reorganization expenses, primarily
legal and consulting fees, offset by $3.8 million of interest
income. In the second quarter 1995, a $20.9 million store
closing reserve was booked related to the closing of
approximately 250 under-performing apparel stores.
The pretax loss for the 26 week period in 1996, excluding
restructuring and reorganization expenses of $18.6 million and
special markdown accruals of $12.4 million, was $11.5 million
compared to a pretax loss of $29.3 million for the same period in
1995 adjusted for the $20.9 million store closing reserve
recorded in 1995. The adjusted pretax loss for the 13 week
period in 1996 was $5.8 million compared to the adjusted pretax
loss of $18.8 million in 1995.
FINANCIAL CONDITION
During the 26 weeks ended August 3, 1996, the company produced
positive cash flow from operations resulting in an increase in
cash and short-term investments of $37.7 million from year-end
1995. During the second quarter 1996, the company invested $54.1
million in short-term government securities. Cash flow from
operations during the 26 week period in 1996 increased $54.0
million from the same period in 1995 primarily due to the
liquidation of merchandise and the receipt of an income tax
refund of $37.9 million in first quarter 1996. Merchandise
inventories decreased $7.3 million or 2.9% from year-end 1995
and $126.0 million or 34.1% from second quarter 1995 primarily
due to the decrease in number of stores but also due to a tighter
control over inventory levels.
Cash flow from operations also improved as a result of the
deferral of payment of interest expense on prepetition
obligations (see Note 2 of the Notes to Condensed Consolidated
Financial Statements). Contractual interest expense not recorded
on certain prepetition debt totalled $17.5 million for the 26
weeks ended August 3,1996. Interest expense of $13.1 million was
recorded in the net loss for the 26 weeks ended July 29, 1995.
Capital expenditures decreased $19.5 million in the 26 week
period of 1996 compared to the comparable period of 1995. The
decrease in property and equipment, net between the end of second
quarter 1995 and second quarter 1996 was due to store closings.
The change between year-end 1995 and the end of second quarter
1996 was primarily due to the write-off of fixed assets in the
Zeidler & Zeidler division in first quarter 1996.
Positive cash flow from operations during 1996 reduced the
company's reliance on debt to fund working capital needs. In the
first half of 1995, the company increased its borrowings by $75.0
million to fund inventory purchases. As discussed in Note 3 of
the Notes to Condensed Consolidated Financial Statements, the
company has available a $200.0 million DIP facility with
available borrowings of $52.2 million as of August 3, 1996. The
DIP facility contains a restrictive covenant prohibiting the
payment of dividends and none were paid in the first half of
1996. In the first half of 1995, the company paid $9.3 million
in dividends.
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
Item 1.Legal Proceedings
See Note 1 of the Notes to Condensed Consolidated
Financial Statements.
Items 2 and 3 of Part II are not applicable.
Item 4.Submission of Matters to a Vote of Security Holders
The company's annual meeting of stockholders was held June 12,
1996. At the meeting, the stockholders voted to elect 10
directors of the company. Each nominee for director was elected
by a vote of the stockholders as follows:
Votes Votes
Cast For Withheld
Bart A. Brown, Jr. 19,019,183 928,913
David B. Cooper, Jr. 19,081,624 866,472
Julian I. Edison 19,071,310 876,786
Peter A. Edison 19,060,439 887,657
Jane Evans 19,036,140 911,956
Richard C. Marcus 19,056,817 891,279
Karl W. Michner 19,063,568 884,528
Alan D. Miller 19,079,601 868,495
Alan A. Sachs 19,069,426 878,670
Craig D. Schnuck 19,055,780 892,316
Item 5 of Part II is not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Bylaws of the Company, as amended April 23, 1996, were filed
as an Exhibit to the company's annual report on Form 10-K
for the year ended February 3, 1996, and are incorporated
herein by reference.
(b) The company's Certificate of Incorporation, as amended
September 8, 1995, was filed as an Exhibit to the company's
quarterly report on Form 10-Q for the quarter ended July 29,
1995, and is incorporated herein by reference.
(c) Form of Amended and Restated Employment Agreement entered
into by the company on June 21, 1996, with Alan D. Miller,
Chairman, President and Chief Executive Officer of the
company.
(d) Form of Amended and Restated Employment Agreement entered
into by the company on June 21, 1996, with certain other
executive officers of the company.
(e) Form of Amended and Restated Employment Agreement entered
into by the company on June 21, 1996, with other executive
officers of the company.
(f) Exhibit 11, computation of per share earnings, is on page 16
of this Form 10-Q.
(g) Exhibit 27, Financial Data Schedule, is on page 17 of this
Form 10-Q.
(h) There were no reports on Form 8-K filed during the quarter
ended August 3, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
EDISON BROTHERS STORES, INC.
DATE: September 16, 1996 By /S/
David B. Cooper, Jr.
Executive Vice President and
Chief Financial Officer
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
dated June 21, 1996 between Alan D. Miller, currently residing at
135 Wyckliffe Place, St. Louis, Missouri 63141 ("Employee"), and
Edison Brothers Stores, Inc., a Delaware corporation (the
"Company"), amending, restating and superseding the Employment
Agreement dated September 18, 1995 between Employee and the
Company.
In consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Employment. Subject to the terms and conditions
hereinafter set forth, the Company hereby agrees to employ
Employee, and Employee hereby agrees to be employed by the
Company, during the three-year period (the "Employment Term")
beginning on September 18, 1995 (the "Commencement Date") and
ending on September 17, 1998. The Employment Term may be
extended by mutual written agreement of the parties or terminated
pursuant to the provisions of Section 4 or Section 5 hereof. In
the event a Change in Control (as hereinafter defined) occurs
less than two years before the end of the Employment Term and at
a time when Employee is still employed hereunder, the Employment
Term shall be extended for a period ending two years after the
date of occurrence of the Change in Control.
2. Duties. Employee shall be employed in the capacity of
Chairman, President and Chief Executive Officer. Employee shall
have such duties as may reasonably be assigned to him by or at
the direction of the Board of Directors of the Company. Employee
shall perform such duties diligently and to the best of his
ability, and shall comply with the Company's Business Conduct
Policy and other policies as in effect from time to time.
Employee's duties shall be performed primarily at the Company's
home office in St. Louis, Missouri, with such foreign and
domestic travel as the performance of his duties may require.
During the Employment Term, Employee shall devote his entire
working time, attention and energy to the business of the
Company, and shall not be engaged in any other business activity
that conflicts with or interferes with Employee's performance of
his duties hereunder except as authorized by the Board of
Directors of the Company.
3. Compensation and Benefits.
A. Salary. During the Employment Term, the Company shall pay
Employee for his services hereunder a base salary at the rate of
$450,000, subject to upward adjustment in accordance with the
Company's salary review practices and procedures in effect from
time to time. Such salary shall be payable semi-monthly on the
15th and last day of each month.
B. Benefits and Perquisites. During the Employment Term,
Employee shall be entitled to participate in, to the extent
Employee is eligible under the terms thereof, the Company's
Medical, Dental, Life Insurance, Disability, Pension and 401(k)
Savings Plans, its Officer Perquisite Program, and all such other
benefit programs as are generally provided from time to time by
the Company to its executive personnel. Subject to the rights of
Employee set forth in Sections 5 and 6 hereof, nothing herein
shall preclude the Company from terminating or amending any
employee benefit plan or program.
C. Vacation. During the Employment Term, Employee shall be
entitled to a vacation of four weeks per calendar year to be
taken in accordance with the Company's normal policies.
D. Bonuses and Stock Options. Subject to the provisions of
the next sentence, Employee shall be entitled to receive two lump
sum cash bonus payments, each equal to two times Employee's
monthly base salary at the highest rate in effect at any time
between the Commencement Date and the date of payment. The first
such bonus payment shall be made on September 17, 1996 or such
earlier date as there occurs a Change in Control, provided that
Employee is still in the employ of the Company as of that date;
and the second such bonus payment shall be made on September 17,
1997 or such earlier date as there occurs a Change in Control,
provided that Employee is still in the employ of the Company as
of that date. Notwithstanding the foregoing, if (i) in the
absence of or prior to the occurrence of a Change in Control and
(ii) after eighteen months from the Commencement Date but prior
to September 17, 1997, Employee's employment is terminated by the
Company Without Cause (as hereinafter defined) or is terminated
by Employee for Good Reason (as hereinafter defined), then the
Company shall pay to Employee on the Termination Date (as
hereinafter defined) a lump sum cash amount equal to two times
Employee's monthly base salary at the highest rate in effect at
any time between the Commencement Date and the Termination Date
multiplied by a fraction, the numerator of which shall be the
number of months from September 18, 1996 to the Termination Date,
including partial months, and the denominator of which shall be
twelve. Employee shall also be eligible for such other bonus
payments and shall be granted such options to purchase common
stock of the Company as the Board of Directors of the Company, or
a duly constituted committee thereof, shall determine in its
discretion.
