UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended February 1, 1997
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each
exchange on which registered
Common stock par value $1 per share New York Stock
Exchange
Common stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained here in,
and will not be contained, to the best of registrant's's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K ( )
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 18, 1997:
Common Stock, $1 par value - $10,407,083
It is assumed for purposes of this calculation that the
registrant has no "affiliates". Information as to the share
holdings of directors of the registrant is provided in Item 12 -
Security Ownership of Certain Beneficial Owners and Management.
The number of shares outstanding of each of the registrant's
classes of common stock, as of April 18, 1997:
Common Stock, $1 par value - 22,201,778 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to stockholders for the fiscal
year ended February 1, 1997 ("1996 Annual Report"), are
incorporated by reference into Parts I and II.
PART I
Item 1. BUSINESS
General
Edison Brothers Stores, Inc. (The "Company") owns and operates chains of
specialty stores in forty-nine of the United States, Puerto Rico, the
Virgin Islands, and Canada. The Company conducts its principal operations
through subsidiaries and divisions in two business segments: apparel and
footwear. Both the apparel and the footwear segments feature private label
merchandise in the moderate price range. The stores operated by the
Company are located primarily in shopping malls. During 1996 the Company
opened 85 stores and closed 419 stores.
Proceedings under Chapter 11
On November 3, 1995 (the "Petition Date"), the Company and 65 of its
subsidiaries and affiliates (the "Debtors") filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code 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 U.S. Trustee appointed an equity committee in the fourth quarter of
1996. The Chapter 11 cases of the Debtors are being jointly administered
for procedural purposes only.
The Company and Edison Brothers Apparel Stores, Inc., as debtors-in-possession,
entered into a Loan Agreement dated effective November 9, 1995
(the "DIP Facility"), with BankAmerica Business Credit, Inc., as Agent and
Lender ("BankAmerica"), under which the Company may borrow up to $200
million to fund ongoing working capital needs. The DIP Facility, subject
to collateral restrictions, has a sublimit of $150 million for the issuance
of letters of credit. The Company expects that the DIP Facility will
provide it with sufficient cash and liquidity to conduct its operations and
pay for merchandise shipments at normal levels through the emergence date.
At the Company's option, the Company may borrow under the DIP Facility at
the Reference Rate (as defined) plus .25% or at the Eurodollar Rate (as
defined) plus 1.5%. The maximum borrowing, up to $200 million, is limited
to 50% of the value of eligible inventory (as defined) plus 95% of the
amount of cash deposited with the Agent. The Company is required to pay a
commitment fee of .375% per annum of the unused portion of the DIP
Facility. The DIP Facility contains restrictive covenants including,
limitations on store closings of 1,100 (as amended), limitations on the
incurrance 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.
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
reorganization plan that is confirmed by the Bankruptcy Court.
On February 27, 1997, the Debtors filed a proposed Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code, which was amended
by a subsequent filing on March 31, 1997 (the plan as amended, the "Plan").
On March 31, 1997, the Debtors also filed a Disclosure Statement pursuant
to Section 1125 of the Bankruptcy Code. The court has set a hearing date of
May 13, 1997, for consideration of the adequacy of the Debtors' Disclosure
Statement. If the Disclosure Statement is approved by the Court, the
Company will then solicit acceptances of the Plan from those holders of
claims and equity interests entitled to vote thereon under the terms of the
Plan. A confirmation hearing will thereafter be held by the Bankruptcy
Court to determine whether the Plan satisfies all of the requirements for
confirmation specified in Section 1129 of the Bankruptcy Code, among which
are that the Plan be: (i) accepted by all impaired classes of claims and
equity interests or, if rejected by an impaired class, that the Plan "does
not discriminate unfairly" and is "fair and equitable" as to such class;
(ii) feasible; and (iii) in the "best interests of creditors and
stockholders that are impaired under the Plan."
The Plan and Disclosure Statement may be subject to further amendment and
revisions. As currently drafted, the Plan provides for a distribution to
creditors of a combination of cash, new corporate debt, new Company common
stock and other assets. General unsecured creditors would receive: (i) a
cash payment of $119 million (subject to certain adjustments); (ii) ten
year, 11% unsecured notes in the principal amount of $100 million (with the
first three years of interest prefunded and no scheduled principal payments
until maturity in 2007); (iii) new common stock of the Company, which would
be issued at the time of emergence and replace all existing shares; (iv)
title to the Company's headquarters building in downtown St. Louis, which
the Company would continue to occupy under the terms of a ten year lease;
and (v) excess cash of approximately $43 million from the Company's
overfunded pension plan. Holders of existing equity interests in the
Company would receive a combination of three and six year warrants to
purchase a total of approximately nine percent of the new common stock.
The Plan will not become effective unless and until certain conditions
specified therein have been satisfied or waived. Among these conditions are
that: (i) an order confirming the Plan, in form and substance reasonably
acceptable to the debtors and the statutory Creditors Committee, shall have
been signed by the Bankruptcy Court and there shall not be a stay or
injunction in effect with respect thereto; (ii) the Debtors shall have at
least $25 million in cash as of July 5, 1997, after giving effect to the
distributions of cash projected to be made under the Plan; (iii) the
Debtors shall have credit availability under a working capital credit
facility providing the Debtors with working capital sufficient to meet
their requirements; and (iv) various other actions, documents and
agreements necessary to implement the Plan shall have been effected or
executed.
The Company anticipates using fresh start accounting once the Plan is
consummated.
Description of Business
Apparel Segment
Edison Brothers' menswear chains and other operations include J. Riggings,
JW/Jeans West, Oaktree, CODA, REPP Ltd. Big & Tall, and Phoenix catalog
operations. The womenswear chain is 5-7-9 Shops. Shifty's and Terrasystems
are experimental concepts that provide apparel for both men and women.
J. Riggings offers modern, traditional work and sport clothing to fashion
oriented customers seeking current quality apparel at moderate prices. In
1996, J. Riggings had an average store square footage of 2,660. J.
Riggings operated 333 and 419 stores at the end of fiscal 1996 and 1995,
respectively.
JW/Jeans West (JW) markets casual fashions, predominantly denim clothing
and accessories, to value conscious young men between the ages of 13 and
20. In 1996, JW had an average store square footage of 1,690. JW operated
341 and 359 stores at the end of fiscal 1996 and 1995, respectively.
Oaktree offers a mix of dress and casual clothing for men ages 19 to 28 who
appreciate and are looking for European influenced fashions, sophisticated
fabrics and styles. In 1996, Oaktree had an average store square footage of
2,386. Oaktree operated 76 and 84 stores at the end of fiscal 1996 and
1995, respectively.
CODA markets the latest in men's casual fashion, including jeans, knit
casual wear and athletic wear. The chain targets the urban youth market -
17 to 25 year old men who are brand conscious and fashion forward. In
1996, CODA had an average store square footage of 2,968. CODA operated 33
and 35 stores at the end of fiscal 1996 and 1995, respectively.
REPP Ltd Big & Tall (REPP) is a chain offering high quality, fashionable
casual and dress men's clothing in both branded and private label. REPP
focuses on the tall man of at least 6'3" and the big man having a 40" or
larger waist. In 1996, REPP had an average store square footage of 3,930.
REPP operated 189 and 214 stores at the end of fiscal 1996 and 1995,
respectively.
Phoenix Big & Tall is a catalog operation that markets fashionable casual
and dress men's clothing and a large assortment of accessories (including
footwear) in primarily branded labels. The catalog operation focuses on
the tall man of at least 6'3" and the big man of a 40" waist or larger
providing a wide variety of sizes, styles, and accessories offered by a
catalog operation.
5-7-9 shops primarily markets sportswear, dresses and accessories to junior
high and high school girls who want to purchase trendy fashions at moderate
prices in sizes 0 through 9. The core customer is conscious of looking
current without being too extreme or mature. In 1996, 5-7-9 had an average
store square footage of 1,801. 5-7-9 operated 274 and 283 stores at the
end of fiscal 1996 and 1995, respectively.
Terrasystems is a concept positioned as a modern, fashionable outfitter
targeting active outdoor men and women with functional apparel and gear for
sport, work, outdoors and home. In 1996, Terrasystems had an average store
square footage of 5,924. Terrasystems operated three stores at the end of
fiscal 1996. The Company announced in April 1997 that the Terrasystems
concept will be phased out during 1997.
Shifty's caters to both male and female teenagers who want to set trends
with fashionable and branded clothing. In 1996, Shifty's had an average
store square footage of 2,506. Shifty's operated four stores at the end of
fiscal 1996 and one store at the end of fiscal 1995.
The Zeidler & Zeidler group discontinued operations in fiscal year 1996.
This chain operated 102 stores at the end of 1995.
Footwear Segment
The Company's footwear chains include Bakers/Leeds, Precis, and The Wild
Pair.
Bakers/Leeds targets young women, predominantly ages 12 to 24, who want
fashionable footwear and accessories at affordable prices -- prices between
the discounters and the department stores. In 1996, Bakers/Leeds had an
average store square footage of 2,714. Bakers/Leeds operated 309 and 347
stores at the end of fiscal 1996 and 1995, respectively.
Precis targets contemporary women looking for stylish, quality, upscale
footwear and accessories. In 1996, Precis had an average store square
footage of 1,904. Precis operated 17 and 39 stores at the end of fiscal
1996 and 1995, respectively.
Wild Pair targets young men and women who are looking for alternative
fashion in footwear. Brand awareness is important to Wild Pair's core
customer, especially among the male customer group. In 1996, Wild Pair had
an average store square footage of 1,743. Wild Pair operated 164 and 194
stores at the end of fiscal 1996 and 1995, respectively.
Entertainment
The Company's mall entertainment division included family entertainment
centers and operations involved with the marketing of new interactive
entertainment technologies. In January 1996 the Company sold substantially
all of the assets of its mall entertainment division to NAMCO
Cybertainment.
The Company operated 21 entertainment centers at the end of 1995. At the
end of 1996, the Company operated two entertainment centers, which it
intends to close by September, 1997.
Additional information regarding the Company's principal business segments
is set forth under "Note 13: Business Segments" to the Consolidated
Financial Statements in the 1996 Annual Report. Such information is
incorporated herein by reference.
Operations, Inventory and Distribution
The specialty retailing business is subject to fluctuations resulting from
changes in customer preferences dictated by fashion and season. This is
especially true for stores emphasizing fashion over classic basics. In
addition, merchandise usually must be ordered significantly in advance of
the season and sometimes before fashion trends are evidenced by customer
purchases. It has been the general practice of the Company and other
apparel retailers to build up inventory levels prior to peak selling
seasons, which further increases the vulnerability of the Company to
changes in demand, pricing shifts and to errors in selection and timing of
merchandise purchases.
Substantially all of the Company's merchandise information, accounting, and
financial control systems are operated centrally from the Company's
headquarters in St. Louis, Missouri. Daily polling of activity from the
point-of-sale registers in each store provides current data for updated
sales, merchandise, and bank activity reporting. Integration of this data
with the Company's merchandise system enables each chain's team of
merchandise controllers and distributors to monitor performance and
replenish and control inventory.
The Company must carry large amounts of inventory to meet the needs of its
stores. The Company operates three main distribution centers located in
Washington, Missouri; Rialto, California; and Princeton, Indiana. The
centers are receiving points for merchandise from foreign and domestic
suppliers and coordinate distribution of individual shipments via contract
and common carriers.
Purchasing
The Company purchases approximately 70% of its merchandise from foreign
suppliers and the balance from domestic sources. The Company has no long
term purchase commitments with any of its suppliers, and is not dependent
on any one supplier. The Company's importing operations are subject to the
contingencies generally associated with foreign operations, including
fluctuations in currency values, customs duty increases, quota limitations
and any other foreign development that could cause a supply disruption. The
Company has international buying offices in Taiwan, Hong Kong, China,
Indonesia, Korea, Honduras, and the Philippines.
The Company does not manufacture any merchandise, but it markets most of
its merchandise under private labels. Each chain of stores maintains a
staff of buyers, who make buying decisions for each chain.
Competition
The apparel and footwear retailing industries are highly competitive. The
Company's stores are in competition with numerous other independent
retailers, department stores, mail order companies and discount and
manufacturer's outlets, many of which have greater sales, assets and
financial resources than the Company. Because the Company's stores are
primarily in regional shopping malls, each faces several nearby
competitors. In competing for customers, the Company emphasizes the
fashion orientation of its merchandise, customer service, store appearance
and price.
Employees
During fiscal 1996, the Company employed an average of 17,700 persons with
approximately 16,000 of them engaged in retail operations at the store
level (approximately 31% full-time and 69% part-time). A substantial
number of the part-time employees are hired temporarily during peak selling
seasons. The Company believes its employee benefits package is competitive
with those offered in the industry. The Company's employees are non-union
and the Company believes that its employee relations are good.
Seasonal Business
The Company experiences a significant increase in sales during the
Christmas selling season (Thanksgiving through Christmas). Sales during
that season accounted for 13.8% of total sales during 1996 compared with
16.5% in 1995. The decrease between years occurred reflected the fact that
the 1996 Christmas selling season had five fewer shopping days than the
1995 season. The Company's inventory is generally increased significantly
prior to this peak selling period.
Trademarks
The Company holds a number of trademarks covering its products. The
Company believes that the loss of any of these trademarks would not have a
material effect on the Company's business.
Item 2. PROPERTIES
Stores are located nationwide, and most are leased with initial terms of
generally from five to ten years. The rentals under most leases are based
upon a percentage of sales to the extent sales exceed a threshold amount.
Many of the leases provide for additional payments for real estate taxes
and other items. The stores generally range in size from 1,300 to 4,000
square feet.
The Company-owned headquarters building in St. Louis, Missouri, was
completed in 1985 and is the home office for all divisions. The building
contains approximately 500,000 square feet, a portion of which the Company
leases to others. The Rialto, California and Princeton, Indiana
distribution centers are owned by the Company. The distribution center in
Washington, Missouri is operated under a long term capital lease
arrangement. The Rialto and Washington centers service primarily the
apparel segment while Princeton services primarily the footwear segment.
Item 3. LEGAL PROCEEDINGS
The Company and 65 of its subsidiaries and affiliates filed petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code on
November 3, 1995. Additional information related to the filing is set
forth under Part 1, Item 1 of this Form 10-K and under the captions "To Our
Shareholders", "Note 1: Proceedings under Chapter 11" to the Consolidated
Financial Statements, and "Management's Discussion and Analysis" in the
1996 Annual Report. Such information is incorporated herein by reference.
The Company is not a party to any other material pending legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Information required by Item 5 is contained in "Note 11: Common Stock" and
"Note 7: Financing Arrangements" to the Consolidated Financial Statements
and under the caption "Quarterly Information" in the 1996 Annual Report.
Such information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Information required by Item 6 is contained under the caption "Five Year
Financial Summary" in the 1996 Annual Report. Such information is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Information required by Item 7 is presented under the captions "To Our
Shareholders" and "Management's Discussion and Analysis" in the 1996 Annual
Report. Such information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by Item 8, as listed below, is included in the 1996
Annual Report. Such information is incorporated herein by reference.
Consolidated Statements of Operations - fiscal years 1996, 1995, and 1994
Consolidated Balance Sheets - 1996 and 1995 fiscal year-ends
Consolidated Statements of Cash Flows - fiscal years 1996, 1995, and 1994
Consolidated Statements of Common Stockholders' Equity (Deficit) - fiscal
years 1996, 1995, and 1994
Notes to Consolidated Financial Statements
Five Year Financial Summary
Quarterly Information
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
<TABLE>
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the directors and
executive officers of the Company:
<CAPTION>
Position in the Company
Name Age Title Term
<S> <C> <C> <C>
Bart A. Brown, Jr. 65 Director Since 1996
David B. Cooper, Jr. 41 Director Since 1995
Executive Vice President
and Chief Financial
Officer Since 1994
Julian I. Edison 67 Director Since 1965
Paul D. Eisen 42 President of JW/Jeans
West Since 1995
President of Oaktree Since 1994
President and General
Merchandise Manager of
Jeans West 1989-1994
Jane Evans 52 Director Since 1990
Michael J. Fine 45 President of Edison
Footwear and Womenswear
Group Since 1996
President of 5-7-9 Shops Since 1994
Eric A. Freesmeier 44 Executive Vice President-
Human Resources Since 1992
Vice President-Human
Resources 1986-1992
Richard C. Marcus 58 Director Since 1996
Karl W. Michner 49 Senior Executive Vice
President Since 1995
Director Since 1989
President of Edison
Menswear Group Since 1987
Alan D. Miller 44 Chairman of the Board,
President and Chief
Executive Officer Since 1995
Director Since 1992
President of Edison
Footwear Group 1993-1995
President of Bakers/Leeds/
Precis 1991-1993
President of 5-7-9 Shops 1987-1991
Alan A. Sachs 50 Executive Vice President
and General Counsel Since 1992
Director Since 1990
Secretary Since 1987
Vice President and General
Counsel 1990-1992
Vice President - Law 1985-1990
Craig D. Schnuck 49 Director Since 1990
Steven R. Thomas 42 President, Edison Big &
Tall Since 1997
President, REPP Ltd. 1996-1997
General Manager, Zeidler
& Zeidler 1995-1996
<fn1>
Other business experience of the named individuals during the past five
years is as follows:
Bart A. Brown, Jr. is President and Chief Executive Officer of Main
Street and Main, Incorporated, a franchisee and operator of 46 T.G.I.
Fridays Restaurants. From May 1996 to December 1996, he was a consultant
to Investcorp International, Inc., an international investment banking
firm. From August 1995 to April 1996, he was Chairman of the Board and
Chief Executive Officer of Color Tile, Inc., a retailer of specialty
flooring and wall covering. From June 1994 to September 1996, he was
Chairman of the Board of Spreckels Industries, Inc., a manufacturing and
processing company, serving as its Chief Executive Officer from June 1994
to May 1995. From June 1990 to August 1995, Mr. Brown was Chairman of the
Board of The Circle K Corporation, an operator and licensor of convenience
stores, serving also as its Chief Executive Officer from June 1991 through
July 1993. He was senior partner of the law firm of Keating, Muething and
Kiekamp, Cincinnati, Ohio, from 1987 to 1990. Mr. Brown is a director of
FirstCity Financial Corp and Factory Card Outlet, Inc.
David B. Cooper, Jr. was Executive Vice President and Chief Financial
Officer of Del Monte Fresh Produce Company from 1993 to April 1994. He was
Vice President and Treasurer of Dole Food Company, Inc. from 1987 to 1993.
Jane Evans is President and Chief Operating Officer of Smart TV. From
March 1991 to March 1995, she was Vice President and General Manager, Home
and Personal Services, of U.S. West Communications, Inc. From 1989 through
March, 1991, she served as President and Chief Executive Officer of
InterPacific Retail Group. From 1987 to 1989, she was a General Partner of
Montgomery Securities. Ms. Evans is a director of Philip Morris
Companies, Inc., Georgia-Pacific Corporation, Kaufman and Broad Home
Corporation, and Banc One-Arizona, N.A.
Michael J. Fine was a Buyer for the Payless Shoe division of The May
Department Stores Company from 1992 to 1994 and President of John Douglas
from 1989 to 1992.
Richard C. Marcus is a principal of InterSolve Group, a management services
firm he co-founded in 1991. He has been a director since September 1994 of
the Plaid Clothing Group, a manufacturer of men's tailored clothing, and
from December 1994 through December 1995 served as Plaid Clothing Group's
Chief Executive Officer. From 1979 to 1988, he was Chairman and Chief
Executive Officer of Nieman Marcus. In addition to Plaid Clothing Group, he
is a director of Zale Corporation and XcelleNet, Inc.
Craig D. Schnuck is Chairman of the Board and Chief Executive Officer of
Schnuck Markets, which operates 94 supermarkets in the Midwest. He is a
director of Mercantile Bancorporation Inc. and General American Life
Insurance Company.
Steven R. Thomas was a Merchandise Manager for Bachrach Menswear from 1992
to 1994.
Additional required information concerning the named individuals is as
follows:
Messrs. Cooper, Michner, Miller and Sachs were serving as executive
officers of the Company in November 1995 when the Company filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Mr. Brown was Chief Executive Officer of Color Tile, Inc. in January 1996
when Color Tile filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. Mr. Marcus was Chief Executive Officer of Plaid Clothing
Group in July 1995 when Plaid Clothing Group filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company and any persons owning more than ten percent
of the Company's common stock to report their ownership of the Company's
common stock to the Securities and Exchange Commission and the New York
Stock Exchange. Based on its review of the reports filed by such persons,
and on written representations by certain of such persons that no reports
on Form 5 were required to be filed by them, the Company believes that all
Section 16(a) reporting requirements for its 1996 fiscal year were complied
with by its officers, directors and greater than ten percent shareholders,
except that one report on Form 4, covering one transaction, was filed late
by Peter A. Edison, who during the 1996 fiscal year was an officer and
director of the Company.
</fn1>
</TABLE>
Item 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to each of the five
most highly compensated executive officers of the Company (the "named
executive officers") for services rendered to the Company and its
subsidiaries for the last three fiscal years.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
Other
Name and Annual Restricted
Principal Fiscal Compen- Stock
Position Year Salary(1) Bonus(2) sation Award(s)
<S> <C> <C> <C> <C> <C>
Alan D. Miller 1996 $ 450,000 $300,000 - $ -
Chairman, 1995 433,333 - - 637,500(5)
President and 1994 339,167 - - -
Chief Executive
Officer
Karl W. Michner 1996 350,000 282,333 - -
Senior Executive 1995 347,167 - - -
Vice President 1994 333,000 - - -
and President of
the Corporation's
Menswear Group
David B. Cooper,Jr.1996 320,000 213,333 - -
Executive Vice 1995 316,666 - - -
President and 1994 81,818(6) - - -
Chief Financial
Officer
Alan A. Sachs 1996 285,000 190,000 - -
Executive Vice 1995 282,333 - - -
President, 1994 269,000 - - -
General Counsel
and Secretary
Michael J. Fine 1996 260,606 192,993 - -
President of 1995 200,000 -
Edison Footwear 1994 45,455(7) -
and Womenswear
Group
</TABLE>
<TABLE>
Long Term Compensation
<CAPTION>
Stock Long
Options Term
Granted Incentive
Fiscal (Number of Plan All Other
Year Shares)(3) Payouts Compensation(4)
<S> <C> <C> <C> <C>
Alan Miller 1996 - - $ 600
1995 45,000 - 529
1994 11,000 - 829
Karl Michner 1996 - - 600
1995 23,500 - 517
1994 11,000 - 899
David Cooper 1996 - - -
1995 20,000 - -
1994 10,000 - 50,000
Alan A. Sachs 1996 - - 600
1995 16,500 - 533
1994 7,000 - 795
Michael J. Fine 1996 - - -
1995 13,000 - -
1994 6,000 - 57,108
<fn2>
(1) Includes all amounts contributed by the named individuals to the
Edison Brothers Stores Savings Plan. The Savings Plan is available to
all employees of the Company who have attained the age of 21 and
completed one year of service. An employee may elect to contribute,
through payroll deduction, up to 15% of his or her annual cash
compensation (subject to certain limitations imposed by the Internal
Revenue Code). Income tax is deferred on all amounts contributed by
the employee pursuant to Section 401(k) of the Internal Revenue Code.
The Company contributes, on a matching basis, between 10% and 50% of
the first 6% of compensation contributed by the employee. The amount
of the Company's matching contribution is determined each year based
upon the return on stockholders' equity achieved by the Company in the
prior year.
(2) The amounts shown for 1996 were comprised of two elements:
(a) "retention" bonuses paid in September 1996 in accordance with the
terms of the respective Amended and Restated Employment Agreements
between the Company and each of its executive officers, and(b) bonuses
paid in April 1997 in respect of fiscal 1996 performance pursuant to
the Company's 1996 Executive Performance Incentive Compensation Plan.
(The Company's executive performance bonus program provides for annual
bonuses contingent on the attainment of certain financial goals
approved by the Special Compensation Subcommittee of the Company's
Board of Directors.)
(3) The number of shares, along with the exercise price, of each option
was subsequently adjusted, pursuant to the terms of the Company's 1992
Stock Option Plan, to reflect the June 1995 spin off by the Company of
its stock in Dave & Buster's, Inc. As a result of such adjustment
which was calculated so that each option would have the same intrinsic
value, based on its relationship to the market price of the Company's
common stock, immediately after the spin-off as it had immediately
before--the number of shares subject to each option was increased by
33.1% and the exercise price was reduced by 24.9%.
(4) Except as indicated in the next sentence, the amounts shown were the
amounts contributed by the Company to the Edison Brothers Stores
Savings Plan for the accounts of these named individuals during such
fiscal year. (See Note 1 above.) The amounts shown for
Messrs. Cooper and Fine for 1994 were lump sum hiring bonuses paid
upon their commencement of employment with the Company.
(5) Reflects the grant on May 11, 1995, of 50,000 shares of common stock
of the Corporation, with the aggregate value based on the closing
price of the Corporation's common stock on the date of grant. As of
the end of the 1996 fiscal year, Mr. Miller held a total of 40,000
restricted shares of common stock of the Company, having an aggregate
value of $75,000 based on the closing price of the Company's common
stock as of the end of such fiscal year. These shares are to vest in
10,000 share increments on May 20, 1997, May 27, 1998, June 3, 1999
and June 12, 2000, subject to certain forfeiture and acceleration
provisions. (If the Company's proposed Amended Joint Plan of
Reorganization is confirmed and implemented, however, all of these
shares will be canceled. See Item 1, "Proceedings under Chapter 11"
at pages 3-4 above.) Dividends (if any) are paid on these restricted
shares at the same time and at the same rate as dividends are paid to
stockholders generally.
(6) Commenced employment with the Company on October 24, 1994.
(7) Commenced employment with the Company on November 9, 1994.
</fn2>
</TABLE>
Stock Options
The following table provides information with respect to stock option
exercises during the 1996 fiscal year by the named executive officers and
the value of such officers' unexercised options as of the end of the fiscal
year.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION>
Shares Acquired
Name on Exercise (#) Value Realized($)
<S> <C> <C>
Alan D. Miller - -
Karl W. Michner - -
David B. Cooper, Jr. - -
Alan A. Sachs - -
Michael J. Fine - -
</TABLE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In the Money
Options/SARs at Fiscal Options/SARs at Fiscal
Year end (#) (1) Year End ($) (2)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Alan D. Miller 22,295 52,247 $0 $0
Karl W. Michner 15,140 30,783 0 0
David B. Cooper, Jr. 16,638 23,295 0 0
Alan A. Sachs 10,148 21,133 0 0
Micheal J. Fine 10,316 14,975 0 0
<fn3>
(1) The number of shares is as adjusted to reflect the June 1995 spin-off
by the Company of its stock in Dave & Buster's, Inc. (See Note 3 on
page 13.)
(2) Aggregate value based on the average of the high and low selling
prices of the Company's common stock on the last trading day of the
fiscal year less the exercise price.
</fn3>
</TABLE>
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
In June 1996, in order to assure the Company of the continued availability
of the services of its key executives, the Company entered into employment
agreements with certain of its officers, including each of the named
executive officers (superseding employment agreements previously entered
into with the named executive officers in September 1995). The agreements
between the Company and the named executive officers provide for terms of
employment ending either on September 17, 1997 or September 17, 1998. In
addition to salary and benefits, the agreements each provide for two lump
sum cash bonuses, each equal to two times the executive's monthly base
salary, the first payable on September 17, 1996 and the second on
September 17, 1997 (subject, in each case, to acceleration in the event of
a change in control as defined in the agreements). These "retention"
bonuses, intended as incentives for the executive to remain with the
Company, are payable only if the executive is still in the Company's employ
on the payment date (subject to the executive's right to receive a prorata
portion of the second bonus if terminated without cause less than six
months before the payment date). If there occurs a "change in control" of
the Company, as defined in the agreements, the employment term is extended
for a period ending either two years, in the case of Alan Miller, or
eighteen months, in the case of the other named executive officers, after
the date of occurrence of the change in control. If, within the term of
the agreement, the executive's employment is terminated by the Company
other than for cause or is terminated by the executive for "good reason"
(which, prior to a change in control, would be limited to a reduction in
salary, and following a change in control would include a reduction in
salary, material change in benefits, diminution in duties or mandatory
geographic transfer), the executive will be entitled to a lump sum payment
equal to (i) the executive's monthly salary at the highest rate in effect
at any time between September 18, 1995 and the date of termination of
employment, multiplied by (ii) the greater of (a) twelve or (b) the number
of months remaining under the agreement. Further, in the event of
termination without cause or for "good reason," the Company is to maintain
for the executive's continued benefit for the longer of the unexpired term
of the agreement or twelve months from the date of termination (or until
the executive's similar coverage by a new employer, if earlier) all life
insurance, health and disability plans in which the executive was entitled
to participate immediately prior to the termination of the executive's
employment (or, alternatively, provide benefits substantially similar to
those which the executive would otherwise have been entitled to receive
under such plans). In addition, the Company is to pay to the executive (or
the executive's beneficiary upon his death) an amount equal to the benefits
the executive would have been entitled to receive under the Edison Brothers
Stores Pension Plan and any supplemental or successor plans then in effect
had the executive remained employed by the Company through the term of the
agreement less the benefits actually payable to the executive under such
plans, such amount to be determined, and payment thereof to commence, in
accordance with the provisions of such plans. If a change in control
occurs after the term of the agreement but at a time when the executive is
still employed by the Company, and the executive's employment is then
terminated by the Company without cause or by the executive for "good
reason" within two years, in the case of Alan Miller, or eighteen months,
in the case of the other named executive officers, after the occurrence of
such change in control, the executive will also be entitled to the payments
and benefits described above. The agreement further provides that if any
payments or benefits payable by the Company to the executive pursuant to
the agreement or any other agreement or arrangement of the Company are
determined to be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code or any successor or comparable tax, the Company will
pay the executive an additional amount so that the net amount actually
retained by the executive after payment of the excise tax is the same
amount which would have been retained if no such excise tax had been
imposed. Legal fees or other expenses incurred by the executive to enforce
his or her rights under the agreement are to be reimbursed by the Company
if the executive prevails on such claim.
Retirement Plans
The Company maintains a Pension Plan for itself and certain of its
subsidiaries under which participation begins when a regular employee has
attained the age of 21 and completed one year of service. Vesting of
rights to a pension occurs upon the completion of five years of service.
Retirement benefits are based on a participant's average annual
compensation during the highest five consecutive calendar years of
compensation within the last fifteen years of credited service prior to
retirement. Compensation includes all salary, bonuses and commissions, but
does not include distributions under any stock option plan. For years
after 1993, compensation and average compensation for determining
retirement benefits is limited to $150,000, subject to annual adjustments
for changes in the cost of living.
Retirement benefits at age 65 are equal to 0.9% of such average annual
compensation, plus 0.6% of such average annual compensation in excess of a
breakpoint, all multiplied by years of credited service (not exceeding 30).
The breakpoint, which is specified by law, is an amount equal to the
average of the maximum wages subject to Social Security taxes during the
35-year period ending in the year prior to a participant's Social Security
retirement date. If retirement occurs prior to age 65, benefits may be
reduced to reflect the earlier payment date. Benefits may also be reduced
if survivor benefits are to be paid to an eligible spouse, based on age
differentials.
For some individuals, the amounts payable under the Pension Plan are
limited by certain provisions of the Internal Revenue Code. The Company
has adopted an unfunded excess benefits plan ("Pension Restoration Plan")
to pay out of its general assets to designated employees that portion of
the benefits that would otherwise be payable to them under the Pension Plan
were it not for such limitations.
For eligible employees reaching the age of 65 during 1996 and retiring
during that year, the following are the approximate total annual retirement
benefits payable under the Pension Plan and the Pension Restoration Plan
based on their average annual compensation as outlined above and their
years of service:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,768 $ 11,691 $ 14,614 $17,536 $ 17,536
$100,000 20,018 26,691 33,364 40,036 40,036
$300,000 65,018 86,691 108,364 130,036 130,036
$500,000 110,018 146,691 183,364 220,036 220,036
$700,000 155,018 206,691 258,364 310,036 310,036
$900,000 200,018 266,691 333,364 400,036 400,036
<fn4>
The preceding table is based on the assumption that the employee was
subject to the maximum aggregate social security tax during each year of
his employment. The benefits shown are in the form of a single life
annuity to the participant.
As of February 1, 1997, the years of credited service under the Pension
Plan for each of the named executive officers were as follows: Alan D.
Miller, 18; Karl W. Michner, 23; David B. Cooper, Jr., 1; Alan A. Sachs,
10; and Michael J. Fine, 1.
On February 24, 1997, the Company's Board of Directors voted to terminate
the Pension Plan, effective May 31, 1997. It is anticipated that the
Company will establish a replacement plan, the details of which have not
yet been determined.
</fn4>
</TABLE>
Compensation of Directors
Directors who are employees of the Company receive no additional
compensation for their attendance at meetings of the Board or any of its
committees of which they are members. Directors who are not employees of
the Corporation receive an annual retainer of $17,500, and $1,200 for
participation in each Board meeting and $1,000 for participation in each
committee meeting. When participation in a Board or committee meeting is
by telephone, the fee paid is one-half of the amount reported above.
The Company has a non-qualified retirement plan for outside directors.
Under this plan, outside directors (other than those who were employees of
the Company and are eligible for benefits under the Company's pension plan)
who attain age 70 and have at least five years of continuous Board service
are entitled upon retirement from the Board to an annual benefit equal to
the annual retainer being paid at that time to the Company's directors.
Compensation Committee Interlocks and Insider Participation
Julian I. Edison, who, during the last fiscal year, was a member of the
Compensation Committee, is a former officer of the Company.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth the number and percentage of outstanding
shares of the Company's common stock beneficially owned as of March 1, 1997
by each person known by management to be the beneficial owner of more than
5% of the outstanding common stock (except for one individual who is a
director of the Company, as to whom such information is set forth below).
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class (1)
<S> <C> <C>
Bernard Edison 1,160,359 5.2%
501 North Broadway
St. Louis, MO 63102
<fn5>
(1) Such percentage is calculated based on the number of shares deemed
outstanding under applicable Securities and Exchange Commission rules
as of March 1, 1997.
</fn5>
</TABLE>
Security Ownership of Management
The following table sets forth the number and percentage of outstanding
shares of the Company's common stock beneficially owned as of March 1, 1997
by (i) each director, (ii) each person named in the Summary Compensation
Table on page 14, and (iii) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name of of Beneficial Percent
Beneficial Owner Ownership (1)(2) of Class (3)
<S> <C> <C>
Bart A. Brown, Jr. -- --
David B. Cooper, Jr. 23,293 --
Julian I. Edison 817,238 3.6%
Jane Evans 100 --
Michael J. Fine 14,642 --
Richard C. Marcus -- --
Karl W. Michner 48,249 --
Alan D. Miller 102,829 (4) --
Alan A. Sachs 32,684 --
Craig D. Schnuck 1,000 --
All directors and
executive officers
as a group 1,076,935 4.8%
<fn6>
(1) Includes shares which were not owned by the named individual or group
member as of March 1, 1997, but which such individual or group member
could acquire on or before April 30, 1997 under options granted
pursuant to the Company's 1992 Stock Option Plan, as follows:
David B. Cooper, Jr., 23,293 shares; Michael J. Fine, 14,642 shares;
Karl W. Michner, 26,621 shares; Alan D. Miller, 40,931 shares; Alan A.
Sachs, 17,969 shares; and all directors and executive officers as a
group, 154,170 shares.
(2) Includes shares allocated to the account of the named individual or
group member under the Edison Brothers Stores Savings Plan, as
follows: Karl W. Michner, 786 shares; Alan D. Miller, 782 shares;
Alan A. Sachs, 755 shares; and all directors and executive officers as
a group, 3,667 shares.
(3) Percentages are calculated based on the number of shares deemed
outstanding under applicable Securities and Exchange Commission rules
as of March 1, 1997. Only percentages of beneficial ownership of 1%
or more are shown.
(4) Includes 50,000 shares of restricted stock granted in 1995.