E. Travel and Business Expenses. Upon submission of itemized
expense statements in the manner specified by the Company,
Employee shall be entitled to reimbursement for reasonable travel
and other business expenses incurred by Employee in the
performance of his duties hereunder.
F. Payment. Payment of all compensation and benefits to
Employee hereunder shall be made in accordance with the relevant
policies of the Company in effect from time to time and shall be
subject to all applicable employment and withholding taxes.
G. Cessation of Employment. If Employee shall cease to be
employed by the Company for any reason, then Employee's
compensation and benefits shall cease as of the Termination Date,
except as otherwise provided herein or in any applicable employee
benefit plan or program.
4. Termination of Employment of Employee by the Company.
(a) Employee's employment may be terminated by the Company
for Cause (as hereinafter defined) at any time, effective upon
the giving to Employee of a written notice of termination
specifying in detail the particulars of the conduct of
Employee deemed by the Company to justify such termination for
Cause.
(b) Employee's employment may be terminated by the Company
Without Cause at any time, effective upon the giving to
Employee of a written notice of termination specifying that
such termination is Without Cause.
(c) Upon a termination by the Company of Employee's
employment for Cause, Employee shall be entitled to the
payments specified in subparagraph (a) of Section 6 of this
Agreement. Upon a termination by the Company of Employee's
employment Without Cause, Employee shall be entitled to all of
the payments and benefits provided for in Section 6 hereof.
(d) If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from
Employee's duties hereunder for 180 days within any 365 day
period, the Company may, by notice to Employee, terminate
Employee's employment hereunder for "Disability". Upon a
termination of Employee's employment for Disability, Employee
shall be entitled to the payments specified in
subparagraph (a) of Section 6 of this Agreement. During any
period that Employee fails to perform Employee's duties
hereunder as a result of incapacity due to physical or mental
illness (a "Disability Period"), Employee shall continue to
receive the compensation and benefits provided for in
Section 3 hereof unless and until Employee's employment
hereunder is terminated; provided, however, that the amount of
compensation and benefits received by Employee during the
Disability Period shall be reduced by the aggregate amounts,
if any, payable to Employee under disability benefit plans and
programs of the Company or under the Social Security
disability insurance program.
5. Termination of Employment by Employee. Employee shall be
entitled to terminate his employment with the Company at any
time. If such termination is for Good Reason, Employee shall be
entitled to all of the payments and benefits specified in
Section 6 hereof. If such termination is for other than Good
Reason, Employee shall be entitled to the payments specified in
subparagraph (a) of Section 6. Employee shall give the Company
written notice of any such voluntary termination of employment,
which notice need specify only Employee's desire to terminate his
employment and, if such termination is for Good Reason, set forth
in reasonable detail the facts and circumstances claimed by
Employee to constitute Good Reason.
6. Payments and Benefits Upon Termination. To the extent
provided in Sections 4 and 5 hereof, upon termination of his
employment, Employee shall be entitled to receive the following
payments and benefits:
(a) The Company shall pay to Employee on the Termination
Date (i) the full base salary earned by Employee through the
Termination Date and unpaid at the Termination Date, plus
(ii) credit for any vacation earned by Employee but not taken
at the Termination Date, plus (iii) all other amounts earned
by Employee and unpaid as of the Termination Date.
(b) The Company shall pay to Employee on the Termination
Date a lump sum cash amount equal to Employee's monthly salary
at the highest rate in effect at any time between the
Commencement Date and the Termination Date multiplied by the
greater of (i) twelve or (ii) the number of months remaining
until the Completion Date (as hereinafter defined), including
partial months.
(c) The Company shall maintain in full force and effect for
Employee's continued benefit until the earlier of (i) the
Completion Date or twelve months from the Termination Date,
whichever is later, or (ii) Employee's similar coverage by a
new employer, all life insurance, medical, dental, and
disability plans, programs or arrangements in which Employee
was entitled to participate immediately prior to the
Termination Date, provided that Employee's continued
participation is possible under the terms and provisions of
such plans, programs or arrangements. In the event that
Employee's participation in any such plan, program or
arrangement is barred by the terms thereof, the Company shall
arrange to provide Employee with benefits substantially
similar to those which Employee would otherwise be entitled to
receive under such plans, programs or arrangements. Any
continuation of benefits under this Section 6(c) shall not be
counted towards the benefits extension period mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985.
(d) The Company shall pay to Employee (or his beneficiary
upon his death) the excess, if any, of (i) the benefit
Employee (or his beneficiary, as the case may be) would have
been entitled to receive under the Edison Brothers Stores
Pension Plan and any supplemental pension plan or any
successor or similar plans then in effect (collectively the
"Plan") had he remained an employee of the Company until the
earlier of the Completion Date or his death at a salary at the
highest rate of Employee's compensation in effect during the
twelve months immediately preceding the Termination Date, over
(ii) the benefit actually payable to Employee (or his
beneficiary, as the case may be) under the Plan. Such excess
benefit shall be determined in accordance with the provisions,
rules and assumptions of the Plan but shall be actually paid
from the general assets of the Company.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 6 be reduced by any compensation or
other amounts paid to or earned by Employee as the result of
employment by another employer after the Termination Date or
otherwise.
7. Tax Indemnity. If any amounts, reimbursements or benefits
payable by the Company to Employee pursuant to this Agreement or
any other plan, agreement or arrangement of the Company are
determined to be subject to an excise or similar tax pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended, or
any successor or other comparable federal, state or local tax
laws, the Company shall pay to Employee such additional sum as is
necessary (after taking into account all federal, state and local
income taxes payable by the Employee as a result of the receipt
of such additional sum) to place Employee in the same after-tax
position he would have been in had no such excise or similar
purpose tax been paid or incurred.
8. Employee's Expenses. All costs and expenses (including
reasonable legal and accounting fees) incurred by Employee to
(a) defend the validity of this Agreement, (b) contest the
termination of his employment by the Company or any
determinations by the Company concerning the amounts payable by
the Company under this Agreement or (c) otherwise obtain or
enforce any right or benefit provided to Employee by this
Agreement (including, without limitation, any right or benefit
under this Section 8), shall be paid by the Company if Employee
is the prevailing party.
9. Confidential Information. Employee, during the period of
his employment by the Company and thereafter, irrespective of
whether the termination of his employment is voluntary or
involuntary, will not, directly or indirectly (without the
Company's prior written consent), use for himself, or use for or
disclose to any other party, any confidential information
regarding the Company. For purposes of this Agreement, such
confidential information shall include any data or information
regarding the business of the Company or any subsidiary or
affiliate of the Company that is not generally known to the
public, including without limitation any confidential information
or data regarding the cost of products sold by, or the plans of,
the Company or its affiliates or the business methods of the
Company or its affiliates not in general use by others or the
identity of any customers or suppliers of the Company or its
affiliates or information respecting transactions or prospective
transactions therewith.
10. Notice. All notices hereunder shall be in writing and
shall be deemed to have been duly given (a) when delivered
personally or by courier, or (b) on the third business day
following the mailing thereof by registered or certified mail,
postage prepaid, in each case addressed as set forth below:
(a) If to the Company
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Peter A. Edison
(b) If to Employee:
Alan D. Miller
135 Wyckliffe Place
St. Louis, Missouri 63141
Any party may change the address to which notices are to be
addressed by giving the other party written notice in the manner
herein set forth.
11. Definitions.
(a) "Cause," when used in connection with the termination of
Employee's employment by the Company, shall mean (i) the
willful or repeated failure by Employee substantially to
perform his duties or otherwise comply with any of his
obligations hereunder, which failure is not or cannot be cured
within five business days after the Company has given written
notice thereof to Employee specifying in detail the
particulars of the acts or omissions deemed to constitute such
failure; (ii) the engaging by Employee in any act of
dishonesty or willful misconduct of more than trifling
significance; (iii) the engaging by Employee in any act of
moral turpitude that is reasonably likely to materially and
adversely affect the Company or its business; or
(iv) Employee's conviction of, or entry of a plea of nolo
contendere with respect to, any felony.