</fn6>
</TABLE>
Changes in Control
On March 31, 1997, the Company filed with the U.S. Bankruptcy Court a
proposed Amended Joint Plan of Reorganization (the "Plan"). If confirmed
by the Court, upon consummation of the Plan, all existing common stock of
the Company will be canceled and all of the new common stock of the
reorganized company (except for approximately 200,000 restricted shares to
be issued to certain of the Company's senior executives) will be issued to
the holders of allowed general unsecured claims.
The Plan also provides that, upon consummation, the Board of Directors of
the Company will be reconstituted to consist of nine individuals, two of
whom will be representatives of the Company's senior management, one of
whom will be a current outside director of the Company, and six of whom
will be selected by the statutory Creditors' Committee.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions or other matters to be reported under this item.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) (1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
(a) (3) Listing of exhibits:
<TABLE>
<CAPTION>
Exhibit No. Page No.
<S> <C>
2 Debtors' Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code, dated March 31, 1997.
3(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.
4(a) Rights Agreement, dated as of January 26, 1988, and
amendments thereto dated November 30, 1989 and September
29, 1992, between Edison Brothers Stores, Inc. and Mellon
Securities Trust Company, as Rights Agent, were
filed as Exhibits to the Company's current reports on
Form 8-K dated February 17, 1988, December 11, 1989, and
October 28, 1992, respectively, and are incorporated
herein by reference.
4(b) Note Agreements and Senior Notes, dated March 1, 1993,
between Edison Brothers Stores, Inc. and a number of
institutional lenders relating to $150 million of
unsecured debt were filed as an Exhibit to the Company's
annual report on Form 10-K for the year ended January 30,
1993, and are incorporated herein by reference.
4(c) Amendment Agreements, dated as of January 15, 1994, and
February 1, 1994, amending the Note Agreements dated
March 1, 1993 between Edison Brothers Stores, Inc. and a
number of institutional lenders relating to $150 million
of unsecured debt were filed as Exhibits to the Company's
annual report on Form 10-K for the year ended January 29,
1994, and are incorporated herein by reference.
4(d) Amendment Agreement, dated as of April 1, 1995, amending the Note
Agreements dated March 1, 1993, as amended January 15, 1994 and
February 1, 1994,between Edison Brothers Stores, Inc. and a
number of institutional lendersrelating to $150 million of
unsecured debt was filed as an Exhibit to the Company's Annual
Report on Form 10-K for the year ended February 3, 1996,
and is incorporated herein by reference.
4(e) Noteholder Forbearance Agreement, dated as of September 22, 1995,
between Edison Brothers Stores, Inc. and a number of
institutional lenders relating to $150 million of unsecured debt
was filed as an Exhibit to the Company's Annual Report on Form
10-K for the year ended February 3, 1996, and is
incorporated herein by reference.
4(f) Credit Agreement, dated as of June 4, 1993, between Edison
Brothers Stores, Inc. and a number of financial institutions
relating to a $150 million revolving credit facility was filed as
an Exhibit to the Company's Annual Report on Form 10-K for the
year ended February 3, 1996, and is incorporated herein
by reference.
4(g) Amendment Agreements, dated as of January 24, 1994, February 17,
1994, and March 29, 1995, amending the Credit Agreement dated
June 4, 1993, between Edison Brothers Stores, Inc. and a number
of financial institutions relating to a $150 million revolving
credit facility were filed as Exhibits to the Company's
Annual Report on Form 10-K for the year ended February 3, 1996,
and are incorporated herein by reference.
4(h) Override Agreement, dated as of September 22, 1995, between
Edison Brothers Stores, Inc. and a number of financial
institutions relating to a $150 million revolving credit facility
were filed as Exhibits to the Company's Annual Report on Form 10-K
for the year ended February 3, 1996, and are incorporated
herein by reference.
4(i) Loan Agreement, dated as of November 9, 1995, between Edison
Brothers Stores, Inc. and Edison Brothers Apparel Stores, Inc.,
Debtors-in-Possession, and BankAmerica Business Credit, Inc., as
Agent, and the financial institutions named therein as Lenders,
for a revolving line of credit for loans and letters of credit of
up to $200 million in the aggregate, was filed as an Exhibit to
the Company's quarterly report on Form 10-Q for the quarter ended
October 28, 1995,and is incorporated herein by reference.
4(j) Amendment Agreements, dated as of December 1, 1995, January 71
12, 1996, March 25, 1996, April 12, 1996, September 13, 1996,
and January 31, 1997, amending the Loan Agreement, dated November
9, 1995, between Edison Brothers Stores, Inc. and Edison Brothers
Apparel Stores, Inc., Debtors-in-Possession, and BankAmerica
Business Credit, Inc., as Agent, and the financial institutions
named therein as Lenders relating to revolving line of credit for
loans and letters of credit up to $200 million in the aggregate.
10(a) Form of Indemnification Agreement between the Company and each of
its directors was filed as an Exhibit to the Company's annual
report on Form 10-K for the year ended January 3, 1987, and is
incorporated herein by reference.
10(b) The Edison Brothers Stores, Inc. 1992 Stock Option Plan, as
amended March 3,1994, was filed as an Exhibit to the Company's
annual report on Form 10-K for the year ended January 29, 1994,
and is incorporated herein by reference.
10(c) The Edison Brothers Stores, Inc. 1986 Stock Option Plan, as
amended April 27, 1987 and March 3, 1994, was filed as an Exhibit
to the Company's annual report on Form 10-K for the year ended
January 29, 1994, and is incorporated herein by reference.
10(d) Non-Qualified Retirement Plan for Outside Directors is described
under the caption "Compensation of Directors" in Item 11 of this
Form 10-K which description is incorporated herein by reference.
10(e) Restricted stock grant by Edison Brothers Stores, Inc. to Alan D.
Miller, Chairman, President and Chief Executive Officer of the
Company, was filed as an Exhibit to the Company's Annual Report
on Form 10-K for the year ended February 3,1996, and is
incorporated herein by reference.
10(f) Form of Employment Agreement entered into by the Company with
Alan D. Miller, Chairman of the Board, President and Chief
Executive Officer of the Company, was filed as an Exhibit to the
Company's quarterly report on Form 10-Q for the quarter ended
August 3, 1996, and is incorporated herein by reference.
10(g) Forms of Employment Agreements entered into by the Company with
other executive officers of the Company were filed as Exhibits to
the Company's quarterly report on Form 10-Q for the quarter ended
August 3, 1996, and are incorporated herein by reference.
11 Computation of per share earnings
13 1996 Annual Report to Stockholders
21 Subsidiaries
23 Consent of Independent Auditors
27 Financial Data Schedule
(b) Exhibits
Exhibits begin on page 30 of this Form 10-K.
(c) Financial statement schedules:
The response to this portion of Item 14 is submitted as a separate
section of this report.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
By By
/s/Alan D. Miller 5/1/97 /s/David B. Cooper, Jr. 5/1/97
Chairman of the Board, President Executive Vice President and
and Chief Executive Officer Chief Financial Officer
By
/s/Thomas K. McCain 5/1/97
Vice President, Taxes and Financial Reporting
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following directors on behalf of the
registrant on the dates indicated.
/s/Alan D. Miller 5/1/97 /s/David B. Cooper, Jr. 5/1/97
/s/Julian I. Edison 5/1/97 /s/Jane Evans 5/1/97
/s/Alan A. Sachs 5/1/97 /s/Karl W. Michner 5/1/97
/s/Craig D. Schnuck 5/1/97 /s/Richard C. Marcus 5/1/97
/s/Bart A. Brown, Jr. 5/1/97
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
/s/Jane Evans 5/1/97
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
/s/Richard C. Marcus 5/1/97
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
/s/Bart A. Brown, Jr. 5/1/97
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following director on behalf of the
registrant and on the date indicated.
/s/Craig D. Schnuck 5/1/97
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) and (2) and ITEM 14(d)
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED FEBRUARY 1, 1997
EDISON BROTHERS STORES, INC.
ST. LOUIS, MISSOURI
FORM 10-K - ITEM 14 (a) (1) and (2) and Item 14 (d)
EDISON BROTHERS STORES, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of Edison Brothers
Stores,Inc. and subsidiaries, included in the 1996 annual report of the
registrant to its stockholders, are incorporated by reference in Item 8:
Consolidated Statements of Operations - fiscal years 1996, 1995, and 1994
Consolidated Balance Sheets - 1996 and 1995 fiscal year-ends
Consolidated Statements of Cash Flows - fiscal years 1996, 1995, and 1994
Consolidated Statements of Common Stockholders' Equity (Deficit) - fiscal
years 1996, 1995, and 1994
Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of Edison Brothers
Stores, Inc. and subsidiaries is included in item 14(d):
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions, or are inapplicable, and therefore
have been omitted.
Individual financial statements of the registrant have been omitted as the
registrant is primarily an operating company and all subsidiaries included
in the consolidated financial statements filed, in the aggregate, do not
have minority equity interests and/or indebtedness to any person other than
the registrant or its consolidated subsidiaries in amounts which together
(excepting indebtedness incurred in the ordinary course of business which
is not overdue and matures within one year from the date of its creation,
whether or not evidenced by securities, and indebtedness of subsidiaries
which is collateralized by the registrant by guarantee, pledge, assignment,
or otherwise) exceed five percent of the total assets as shown by the most
recent year end consolidated balance sheet.
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
<CAPTION>
Col. A Col. B Col. C Col. D Col. F
<S> <C> <C> <C> <C>
Additions
Balance at Charged to Balance at
February Costs and Deductions February
Description 3, 1996 Expenses Describe 1, 1997
(In Millions)
Deferred tax
valuation
allowance $43.5 $18.2 $61.7
<fn12>
See "Note 10: Income Taxes" of the Notes to Consolidated Financial
Statements in the 1996 Annual Report.
</fn12>
</TABLE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
- ---------------------------------------------------------------X
:
In re : CHAPTER 11
:
EDISON BROTHERS STORES, INC., et al., : Case No. 95-1354 (PJW)
:
Debtors. : JOINTLY ADMINISTERED
:
- ---------------------------------------------------------------X
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
and
YOUNG, CONAWAY, STARGATT
& TAYLOR
Attorneys for the Debtors
1110 N. Market St.
P. O. Box 391
Rodney Square North, 11th Floor
Wilmington, Delaware 19801
(302) 571-6600
Dated: Wilmington, Delaware
March 31, 1997
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
ARTICLE I.
<S> <C>
DEFINITIONS AND CONSTRUCTION OF TERMS. . . . . . . . . . . . . . . . . . 1
1.1. Administrative Expense Claim . . . . . . . . . . . . . . . . . 1
1.2. Administrative Reclamation Claim . . . . . . . . . . . . . . . 1
1.3. Allowed. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. Amended Edison Bylaws. . . . . . . . . . . . . . . . . . . . . 2
1.5. Amended Edison Certificate of Incorporation. . . . . . . . . . 2
1.6. Avoidance Claims . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. Ballot . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8. Bankruptcy Code. . . . . . . . . . . . . . . . . . . . . . . . 2
1.9. Bankruptcy Court . . . . . . . . . . . . . . . . . . . . . . . 2
1.10.Bankruptcy Rules . . . . . . . . . . . . . . . . . . . . . . . 2
1.11.Business Day . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12.Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13.Cash Distribution Pool . . . . . . . . . . . . . . . . . . . . 2
1.14.Causes of Action . . . . . . . . . . . . . . . . . . . . . . . 3
1.15.Chapter 11 Cases . . . . . . . . . . . . . . . . . . . . . . . 3
1.16.Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17.Claims Resolution Committee. . . . . . . . . . . . . . . . . . 3
1.18.Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Class A Membership Units . . . . . . . . . . . . . . . . . . . 3
1.20 Class B Membership Units . . . . . . . . . . . . . . . . . . . 3
1.21.Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22.Commencement Date. . . . . . . . . . . . . . . . . . . . . . . 3
1.23.Confirmation Date. . . . . . . . . . . . . . . . . . . . . . . 3
1.24.Confirmation Hearing . . . . . . . . . . . . . . . . . . . . . 3
1.25.Confirmation Order . . . . . . . . . . . . . . . . . . . . . . 3
1.26.Convenience Claim. . . . . . . . . . . . . . . . . . . . . . . 3
1.27.Corporate Headquarters Building. . . . . . . . . . . . . . . . 3
1.28.Corporate Headquarters Building Lease. . . . . . . . . . . . . 3
1.29.Corporate Headquarters Building Proceeds . . . . . . . . . . . 3
1.30.Creditors' Committee . . . . . . . . . . . . . . . . . . . . . 4
1.31 D&B Spinoff. . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32.Debtors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.33.Debtors in Possession. . . . . . . . . . . . . . . . . . . . . 4
1.34.Disclosure Statement . . . . . . . . . . . . . . . . . . . . . 4
1.35.Disputed . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.36.Disputed Claim Amount. . . . . . . . . . . . . . . . . . . . . 4
1.37.EBS Building, L.L.C. . . . . . . . . . . . . . . . . . . . . . 5
1.38.EBS Building LLC Members Agreement . . . . . . . . . . . . . . 5
1.39.EBS Claims, L.L.C. . . . . . . . . . . . . . . . . . . . . . . 5
1.40.EBS Claims LLC Members Agreement . . . . . . . . . . . . . . . 5
1.41.Edbro Missouri . . . . . . . . . . . . . . . . . . . . . . . . 5
1.42.Edison . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.43.Edison Equity Interest . . . . . . . . . . . . . . . . . . . . 5
1.44.Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 5
1.45.Equity Committee . . . . . . . . . . . . . . . . . . . . . . . 5
1.46.Equity Interest. . . . . . . . . . . . . . . . . . . . . . . . 5
1.47.Final Order. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.48.Funding Escrow . . . . . . . . . . . . . . . . . . . . . . . . 5
1.49.Funding Escrow Assets. . . . . . . . . . . . . . . . . . . . . 6
1.50 Funding Escrow Agent . . . . . . . . . . . . . . . . . . . . . 6
1.51.Funding Escrow Agreement . . . . . . . . . . . . . . . . . . . 6
1.52.Funding Escrow Properties. . . . . . . . . . . . . . . . . . . 6
1.53.General Unsecured Claim. . . . . . . . . . . . . . . . . . . . 6
1.54.IDB Secured Notes. . . . . . . . . . . . . . . . . . . . . . . 6
1.55.Initial Distribution Date. . . . . . . . . . . . . . . . . . . 6
1.56.Insured Claim. . . . . . . . . . . . . . . . . . . . . . . . . 6
1.57.Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.58.LLC Funding Amount . . . . . . . . . . . . . . . . . . . . . . 6
1.59.Management Incentive Plan. . . . . . . . . . . . . . . . . . . 6
1.60.Management Options . . . . . . . . . . . . . . . . . . . . . . 6
1.61.Mercantile . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.62.1976 IDB Claim . . . . . . . . . . . . . . . . . . . . . . . . 7
1.63.1985 IDB Claim . . . . . . . . . . . . . . . . . . . . . . . . 7
1.64.1976 IDB Related Instruments . . . . . . . . . . . . . . . . . 7
1.65.1985 IDB Related Instruments . . . . . . . . . . . . . . . . . 7
1.66.1976 IDB Secured Notes . . . . . . . . . . . . . . . . . . . . 7
1.67.1985 IDB Secured Notes . . . . . . . . . . . . . . . . . . . . 7
1.68.New Common Stock . . . . . . . . . . . . . . . . . . . . . . . 7
1.69.New Common Stock Distribution Pool . . . . . . . . . . . . . . 7
1.70.New Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.71.New Notes Distribution Amount. . . . . . . . . . . . . . . . . 7
1.72.New Notes Indentures . . . . . . . . . . . . . . . . . . . . . 8
1.73.Other Priority Claim . . . . . . . . . . . . . . . . . . . . . 8
1.74.Other Secured Claim. . . . . . . . . . . . . . . . . . . . . . 8
1.75.Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.76.Pension Plan Payment Date. . . . . . . . . . . . . . . . . . . 8
1.77.Pension Plan Proceeds. . . . . . . . . . . . . . . . . . . . . 8
1.78.Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.79.Plan Supplement. . . . . . . . . . . . . . . . . . . . . . . . 8
1.80.Priority Tax Claim . . . . . . . . . . . . . . . . . . . . . . 8
1.81.Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . 8
1.82.Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.83.Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.84.Registration Rights Agreement. . . . . . . . . . . . . . . . . 8
1.85.Reorganized Debtors. . . . . . . . . . . . . . . . . . . . . . 9
1.86.Reorganized Edison . . . . . . . . . . . . . . . . . . . . . . 9
1.87.Reorganized Subsidiaries . . . . . . . . . . . . . . . . . . . 9
1.88.Reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.89.Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . 9
1.90.Resolved Avoidance Claims. . . . . . . . . . . . . . . . . . . 9
1.91.Resolved Avoidance Claims Proceeds . . . . . . . . . . . . . . 9
1.92.Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.93.Secured Claim. . . . . . . . . . . . . . . . . . . . . . . . . 9
1.94.Secured 1976 IDB Claim . . . . . . . . . . . . . . . . . . . . 9
1.95.Secured 1985 IDB Claim . . . . . . . . . . . . . . . . . . . . 9
1.96. Secured Tax Claim. . . . . . . . . . . . . . . . . . . . . . 9
1.97. Secured United of Omaha Claim. . . . . . . . . . . . . . . . 9
1.98. Six Year Warrants. . . . . . . . . . . . . . . . . . . . . . 9
1.99. Subsequent Distribution Date . . . . . . . . . . . . . . . 10
1.100. Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.101. Subsidiary Equity Interest. . . . . . . . . . . . . . . . . 10
1.102 Surplus Distributions . . . . . . . . . . . . . . . . . . . 10
1.103. Three Year Warrants . . . . . . . . . . . . . . . . . . . . 10
1.104. Tort Claim. . . . . . . . . . . . . . . . . . . . . . . . . 10
1.105. United of Omaha . . . . . . . . . . . . . . . . . . . . . . 10
1.106. United of Omaha Claim . . . . . . . . . . . . . . . . . . . 10
1.107. United of Omaha Instruments . . . . . . . . . . . . . . . . 10
1.108. United of Omaha Secured Notes . . . . . . . . . . . . . . . 10
1.109. Unresolved Avoidance Claims . . . . . . . . . . . . . . . . 10
1.110. Unsecured Claim . . . . . . . . . . . . . . . . . . . . . . 10
1.111. Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.112. Warrant Distribution Pool . . . . . . . . . . . . . . . . . 11
ARTICLE II.