(b) "Change in Control" shall mean the occurrence of either
of the following events:
(i) at any time during any 24-month period, the membership
of the Board of Directors of the Company is not at least
two-thirds constituted by (1) individuals who were directors
at the beginning of such period or (2) individuals whose
election, or nomination for election by the Company's
stockholders, to the Board during such period was approved
by the vote of two-thirds of those directors then still in
office who were directors at the beginning of such period;
provided, however, that any such change in the composition
of the Board shall not be deemed a Change in Control if such
change occurs as part of the implementation of, and pursuant
to the express terms of, a plan of reorganization of the
Company under Chapter 11 of Title 11 of the United States
Code (a "Chapter 11 Plan") which Chapter 11 Plan (a) is
voluntary and supported by the Company, (b) is confirmed by
the United States Bankruptcy Court in the Company's case
under Chapter 11 of Title 11 of the United States Code (the
"Chapter 11 Case") and (c) provides for the continued
existence of the Company as a stand-alone, independent
commercial enterprise and (without limiting the generality
of the foregoing) does not contemplate (1) a merger or
consolidation of the Company with or into any unrelated
corporation, (2) any person (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becoming the beneficial owner
(as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing more than thirty percent (30%) of the combined
voting power of the Company's then-outstanding securities or
(3) any person (as defined above) acquiring all or
substantially all of the Company's assets; provided that two
or more entities shall not be deemed to constitute a
"person" for the purposes of this Section 11(b)(i) in
respect of any securities of the Company received by them
pursuant to a Chapter 11 Plan merely by virtue of the fact
that such entities are each members of the statutory
Creditors' Committee appointed in the Chapter 11 Case or
that they were each signatories to either that certain
Credit Agreement with the Company dated June 4, 1993, as
amended on January 24, 1994, February 17, 1994 and March 29,
1995, and as amended and restated in the Override Agreement
dated as of September 22, 1995, or those certain Note
Agreements with the Company dated March 1, 1993, as amended
on January 15, 1994, February 1, 1994, April 1, 1995 and
September 22, 1995; or
(ii) an agreement for the sale or other disposition by the
Company of all or substantially all of the Company's assets
(other than a sale of all or substantially all of the
Company's inventory to a third party for the purpose of
conducting a liquidation sale thereof) is approved by either
the stockholders of the Company subsequent to substantial
consummation of a Chapter 11 Plan or the United States
Bankruptcy Court in the Chapter 11 Case, or a sale or other
disposition of all or substantially all of the Company's
assets is consummated to implement a Chapter 11 Plan.
(c) "Company" shall have the definition set forth in
Section 12 hereof.
(d) "Completion Date" shall mean the date the Employment
Term would have ended under the provisions of Section 1 hereof
had it not been terminated pursuant to Section 4 or Section 5.
(e) "Good Reason," when used with reference to a voluntary
termination by Employee of his employment with the Company in
the absence of or prior to the occurrence of a Change in
Control, shall mean a reduction in Employee's base salary as
in effect on the Commencement Date or as the same may be
increased from time to time. "Good Reason," when used with
reference to a voluntary termination by Employee of his
employment with the Company after the occurrence of a Change
in Control, shall mean:
(i) the assignment to Employee of any duties materially
inconsistent with, or the reduction of powers or functions
associated with, his positions, responsibilities or status
with the Company immediately prior to the Change in Control,
or any removal of Employee from or any failure to re-elect
Employee to any positions or offices held by Employee
immediately prior to the Change in Control, except in
connection with the termination of Employee's employment by
the Company for Cause or for Disability;
(ii) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from
time to time;
(iii) the mandatory transfer of Employee to another
geographic location, except for required travel on Company
business to an extent substantially consistent with
Employee's business travel obligations immediately prior to
the Change in Control;
(iv) the failure by the Company to continue in effect any
employee benefit plan, program or arrangement in which
Employee was participating immediately prior to the Change
in Control (or plans, programs or arrangements providing
Employee with substantially similar benefits), or the taking
of any action by the Company which would adversely affect
Employee's participation in, or materially reduce Employee's
benefits under, any of such plans, programs or arrangements,
or the failure by the Company to provide Employee with the
number of paid vacation days to which Employee was entitled
immediately prior to the Change in Control;
(v) the failure by the Company to obtain an express written
assumption of the obligations of the Company to perform this
Agreement by any successor (whether by purchase, merger or
otherwise) to all or substantially all of the business
and/or assets of the Company upon or prior to the effective
date of any such succession; or
(vi) any purported termination of Employee's employment by
the Company which is not effected pursuant to the
requirements of this Agreement.
(e) "Termination Date" shall mean the effective date as
provided hereunder of the termination of Employee's
employment.
(f) "Without Cause," when used in connection with the
termination of Employee's employment by the Company, shall
mean any termination of the employment of Employee by the
Company which is not a termination of employment for Cause.
12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company, upon or prior to such succession, to expressly
assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would have been
required to perform it if no such succession had taken place.
A copy of such assumption and agreement shall be delivered to
Employee promptly after its execution by the successor.
Failure of the Company to obtain such agreement upon or prior
to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to benefits from
the Company in the same amounts and on the same terms as
Employee would be entitled hereunder if Employee terminated
his employment for Good Reason after a Change in Control. For
purposes of the preceding sentence, the date on which any such
succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12(a) or
which otherwise becomes bound by the terms and provisions of
this Agreement by operation of law.
(b) This Agreement is personal to Employee and Employee may
not assign or delegate any part of his rights or duties
hereunder to any other person, except that this Agreement
shall inure to the benefit of and be enforceable by Employee's
legal representatives, executors, administrators, heirs and
beneficiaries.
13. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any
extent be held to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to persons
or circumstances other than those as to which it is held invalid
or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in one or
more identical counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
16. Waiver. Neither any course of dealing nor any failure or
neglect of either party hereto in any instance to exercise any
right, power or privilege hereunder or under law shall constitute
a waiver of such right, power or privilege or of any other right,
power or privilege or of the same right, power or privilege in
any other instance. Without limiting the generality of the
foregoing, Employee's continued employment without objection
shall not constitute Employee's consent to, or a waiver of
Employee's rights with respect to, any circumstances constituting
Good Reason. All waivers by either party hereto must be
contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by its duly
authorized officer.
17. Entire Agreement. This instrument constitutes the entire
agreement of the parties in this matter and supersedes any other
agreement between the parties, oral or written, concerning the
same subject matter, including that certain agreement dated
April 3, 1995, between the Company and Employee, and the
Employment Agreement dated September 18, 1995 between the Company
and Employee.
18. Amendment. This Agreement may be amended only by a
writing which makes express reference to this Agreement as the
subject of such amendment and which is signed by Employee and by
a duly authorized officer of the Company.
19. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Missouri, without reference to the conflict of laws rules of
such State.
20. Post Employment Term Change in Control. In the event a
Change in Control occurs after the end of the Employment Term but
at a time when Employee is still employed by the Company, and if,
within two years after the occurrence of such Change in Control,
Employee's employment is terminated by the Company Without Cause
or is terminated by Employee for Good Reason, then Employee shall
be entitled to all of the payments and benefits provided for in
Section 6 of this Agreement. For purposes hereof, the term
"Completion Date" as used in Section 6 shall be deemed to be the
last day of such two-year period.
21. Survival. This Agreement, and the respective rights and
obligations of the Company and Employee hereunder, shall survive
and remain in full force and effect following the expiration of
the Employment Term and the termination of Employee's employment
hereunder.
IN WITNESS WHEREOF, Employee and the Company have executed
this Agreement as of the day and year first above written.
EDISON BROTHERS STORES, INC.
By: /s/____________________________
Name: Julian I. Edison
Title: Chairman, Compensation
Committee of the
Board of Directors
By: /s/____________________________
Name: Peter A. Edison
Title: Senior Executive
Vice President
/s/____________________________
Alan D. Miller
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
dated June 21, 1996 between _____________, currently residing at
________________, __________, Missouri _____ ("Employee"), and
Edison Brothers Stores, Inc., a Delaware corporation (the
"Company"), amending, restating and superseding the Employment
Agreement dated September 18, 1995 between Employee and the
Company.
In consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Employment. Subject to the terms and conditions
hereinafter set forth, the Company hereby agrees to employ
Employee, and Employee hereby agrees to be employed by the
Company, during the three-year period (the "Employment Term")
beginning on September 18, 1995 (the "Commencement Date") and
ending on September 17, 1998. The Employment Term may be
extended by mutual written agreement of the parties or terminated
pursuant to the provisions of Section 4 or Section 5 hereof. In
the event a Change in Control (as hereinafter defined) occurs
less than eighteen months before the end of the Employment Term
and at a time when Employee is still employed hereunder, the
Employment Term shall be extended for a period ending eighteen
months after the date of occurrence of the Change in Control.
2. Duties. Employee shall be employed in the capacity of
_______________________________________________________.
Employee shall have such duties as may reasonably be assigned to
him by or at the direction of the Board of Directors of the
Company. Employee shall perform such duties diligently and to
the best of his ability, and shall comply with the Company's
Business Conduct Policy and other policies as in effect from time
to time. Employee's duties shall be performed primarily at the
Company's home office in St. Louis, Missouri, with such foreign
and domestic travel as the performance of his duties may require.
During the Employment Term, Employee shall devote his entire
working time, attention and energy to the business of the
Company, and shall not be engaged in any other business activity
that conflicts with or interferes with Employee's performance of
his duties hereunder except as authorized by the Board of
Directors of the Company.
3. Compensation and Benefits.
A. Salary. During the Employment Term, the Company shall pay
Employee for his services hereunder a base salary at the rate of
$_______, subject to upward adjustment in accordance with the
Company's salary review practices and procedures in effect from
time to time. Such salary shall be payable semi-monthly on the
15th and last day of each month.
B. Benefits and Perquisites. During the Employment Term,
Employee shall be entitled to participate in, to the extent
Employee is eligible under the terms thereof, the Company's
Medical, Dental, Life Insurance, Disability, Pension and 401(k)
Savings Plans, its Officer Perquisite Program, and all such other
benefit programs as are generally provided from time to time by
the Company to its executive personnel. Subject to the rights of
Employee set forth in Sections 5 and 6 hereof, nothing herein
shall preclude the Company from terminating or amending any
employee benefit plan or program.
C. Vacation. During the Employment Term, Employee shall be
entitled to a vacation of ____ weeks per calendar year to be
taken in accordance with the Company's normal policies.
D. Bonuses and Stock Options. Subject to the provisions of
the next sentence, Employee shall be entitled to receive two lump
sum cash bonus payments, each equal to two times Employee's
monthly base salary at the highest rate in effect at any time
between the Commencement Date and the date of payment. The first
such bonus payment shall be made on September 17, 1996 or such
earlier date as there occurs a Change in Control, provided that
Employee is still in the employ of the Company as of that date;
and the second such bonus payment shall be made on September 17,
1997 or such earlier date as there occurs a Change in Control,
provided that Employee is still in the employ of the Company as
of that date. Notwithstanding the foregoing, if (i) in the
absence of or prior to the occurrence of a Change in Control and
(ii) after eighteen months from the Commencement Date but prior
to September 17, 1997, Employee's employment is terminated by the
Company Without Cause (as hereinafter defined) or is terminated
by Employee for Good Reason (as hereinafter defined), then the
Company shall pay to Employee on the Termination Date (as
hereinafter defined) a lump sum cash amount equal to two times
Employee's monthly base salary at the highest rate in effect at
any time between the Commencement Date and the Termination Date
multiplied by a fraction, the numerator of which shall be the
number of months from September 18, 1996 to the Termination Date,
including partial months, and the denominator of which shall be
twelve. Employee shall also be eligible for such other bonus
payments and shall be granted such options to purchase common
stock of the Company as the Board of Directors of the Company, or
a duly constituted committee thereof, shall determine in its
discretion.
E. Travel and Business Expenses. Upon submission of itemized
expense statements in the manner specified by the Company,
Employee shall be entitled to reimbursement for reasonable travel
and other business expenses incurred by Employee in the
performance of his duties hereunder.
F. Payment. Payment of all compensation and benefits to
Employee hereunder shall be made in accordance with the relevant
policies of the Company in effect from time to time and shall be
subject to all applicable employment and withholding taxes.
G. Cessation of Employment. If Employee shall cease to be
employed by the Company for any reason, then Employee's
compensation and benefits shall cease as of the Termination Date,
except as otherwise provided herein or in any applicable employee
benefit plan or program.
4. Termination of Employment of Employee by the Company.
(a) Employee's employment may be terminated by the Company
for Cause (as hereinafter defined) at any time, effective upon
the giving to Employee of a written notice of termination
specifying in detail the particulars of the conduct of
Employee deemed by the Company to justify such termination for
Cause.
(b) Employee's employment may be terminated by the Company
Without Cause at any time, effective upon the giving to
Employee of a written notice of termination specifying that
such termination is Without Cause.
(c) Upon a termination by the Company of Employee's
employment for Cause, Employee shall be entitled to the
payments specified in subparagraph (a) of Section 6 of this
Agreement. Upon a termination by the Company of Employee's
employment Without Cause, Employee shall be entitled to all of
the payments and benefits provided for in Section 6 hereof.
(d) If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from
Employee's duties hereunder for 180 days within any 365 day
period, the Company may, by notice to Employee, terminate
Employee's employment hereunder for "Disability". Upon a
termination of Employee's employment for Disability, Employee
shall be entitled to the payments specified in
subparagraph (a) of Section 6 of this Agreement. During any
period that Employee fails to perform Employee's duties
hereunder as a result of incapacity due to physical or mental
illness (a "Disability Period"), Employee shall continue to
receive the compensation and benefits provided for in
Section 3 hereof unless and until Employee's employment
hereunder is terminated; provided, however, that the amount of
compensation and benefits received by Employee during the
Disability Period shall be reduced by the aggregate amounts,
if any, payable to Employee under disability benefit plans and
programs of the Company or under the Social Security
disability insurance program.
5. Termination of Employment by Employee. Employee shall be
entitled to terminate his employment with the Company at any
time. If such termination is for Good Reason, Employee shall be
entitled to all of the payments and benefits specified in
Section 6 hereof. If such termination is for other than Good
Reason, Employee shall be entitled to the payments specified in
subparagraph (a) of Section 6. Employee shall give the Company
written notice of any such voluntary termination of employment,
which notice need specify only Employee's desire to terminate his
employment and, if such termination is for Good Reason, set forth
in reasonable detail the facts and circumstances claimed by
Employee to constitute Good Reason.
6. Payments and Benefits Upon Termination. To the extent
provided in Sections 4 and 5 hereof, upon termination of his
employment, Employee shall be entitled to receive the following
payments and benefits:
(a) The Company shall pay to Employee on the Termination
Date (i) the full base salary earned by Employee through the
Termination Date and unpaid at the Termination Date, plus
(ii) credit for any vacation earned by Employee but not taken
at the Termination Date, plus (iii) all other amounts earned
by Employee and unpaid as of the Termination Date.
(b) The Company shall pay to Employee on the Termination
Date a lump sum cash amount equal to Employee's monthly salary
at the highest rate in effect at any time between the
Commencement Date and the Termination Date multiplied by the
greater of (i) twelve or (ii) the number of months remaining
until the Completion Date (as hereinafter defined), including
partial months.
(c) The Company shall maintain in full force and effect for
Employee's continued benefit until the earlier of (i) the
Completion Date or twelve months from the Termination Date,
whichever is later, or (ii) Employee's similar coverage by a
new employer, all life insurance, medical, dental, and
disability plans, programs or arrangements in which Employee
was entitled to participate immediately prior to the
Termination Date, provided that Employee's continued
participation is possible under the terms and provisions of
such plans, programs or arrangements. In the event that
Employee's participation in any such plan, program or
arrangement is barred by the terms thereof, the Company shall
arrange to provide Employee with benefits substantially
similar to those which Employee would otherwise be entitled to
receive under such plans, programs or arrangements. Any
continuation of benefits under this Section 6(c) shall not be
counted towards the benefits extension period mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985.