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS . . . . . . . . . . . . . . . . . 11
2.1. Administrative Expense Claims . . . . . . . . . . . . . . . 11
2.2. Professional Compensation and Reimbursement Claims. . . . . 11
2.3. Priority Tax Claims . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS. . . . . . . . . . . . . . 12
ARTICLE IV.
TREATMENT OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . 12
4.1. CLASS 1 -- OTHER PRIORITY CLAIMS. . . . . . . . . . . . . . 12
4.2. CLASS 2 -- SECURED 1976 IDB CLAIMS. . . . . . . . . . . . . 13
4.3. CLASS 3 -- SECURED 1985 IDB CLAIMS. . . . . . . . . . . . . 13
4.4. CLASS 4 -- SECURED UNITED OF OMAHA CLAIMS . . . . . . . . . 13
4.5. CLASS 5 -- SECURED TAX CLAIMS . . . . . . . . . . . . . . . 14
4.6. CLASS 6 -- OTHER SECURED CLAIMS . . . . . . . . . . . . . . 14
4.7. CLASS 7 -- CONVENIENCE CLAIMS . . . . . . . . . . . . . . . 15
4.8. CLASS 8 -- GENERAL UNSECURED CLAIMS . . . . . . . . . . . . 15
4.9. CLASS 9 -- EDISON EQUITY INTERESTS. . . . . . . . . . . . . 15
ARTICLE V.
ESTABLISHMENT OF LIMITED LIABILITY
COMPANIES AND FUNDING ESCROW; PENSION PLAN . . . . . . . . . . . . . . . 16
5.1. EBS Claims, L.L.C. and EBS Building, L.L.C. . . . . . . . . 16
5.2. Funding Escrow. . . . . . . . . . . . . . . . . . . . . . . 17
5.3. Pension Plan. . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI.
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED ADMINISTRATIVE
EXPENSE CLAIMS, CLAIMS AND EQUITY INTERESTS. . . . . . . . . . . . . . . 18
6.1. Voting of Claims and Equity Interests . . . . . . . . . . . 18
6.2. Nonconsensual Confirmation. . . . . . . . . . . . . . . . . 18
6.3. Method of Distributions Under the Plan. . . . . . . . . . . 19
6.4. General Unsecured Claims. . . . . . . . . . . . . . . . . . 20
6.5. Objections to and Resolution of Administrative Expense
Claims, Claims and Equity Interests . . . . . . . . . . . . 21
6.6. Distributions Relating to Allowed Insured Claims. . . . . . 22
6.7. Cancellation and Surrender of Existing Securities and
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8. Registration of New Common Stock. . . . . . . . . . . . . . 23
6.9. Listing of New Common Stock . . . . . . . . . . . . . . . . 23
6.10. Full Recovery for Holders of Allowed General Unsecured
Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . . . . . 23
7.1. Assumption or Rejection of Executory Contracts and
Unexpired Leases. . . . . . . . . . . . . . . . . . . . . . 23
7.2. Releases. . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3. Indemnification Obligations . . . . . . . . . . . . . . . . 25
7.4. Compensation and Benefit Programs . . . . . . . . . . . . . 25
7.5. Retiree Benefits. . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII.
CONSOLIDATION OF EDISON AND THE SUBSIDIARIES . . . . . . . . . . . . . . 26
8.1. Substantive Consolidation . . . . . . . . . . . . . . . . . 26
8.2. Merger of Corporate Entities. . . . . . . . . . . . . . . . 26
ARTICLE IX.
PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTORS. . . . . . . . . . . . . . . . 27
9.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2. Meetings of Reorganized Edison Stockholders . . . . . . . . 27
9.3. Directors and Officers of Reorganized Debtors . . . . . . . 27
9.4. Amended Bylaws and Amended Certificates of Incorporation. . 27
9.5. Issuance of New Securities. . . . . . . . . . . . . . . . . 28
9.6. Adoption of Management Incentive Plan . . . . . . . . . . . 28
9.7. Management Restricted Stock Grant and Options on the
Effective Date. . . . . . . . . . . . . . . . . . . . . . . 28
9.8. Employment Contracts. . . . . . . . . . . . . . . . . . . . 28
9.9. Retention/Performance Bonuses . . . . . . . . . . . . . . . 28
ARTICLE X.
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN. . . . . . . . . . . . 29
10.1. Term of Bankruptcy Injunction or Stays. . . . . . . . . . . 29
10.2. Revesting of Assets . . . . . . . . . . . . . . . . . . . . 29
10.3. Causes of Action. . . . . . . . . . . . . . . . . . . . . . 29
10.4. Discharge of Debtors. . . . . . . . . . . . . . . . . . . . 29
10.5. Injunction. . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XI.
EFFECTIVENESS OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . 30
11.1. Conditions Precedent to Effectiveness . . . . . . . . . . . 30
11.2. Effect of Failure of Conditions . . . . . . . . . . . . . . 31
11.3. Waiver of Conditions. . . . . . . . . . . . . . . . . . . . 31
ARTICLE XII.
RETENTION OF JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XIII.
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 32
13.1. Effectuating Documents and Further Transactions . . . . . . 32
13.2. Corporate Action. . . . . . . . . . . . . . . . . . . . . . 32
13.3. Exemption from Transfer Taxes . . . . . . . . . . . . . . . 33
13.4. Injunction Regarding Worthless Stock Deduction. . . . . . . 33
13.5. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . 33
13.6. Termination of Committees . . . . . . . . . . . . . . . . . 33
13.7. Claims Resolution Committee . . . . . . . . . . . . . . . . 33
13.8. Post-Confirmation Date Fees and Expenses. . . . . . . . . . 34
13.9. Payment of Statutory Fees . . . . . . . . . . . . . . . . . 34
13.10. Amendment or Modification of the Plan . . . . . . . . . . . 34
13.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . 35
13.12. Revocation or Withdrawal of the Plan. . . . . . . . . . . . 35
13.13. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . 35
13.14. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 36
13.16. Withholding and Reporting Requirements. . . . . . . . . . . 36
13.17. Plan Supplement . . . . . . . . . . . . . . . . . . . . . . 36
13.18. Allocation of Plan Distributions Between Principal and
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.19. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.20. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.21. Filing of Additional Documents. . . . . . . . . . . . . . . 37
</TABLE>
<TABLE>
<CAPTION>
INDEX OF SCHEDULES AND EXHIBITS
<S> <C>
Exhibit A. . . . . . . . . Summary of Terms of Corporate Headquarters Lease
Exhibit B. . . . . . . . . Summary of Terms of 1976 IDB Secured Notes
Exhibit C. . . . . . . . . Summary of Terms of 1985 IDB Secured Notes
Exhibit D. . . . . . . . .Summary of Terms of New Notes
Exhibit E. . . . . . . . .Summary of Terms of Six Year Warrants
Exhibit F. . .. . . . . . .Summary of Terms of Three Year Warrants
Exhibit G. . . . . . . . . Summary of Terms of United of Omaha Secured Notes
</TABLE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
- ---------------------------------------------------------------X
:
In re : CHAPTER 11
:
EDISON BROTHERS STORES, INC., et al., : Case No. 95-1354 (PJW)
:
Debtors. : JOINTLY ADMINISTERED
:
- ---------------------------------------------------------------X
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Edison Brothers Stores, Inc. and its 65 affiliate Debtors propose
the following joint plan of reorganization under section 1121(a) of title
11 of the United States Code:
ARTICLE I.
DEFINITIONS AND CONSTRUCTION OF TERMS
Definitions. As used herein, the following terms have the respective
meanings specified below, unless the context otherwise requires:
1.1. Administrative Expense Claim means any right to payment
constituting a cost or expense of administration of any of the Chapter 11
Cases under sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, any actual and necessary costs and expenses
of preserving the estates of the Debtors, any actual and necessary costs
and expenses of operating the business of the Debtors, any indebtedness or
obligations incurred or assumed by the Debtors in Possession in connection
with the conduct of their business, including, without limitation, for the
acquisition or lease of property or an interest in property or the
rendition of services, all compensation and reimbursement of expenses to
the extent Allowed by the Bankruptcy Court under section 330 or 503 of the
Bankruptcy Code, any Administrative Reclamation Claim, and any fees or
charges assessed against the estates of the Debtors under section 1930 of
chapter 123 of title 28 of the United States Code.
1.2. Administrative Reclamation Claim means any Claim under section
546(c) of the Bankruptcy Code, which, at the election of the holder thereof
pursuant to an order of the Bankruptcy Court dated June 4, 1996, is deemed
an Administrative Expense Claim under the Plan.
1.3. Allowed means, with reference to any Claim or Equity Interest,
(a) any Claim against or Equity Interest in the Debtors which has been
listed by the Debtors in their Schedules, as such Schedules may be amended
by the Debtors from time to time in accordance with Bankruptcy Rule 1009,
as liquidated in amount and not disputed or contingent and for which no
contrary proof of claim or interest has been filed, (b) any Claim or Equity
Interest allowed hereunder, (c) any Claim or Equity Interest which is not
Disputed, or (d) any Claim or Equity Interest which, if Disputed, (i) as to
which, pursuant to the Plan or a Final Order of the Bankruptcy Court, the
liability of the Debtors and the amount thereof are determined by a final
order of a court of competent jurisdiction other than the Bankruptcy Court,
or (ii) has been Allowed by Final Order; provided, however, that any Claims
or Equity Interests allowed solely for the purpose of voting to accept or
reject the Plan pursuant to an order of the Bankruptcy Court shall not be
considered "Allowed Claims" or "Allowed Equity Interests" hereunder.
Unless otherwise specified herein or by order of the Bankruptcy Court,
"Allowed Administrative Expense Claim," "Allowed Claim," or "Allowed Equity
Interest" shall not, for purposes of computation of distributions under the
Plan, include interest on such Administrative Expense Claim, Claim or
Equity Interest from and after the Commencement Date.
1.4. Amended Edison Bylaws means the amended and restated Bylaws of
Reorganized Edison, which shall be in substantially the form contained in
the Plan Supplement.
1.5. Amended Edison Certificate of Incorporation means the amended and
restated Certificate of Incorporation of Reorganized Edison, which shall be
in substantially the form contained in the Plan Supplement.
1.6. Avoidance Claims means all fraudulent transfer Causes of Action
under sections 544, 548 and 550 of the Bankruptcy Code or otherwise
applicable state law that one or more of the Debtors or Debtors in
Possession may have in connection with or arising out of D&B Spinoff.
1.7. Ballot means the form distributed to each holder of an impaired
Claim or Equity Interest on which is to be indicated acceptance or
rejection of the Plan.
1.8. Bankruptcy Code means title 11 of the United States Code, as
amended from time to time, as applicable to the Chapter 11 Cases.
1.9. Bankruptcy Court means the United States District Court for the
District of Delaware having jurisdiction over the Chapter 11 Cases and, to
the extent of any reference under section 157 of title 28 of the United
States Code, the unit of such District Court under section 151 of title 28
of the United States Code.
1.10. Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure as promulgated by the United States Supreme Court under section
2075 of title 28 of the United States Code, and any Local Rules of the
Bankruptcy Court.
1.11. Business Day means any day other than a Saturday, Sunday or
any other day on which commercial banks in New York, New York are required
or authorized to close by law or executive order.
1.12. Cash means legal tender of the United States of America and
equivalents thereof.
1.13. Cash Distribution Pool means $119,000,000 (a) plus the sum
of (i) the Pension Plan Proceeds to the extent received by the Debtors
prior to the Effective Date, (ii) the Corporate Headquarters Building
Proceeds to the extent received by the Debtors prior to the Effective Date,
and (iii) the Resolved Avoidance Claims Proceeds, if any, and (b) minus the
LLC Funding Amount.
1.14. Causes of Action means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights, suits, debts,
sums of money, damages, judgments, claims and demands whatsoever, whether
known or unknown, in law, equity or otherwise.
1.15. Chapter 11 Cases means the cases under chapter 11 of the
Bankruptcy Code commenced by the Debtors, styled In re Edison Brothers
Stores, Inc. et al., Chapter 11 Case No. 95-1354 (PJW), Jointly
Administered, currently pending in the Bankruptcy Court.
1.16. Claim has the meaning set forth in section 101 of the
Bankruptcy Code.
1.17. Claims Resolution Committee means the committee to be
established pursuant to Section 13.7 of the Plan.
1.18. Class means a category of holders of Claims or Equity
Interests as set forth in Article III of the Plan.
1.19. Class A Membership Units means 10,000,000 Class A Membership
Units in the EBS Claims, L.L.C. and 10,000,000 Class A Membership Units in
the EBS Building, L.L.C.
1.20. Class B Membership Units means 10,000,000 Class B Membership
Units in the EBS Claims, L.L.C. and 10,000,000 Class B Membership Units in
the EBS Building, L.L.C.
1.21. Collateral means any property or interest in property of the
estates of the Debtors subject to a Lien to secure the payment or
performance of a Claim, which Lien is not subject to avoidance under the
Bankruptcy Code or otherwise invalid under the Bankruptcy Code or
applicable state law.
1.22. Commencement Date means November 3, 1995, the date on which
the Debtors commenced the Chapter 11 Cases.
1.23. Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket.
1.24. Confirmation Hearing means the hearing held by the
Bankruptcy Court to consider confirmation of the Plan pursuant to section
1129 of the Bankruptcy Code, as such hearing may be adjourned or continued
from time to time.
1.25. Confirmation Order means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
1.26. Convenience Claim means any Unsecured Claim in the amount of
$1,000 or less and any Unsecured Claim that is reduced to $1,000 by the
election of the holder thereof on such holder's Ballot.
1.27. Corporate Headquarters Building means the Debtors' corporate
headquarters building located at 501 North Broadway in St. Louis, Missouri.
1.28. Corporate Headquarters Building Lease means the lease for
the Corporate Headquarters Building between the EBS Building, L.L.C., as
lessor, and Reorganized Edison, as lessee, on the terms and subject to the
conditions described in Exhibit A annexed hereto, which shall be in
substantially the form contained in the Plan Supplement.
1.29. Corporate Headquarters Building Proceeds means the Cash
proceeds received by the Debtors or Reorganized Debtors as a consequence of
the sale, sale/leaseback or other disposition of the Corporate Headquarters
Building, net of all costs and expenses incurred by the Debtors or
Reorganized Debtors in connection with such sale, sale/leaseback or other
similar disposition, including, without limitation, all applicable taxes,
brokers' fees, advertising fees, legal fees and filing fees.
1.30. Creditors' Committee means the statutory committee of
unsecured creditors appointed in the Chapter 11 Cases pursuant to section
1102 of the Bankruptcy Code.
1.31. D&B Spinoff means the June 29, 1995 distribution by Edison
of its 85% equity interest in Dave & Buster's, Inc. (a Missouri
corporation), as a stock dividend, to holders of Edison common stock as of
June 19, 1995 and all related transactions.
1.32. Debtors means, collectively, Edison, Edison Brothers Apparel
Stores, Inc., Edison Brothers Shoe Stores, Inc., Edison Paymaster, Inc.,
Edison Brothers Redevelopment Corporation, Edbro Missouri, Edison Alabama
Stores, Inc., Edison Arkansas Stores, Inc., Edison Colorado Stores, Inc.,
Edison Brothers Company, Edison Hawaii Stores, Inc., Edison Illinois
Stores, Inc., Edison Kansas Stores, Inc., Edison Kentucky Stores, Inc.,
Edison Louisiana Stores, Inc., Edison Maryland Stores, Inc., Edison
Massachusetts Stores, Inc., Edison Michigan Stores, Inc., Edison Minnesota
Stores, Inc., Edison Mississippi Stores, Inc., Edison Nebraska Stores,
Inc., Edison New Jersey Stores, Inc., Edison New Mexico Stores, Inc.,
Edison New York Stores, Inc., Edison Ohio Stores, Inc., Edison Oklahoma
Stores, Inc., Edison Oregon Stores, Inc., Edison Pennsylvania Stores, Inc.,
Edison Tennessee Stores, Inc., Edison Texas Stores, Inc., Edison Utah
Stores, Inc., Edbro Ohio Realty, Inc., EBSS-Montana, Inc., EBSS-North
Central, Inc., EBSS-Indiana, Inc., EBSS-Iowa, Inc., EBSS-Kansas, Inc.,
EBSS-Wisconsin, Inc., EBSS-Northeast, Inc., EBSS-South, Inc., EBSS-Mideast,
Inc., EBSS-Michigan, Inc., EBSS-East, Inc., EBSS-Ohio, Inc.,
EBSS-Pennsylvania, Inc., EBSS-Texas, Inc., EBSS-West, Inc., Edison
Puerto Rico Stores, Inc., Ebscat, Inc., Edison Brothers Mall Entertainment,
Inc., Horizon Entertainment, Inc., Edison Brothers Stores International, Inc.,
Edisur, Inc., EBS Holdings Corp., Edison Whittier Warehouse, Inc., Edbro
California USG -- 2, Inc., Edbro Missouri USG -- 2, Inc., Edbro California
USG -- 1, Inc., Industrial Design, Inc., Webster Clothes, Inc., Z&Z
Fashions, Ltd., Webster-Rossville, Inc., Time-Out Family Amusement Centers,
Inc., Tofac of Puerto Rico, Inc., Sacha Shoes Ltd. and Mandel's of
California.
1.33. Debtors in Possession means the Debtors in their capacity as
debtors in possession in the Chapter 11 Cases pursuant to sections 1101,
1107(a) and 1108 of the Bankruptcy Code.
1.34. Disclosure Statement means the disclosure statement relating
to the Plan, including, without limitation, all exhibits and schedules
thereto, as approved by the Bankruptcy Court pursuant to section 1125 of
the Bankruptcy Code.
1.35. Disputed means, with reference to any Claim or Equity
Interest, any Claim or Equity Interest proof of which was timely and
properly filed and which has been or hereafter is listed on the Schedules
as unliquidated, disputed or contingent, and in either case or in the case
of an Administrative Expense Claim, any Administrative Expense Claim, Claim
or Equity Interest which is disputed under the Plan or as to which the
Debtors or, if not prohibited by the Plan, any other party in interest has
interposed a timely objection and/or request for estimation in accordance
with section 502(c) of the Bankruptcy Code and Bankruptcy Rule 3018, which
objection and/or request for estimation has not been withdrawn or
determined by a Final Order, and any Claim or Equity Interest proof of
which was required to be filed by order of the Bankruptcy Court but as to
which a proof of claim or interest was not timely or properly filed.