(d) The Company shall pay to Employee (or his beneficiary
upon his death) the excess, if any, of (i) the benefit
Employee (or his beneficiary, as the case may be) would have
been entitled to receive under the Edison Brothers Stores
Pension Plan and any supplemental pension plan or any
successor or similar plans then in effect (collectively the
"Plan") had he remained an employee of the Company until the
earlier of the Completion Date or his death at a salary at the
highest rate of Employee's compensation in effect during the
twelve months immediately preceding the Termination Date, over
(ii) the benefit actually payable to Employee (or his
beneficiary, as the case may be) under the Plan. Such excess
benefit shall be determined in accordance with the provisions,
rules and assumptions of the Plan but shall be actually paid
from the general assets of the Company.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 6 be reduced by any compensation or
other amounts paid to or earned by Employee as the result of
employment by another employer after the Termination Date or
otherwise.
7. Tax Indemnity. If any amounts, reimbursements or benefits
payable by the Company to Employee pursuant to this Agreement or
any other plan, agreement or arrangement of the Company are
determined to be subject to an excise or similar tax pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended, or
any successor or other comparable federal, state or local tax
laws, the Company shall pay to Employee such additional sum as is
necessary (after taking into account all federal, state and local
income taxes payable by the Employee as a result of the receipt
of such additional sum) to place Employee in the same after-tax
position he would have been in had no such excise or similar
purpose tax been paid or incurred.
8. Employee's Expenses. All costs and expenses (including
reasonable legal and accounting fees) incurred by Employee to
(a) defend the validity of this Agreement, (b) contest the
termination of his employment by the Company or any
determinations by the Company concerning the amounts payable by
the Company under this Agreement or (c) otherwise obtain or
enforce any right or benefit provided to Employee by this
Agreement (including, without limitation, any right or benefit
under this Section 8), shall be paid by the Company if Employee
is the prevailing party.
9. Confidential Information. Employee, during the period of
his employment by the Company and thereafter, irrespective of
whether the termination of his employment is voluntary or
involuntary, will not, directly or indirectly (without the
Company's prior written consent), use for himself, or use for or
disclose to any other party, any confidential information
regarding the Company. For purposes of this Agreement, such
confidential information shall include any data or information
regarding the business of the Company or any subsidiary or
affiliate of the Company that is not generally known to the
public, including without limitation any confidential information
or data regarding the cost of products sold by, or the plans of,
the Company or its affiliates or the business methods of the
Company or its affiliates not in general use by others or the
identity of any customers or suppliers of the Company or its
affiliates or information respecting transactions or prospective
transactions therewith.
10. Notice. All notices hereunder shall be in writing and
shall be deemed to have been duly given (a) when delivered
personally or by courier, or (b) on the third business day
following the mailing thereof by registered or certified mail,
postage prepaid, in each case addressed as set forth below:
(a) If to the Company
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan D. Miller
(b) If to Employee:
___________________
___________________
___________________
Any party may change the address to which notices are to be
addressed by giving the other party written notice in the manner
herein set forth.
11. Definitions.
(a) "Cause," when used in connection with the termination of
Employee's employment by the Company, shall mean (i) the
willful or repeated failure by Employee substantially to
perform his duties or otherwise comply with any of his
obligations hereunder, which failure is not or cannot be cured
within five business days after the Company has given written
notice thereof to Employee specifying in detail the
particulars of the acts or omissions deemed to constitute such
failure; (ii) the engaging by Employee in any act of
dishonesty or willful misconduct of more than trifling
significance; (iii) the engaging by Employee in any act of
moral turpitude that is reasonably likely to materially and
adversely affect the Company or its business; or
(iv) Employee's conviction of, or entry of a plea of nolo
contendere with respect to, any felony.
(b) "Change in Control" shall mean the occurrence of either
of the following events:
(i) at any time during any 24-month period, the membership
of the Board of Directors of the Company is not at least
two-thirds constituted by (1) individuals who were directors
at the beginning of such period or (2) individuals whose
election, or nomination for election by the Company's
stockholders, to the Board during such period was approved
by the vote of two-thirds of those directors then still in
office who were directors at the beginning of such period;
provided, however, that any such change in the composition
of the Board shall not be deemed a Change in Control if such
change occurs as part of the implementation of, and pursuant
to the express terms of, a plan of reorganization of the
Company under Chapter 11 of Title 11 of the United States
Code (a "Chapter 11 Plan") which Chapter 11 Plan (a) is
voluntary and supported by the Company, (b) is confirmed by
the United States Bankruptcy Court in the Company's case
under Chapter 11 of Title 11 of the United States Code (the
"Chapter 11 Case") and (c) provides for the continued
existence of the Company as a stand-alone, independent
commercial enterprise and (without limiting the generality
of the foregoing) does not contemplate (1) a merger or
consolidation of the Company with or into any unrelated
corporation, (2) any person (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becoming the beneficial owner
(as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing more than thirty percent (30%) of the combined
voting power of the Company's then-outstanding securities or
(3) any person (as defined above) acquiring all or
substantially all of the Company's assets; provided that two
or more entities shall not be deemed to constitute a
"person" for the purposes of this Section 11(b)(i) in
respect of any securities of the Company received by them
pursuant to a Chapter 11 Plan merely by virtue of the fact
that such entities are each members of the statutory
Creditors' Committee appointed in the Chapter 11 Case or
that they were each signatories to either that certain
Credit Agreement with the Company dated June 4, 1993, as
amended on January 24, 1994, February 17, 1994 and March 29,
1995, and as amended and restated in the Override Agreement
dated as of September 22, 1995, or those certain Note
Agreements with the Company dated March 1, 1993, as amended
on January 15, 1994, February 1, 1994, April 1, 1995 and
September 22, 1995; or
(ii) an agreement for the sale or other disposition by the
Company of all or substantially all of the Company's assets
(other than a sale of all or substantially all of the
Company's inventory to a third party for the purpose of
conducting a liquidation sale thereof) is approved by either
the stockholders of the Company subsequent to substantial
consummation of a Chapter 11 Plan or the United States
Bankruptcy Court in the Chapter 11 Case, or a sale or other
disposition of all or substantially all of the Company's
assets is consummated to implement a Chapter 11 Plan.
(c) "Company" shall have the definition set forth in
Section 12 hereof.
(d) "Completion Date" shall mean the date the Employment
Term would have ended under the provisions of Section 1 hereof
had it not been terminated pursuant to Section 4 or Section 5.
(e) "Good Reason," when used with reference to a voluntary
termination by Employee of his employment with the Company in
the absence of or prior to the occurrence of a Change in
Control, shall mean a reduction in Employee's base salary as
in effect on the Commencement Date or as the same may be
increased from time to time. "Good Reason," when used with
reference to a voluntary termination by Employee of his
employment with the Company after the occurrence of a Change
in Control, shall mean:
(i) the assignment to Employee of any duties materially
inconsistent with, or the reduction of powers or functions
associated with, his positions, responsibilities or status
with the Company immediately prior to the Change in Control,
or any removal of Employee from or any failure to re-elect
Employee to any positions or offices held by Employee
immediately prior to the Change in Control, except in
connection with the termination of Employee's employment by
the Company for Cause or for Disability;
(ii) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from
time to time;
(iii) the mandatory transfer of Employee to another
geographic location, except for required travel on Company
business to an extent substantially consistent with
Employee's business travel obligations immediately prior to
the Change in Control;
(iv) the failure by the Company to continue in effect any
employee benefit plan, program or arrangement in which
Employee was participating immediately prior to the Change
in Control (or plans, programs or arrangements providing
Employee with substantially similar benefits), or the taking
of any action by the Company which would adversely affect
Employee's participation in, or materially reduce Employee's
benefits under, any of such plans, programs or arrangements,
or the failure by the Company to provide Employee with the
number of paid vacation days to which Employee was entitled
immediately prior to the Change in Control;
(v) the failure by the Company to obtain an express written
assumption of the obligations of the Company to perform this
Agreement by any successor (whether by purchase, merger or
otherwise) to all or substantially all of the business
and/or assets of the Company upon or prior to the effective
date of any such succession; or
(vi) any purported termination of Employee's employment by
the Company which is not effected pursuant to the
requirements of this Agreement.
(e) "Termination Date" shall mean the effective date as
provided hereunder of the termination of Employee's
employment.
(f) "Without Cause," when used in connection with the
termination of Employee's employment by the Company, shall
mean any termination of the employment of Employee by the
Company which is not a termination of employment for Cause.
12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company, upon or prior to such succession, to expressly
assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would have been
required to perform it if no such succession had taken place.