1.36. Disputed Claim Amount means the amount set forth in the
proof of claim relating to a Disputed Claim or, if an amount is estimated
in respect of a Disputed Claim in accordance with section 502(c) of the
Bankruptcy Code and Bankruptcy Rule 3018 for purposes of, among other
things, Section 6.4(c)(i) of the Plan, the amount so estimated pursuant to
an order of the Bankruptcy Court.
1.37. EBS Building, L.L.C. means the Delaware limited liability
company formed pursuant to the EBS Building LLC Members Agreement.
1.38. EBS Building LLC Members Agreement means that certain
Members Agreement to govern EBS Building, L.L.C., which shall be in
substantially the form set forth in the Plan Supplement.
1.39. EBS Claims, L.L.C. means the Delaware limited liability
company formed pursuant to the EBS Claims LLC Members Agreement.
1.40. EBS Claims LLC Members Agreement means that certain Members
Agreement to govern EBS Claims, L.L.C., which shall be in substantially the
form set forth in the Plan Supplement.
1.41. Edbro Missouri means Edbro Missouri Realty Company, Inc., a
Missouri corporation.
1.42. Edison means Edison Brothers Stores, Inc., a Delaware
corporation.
1.43. Edison Equity Interest means any share of common stock or
other instrument evidencing a present ownership interest in Edison, whether
or not transferable, and any option, warrant or right, contractual or
otherwise, to acquire any such interest.
1.44. Effective Date means the first Business Day on which the
conditions specified in Section 11.1 of the Plan have been satisfied or
waived.
1.45. Equity Committee means the committee of equity security
holders appointed in the Chapter 11 Cases pursuant to section 1102 of the
Bankruptcy Code.
1.46. Equity Interest means any share of common stock or other
instrument evidencing an ownership interest in any of the Debtors, whether
or not transferable, and any option, warrant or right, contractual or
otherwise, to acquire any such interest.
1.47. Final Order means an order of the Bankruptcy Court as to
which the time to appeal, petition for certiorari, or move for reargument
or rehearing has expired and as to which no appeal, petition for
certiorari, or other proceedings for reargument or rehearing shall then be
pending or as to which any right to appeal, petition for certiorari,
reargue, or rehear shall have been waived in writing in form and substance
satisfactory to the Debtors or the Reorganized Debtors or, in the event
that an appeal, writ of certiorari, or reargument or rehearing thereof has
been sought, such order of the Bankruptcy Court shall have been determined
by the highest court to which such order was appealed, or certiorari,
reargument or rehearing shall have been denied and the time to take any
further appeal, petition for certiorari or move for reargument or rehearing
shall have expired; provided, however, that the possibility that a motion
under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any
analogous rule under the Bankruptcy Rules, may be filed with respect to
such order shall not cause such order not to be a Final Order.
1.48. Funding Escrow means the escrow established pursuant to
Section 5.2 of the Plan and governed by the Funding Escrow Agreement.
1.49. Funding Escrow Assets means (a) $16,000,000, (b) the
documents of title to the Funding Escrow Properties, and (c) anything
deposited in or transferred to or earned by the Funding Escrow on or after
the Effective Date; provided, however, that if the Debtors have, prior to
the Effective Date, entered into a contract to sell, sell and lease back or
otherwise dispose of one or more of the Funding Escrow Properties, the Cash
proceeds of such transaction or, if such Cash proceeds have not been
received prior to the Effective Date, the right to receive such Cash
proceeds, shall be transferred into the Funding Escrow in lieu of the
Funding Escrow Property or Funding Escrow Properties disposed of.
1.50. Funding Escrow Agent means the escrow agent appointed
pursuant to Section 5.2 of the Plan and the Funding Escrow Agreement.
1.51. Funding Escrow Agreement means the escrow agreement
governing the Funding Escrow, which shall be in substantially the form
contained in the Plan Supplement.
1.52. Funding Escrow Properties means the following properties
owned by the Debtors: (a) a parcel of land containing a 13-story building
with accompanying driveways and parking facility located at 400 South 14th
Street, St. Louis, Missouri; (b) a parcel of land containing a five-story
building plus basement comprising the whole of Block 282 of the City of St.
Louis located at 1230 North Second Street, St. Louis, Missouri; (c) a
parcel of land containing a four-story building plus basement located in
Cook County, Illinois at 131-133 South State Street, Chicago, Illinois; (d)
a parcel of land containing approximately 15.02 acres together with a
building thereon containing approximately 309,444 square feet of ground
floor space with accompanying parking facility and truck areas located at
1351 Redmond Road, Rome, Georgia; and (e) a parcel of land in Princeton,
Potaka County, Illinois, containing approximately 41.19 acres together with
a building thereon containing approximately 369,000 square feet of ground
floor space with accompanying parking facility and truck areas located at
U.S. 41 and Highway 100, Princeton, Indiana.
1.53. General Unsecured Claim means any Unsecured Claim other than
a Convenience Claim.
1.54. IDB Secured Notes means the 1976 IDB Secured Notes and the
1985 IDB Secured Notes.
1.55. Initial Distribution Date means the date that is 60 days
subsequent to the Effective Date, or as soon thereafter as is practicable.
1.56. Insured Claim means any Claim arising from an incident or
occurrence that is covered under the Debtors' insurance policies.
1.57. Lien has the meaning set forth in section 101 of the
Bankruptcy Code.
1.58. LLC Funding Amount means an amount determined in the sole
discretion of the Creditors' Committee and specified in a writing provided
to the Debtors by no later than 10 days prior to the date of the
Confirmation Hearing; provided, however, that such amount shall in no event
be greater than $119,000,000.
1.59. Management Incentive Plan means the management incentive
compensation plan substantially in the form contained in the Plan
Supplement.
1.60. Management Options shall have the meaning set forth in
Section 9.7 of the Plan.
1.61. Mercantile means Mercantile Bank of St. Louis, National
Association.
1.62. 1976 IDB Claim means any Claim against Edbro Missouri or
Edison arising under or relating to the 1976 IDB Related Instruments.
1.63. 1985 IDB Claim means any Claim against Edbro Missouri or
Edison arising under or relating to the 1985 IDB Related Instruments.
1.64. 1976 IDB Related Instruments means (a) the Agreement of
Lease and Option to Purchase, dated December 15, 1976, between the city of
Washington, Missouri and Edbro Missouri, (b) the Guaranty Agreement, dated
December 15, 1976, between the city of Washington, Missouri and Edison, (c)
the Guaranty Agreement, dated June 6, 1977, between the city of Washington,
Missouri and Edison, (d) the First Amendment of Lease and Option to
Purchase, dated June 6, 1977, by and between the city of Washington,
Missouri, as Lessor, and Edbro Missouri, as Lessee, (e) the General
Warranty Deed, dated July 6, 1977, by and between Edbro Missouri, as
Grantor, and the city of Washington, Missouri, as Grantee, and (f) any of
the documents and instruments relating to the foregoing documents and
instruments, as amended, supplemented or modified as of the date hereof.
1.65. 1985 IDB Related Instruments means (a) the Amended Lease
Agreement, dated November 15, 1985, between the city of Washington,
Missouri and Edbro Missouri, (b) the Amendment to Amended Lease Agreement,
dated November 28, 1994, between the city of Washington, Missouri and Edbro
Missouri, (c) the Indenture of Trust, dated November 15, 1985, between the
city of Washington, Missouri and Mercantile, (d) the Bank Agreement, dated
November 15, 1985, between Edison and Mercantile, (e) the Guarantee, dated
November 15, 1985, among the city of Washington, Missouri, Mercantile and
Edison, (f) the Bond Purchase Agreement, dated November 15, 1985, among the
city of Washington, Missouri, Mercantile and Edbro Missouri, (g) the
General Warranty Deed, dated November 28, 1994, by and between Edbro
Missouri, as Grantor, and the city of Washington, Missouri, as Grantee, and
(h) any of the documents and instruments relating to the foregoing
documents and instruments, as amended, supplemented or modified as of the
date hereof.
1.66. 1976 IDB Secured Notes means the promissory notes authorized
and to be issued pursuant to the Plan on the terms and subject to the
conditions described in Exhibit B annexed hereto.
1.67. 1985 IDB Secured Notes means the promissory notes authorized
and to be issued pursuant to the Plan on the terms and subject to the
conditions described in Exhibit C annexed hereto.
1.68. New Common Stock means the common stock of Reorganized
Edison authorized and to be issued pursuant to the Plan. The New Common
Stock shall have a par value of $.01 per share and such rights with respect
to dividends, liquidation, voting and other matters as are provided for by
applicable nonbankruptcy law or in the Amended Edison Certificate of
Incorporation and the Amended Edison Bylaws.
1.69. New Common Stock Distribution Pool means 10,000,000 shares
of New Common Stock.
1.70. New Notes means the promissory notes authorized and to be
issued pursuant to the Plan on the terms and subject to the conditions
described in Exhibit D annexed hereto.
1.71. New Notes Distribution Amount means $100,000,000 in
principal amount of New Notes.
1.72. New Notes Indentures means the trust indenture and
supplemental trust indenture between Reorganized Edison, as issuer, and the
indenture trustee, which shall be in substantially the form contained in
the Plan Supplement.
1.73. Other Priority Claim means any Claim, other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority
in right of payment under section 507(a) of the Bankruptcy Code.
1.74. Other Secured Claim means any Secured Claim, other than a
Secured 1976 IDB Claim, a Secured 1985 IDB Claim, a Secured United of Omaha
Claim or a Secured Tax Claim.
1.75. Pension Plan means the Edison Brothers Stores Pension Plan,
as the same may have been or may be amended, modified, revised or restated.
1.76. Pension Plan Payment Date means the date upon which there is
a final distribution of assets from the Pension Plan.
1.77. Pension Plan Proceeds means the Cash proceeds received by
the Debtors or Reorganized Debtors as a consequence of the termination of
the Pension Plan, net of (a) the Pension Plan assets transferred to a
qualified replacement pension plan within the meaning of section 4980(d)(2)
of the Internal Revenue Code (which assets in excess of accrued benefits
are not to exceed the statutory minimum required to limit excise taxes
relating to the termination of the Pension Plan to 20%), (b) all costs,
fees and expenses incurred or for which a reserve is established in
connection with, arising from or related to such termination and the
establishment of a replacement pension plan, and (c) all applicable taxes
incurred or for which a reserve is established in connection with, arising
from or related to the termination of the Pension Plan, including, without
limitation, income and excise taxes.
1.78. Plan means this chapter 11 plan of reorganization,
including, without limitation, the Plan Supplement and all exhibits,
supplements, appendices and schedules hereto, either in its present form or
as the same may be altered, amended or modified from time to time.
1.79. Plan Supplement means the forms of documents specified in
Section 13.17 of the Plan.
1.80. Priority Tax Claim means any Claim of a governmental unit of
the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.81. Pro Rata Share means a proportionate share, so that the
ratio of the consideration distributed on account of an Allowed Claim or
Allowed Equity Interest in a Class to the amount of such Allowed Claim or
Allowed Equity Interest is the same as the ratio of the amount of the
consideration distributed on account of all Allowed Claims or Allowed
Equity Interests in such Class to the amount of all Allowed Claims or
Allowed Equity Interests in such Class.
1.82. Quarter means the period beginning on the Effective Date and
ending on the next of October 31, January 31, April 30 and July 31, and
each three month period thereafter.
1.83. Record Date means the day that is five days from and after
the Confirmation Date.
1.84. Registration Rights Agreement means a registration rights
agreement to be entered into pursuant to Section 6.8 of the Plan between
Reorganized Edison and any person or entity entitled to become a party to
such registration rights agreement under Section 6.8 of the Plan, which
shall be in substantially the form contained in the Plan Supplement.
1.85. Reorganized Debtors means Reorganized Edison and each of the
Reorganized Subsidiaries.
1.86. Reorganized Edison means Edison, or any successor thereto by
merger, consolidation or otherwise, on and after the Effective Date.
1.87. Reorganized Subsidiaries means each of the Subsidiaries, or
any successors thereto by merger, consolidation or otherwise, on and after
the Effective Date.
1.88. Reserve shall have the meaning set forth in
Section 6.4(c)(i) of the Plan.
1.89. Restricted Stock shall have the meaning set forth in Section
9.7 of the Plan.
1.90. Resolved Avoidance Claims means all Avoidance Claims that
are, prior to the Effective Date, the subject of a compromise and
settlement approved pursuant to Bankruptcy Rule 9019 by Final Order or
otherwise resolved, discontinued, abandoned or dismissed.
1.91. Resolved Avoidance Claims Proceeds means the Cash proceeds
received by the Debtors or Reorganized Debtors as a consequence of the
Resolved Avoidance Claims.
1.92. Schedules means the schedules of assets and liabilities, the
list of holders of Equity Interests, and the statements of financial
affairs filed by the Debtors under section 521 of the Bankruptcy Code and
Bankruptcy Rule 1007, and all amendments and modifications thereto through
the Confirmation Date.
1.93. Secured Claim means any Claim, to the extent reflected in
the Schedules or a proof of claim as a Secured Claim, which is secured by a
Lien on Collateral to the extent of the value of such Collateral, as
determined in accordance with section 506(a) of the Bankruptcy Code, or, in
the event that such Claim is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of such setoff.
1.94. Secured 1976 IDB Claim means any 1976 IDB Claim to the
extent such Claim is a Secured Claim.
1.95. Secured 1985 IDB Claim means any 1985 IDB Claim to the
extent such Claim is a Secured Claim.
1.96. Secured Tax Claim means any Secured Claim which, absent its
secured status, would be entitled to priority in right of payment under
section 507(a)(8) of the Bankruptcy Code.
1.97. Secured United of Omaha Claim means any United of Omaha
Claim to the extent such Claim is a Secured Claim.
1.98. Six Year Warrants means warrants to purchase New Common
Stock, on the terms and subject to the conditions described in Exhibit E
annexed hereto, to be distributed to the holders of Allowed Edison Equity
Interests pursuant to Section 4.9 of the Plan.
1.99. Subsequent Distribution Date means the twentieth day after
the end of the Quarter following the Quarter in which the Initial
Distribution Date occurs and the twentieth day after the end of each
subsequent Quarter; provided, however, that solely for purposes of Sections
4.8(b)(ii) and 6.4(d) of the Plan, the first and second Subsequent
Distribution Date shall occur on the twentieth day after the end of the
second and fourth Quarters, respectively, following the Quarter in which
the Initial Distribution Date occurs.
1.100. Subsidiary means any Debtor of which Edison owns directly or
indirectly all of the outstanding capital stock.
1.101. Subsidiary Equity Interest means any share of common stock
or other instrument evidencing a present ownership interest in any of the
Subsidiaries, whether or not transferable, and any option, warrant or
right, contractual or otherwise, to acquire any such interest.
1.102. Surplus Distributions shall have the meaning set forth in
Section 6.4(d) of the Plan.
1.103. Three Year Warrants means warrants to purchase New Common
Stock, on the terms and subject to the conditions described in Exhibit F
annexed hereto, to be distributed to the holders of Allowed Edison Equity
Interests pursuant to Section 4.9 of the Plan.
1.104. Tort Claim means any Claim relating to personal injury,
property damage or products liability or other similar Claim asserted
against any of the Debtors that has not been compromised and settled or
otherwise resolved.
1.105. United of Omaha means United of Omaha Life Insurance
Company.
1.106. United of Omaha Claim means any Claim against Edison arising
under or relating to the United of Omaha Instruments to the extent such
instruments constitute financing transactions rather than true leases.
1.107. United of Omaha Instruments means (a) Lease Agreement No.
EBS-101, dated September 30, 1989, between Edison and Parctec, Inc., (b)
all schedules executed from time to time by Edison and Parctec, Inc.
pursuant to Lease Agreement No. EBS-101, including, without limitation, the
schedules assigned to United of Omaha, and (c) any of the documents and
instruments relating to the foregoing documents and instruments, as
amended, supplemented, or modified as of the date hereof; provided,
however, that any reference to documents as "leases" in this Section 1.106
shall not constitute an admission or concession that such documents are
leases or that the transactions relating to such documents are leasing
transactions.
1.108. United of Omaha Secured Notes means the promissory notes
authorized and to be issued pursuant to the Plan on the terms and subject
to the conditions described in Exhibit G annexed hereto.
1.109. Unresolved Avoidance Claims means all Avoidance Claims that
are not, prior to the Effective Date, the subject of a compromise and
settlement approved pursuant to Bankruptcy Rule 9019 by Final Order or
otherwise resolved, discontinued, abandoned or dismissed.
1.110. Unsecured Claim means any Claim that is not a Secured Claim,
Administrative Expense Claim, Priority Tax Claim or Other Priority Claim.
1.111. Warrants means the Three Year Warrants and the Six Year
Warrants.
1.112. Warrant Distribution Pool means approximately 416,667 Three
Year Warrants and approximately 548,246 Six Year Warrants.
Interpretation; Application of Definitions and Rules of Construction.
Wherever from the context it appears appropriate, each term stated in
either the singular or the plural shall include both the singular and the
plural and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter. Unless otherwise
specified, all section, article, schedule or exhibit references in the Plan
are to the respective Section in, Article of, Schedule to, or Exhibit to,
the Plan. The words "herein," "hereof," "hereto," "hereunder" and other
words of similar import refer to the Plan as a whole and not to any
particular section, subsection or clause contained in the Plan. The rules
of construction contained in section 102 of the Bankruptcy Code shall apply
to the construction of the Plan. A term used herein that is not defined
herein, but that is used in the Bankruptcy Code, shall have the meaning
ascribed to that term in the Bankruptcy Code. The headings in the Plan are
for convenience of reference only and shall not limit or otherwise affect
the provisions of the Plan.
ARTICLE II.