A copy of such assumption and agreement shall be delivered to
Employee promptly after its execution by the successor.
Failure of the Company to obtain such agreement upon or prior
to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to benefits from
the Company in the same amounts and on the same terms as
Employee would be entitled hereunder if Employee terminated
his employment for Good Reason after a Change in Control. For
purposes of the preceding sentence, the date on which any such
succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12(a) or
which otherwise becomes bound by the terms and provisions of
this Agreement by operation of law.
(b) This Agreement is personal to Employee and Employee may
not assign or delegate any part of his rights or duties
hereunder to any other person, except that this Agreement
shall inure to the benefit of and be enforceable by Employee's
legal representatives, executors, administrators, heirs and
beneficiaries.
13. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any
extent be held to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to persons
or circumstances other than those as to which it is held invalid
or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in one or
more identical counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
16. Waiver. Neither any course of dealing nor any failure or
neglect of either party hereto in any instance to exercise any
right, power or privilege hereunder or under law shall constitute
a waiver of such right, power or privilege or of any other right,
power or privilege or of the same right, power or privilege in
any other instance. Without limiting the generality of the
foregoing, Employee's continued employment without objection
shall not constitute Employee's consent to, or a waiver of
Employee's rights with respect to, any circumstances constituting
Good Reason. All waivers by either party hereto must be
contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by its duly
authorized officer.
17. Entire Agreement. This instrument constitutes the entire
agreement of the parties in this matter and supersedes any other
agreement between the parties, oral or written, concerning the
same subject matter, including that certain agreement dated
____________ between the Company and Employee, and the Employment
Agreement dated September 18, 1995 between the Company and
Employee.
18. Amendment. This Agreement may be amended only by a
writing which makes express reference to this Agreement as the
subject of such amendment and which is signed by Employee and by
a duly authorized officer of the Company.
19. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Missouri, without reference to the conflict of laws rules of
such State.
20. Post Employment Term Change in Control. In the event a
Change in Control occurs after the end of the Employment Term but
at a time when Employee is still employed by the Company, and if,
within eighteen months after the occurrence of such Change in
Control, Employee's employment is terminated by the Company
Without Cause or is terminated by Employee for Good Reason, then
Employee shall be entitled to all of the payments and benefits
provided for in Section 6 of this Agreement. For purposes
hereof, the term "Completion Date" as used in Section 6 shall be
deemed to be the last day of such eighteen-month period.
21. Survival. This Agreement, and the respective rights and
obligations of the Company and Employee hereunder, shall survive
and remain in full force and effect following the expiration of
the Employment Term and the termination of Employee's employment
hereunder.
IN WITNESS WHEREOF, Employee and the Company have executed
this Agreement as of the day and year first above written.
EDISON BROTHERS STORES, INC.
By: /s/____________________________
Name: Alan D. Miller
Title: Chairman, President and
Chief Executive Officer
/s/____________________________
(name of employee)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
dated June 21, 1996 between _____________, currently residing at
_____________________, ___________, Missouri _____ ("Employee"),
and Edison Brothers Stores, Inc., a Delaware corporation (the
"Company"), amending, restating and superseding the Employment
Agreement dated September 18, 1995 between Employee and the
Company.
In consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Employment. Subject to the terms and conditions
hereinafter set forth, the Company hereby agrees to employ
Employee, and Employee hereby agrees to be employed by the
Company, during the two-year period (the "Employment Term")
beginning on September 18, 1995 (the "Commencement Date") and
ending on September 17, 1997. The Employment Term may be
extended by mutual written agreement of the parties or terminated
pursuant to the provisions of Section 4 or Section 5 hereof. In
the event a Change in Control (as hereinafter defined) occurs at
a time when Employee is still employed hereunder, the Employment
Term shall be extended for a period ending eighteen months after
the date of occurrence of the Change in Control.
2. Duties. Employee shall be employed in the capacity of
___________________________________________________. Employee
shall have such duties as may reasonably be assigned to him by or
at the direction of the Board of Directors of the Company.
Employee shall perform such duties diligently and to the best of
his ability, and shall comply with the Company's Business Conduct
Policy and other policies as in effect from time to time.
Employee's duties shall be performed primarily at the Company's
home office in St. Louis, Missouri, with such foreign and
domestic travel as the performance of his duties may require.
During the Employment Term, Employee shall devote his entire
working time, attention and energy to the business of the
Company, and shall not be engaged in any other business activity
that conflicts with or interferes with Employee's performance of
his duties hereunder except as authorized by the Board of
Directors of the Company.
3. Compensation and Benefits.
A. Salary. During the Employment Term, the Company shall pay
Employee for his services hereunder a base salary at the rate of
$_______, subject to upward adjustment in accordance with the
Company's salary review practices and procedures in effect from
time to time. Such salary shall be payable semi-monthly on the
15th and last day of each month.
B. Benefits and Perquisites. During the Employment Term,
Employee shall be entitled to participate in, to the extent
Employee is eligible under the terms thereof, the Company's
Medical, Dental, Life Insurance, Disability, Pension and 401(k)
Savings Plans, its Officer Perquisite Program, and all such other
benefit programs as are generally provided from time to time by
the Company to its executive personnel. Subject to the rights of
Employee set forth in Sections 5 and 6 hereof, nothing herein
shall preclude the Company from terminating or amending any
employee benefit plan or program.
C. Vacation. During the Employment Term, Employee shall be
entitled to a vacation of ____ weeks per calendar year to be
taken in accordance with the Company's normal policies.
D. Bonuses and Stock Options. Subject to the provisions of
the next sentence, Employee shall be entitled to receive two lump
sum cash bonus payments, each equal to two times Employee's
monthly base salary at the highest rate in effect at any time
between the Commencement Date and the date of payment. The first
such bonus payment shall be made on September 17, 1996 or such
earlier date as there occurs a Change in Control, provided that
Employee is still in the employ of the Company as of that date;
and the second such bonus payment shall be made on September 17,
1997 or such earlier date as there occurs a Change in Control,
provided that Employee is still in the employ of the Company as
of that date. Notwithstanding the foregoing, if (i) in the
absence of or prior to the occurrence of a Change in Control and
(ii) after eighteen months from the Commencement Date but prior
to September 17, 1997, Employee's employment is terminated by the
Company Without Cause (as hereinafter defined) or is terminated
by Employee for Good Reason (as hereinafter defined), then the
Company shall pay to Employee on the Termination Date (as
hereinafter defined) a lump sum cash amount equal to two times
Employee's monthly base salary at the highest rate in effect at
any time between the Commencement Date and the Termination Date
multiplied by a fraction, the numerator of which shall be the
number of months from September 18, 1996 to the Termination Date,
including partial months, and the denominator of which shall be
twelve. Employee shall also be eligible for such other bonus
payments and shall be granted such options to purchase common
stock of the Company as the Board of Directors of the Company, or
a duly constituted committee thereof, shall determine in its
discretion.
E. Travel and Business Expenses. Upon submission of itemized
expense statements in the manner specified by the Company,
Employee shall be entitled to reimbursement for reasonable travel
and other business expenses incurred by Employee in the
performance of his duties hereunder.
F. Payment. Payment of all compensation and benefits to
Employee hereunder shall be made in accordance with the relevant
policies of the Company in effect from time to time and shall be
subject to all applicable employment and withholding taxes.
G. Cessation of Employment. If Employee shall cease to be
employed by the Company for any reason, then Employee's
compensation and benefits shall cease as of the Termination Date,
except as otherwise provided herein or in any applicable employee
benefit plan or program.
4. Termination of Employment of Employee by the Company.
(a) Employee's employment may be terminated by the Company
for Cause (as hereinafter defined) at any time, effective upon
the giving to Employee of a written notice of termination
specifying in detail the particulars of the conduct of
Employee deemed by the Company to justify such termination for
Cause.
(b) Employee's employment may be terminated by the Company
Without Cause at any time, effective upon the giving to
Employee of a written notice of termination specifying that
such termination is Without Cause.
(c) Upon a termination by the Company of Employee's
employment for Cause, Employee shall be entitled to the
payments specified in subparagraph (a) of Section 6 of this
Agreement. Upon a termination by the Company of Employee's
employment Without Cause, Employee shall be entitled to all of
the payments and benefits provided for in Section 6 hereof.
(d) If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from
Employee's duties hereunder for 180 days within any 365 day
period, the Company may, by notice to Employee, terminate
Employee's employment hereunder for "Disability". Upon a
termination of Employee's employment for Disability, Employee
shall be entitled to the payments specified in
subparagraph (a) of Section 6 of this Agreement. During any
period that Employee fails to perform Employee's duties
hereunder as a result of incapacity due to physical or mental
illness (a "Disability Period"), Employee shall continue to
receive the compensation and benefits provided for in
Section 3 hereof unless and until Employee's employment
hereunder is terminated; provided, however, that the amount of
compensation and benefits received by Employee during the
Disability Period shall be reduced by the aggregate amounts,
if any, payable to Employee under disability benefit plans and
programs of the Company or under the Social Security
disability insurance program.
5. Termination of Employment by Employee. Employee shall be
entitled to terminate his employment with the Company at any
time. If such termination is for Good Reason, Employee shall be
entitled to all of the payments and benefits specified in
Section 6 hereof. If such termination is for other than Good
Reason, Employee shall be entitled to the payments specified in
subparagraph (a) of Section 6. Employee shall give the Company
written notice of any such voluntary termination of employment,
which notice need specify only Employee's desire to terminate his
employment and, if such termination is for Good Reason, set forth
in reasonable detail the facts and circumstances claimed by
Employee to constitute Good Reason.
6. Payments and Benefits Upon Termination. To the extent
provided in Sections 4 and 5 hereof, upon termination of his
employment, Employee shall be entitled to receive the following
payments and benefits:
(a) The Company shall pay to Employee on the Termination
Date (i) the full base salary earned by Employee through the
Termination Date and unpaid at the Termination Date, plus
(ii) credit for any vacation earned by Employee but not taken
at the Termination Date, plus (iii) all other amounts earned
by Employee and unpaid as of the Termination Date.
(b) The Company shall pay to Employee on the Termination
Date a lump sum cash amount equal to Employee's monthly salary
at the highest rate in effect at any time between the
Commencement Date and the Termination Date multiplied by the
greater of (i) twelve or (ii) the number of months remaining
until the Completion Date (as hereinafter defined), including
partial months.
(c) The Company shall maintain in full force and effect for
Employee's continued benefit until the earlier of (i) the
Completion Date or twelve months from the Termination Date,
whichever is later, or (ii) Employee's similar coverage by a
new employer, all life insurance, medical, dental, and
disability plans, programs or arrangements in which Employee
was entitled to participate immediately prior to the
Termination Date, provided that Employee's continued
participation is possible under the terms and provisions of
such plans, programs or arrangements. In the event that
Employee's participation in any such plan, program or
arrangement is barred by the terms thereof, the Company shall
arrange to provide Employee with benefits substantially
similar to those which Employee would otherwise be entitled to
receive under such plans, programs or arrangements. Any
continuation of benefits under this Section 6(c) shall not be
counted towards the benefits extension period mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985.
(d) The Company shall pay to Employee (or his beneficiary
upon his death) the excess, if any, of (i) the benefit
Employee (or his beneficiary, as the case may be) would have
been entitled to receive under the Edison Brothers Stores
Pension Plan and any supplemental pension plan or any
successor or similar plans then in effect (collectively the
"Plan") had he remained an employee of the Company until the
earlier of the Completion Date or his death at a salary at the
highest rate of Employee's compensation in effect during the
twelve months immediately preceding the Termination Date, over
(ii) the benefit actually payable to Employee (or his
beneficiary, as the case may be) under the Plan. Such excess
benefit shall be determined in accordance with the provisions,
rules and assumptions of the Plan but shall be actually paid
from the general assets of the Company.
Employee shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 6 be reduced by any compensation or
other amounts paid to or earned by Employee as the result of
employment by another employer after the Termination Date or
otherwise.
7. Tax Indemnity. If any amounts, reimbursements or benefits
payable by the Company to Employee pursuant to this Agreement or
any other plan, agreement or arrangement of the Company are
determined to be subject to an excise or similar tax pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended, or
any successor or other comparable federal, state or local tax
laws, the Company shall pay to Employee such additional sum as is
necessary (after taking into account all federal, state and local
income taxes payable by the Employee as a result of the receipt
of such additional sum) to place Employee in the same after-tax
position he would have been in had no such excise or similar
purpose tax been paid or incurred.
8. Employee's Expenses. All costs and expenses (including
reasonable legal and accounting fees) incurred by Employee to
(a) defend the validity of this Agreement, (b) contest the
termination of his employment by the Company or any
determinations by the Company concerning the amounts payable by
the Company under this Agreement or (c) otherwise obtain or
enforce any right or benefit provided to Employee by this
Agreement (including, without limitation, any right or benefit
under this Section 8), shall be paid by the Company if Employee
is the prevailing party.
9. Confidential Information. Employee, during the period of
his employment by the Company and thereafter, irrespective of
whether the termination of his employment is voluntary or
involuntary, will not, directly or indirectly (without the
Company's prior written consent), use for himself, or use for or
disclose to any other party, any confidential information
regarding the Company. For purposes of this Agreement, such
confidential information shall include any data or information
regarding the business of the Company or any subsidiary or
affiliate of the Company that is not generally known to the
public, including without limitation any confidential information
or data regarding the cost of products sold by, or the plans of,
the Company or its affiliates or the business methods of the
Company or its affiliates not in general use by others or the
identity of any customers or suppliers of the Company or its
affiliates or information respecting transactions or prospective
transactions therewith.
10. Notice. All notices hereunder shall be in writing and
shall be deemed to have been duly given (a) when delivered
personally or by courier, or (b) on the third business day
following the mailing thereof by registered or certified mail,
postage prepaid, in each case addressed as set forth below:
(a) If to the Company
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attention: Alan D. Miller
(b) If to Employee:
___________________
___________________
___________________
Any party may change the address to which notices are to be
addressed by giving the other party written notice in the manner
herein set forth.
11. Definitions.
(a) "Cause," when used in connection with the termination of
Employee's employment by the Company, shall mean (i) the
willful or repeated failure by Employee substantially to
perform his duties or otherwise comply with any of his
obligations hereunder, which failure is not or cannot be cured
within five business days after the Company has given written
notice thereof to Employee specifying in detail the
particulars of the acts or omissions deemed to constitute such
failure; (ii) the engaging by Employee in any act of
dishonesty or willful misconduct of more than trifling
significance; (iii) the engaging by Employee in any act of
moral turpitude that is reasonably likely to materially and
adversely affect the Company or its business; or
(iv) Employee's conviction of, or entry of a plea of nolo
contendere with respect to, any felony.
(b) "Change in Control" shall mean the occurrence of either
of the following events:
(i) at any time during any 24-month period, the membership
of the Board of Directors of the Company is not at least
two-thirds constituted by (1) individuals who were directors
at the beginning of such period or (2) individuals whose
election, or nomination for election by the Company's
stockholders, to the Board during such period was approved
by the vote of two-thirds of those directors then still in
office who were directors at the beginning of such period;
provided, however, that any such change in the composition
of the Board shall not be deemed a Change in Control if such
change occurs as part of the implementation of, and pursuant
to the express terms of, a plan of reorganization of the
Company under Chapter 11 of Title 11 of the United States
Code (a "Chapter 11 Plan") which Chapter 11 Plan (a) is
voluntary and supported by the Company, (b) is confirmed by
the United States Bankruptcy Court in the Company's case
under Chapter 11 of Title 11 of the United States Code (the
"Chapter 11 Case") and (c) provides for the continued
existence of the Company as a stand-alone, independent
commercial enterprise and (without limiting the generality
of the foregoing) does not contemplate (1) a merger or
consolidation of the Company with or into any unrelated
corporation, (2) any person (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) becoming the beneficial owner
(as determined pursuant to Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing more than thirty percent (30%) of the combined
voting power of the Company's then-outstanding securities or
(3) any person (as defined above) acquiring all or
substantially all of the Company's assets; provided that two
or more entities shall not be deemed to constitute a
"person" for the purposes of this Section 11(b)(i) in
respect of any securities of the Company received by them
pursuant to a Chapter 11 Plan merely by virtue of the fact
that such entities are each members of the statutory
Creditors' Committee appointed in the Chapter 11 Case or
that they were each signatories to either that certain
Credit Agreement with the Company dated June 4, 1993, as
amended on January 24, 1994, February 17, 1994 and March 29,
1995, and as amended and restated in the Override Agreement
dated as of September 22, 1995, or those certain Note
Agreements with the Company dated March 1, 1993, as amended
on January 15, 1994, February 1, 1994, April 1, 1995 and
September 22, 1995; or
(ii) an agreement for the sale or other disposition by the
Company of all or substantially all of the Company's assets
(other than a sale of all or substantially all of the
Company's inventory to a third party for the purpose of
conducting a liquidation sale thereof) is approved by either
the stockholders of the Company subsequent to substantial
consummation of a Chapter 11 Plan or the United States
Bankruptcy Court in the Chapter 11 Case, or a sale or other
disposition of all or substantially all of the Company's
assets is consummated to implement a Chapter 11 Plan.