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
2.1. Administrative Expense Claims. Except to the extent that any
entity entitled to payment of any Allowed Administrative Expense Claim
agrees to a different treatment, each holder of an Allowed Administrative
Expense Claim shall receive Cash in an amount equal to such Allowed
Administrative Expense Claim on the later of the Effective Date and the
date such Administrative Expense Claim becomes an Allowed Administrative
Expense Claim, or as soon thereafter as is practicable; provided, however,
that Allowed Administrative Expense Claims representing liabilities
incurred in the ordinary course of business by the Debtors in Possession or
liabilities arising under loans or advances to or other obligations
incurred by the Debtors in Possession, to the extent authorized and
approved by the Bankruptcy Court if such authorization and approval was
required under the Bankruptcy Code, shall be paid in full and performed by
the Reorganized Debtors in the ordinary course of business in accordance
with the terms and subject to the conditions of any agreements governing,
instruments evidencing or other documents relating to, such transactions.
2.2. Professional Compensation and Reimbursement Claims. All entities
seeking an award by the Bankruptcy Court of compensation for services
rendered or reimbursement of expenses incurred through and including the
Confirmation Date under sections 503(b)(2), 503(b)(3), 503(b)(4) or
503(b)(5) of the Bankruptcy Code (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred through the Confirmation Date by the
date that is 60 days after the Effective Date or such other date as may be
fixed by the Bankruptcy Court and, (b) if granted such an award by the
Bankruptcy Court, shall be paid in full in such amounts as are Allowed by
the Bankruptcy Court (i) on the date such Administrative Expense Claim
becomes an Allowed Administrative Expense Claim, or as soon thereafter as
is practicable or (ii) upon such other terms as may be mutually agreed upon
between such holder of an Administrative Expense Claim and the Debtors in
Possession or, on and after the Effective Date, the Reorganized Debtors.
2.3. Priority Tax Claims. Except to the extent that a holder of an
Allowed Priority Tax Claim has been paid by the Debtors prior to the
Effective Date or agrees to a different treatment, each holder of an
Allowed Priority Tax Claim shall receive, at the sole option of Reorganized
Edison, (a) Cash in an amount equal to such Allowed Priority Tax Claim on
the later of the Effective Date and the date such Priority Tax Claim
becomes an Allowed Priority Tax Claim, or as soon thereafter as is
practicable, or (b) equal annual Cash payments in an aggregate amount equal
to such Allowed Priority Tax Claim, together with interest at a fixed
annual rate equal to 8.25%, over a period through the sixth anniversary of
the date of assessment of such Allowed Priority Tax Claim, or upon such
other terms determined by the Bankruptcy Court to provide the holder of
such Allowed Priority Tax Claim deferred Cash payments having a value, as
of the Effective Date, equal to such Allowed Priority Tax Claim.
ARTICLE III.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims, other than Administrative Expense Claims and Priority Tax Claims,
and Equity Interests are classified for all purposes, including voting,
confirmation and distribution pursuant to the Plan, as follows:
<TABLE>
<CAPTION>
Class Status
<S> <C>
Class 1 -- Other Priority Claims . . . . . . . . . . . . . . . . . Unimpaired
Class 2 -- Secured 1976 IDB Claims . . . . . . . . . . . . . . . . Impaired
Class 3 -- Secured 1985 IDB Claims . . . . . . . . . . . . . . . . Impaired
Class 4 -- Secured United of Omaha Claims. . . . . . . . . . . . . Impaired
Class 5 -- Secured Tax Claims. . . . . . . . . . . . . . . . . . . Impaired
Class 6 -- Other Secured Claims. . . . . . . . . . . . . . . . . . Unimpaired
Class 7 -- Convenience Claims. . . . . . . . . . . . . . . . . . . Impaired
Class 8 -- General Unsecured Claims. . . . . . . . . . . . . . . . Impaired
Class 9 -- Edison Equity Interests . . . . . . . . . . . . . . . . Impaired
</TABLE>
ARTICLE IV.
TREATMENT OF CLAIMS AND EQUITY INTERESTS
4.1. CLASS 1 -- OTHER PRIORITY CLAIMS.
(a) Impairment and Voting. Class 1 is unimpaired by the Plan. Each
holder of an Allowed Other Priority Claim is conclusively presumed to have
accepted the Plan and is not entitled to vote to accept or reject the Plan.
(b) Distributions. Each holder of an Allowed Other Priority Claim
shall receive Cash in an amount equal to such Allowed Other Priority Claim
on the later of the Effective Date and the date such Allowed Other Priority
Claim becomes an Allowed Other Priority Claim, or as soon thereafter as is
practicable.
4.2. CLASS 2 -- SECURED 1976 IDB CLAIMS.
(a) Impairment and Voting. Class 2 is impaired by the Plan. Each
holder of an Allowed Secured 1976 IDB Claim is entitled to vote to accept
or reject the Plan.
(b) Distributions. Each holder of an Allowed Secured 1976 IDB Claim
shall receive a 1976 IDB Secured Note in the principal amount equal to its
Allowed Secured 1976 IDB Claim on the later of the Effective Date and the
date such Allowed Secured 1976 IDB Claim becomes an Allowed Secured 1976
IDB Claim, or as soon thereafter as is practicable.
(c) Retention of Liens. Each holder of an Allowed Secured 1976 IDB
Claim shall retain the Liens securing its Allowed Secured 1976 IDB Claim as
of the Effective Date to the extent of the obligations of Reorganized
Edison under the 1976 IDB Secured Notes issued to the holders of Allowed
Secured 1976 IDB Claims.
4.3. CLASS 3 -- SECURED 1985 IDB CLAIMS.
(a) Impairment and Voting. Class 3 is impaired by the Plan. Each
holder of an Allowed Secured 1985 IDB Claim is entitled to vote to accept
or reject the Plan.
(b) Distributions. Each holder of an Allowed Secured 1985 IDB Claim
shall receive a 1985 IDB Secured Note in the principal amount equal to its
Allowed Secured 1985 IDB Claim on the later of the Effective Date and the
date such Allowed Secured 1985 IDB Claim becomes an Allowed Secured 1985
IDB Claim, or as soon thereafter as is practicable.
(c) Retention of Liens. Each holder of an Allowed Secured 1985 IDB
Claim shall retain the Liens securing its Allowed Secured 1985 IDB Claim as
of the Effective Date to the extent of the obligations of Reorganized
Edison under the 1985 IDB Secured Notes issued to the holders of Allowed
Secured 1985 IDB Claims.
4.4. CLASS 4 -- SECURED UNITED OF OMAHA CLAIMS.
(a) Impairment and Voting. Class 4 is impaired by the Plan. Each
holder of an Allowed Secured United of Omaha Claim is entitled to vote to
accept or reject the Plan.
(b) Distributions. Except to the extent that a holder of an Allowed
Secured United of Omaha Claim agrees to a different treatment, at the sole
option of Reorganized Edison, (i) each holder of an Allowed Secured United
of Omaha Claim shall receive a United of Omaha Secured Note in the
principal amount equal to its Allowed Secured United of Omaha Claim on the
later of the Effective Date and the date such Allowed Secured United of
Omaha Claim becomes an Allowed Secured United of Omaha Claim, or as soon
thereafter as is practicable, and each holder of an Allowed Secured United
of Omaha Claim shall retain the Liens securing its Allowed Secured United
of Omaha Claim as of the Effective Date to the extent of the obligations of
Reorganized Edison under the United of Omaha Secured Notes issued to the
holders of Allowed Secured United of Omaha Claims, (ii) each holder of an
Allowed Secured United of Omaha Claim shall receive Cash in an amount equal
to such Allowed Secured United of Omaha Claim, including any interest on
such Allowed Secured United of Omaha Claim required to be paid pursuant to
section 506(b) of the Bankruptcy Code, on the later of the Effective Date
and the date such Allowed Secured United of Omaha Claim becomes an Allowed
Secured United of Omaha Claim, or as soon thereafter as is practicable, or
(iii) each holder of an Allowed Secured United of Omaha Claim shall receive
the Collateral securing its Allowed Secured United of Omaha Claim in full
and complete satisfaction of such Allowed Secured United of Omaha Claim on
the later of the Effective Date and the date such Allowed Secured United of
Omaha Claim becomes an Allowed Secured United of Omaha Claim, or as soon
thereafter as is practicable.
(c) Retention of Liens. Each holder of an Allowed Secured United of
Omaha Claim shall retain the Liens securing its Allowed Secured United of
Omaha Claim as of the Effective Date to the extent of the obligations of
Reorganized Edison under the United of Omaha Secured Notes issued to the
holders of Allowed Secured United of Omaha Claims.
4.5. CLASS 5 -- SECURED TAX CLAIMS.
(a) Impairment and Voting. Class 5 is impaired by the Plan. Each
holder of an Allowed Secured Tax Claim is entitled to vote to accept or
reject the Plan.
(b) Distributions. Except to the extent that a holder of an Allowed
Secured Tax Claim has been paid by the Debtors prior to the Effective Date
or agrees to a different treatment, each holder of an Allowed Secured Tax
Claim shall receive, at the sole option of Reorganized Edison, (i) Cash in
an amount equal to such Allowed Secured Tax Claim, including any interest
on such Allowed Secured Tax Claim required to be paid pursuant to section
506(b) of the Bankruptcy Code, on the later of the Effective Date and the
date such Allowed Secured Tax Claim becomes an Allowed Secured Tax Claim,
or as soon thereafter as is practicable, or (ii) equal annual Cash payments
in an aggregate amount equal to such Allowed Secured Tax Claim, together
with interest at a fixed annual rate equal to 8.25%, over a period through
the sixth anniversary of the date of assessment of such Allowed Secured Tax
Claim, or upon such other terms determined by the Bankruptcy Court to
provide the holder of such Allowed Secured Tax Claim deferred Cash payments
having a value, as of the Effective Date, equal to such Allowed Secured Tax
Claim.
(c) Retention of Liens. Each holder of an Allowed Secured Tax Claim
shall retain the Liens (or replacement Liens as may be contemplated under
nonbankruptcy law) securing its Allowed Secured Tax Claim as of the
Effective Date until full and final payment of such Allowed Secured Tax
Claim is made as provided herein, and upon such full and final payment,
such Liens shall be deemed null and void and shall be unenforceable for all
purposes.
4.6. CLASS 6 -- OTHER SECURED CLAIMS.
(a) Impairment and Voting. Class 6 is unimpaired by the Plan. Each
holder of an Allowed Other Secured Claim is conclusively presumed to have
accepted the Plan and is not entitled to vote to accept or reject the Plan.
(b) Distributions/Reinstatement of Claims. Except to the extent that
a holder of an Allowed Other Secured Claim agrees to a different treatment,
at the sole option of Reorganized Edison, (i) each Allowed Other Secured
Claim shall be reinstated and rendered unimpaired in accordance with
section 1124(2) of the Bankruptcy Code, notwithstanding any contractual
provision or applicable nonbankruptcy law that entitles the holder of an
Allowed Other Secured Claim to demand or receive payment of such Allowed
Other Secured Claim prior to the stated maturity of such Allowed Other
Secured Claim from and after the occurrence of a default, (ii) each holder
of an Allowed Other Secured Claim shall receive Cash in an amount equal to
such Allowed Other Secured Claim, including any interest on such Allowed
Other Secured Claim required to be paid pursuant to section 506(b) of the
Bankruptcy Code, on the later of the Effective Date and the date such
Allowed Other Secured Claim becomes an Allowed Other Secured Claim, or as
soon thereafter as is practicable, or (iii) each holder of an Allowed Other
Secured Claim shall receive the Collateral securing its Allowed Other
Secured Claim and any interest on such Allowed Other Secured Claim required
to be paid pursuant to section 506(b) of the Bankruptcy Code, in full and
complete satisfaction of such Allowed Other Secured Claim on the later of
the Effective Date and the date such Allowed Other Secured Claim becomes an
Allowed Other Secured Claim, or as soon thereafter as is practicable.
4.7. CLASS 7 -- CONVENIENCE CLAIMS.
(a) Impairment and Voting. Class 7 is impaired by the Plan. Each
holder of an Allowed Convenience Claim is entitled to vote to accept or
reject the Plan.
(b) Distributions. Each holder of an Allowed Convenience Claim as of
the Record Date shall receive Cash in an amount equal to 100% of such
Allowed Convenience Claim on the later of the Effective Date and the date
such Allowed Convenience Claim becomes an Allowed Convenience Claim, or as
soon thereafter as is practicable.
4.8. CLASS 8 -- GENERAL UNSECURED CLAIMS.
(a) Impairment and Voting. Class 8 is impaired by the Plan. Each
holder of an Allowed General Unsecured Claim is entitled to vote to accept
or reject the Plan.
(b) Distributions.
(i) On the Initial Distribution Date or as soon thereafter as is
practicable, each holder of an Allowed General Unsecured Claim as of
the Record Date shall receive a Pro Rata Share of (a) the Cash
Distribution Pool less the amount of Cash in the Reserve, (b) the New
Notes Distribution Amount less the aggregate principal amount of New
Notes in the Reserve, (c) the New Common Stock Distribution Pool less
the number of shares of New Common Stock in the Reserve, and (d)
subject to Section 5.1(c) of the Plan and in accordance with Section
6.4(b) of the Plan, the Class A Membership Units, plus any interest
required to be paid pursuant to Section 6.4(a) of the Plan.
(ii) On each Subsequent Distribution Date, each holder of an
Allowed General Unsecured Claim as of the Record Date shall receive a
Pro Rata Share of the amount of Cash, New Notes, New Common Stock and
Class A Membership Units in the Surplus Distributions.
4.9. CLASS 9 -- EDISON EQUITY INTERESTS.
(a) Impairment and Voting. Class 9 is impaired by the Plan. Each
holder of an Allowed Edison Equity Interest is entitled to vote to accept
or reject the Plan.
(b) Distributions. Each holder of an Allowed Edison Equity Interest
as of the Record Date shall receive a Pro Rata Share of the Three Year
Warrants and the Six Year Warrants in the Warrant Distribution Pool on the
later of the Initial Distribution Date and the date such Allowed Edison
Equity Interest becomes an Allowed Edison Equity Interest, or as soon
thereafter as is practicable.
ARTICLE V.
ESTABLISHMENT OF LIMITED LIABILITY
COMPANIES AND FUNDING ESCROW; PENSION PLAN
5.1. EBS Claims, L.L.C. and EBS Building, L.L.C.
(a) Creation. Subject to Section 5.1(c) of the Plan, prior to the
Effective Date, the EBS Claims, L.L.C. shall be established pursuant to the
EBS Claims LLC Members Agreement and the Plan. Prior to the Effective
Date, the EBS Building, L.L.C. shall be established pursuant to the EBS
Building LLC Members Agreement and the Plan.
(b) Transfer of Certain Assets to the LLCs.
(i) Subject to Section 5.1(c) of the Plan, on the Effective
Date, the Debtors and the Reorganized Debtors shall transfer to the
EBS Claims, L.L.C. all of their right, title and interest in and to
(a) the Unresolved Avoidance Claims and (b) the right to receive the
Pension Plan Proceeds from the Reorganized Debtors within five days
after the Pension Plan Payment Date. The EBS Claims, L.L.C. shall be
appointed the representative of the Debtors' estates for the purpose
of retaining and enforcing the Unresolved Avoidance Claims in
accordance with section 1123(b)(3)(B) of the Bankruptcy Code and the
EBS Claims LLC Members Agreement.
(ii) Subject to Section 5.1(c) of the Plan, on the Effective
Date, the Debtors and the Reorganized Debtors will transfer to the EBS
Building, L.L.C.: (a) the right to receive the Corporate Headquarters
Building Proceeds if the Debtors or Reorganized Debtors have, as of
the Effective Date, entered into a contract to sell, sell and lease
back or otherwise dispose of the Corporate Headquarters Building and
all of the Corporate Headquarters Building Proceeds have not been
received by the Debtors prior to the Effective Date; provided,
however, that if such contract does not thereafter result in the sale
or other disposition contemplated, the Debtors shall transfer the
Corporate Headquarters Building to the EBS Building, L.L.C., or (b) if
no such contract to sell, sell and lease back or otherwise dispose of
the Corporate Headquarters Building has been entered into as of the
Effective Date, the Corporate Headquarters Building.
(c) Exceptions to Transfers. If prior to the Effective Date, the
Debtors have received the Pension Plan Proceeds, then the Pension Plan
Proceeds shall be added to the Cash Distribution Pool pursuant to Section
1.13 hereof. If in accordance with the preceding sentence, the Pension
Plan Proceeds are added to the Cash Distribution Pool, and if there are no
Unresolved Avoidance Claims as of the Effective Date and the Resolved
Avoidance Claims Proceeds have been added to the Cash Distribution Pool in
accordance with Section 1.13 hereof, then the EBS Claims, L.L.C. shall be
terminated. If prior to the Effective Date, the Debtors receive the
Corporate Headquarters Building Proceeds and the Corporate Headquarters
Building Proceeds have been added to the Cash Distribution Pool pursuant to
Section 1.13 hereof, the EBS Building, L.L.C. shall be terminated.
(d) Funding of the LLCs. On the Effective Date, the Debtors or
Reorganized Debtors shall transfer to the EBS Claims, L.L.C. and the EBS
Building, L.L.C. the LLC Funding Amount in the respective amounts
designated to the Debtors by the Creditors' Committee, in writing, within
10 days prior to the Confirmation Date.
(e) Corporate Headquarters Building Lease. Subject to Section 5.1(c)
of the Plan, on the Effective Date, the EBS Building, L.L.C., as lessor,
and Reorganized Edison, as lessee, shall enter into the Corporate
Headquarters Building Lease.
(f) Indemnification. Except with respect to any Unresolved Avoidance
Claims that the EBS Claims, L.L.C. may have against present or former
officers, directors or employees of the Debtors in their capacities other
than as present or former officers, directors or employees, the EBS Claims,
L.L.C. and the EBS Building, L.L.C. shall indemnify, defend and hold
harmless the Reorganized Debtors and their present or former officers,
directors and employees from and against any losses, claims, damages,
liabilities and actions arising from or relating to the EBS Claims, L.L.C.
(including, without limitation, any actions taken or proceedings commenced
by the EBS Claims, L.L.C.) and the EBS Building, L.L.C.
5.2. Funding Escrow.
(a) Creation of the Funding Escrow. On the Effective Date, pursuant
to section 1123(b)(3)(B) of the Bankruptcy Code, the Funding Escrow shall
be created and governed by the Funding Escrow Agreement for the benefit of
the Reorganized Debtors and holders of New Notes.