(c) "Company" shall have the definition set forth in
Section 12 hereof.
(d) "Completion Date" shall mean the date the Employment
Term would have ended under the provisions of Section 1 hereof
had it not been terminated pursuant to Section 4 or Section 5.
(e) "Good Reason," when used with reference to a voluntary
termination by Employee of his employment with the Company in
the absence of or prior to the occurrence of a Change in
Control, shall mean a reduction in Employee's base salary as
in effect on the Commencement Date or as the same may be
increased from time to time. "Good Reason," when used with
reference to a voluntary termination by Employee of his
employment with the Company after the occurrence of a Change
in Control, shall mean:
(i) the assignment to Employee of any duties materially
inconsistent with, or the reduction of powers or functions
associated with, his positions, responsibilities or status
with the Company immediately prior to the Change in Control,
or any removal of Employee from or any failure to re-elect
Employee to any positions or offices held by Employee
immediately prior to the Change in Control, except in
connection with the termination of Employee's employment by
the Company for Cause or for Disability;
(ii) a reduction in Employee's base salary as in effect on
the Commencement Date or as the same may be increased from
time to time;
(iii) the mandatory transfer of Employee to another
geographic location, except for required travel on Company
business to an extent substantially consistent with
Employee's business travel obligations immediately prior to
the Change in Control;
(iv) the failure by the Company to continue in effect any
employee benefit plan, program or arrangement in which
Employee was participating immediately prior to the Change
in Control (or plans, programs or arrangements providing
Employee with substantially similar benefits), or the taking
of any action by the Company which would adversely affect
Employee's participation in, or materially reduce Employee's
benefits under, any of such plans, programs or arrangements,
or the failure by the Company to provide Employee with the
number of paid vacation days to which Employee was entitled
immediately prior to the Change in Control;
(v) the failure by the Company to obtain an express written
assumption of the obligations of the Company to perform this
Agreement by any successor (whether by purchase, merger or
otherwise) to all or substantially all of the business
and/or assets of the Company upon or prior to the effective
date of any such succession; or
(vi) any purported termination of Employee's employment by
the Company which is not effected pursuant to the
requirements of this Agreement.
(e) "Termination Date" shall mean the effective date as
provided hereunder of the termination of Employee's
employment.
(f) "Without Cause," when used in connection with the
termination of Employee's employment by the Company, shall
mean any termination of the employment of Employee by the
Company which is not a termination of employment for Cause.
12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of
the Company, upon or prior to such succession, to expressly
assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would have been
required to perform it if no such succession had taken place.
A copy of such assumption and agreement shall be delivered to
Employee promptly after its execution by the successor.
Failure of the Company to obtain such agreement upon or prior
to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to benefits from
the Company in the same amounts and on the same terms as
Employee would be entitled hereunder if Employee terminated
his employment for Good Reason after a Change in Control. For
purposes of the preceding sentence, the date on which any such
succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12(a) or
which otherwise becomes bound by the terms and provisions of
this Agreement by operation of law.
(b) This Agreement is personal to Employee and Employee may
not assign or delegate any part of his rights or duties
hereunder to any other person, except that this Agreement
shall inure to the benefit of and be enforceable by Employee's
legal representatives, executors, administrators, heirs and
beneficiaries.
13. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any
extent be held to be invalid or unenforceable, the remainder of
this Agreement and the application of such provision to persons
or circumstances other than those as to which it is held invalid
or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in one or
more identical counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
16. Waiver. Neither any course of dealing nor any failure or
neglect of either party hereto in any instance to exercise any
right, power or privilege hereunder or under law shall constitute
a waiver of such right, power or privilege or of any other right,
power or privilege or of the same right, power or privilege in
any other instance. Without limiting the generality of the
foregoing, Employee's continued employment without objection
shall not constitute Employee's consent to, or a waiver of
Employee's rights with respect to, any circumstances constituting
Good Reason. All waivers by either party hereto must be
contained in a written instrument signed by the party to be
charged therewith, and, in the case of the Company, by its duly
authorized officer.
17. Entire Agreement. This instrument constitutes the entire
agreement of the parties in this matter and supersedes any other
agreement between the parties, oral or written, concerning the
same subject matter, including that certain agreement dated
_________________ between the Company and Employee, and the
Employment Agreement dated September 18, 1995 between the Company
and Employee.
18. Amendment. This Agreement may be amended only by a
writing which makes express reference to this Agreement as the
subject of such amendment and which is signed by Employee and by
a duly authorized officer of the Company.
19. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Missouri, without reference to the conflict of laws rules of
such State.
20. Post Employment Term Change in Control. In the event a
Change in Control occurs after the end of the Employment Term but
at a time when Employee is still employed by the Company, and if,
within eighteen months after the occurrence of such Change in
Control, Employee's employment is terminated by the Company
Without Cause or is terminated by Employee for Good Reason, then
Employee shall be entitled to all of the payments and benefits
provided for in Section 6 of this Agreement. For purposes
hereof, the term "Completion Date" as used in Section 6 shall be
deemed to be the last day of such eighteen-month period.
21. Survival. This Agreement, and the respective rights and
obligations of the Company and Employee hereunder, shall survive
and remain in full force and effect following the expiration of
the Employment Term and the termination of Employee's employment
hereunder.
IN WITNESS WHEREOF, Employee and the Company have executed
this Agreement as of the day and year first above written.
EDISON BROTHERS STORES, INC.
By: /s/____________________________
Name: Alan D. Miller
Title: Chairman, President and
Chief Executive Officer
/s/____________________________
(name of employee)
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
<CAPTION>
13 Weeks Ended 26 Weeks Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Loss from continuing
operations $(25,215) $(25,750) $(42,890) $(32,138)
Preferred stock
dividends (2)
Net Loss applicable to
common stock $(25,215) $(25,750) $(42,890) $(32,140)
SIMPLE AND PRIMARY
Weighted average shares
outstanding 22,202 22,074 22,168 22,051
Net effect of dilutive
stock options based on
the treasury method
TOTAL 22,202 22,074 22,168 22,051
Per common share amounts: Simple
Net Loss applicable to
common stock $ (1.14) $ (1.17) $ (1.93) $ (1.46)
Per common share amounts: Primary
Net Loss applicable to
common stock $ (1.14) $ (1.17) $ (1.93) $ (1.46)
FULLY DILUTED
Weighted average shares
outstanding 22,202 22,074 22,168 22,051
Net effect of dilutive
stock options based on the
treasury method 38 27
TOTAL 22,202 22,112 22,168 22,078
Per common share amounts: Fully Diluted
Net Loss applicable to
common stock $ (1.14) $ (1.16) $ (1.93) $ (1.46)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet as of August 3, 1996, and the condensed
consolidated statement of income for the 26 weeks ended August 3, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000031575
<NAME> EDISON BROTHERS STORES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> AUG-03-1996
<CASH> 123,300
<SECURITIES> 54,100
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 243,200
<CURRENT-ASSETS> 434,200
<PP&E> 410,100
<DEPRECIATION> 219,600
<TOTAL-ASSETS> 722,600
<CURRENT-LIABILITIES> 107,700
<BONDS> 0
0
0
<COMMON> 22,200
<OTHER-SE> 75,600
<TOTAL-LIABILITY-AND-EQUITY> 722,600
<SALES> 526,900
<TOTAL-REVENUES> 526,900
<CGS> 391,000
<TOTAL-COSTS> 158,900
<OTHER-EXPENSES> 18,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 900
<INCOME-PRETAX> (42,500)
<INCOME-TAX> 400
<INCOME-CONTINUING> (42,900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,900)
<EPS-PRIMARY> (1.93)
<EPS-DILUTED> (1.93)
</TABLE>