(b) Funding Escrow Assets. On the Effective Date, Reorganized Edison
shall enter into the Funding Escrow Agreement and deposit the Funding
Escrow Assets in the Funding Escrow for the purpose of "prefunding" the
interest payments required to be made by Reorganized Edison under the New
Notes through and including July 31, 2000. Pursuant to the Funding Escrow
Agreement, Reorganized Edison shall (i) have the right in its sole
discretion to direct the Funding Escrow Agent to transfer to Reorganized
Edison Cash from the Funding Escrow in amounts necessary to pay the
interest payments required under the New Notes through and including July
31, 2000, (ii) have the right in its sole discretion to direct the Funding
Escrow Agent to sell, sell and lease back or otherwise dispose of the
Funding Escrow Properties and retain the proceeds therefrom in the Funding
Escrow, (iii) have the right to use of the Funding Escrow Properties for no
cost at all times during the existence of the Funding Escrow, unless and
until the Funding Escrow Properties are sold, sold and leased back or
otherwise disposed of pursuant to this Section 5.2(b) of the Plan and the
Funding Escrow Agreement, (iv) be required to pay the taxes relating to and
operating costs of the Funding Escrow Properties, unless and until the
Funding Escrow Properties are sold, sold and leased back or otherwise
disposed of pursuant to this Section 5.2(b) of the Plan and the Funding
Escrow Agreement, and (v) have the right in its sole discretion to
substitute $14,000,000 in Cash for the Funding Escrow Properties at any
time during the existence of the Funding Escrow, unless and until the
Funding Escrow Properties are sold, sold and leased back or otherwise
disposed of pursuant to this Section 5.2(b) of the Plan and the Funding
Escrow Agreement; provided, however, that if the Debtors have, prior to the
Effective Date, entered into a contract to sell, sell and lease back or
otherwise dispose of one or more of the Funding Escrow Properties, the Cash
proceeds of such transaction or, if such Cash proceeds have not been
received prior to the Effective Date, the right to receive such Cash
proceeds, shall be transferred into the Funding Escrow pursuant to Section
1.46 of the Plan and the amount of Cash that Reorganized Edison may
substitute for the Funding Escrow Properties ($14,000,000) shall be reduced
by the Cash proceeds of such transaction or transactions. Provided that
all interest payments required under the New Notes have been paid by
Reorganized Edison through and including July 31, 2000, any funds in the
Funding Escrow that have not been distributed and the Funding Escrow
Properties that have not been sold or otherwise disposed of by the Funding
Escrow Agent on or before August 1, 2000, shall be returned to Reorganized
Edison by the Funding Escrow Agent free and clear of all claims, liens,
encumbrances and contractually imposed restrictions arising under or
related to the Funding Escrow Agreement and the Plan and any documents or
instruments relating thereto.
(c) Funding Escrow Agent. The Funding Escrow Agent shall be
appointed by the Debtors by no later than 10 days prior to the date of the
Confirmation Hearing. The name of the person appointed in that capacity
shall be disclosed at or prior to the Confirmation Hearing. The Funding
Escrow Agent shall serve for the duration of the Funding Escrow subject to
his or her earlier death, resignation, incapacity or removal as provided in
the Funding Escrow Agreement.
(d) Powers of Funding Escrow Agent. From and after the Effective
Date, the Funding Escrow Agent's powers shall be as provided for in the
Funding Escrow Agreement.
(e) Distribution of Funding Escrow Assets. The Funding Escrow Assets
shall be distributed in accordance with the provisions of the Plan and the
Funding Escrow Agreement.
(f) Term of Funding Escrow. The Funding Escrow and the Funding
Escrow Agreement shall terminate on the thirtieth day after the
distribution of all of the Funding Escrow Assets in accordance with the
provisions of the Plan and the Funding Escrow Agreement.
(g) Indemnification. The Funding Escrow shall indemnify, defend and
hold harmless the Reorganized Debtors and their officers, directors and
employees from and against any losses, claims, damages, liabilities and
actions arising from or relating to the Funding Escrow.
5.3. Pension Plan. The Debtors and Reorganized Debtors shall take all
actions necessary and appropriate to generate the Pension Plan Proceeds.
Except as provided in Section 5.1(c) of the Plan, the Pension Plan Proceeds
shall be transferred to the EBS Claims, L.L.C. in accordance with Section
5.1(b) of the Plan.
ARTICLE VI.
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED ADMINISTRATIVE
EXPENSE CLAIMS, CLAIMS AND EQUITY INTERESTS
6.1. Voting of Claims and Equity Interests. Each holder of an Allowed
Claim or an Allowed Equity Interest in an impaired Class of Claims or
Equity Interests shall be entitled to vote separately to accept or reject
the Plan as provided in such order as is entered by the Bankruptcy Court
establishing certain procedures with respect to the solicitation and
tabulation of votes to accept or reject the Plan, or any other order or
orders of the Bankruptcy Court.
6.2. Nonconsensual Confirmation. If any impaired Class of Claims or
Equity Interests entitled to vote shall not accept the Plan by the
requisite statutory majorities provided in sections 1126(c) or 1126(d) of
the Bankruptcy Code, as applicable, the Debtors reserve the right to amend
the Plan in accordance with Section 13.10 hereof or undertake to have the
Bankruptcy Court confirm the Plan under section 1129(b) of the Bankruptcy
Code or both.
6.3. Method of Distributions Under the Plan.
(a) In General. Subject to Bankruptcy Rule 9010, all distributions
under the Plan shall be made by Reorganized Edison to the holder of each
Allowed Claim at the address of such holder as listed on the Schedules as
of the Record Date, and to the holder of each Allowed Edison Equity
Interest at the address of such holder as listed in the transfer ledger for
Edison Equity Interests as of the Record Date, unless the Debtors or
Reorganized Debtors have been notified in writing of a change of address,
including, without limitation, by the filing of a proof of Claim or Equity
Interest by such holder that provides an address for such holder different
from the address reflected on the Schedules (for holders of Allowed Claims)
or on the transfer ledger as of the Record Date (for holders of Allowed
Edison Equity Interests).
(b) Distributions of Cash. Any payment of Cash made by Reorganized
Edison pursuant to the Plan shall be made by check drawn on a domestic
bank.
(c) Timing of Distributions. Any payment or distribution required to
be made under the Plan on a day other than a Business Day shall be made on
the next succeeding Business Day.
(d) Hart-Scott-Rodino Compliance. Any shares of New Common Stock to
be distributed under the Plan to any entity required to file a Premerger
Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall not be distributed until the
notification and waiting periods applicable under such Act to such entity
shall have expired or been terminated.
(e) Minimum Distributions. No payment of Cash less than one-hundred
dollars shall be made by Reorganized Edison to any holder of a Claim unless
a request therefor is made in writing to Reorganized Edison.
(f) Fractional Shares or Warrants. No fractional shares of New
Common Stock or fractional Warrants or Class A Membership Units or Cash in
lieu thereof shall be distributed under the Plan. When any distribution on
account of an Allowed Claim or Allowed Edison Equity Interest pursuant to
the Plan would otherwise result in the issuance of a number of shares of
New Common Stock, Warrants or Class A Membership Units that is not a whole
number, the actual distribution of shares of New Common Stock, Warrants or
Class A Membership Units shall be rounded to as follows: (i) fractions of
.5 or greater shall be rounded to the next higher whole number and (ii)
fractions of less than .5 shall be rounded to the next lower whole number.
The total number of shares of New Common Stock, Warrants or Class A
Membership Units to be distributed to a Class of Claims or Edison Equity
Interests, as the case may be, shall be adjusted as necessary to account
for the rounding provided in this Section 6.3(f).
(g) Unclaimed Distributions. Except with respect to distributions
under the Plan to holders of Allowed General Unsecured Claims, any
distributions under the Plan that are unclaimed for a period of one year
after distribution thereof shall be revested in Reorganized Edison and any
entitlement of any holder of any Claim or Equity Interest to such
distributions shall be extinguished and forever barred. Distributions
under the Plan to holders of Allowed General Unsecured Claims that are
unclaimed for a period of one year after distribution thereof shall be
added to the Reserve and any entitlement of such holders of Allowed General
Unsecured Claims to such distributions shall be extinguished and forever
barred.
(h) Distributions to Holders as of the Record Date. As at the close
of business on the Record Date, the claims register (for Claims) and the
transfer ledgers (for Edison Equity Interests) shall be closed, and there
shall be no further changes in the record holders of any Claims or Edison
Equity Interests. Edison and Reorganized Edison shall have no obligation
to recognize any transfer of any Claims or Edison Equity Interests
occurring after the Record Date. Edison and Reorganized Edison shall
instead be entitled to recognize and deal for all purposes under the Plan
(except as to voting to accept or reject the Plan pursuant to Section 6.1
of the Plan) with only those record holders stated on the claims register
(for Claims) and transfer ledgers (for Edison Equity Interests) as of the
close of business on the Record Date.
6.4. General Unsecured Claims.
(a) Cash Held Prior to the Initial Distribution Date. On the
Effective Date, Reorganized Edison shall deposit the Cash in the Cash
Distribution Pool in a segregated bank account or accounts. Reorganized
Edison shall invest the Cash held in such account or accounts in a manner
consistent with investment guidelines to be agreed upon by the Debtors and
the Creditors' Committee, which investment guidelines shall be included in
the Plan Supplement. Reorganized Edison shall pay, or cause to be paid,
out of the funds held in such account or accounts, any tax imposed on such
account by any governmental unit with respect to income generated by the
property held in such account or accounts. The yield earned on such
invested Cash for the period commencing on the Effective Date and
continuing through and including the Initial Distribution Date (net of
applicable taxes), shall be distributed to each holder of an Allowed
General Unsecured Claim on the Initial Distribution Date, based upon each
holders' Pro Rata Share.
(b) Membership Units. On the Effective Date, Reorganized Edison
shall hold 100% of the Class B Membership Units. In connection with each
distribution of Class A Membership Units under the Plan, Reorganized Edison
will surrender for cancellation a number of Class B Membership Units in
each of the EBS Claims, L.L.C. and the EBS Building, L.L.C. equal to the
number of Class A Membership Units in each such LLC that are to be
distributed under the Plan, and will receive in exchange therefor, for
distribution under the Plan, a like number of Class A Membership Units in
such LLC.
(c) Distributions Withheld for Disputed General Unsecured Claims.
(i) Establishment and Maintenance of Reserve. On the Initial
Distribution Date and each Subsequent Distribution Date, Reorganized
Edison shall reserve from the distributions to be made on such dates
to the holders of Allowed General Unsecured Claims, an amount of Cash,
New Notes and New Common Stock equal to 100% of the distributions to
which holders of Disputed General Unsecured Claims would be entitled
under the Plan as of such dates as if such Disputed General Unsecured
Claims were Allowed Claims in their Disputed Claim Amounts (the
"Reserve"). Subject to Section 6.4(b) of the Plan, Reorganized Edison
shall also hold in the Reserve the Class B Membership Units.
(ii) Property Held in Reserve. Cash held in the Reserve
(including interest paid on New Notes held in the Reserve and
dividends paid on New Common Stock held in the Reserve, if any) shall
be deposited in a segregated bank account or accounts in the name of
Reorganized Edison and designated as held in trust for the benefit of
holders of Allowed General Unsecured Claims. Cash held in the Reserve
shall not constitute property of the Reorganized Debtors. Reorganized
Edison shall invest the Cash held in the Reserve in a manner
consistent with investment guidelines to be agreed upon by the Debtors
and the Creditors' Committee, which investment guidelines shall be
included in the Plan Supplement. Reorganized Edison shall pay, or
cause to be paid, out of the funds held in the Reserve, any tax
imposed on the Reserve by any governmental unit with respect to income
generated by the property held in the Reserve. The yield earned on
such invested Cash (net of applicable taxes) shall be distributed to
each holder of an Allowed General Unsecured Claim on the last
Subsequent Distribution Date under the Plan, based upon each holders'
Pro Rata Share. New Notes, New Common Stock and Class B Membership
Interests held in the Reserve shall be held in trust by the
Reorganized Debtors for the benefit of the potential claimants of such
securities and shall not constitute property of the Reorganized
Debtors.
(d) Distributions Upon Allowance of Disputed General Unsecured
Claims. The holder of a Disputed General Unsecured Claim that becomes an
Allowed Claim subsequent to the Initial Distribution Date shall receive
distributions of Cash, New Notes and New Common Stock from the Reserve and,
in accordance with Section 6.4(b) of the Plan, Class A Membership Units, on
the next Subsequent Distribution Date that follows the Quarter during which
such Disputed General Unsecured Claim becomes an Allowed Claim pursuant to
a Final Order. Such distributions shall be made in accordance with the
Plan based upon the distributions that would have been made to such holder
under the Plan if the Disputed General Unsecured Claim had been an Allowed
Claim on or prior to the Effective Date, without any post-Effective Date
interest thereon (without regard to interest earned on property held in the
Reserve pursuant to Section 6.4 of the Plan).
(e) Surplus Distributions to Holders of Allowed General Unsecured
Claims. The following consideration shall constitute surplus distributions
(the "Surplus Distributions") pursuant to the Plan: (i) pursuant to
Section 6.3(g) of the Plan, distributions under the Plan to holders of
Allowed General Unsecured Claims that are unclaimed for a period of one
year after distribution thereof; (ii) to the extent that a Disputed General
Unsecured Claim is not Allowed or becomes an Allowed Claim in an amount
less than the Disputed Claim Amount, the excess of the amount of Cash, New
Notes and New Common Stock in the Reserve over the amount of Cash, New
Notes and New Common Stock actually distributed on account of such Disputed
General Unsecured Claim; and (iii) to the extent that a Disputed General
Unsecured Claim is not Allowed or becomes an Allowed Claim in an amount
less than the Disputed Claim Amount, a number of Class A Membership Units
equal to the number of Class B Membership Units held in the Reserve on
account of such excess. The Surplus Distributions shall be distributed to
the holders of Allowed General Unsecured Claims pursuant to Section
4.8(b)(ii) of the Plan; provided, however, that Reorganized Edison shall
not be under any obligation to make any Surplus Distributions on a
Subsequent Distribution Date unless the Cash portion of the Surplus
Distributions to be distributed on a Subsequent Distribution Date
aggregates $1,000,000 or more, unless the distribution is the last
distribution under the Plan.
(f) Personal Injury Tort Claims. All personal injury Tort Claims are
Disputed Claims. Any personal injury Tort Claim as to which a proof of
claim was timely filed in the Chapter 11 Cases shall be determined and
liquidated in the administrative or judicial tribunal(s) in which it is
pending on the Effective Date or, if no action was pending on the Effective
Date, in any administrative or judicial tribunal of appropriate
jurisdiction, or in accordance with any alternative dispute resolution or
similar proceeding as same may be approved by order of the Bankruptcy
Court. Any personal injury Tort Claim determined and liquidated (i)
pursuant to a judgment obtained in accordance with this Section 6.4(e) and
applicable nonbankruptcy law which is no longer appealable or subject to
review, or (ii) in any alternative dispute resolution or similar proceeding
as same may be approved by order of the Bankruptcy Court, shall be deemed
an Allowed General Unsecured Claim in such liquidated amount and satisfied
in accordance with the Plan. Nothing contained in this Section 6.4(e)
shall impair the Debtors' right to seek estimation of any and all personal
injury Tort Claims in a court or courts of competent jurisdiction or
constitute or be deemed a waiver of any Cause of Action that the Debtors
may hold against any entity, including, without limitation, in connection
with or arising out of any personal injury Tort Claim.
6.5. Objections to and Resolution of Administrative Expense Claims,
Claims and Equity Interests.
(a) Except as to applications for allowances of compensation and
reimbursement of expenses under sections 330 and 503 of the Bankruptcy
Code, the Debtors or Reorganized Debtors shall have the exclusive right to
make and file objections to Administrative Expense Claims, Claims and
Equity Interests subsequent to the Confirmation Date. All objections shall
be litigated to Final Order; provided, however, that, subject to Section
6.5(b) of the Plan, the Reorganized Debtors shall have the authority to
compromise, settle, otherwise resolve or withdraw any objections, without
approval of the Bankruptcy Court. Unless otherwise ordered by the
Bankruptcy Court, the Debtors or Reorganized Debtors shall file all
objections to Administrative Expense Claims that are the subject of proofs
of claim or requests for payment filed with the Bankruptcy Court (other
than applications for allowances of compensation and reimbursement of
expenses), Claims and Equity Interests and serve such objections upon the
holder of the Administrative Expense Claim, Claim or Equity Interest as to
which the objection is made as soon as is practicable, but in no event
later than 60 days after the Effective Date or such later date as may be
approved by the Bankruptcy Court.
(b) On the last day of each month or as otherwise agreed to in
writing by the Debtors and the Creditors' Committee, the Reorganized
Debtors shall provide counsel to the Claims Resolution Committee with
written notice by overnight delivery service or facsimile transmission of
each Disputed Claim that they intend to compromise, settle or resolve,
other than such compromises, settlements or resolutions that fall within
the parameters of (i) prior orders of the Bankruptcy Court authorizing the
Debtors to compromise or settle certain Claims without approval of the
Bankruptcy Court, (ii) settlement guidelines to be agreed upon by the
Debtors and the Creditors' Committee prior to the Confirmation Date, or
(iii) settlement guidelines to be agreed upon by the Debtors and the Claims
Resolution Committee subsequent to the Effective Date. Within 15 days
after the receipt of such notice, the Claims Resolution Committee shall
provide the Reorganized Debtors with written notice of any such
compromises, settlements or resolutions with which it does not concur. If
the Reorganized Debtors and the Claims Resolution Committee cannot reach
agreement with respect to any such compromise, settlement or resolution,
the Claims Resolution Committee will be permitted to file with the
Bankruptcy Court and serve on the Reorganized Debtors an objection to the
reasonableness of any such compromise, settlement or resolution within 15
days after the date that the Claims Resolution Committee provides the
Reorganized Debtors with written notice of such compromise, settlement or
resolution with which it does not concur, or within such other time period
as may be agreed upon by the Reorganized Debtors and the Creditors'
Committee, and the reasonableness of such compromise, settlement or
resolution shall be determined by the Bankruptcy Court. If the Claims
Resolution Committee fails to timely file and serve an objection to a
compromise, settlement or resolution, such compromise, settlement or
resolution shall be deemed resolved on the terms and subject to the
conditions agreed to by the Reorganized Debtors. Notwithstanding the
foregoing, the Claims Resolution Committee shall have the authority to
compromise, settle or resolve any Disputed Claim without the consent of the
Reorganized Debtors.
6.6. Distributions Relating to Allowed Insured Claims. Distributions
under the Plan to each holder of an Allowed Insured Claim shall be in
accordance with the treatment provided under the Plan for the Class in
which such Allowed Insured Claim is classified, but solely to the extent
that such Allowed Insured Claim is not satisfied from proceeds payable to
the holder thereof under any pertinent insurance policies and applicable
law. Nothing contained in this Section 6.6 shall constitute or be deemed a
waiver of any Cause of Action that the Debtors or any entity may hold
against any other entity, including, without limitation, insurers under any
policies of insurance.
6.7. Cancellation and Surrender of Existing Securities and Agreements.
(a) On the Effective Date, the promissory notes, share certificates
and other instruments evidencing any Claim or Edison Equity Interest shall
be deemed cancelled without further act or action under any applicable
agreement, law, regulation, order or rule and the obligations of the
Debtors under the agreements, indentures and certificates of designations
governing such Claims and Edison Equity Interests, as the case may be,
shall be discharged.
(b) Each holder of a promissory note, share certificate or other
instrument evidencing a Claim or Edison Equity Interest shall surrender
such promissory note, share certificate or instrument to the Reorganized
Debtors, unless such requirement is waived by the Reorganized Debtors. No
distribution of property hereunder shall be made to or on behalf of any
such holders unless and until such promissory note, share certificate or
instrument is received by the Reorganized Debtors or the unavailability of
such promissory note, share certificate or instrument is established to the
reasonable satisfaction of the Reorganized Debtors or such requirement is
waived by the Reorganized Debtors. The Reorganized Debtors may require any
holder that is unable to surrender or cause to be surrendered any such
promissory notes, share certificates or instruments to deliver an affidavit
of loss and indemnity and/or furnish a bond in form and substance
(including, without limitation, with respect to amount) reasonably
satisfactory to the Reorganized Debtors. Any holder that fails within the
later of one year after the Confirmation Date and the date of Allowance of
its Claim or Edison Equity Interest (i) if possible, to surrender or cause
to be surrendered such promissory note, share certificate or instrument,
(ii) if requested, to execute and deliver an affidavit of loss and
indemnity reasonably satisfactory to the Reorganized Debtors, and (iii) if
requested, to furnish a bond reasonably satisfactory to the Reorganized
Debtors, shall be deemed to have forfeited all rights, claims and Causes of
Action against the Debtors and Reorganized Debtors and shall not
participate in any distribution hereunder.
6.8. Registration of New Common Stock. Each person or entity
receiving a distribution of New Common Stock pursuant to the Plan
representing at least 10% of the aggregate New Common Stock issuable
pursuant to the Plan shall be entitled to become a party to the
Registration Rights Agreement.
6.9. Listing of New Common Stock. Reorganized Edison shall use
reasonable commercial efforts to cause the shares of New Common Stock to be
listed on a national securities exchange or the Nasdaq National Market.
6.10. Full Recovery for Holders of Allowed General Unsecured
Claims. Holders of Allowed General Unsecured Claims will not be deemed to
have received 100% of the value of their Allowed General Unsecured Claims
unless and until the aggregate value of all distributions to such holders
under the Plan equals the amount of their Allowed General Unsecured Claims,
plus interest from the Commencement Date through and including the
Effective Date at a rate of 8.89%.
ARTICLE VII.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
7.1. Assumption or Rejection of Executory Contracts and Unexpired
Leases.
(a) Executory Contracts and Unexpired Leases. Pursuant to sections
365(a) and 1123(b)(2) of the Bankruptcy Code, all executory contracts and
unexpired leases that exist between the Debtors and any person shall be
deemed assumed by the Reorganized Debtors as of the Effective Date, except
for any executory contract or unexpired lease (i) which has been assumed
pursuant to an order of the Bankruptcy Court entered prior to the
Confirmation Date, (ii) which has been rejected pursuant to an order of the
Bankruptcy Court entered prior to the Confirmation Date, (iii) as to which
a motion for approval of the rejection of such executory contract or
unexpired lease has been filed and served prior to the Confirmation Date or
(iv) which is set forth in Schedule 7.1(a)(x) (executory contracts) or
Schedule 7.1(a)(y) (unexpired leases), which Schedules shall be included in
the Plan Supplement; provided, however, that the Debtors or Reorganized
Debtors reserve the right, on or prior to the Effective Date, to amend
Schedules 7.1(a)(x) or 7.1(a)(y) to delete any executory contract or
unexpired lease therefrom or add any executory contract or unexpired lease
thereto, in which event such executory contract(s) or unexpired lease(s)
shall be deemed to be, respectively, assumed or rejected. The Debtors or
Reorganized Debtors shall provide notice of any amendments to Schedules
7.1(a)(x) or 7.1(a)(y) to the parties to the executory contracts and
unexpired leases affected thereby. The listing of a document on Schedules
7.1(a)(x) and 7.1(a)(y) shall not constitute an admission by the Debtors or
Reorganized Debtors that such document is an executory contract or an
unexpired lease or that the Debtors or Reorganized Debtors have any
liability thereunder.
(b) Schedules of Rejected Executory Contracts and Unexpired Leases;
Inclusiveness. Each executory contract and unexpired lease listed or to be
listed on Schedules 7.1(a)(x) or 7.1(a)(y) that relates to the use or
occupancy of real property shall include (i) modifications, amendments,
supplements, restatements, or other agreements made directly or indirectly
by any agreement, instrument, or other document that in any manner affects
such executory contract or unexpired lease, without regard to whether such
agreement, instrument or other document is listed on Schedules 7.1(a)(x) or
7.1(a)(y), and (ii) executory contracts or unexpired leases appurtenant to
the premises listed on Schedules 7.1(a)(x) or 7.1(a)(y), including, without
limitation, all easements, licenses, permits, rights, privileges, immuni-
ties, options, rights of first refusal, powers, uses, usufructs, reciprocal
easement agreements, vault, tunnel or bridge agreements or franchises, and
any other interests in real estate or rights in rem relating to such
premises to the extent any of the foregoing are executory contracts or
unexpired leases, unless any of the foregoing agreements previously have
been assumed.
(c) Insurance Policies. Each of the Debtors' insurance policies and
any agreements, documents or instruments relating thereto, including,
without limitation, any retrospective premium rating plans relating to such
policies, are treated as executory contracts under the Plan.
Notwithstanding the foregoing, distributions under the Plan to any holder
of a Claim covered by any of such insurance policies and related
agreements, documents or instruments that are assumed hereunder, shall be
in accordance with the treatment provided under Article IV and Section 6.6
of the Plan. Nothing contained in this Section 7.1(c) shall constitute or
be deemed a waiver of any Cause of Action that the Debtors may hold against
any entity, including, without limitation, the insurer under any of the
Debtors' policies of insurance.
(d) Approval of Assumption or Rejection of Executory Contracts and
Unexpired Leases. Entry of the Confirmation Order shall constitute (i) the
approval, pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy
Code, of the assumption of the executory contracts and unexpired leases
assumed pursuant to Section 7.1(a) hereof, (ii) the extension of time,
pursuant to section 365(d)(4) of the Bankruptcy Code, within which the
Debtors may assume or reject the unexpired leases specified in Section
7.1(a) hereof through the date of entry of an order approving the
assumption or rejection of such unexpired leases, and (iii) the approval,
pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of the
rejection of the executory contracts and unexpired leases rejected pursuant
to Sections 7.1(a) hereof.
(e) Cure of Defaults. Except as may otherwise be agreed to by the
parties, within 60 days after the Effective Date or as soon thereafter as
is practicable, the Reorganized Debtors shall cure any and all undisputed
defaults under any executory contract or unexpired lease assumed pursuant
to the Plan in accordance with section 365(b)(1) of the Bankruptcy Code.
All disputed defaults that are required to be cured shall be cured either
within 30 days of the entry of a Final Order determining the amount, if
any, of the Debtors' or Reorganized Debtors' liability with respect
thereto, or as may otherwise be agreed to by the parties.
(f) Bar Date for Filing Proofs of Claim Relating to Executory
Contracts and Unexpired Leases Rejected Pursuant to the Plan. Claims
arising out of the rejection of an executory contract or unexpired lease
pursuant to Section 7.1 of the Plan must be filed with the Bankruptcy Court
and/or served upon the Debtors or Reorganized Debtors as otherwise may be
provided in the Confirmation Order, by no later than 30 days after the
later of (i) notice of entry of an order approving the rejection of such
executory contract or unexpired lease, (ii) notice of entry of the
Confirmation Order, and (iii) notice of an amendment to Schedule 7.1(a)(x)
or 7.1(a)(y). Any Claims not filed within such time will be forever barred
from assertion against the Debtors, their estates, the Reorganized Debtors
and their property. Unless otherwise ordered by the Bankruptcy Court, all
Claims arising from the rejection of executory contracts and unexpired
leases shall be treated as General Unsecured Claims under the Plan.
7.2. Releases. The following releases are provided for pursuant to
the Plan:
(a) The Debtors hereby release and are permanently enjoined from
any prosecution or attempted prosecution of any and all Causes of
Action which they have, may have or claim to have against any present
or former director, officer, agent or employee of the Debtors;
provided, however, that the foregoing shall not operate as a waiver of
or release from (i) any Causes of Action arising out of any express
contractual obligation owing by any such director, officer, agent or
employee to the Debtors or any reimbursement obligation of any such
director, officer, agent or employee with respect to a loan or advance
made by the Debtors to such director, officer, agent or employee, and
(ii) any Avoidance Claims that any such director, officer, agent or
employee may be subject to in their capacities other than as present
or former director, officer, agent or employee.
(b) All parties in interest, including, without limitation, the
EBS Claims, L.L.C. and the EBS Building, L.L.C., hereby release and
are permanently enjoined from any prosecution or attempted prosecution
of any and all Causes of Action, whether or not derivative from or
through the Debtors, which any party in interest either individually
or collectively with other persons or entities has, may have or claim
to have against any present or former director, officer, agent or
employee of the Debtors; provided, however, that the foregoing shall
not operate as a waiver of or release from any Avoidance Claims that
any such director, officer, agent or employee may be subject to in
their capacities other than as present or former director, officer,
agent or employee.
7.3. Indemnification Obligations. For purposes of the Plan, the
obligations of the Debtors to defend, indemnify, reimburse or limit the
liability of their present and any former directors, officers or employees
that were directors, officers or employees, respectively, on or after the
Commencement Date against any claims or obligations pursuant to the
Debtors' certificates of incorporation or bylaws, applicable state law or
specific agreement, or any combination of the foregoing, shall survive
confirmation of the Plan, remain unaffected thereby, and not be discharged
irrespective of whether indemnification, defense, reimbursement or
limitation is owed in connection with an event occurring before, on, or
after the Commencement Date.
7.4. Compensation and Benefit Programs. Except as provided in Section
7.1(a) of the Plan, all employment and severance practices and policies,
and all compensation and benefit plans, policies, and programs of the
Debtors applicable to their directors, officers or employees, including,
without limitation, all savings plans, retirement plans, health care plans,
severance benefit plans, incentive plans, workers' compensation programs
and life, disability and other insurance plans are treated as executory
contracts under the Plan and are hereby assumed pursuant to sections 365(a)
and 1123(b)(2) of the Bankruptcy Code.
7.5. Retiree Benefits. Payments, if any, due to any person for the
purpose of providing or reimbursing payments for retired employees and
their spouses and dependents for medical, surgical, or hospital care
benefits, or benefits in the event of sickness, accident, disability, or
death under any plan, fund, or program (through the purchase of insurance
or otherwise) maintained or established in whole or in part by the Debtors
prior to the Commencement Date shall be continued for the duration of the
period the Debtors have obligated themselves to provide such benefits.
ARTICLE VIII.
CONSOLIDATION OF EDISON AND THE SUBSIDIARIES
8.1. Substantive Consolidation. The Chapter 11 Cases shall be
substantively consolidated, pursuant to an order of the Bankruptcy Court
granting the substantive consolidation of the Chapter 11 Cases, for all
purposes related to the Plan, including, without limitation, for purposes
of voting, confirmation and distribution. In accordance with such order of
the Bankruptcy Court, (i) all assets and liabilities of the Subsidiaries
shall be deemed merged or treated as though they were merged into and with
the assets and liabilities of Edison, (ii) no distributions shall be made
under the Plan on account of intercompany claims among the Debtors, (iii)
no distributions shall be made under the Plan on account of Subsidiary
Equity Interests, (iv) all guarantees of the Debtors of the obligations of
any other Debtor shall be deemed eliminated so that any claim against any
Debtor and any guarantee thereof executed by any other Debtor and any joint
or several liability of any of the Debtors shall be deemed to be one
obligation of the consolidated Debtors, and (v) each and every Claim filed
or to be filed in the Chapter 11 Case of any of the Debtors shall be deemed
filed against the consolidated Debtors, and shall be deemed one Claim
against and obligation of the consolidated Debtors. Such substantive
consolidation shall not (other than for purposes related to the Plan)
effect (i) the legal and corporate structures of the Reorganized Debtors,
subject to the right of the Debtors or Reorganized Debtors to effect
restructurings as provided in Section 8.2 of the Plan, (ii) intercompany
claims by and among the Debtors or Reorganized Debtors, (iii) Subsidiary
Equity Interests, and (iv) pre and post Commencement Date guarantees that
are required to be maintained (a) in connection with executory contracts or
unexpired leases that were entered into during the Chapter 11 Cases or that
have been or will be assumed, or (b) pursuant to the Plan.
8.2. Merger of Corporate Entities. On or as of the Effective Date,
within the sole and exclusive discretion of the Debtors, any or all of the
Subsidiaries may be merged into one or more of the Debtors or dissolved.
Upon the occurrence of any such merger, all assets of the merged entities
shall be transferred to and become the assets of the surviving corporation,
and all liabilities of the merged entities, except to the extent
discharged, released or extinguished pursuant to the Plan and the
Confirmation Order, shall be assumed by and shall become the liabilities of
the surviving corporation. All mergers and dissolutions shall be effective
as of the Effective Date pursuant to the Confirmation Order without any
further action by the stockholders or directors of any of the Debtors, the
Debtors in Possession or the Reorganized Debtors.
ARTICLE IX.
PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTORS
9.1. General. On the Effective Date, the management, control and
operation of the Reorganized Debtors shall become the general
responsibility of the respective Boards of Directors of the Reorganized
Debtors, who shall, thereafter, have the responsibility for the management,
control and operation of the Reorganized Debtors.
9.2. Meetings of Reorganized Edison Stockholders. In accordance with
the Amended Edison Certificate of Incorporation and the Amended Edison
Bylaws, as the same may be amended from time to time, the first annual
meeting of the stockholders of Reorganized Edison shall be held on a date
in 1998 selected by the Board of Directors of Reorganized Edison, and
subsequent meetings of the stockholders of Reorganized Edison shall be held
at least once annually each year thereafter.
9.3. Directors and Officers of Reorganized Debtors.
(a) Boards of Directors.
(i) Reorganized Edison. The initial Board of Directors of
Reorganized Edison shall consist of nine individuals whose names shall
be disclosed prior to the date of the Confirmation Hearing. Each of
the members of such initial Board of Directors shall serve until the
first annual meeting of stockholders of Reorganized Edison or their
earlier resignation or removal in accordance with the Amended Edison
Certificate of Incorporation or Amended Edison Bylaws, as the same may
be amended from time to time.
(ii) Reorganized Subsidiaries. The initial Board of
Directors of each of the Reorganized Subsidiaries shall consist of
officers or employees of Reorganized Edison whose names shall be
disclosed prior to the date of the Confirmation Hearing. Each of the
members of each such initial Board of Directors shall serve until the
first meeting of stockholders of the respective Reorganized Subsidiary
or their earlier resignation or removal in accordance with the
certificate of incorporation or bylaws of such Reorganized Subsidiary.
(b) Officers. The officers of the respective Debtors immediately
prior to the Effective Date shall serve as the initial officers of the
respective Reorganized Debtors on and after the Effective Date. Such
officers shall serve in accordance with any employment agreement with the
Reorganized Debtors and applicable nonbankruptcy law.
9.4. Amended Bylaws and Amended Certificates of Incorporation. The
Amended Edison Bylaws and Amended Edison Certificate of Incorporation and
the bylaws and certificates of incorporation of each of the Reorganized
Subsidiaries shall be amended and restated as of the Effective Date to the
extent necessary (a) to prohibit the issuance of nonvoting equity
securities as required by section 1123(a)(6) of the Bankruptcy Code,
subject to further amendment of such certificates of incorporation and
bylaws as permitted by applicable law, and (b) to effectuate the provisions
of the Plan, in each case without any further action by the stockholders or
directors of the Debtors, the Debtors in Possession or the Reorganized
Debtors.
9.5. Issuance of New Securities. The issuance of the following
securities and notes by Reorganized Edison, or, as applicable, by the EBS
Claims, L.L.C. and the EBS Building, L.L.C. as successor in interest to the
Debtors with respect to certain Edison assets, is hereby authorized without
further act or action under applicable law, regulation, order or rule:
(a) 100,000,000 shares of New Common Stock;
(b) the Warrants;
(c) the IDB Secured Notes;
(d) the United of Omaha Secured Notes;
(e) the New Notes;
(f) the Class A Membership Units and Class B Membership Units;
(g) the Restricted Stock;
(h) the Management Options; and
(i) 10,000,000 shares of preferred stock.
9.6. Adoption of Management Incentive Plan. If not theretofore
adopted by Edison, on the Effective Date, Reorganized Edison shall adopt
the Management Incentive Plan.
9.7. Management Restricted Stock Grant and Options on the Effective
Date. Reorganized Edison will be authorized to issue to certain of its
senior executives approximately 200,000 shares of restricted New Common
Stock (the "Restricted Stock") and options to purchase approximately
800,000 shares of New Common Stock (the "Management Options") pursuant and
subject to the Management Incentive Plan. Said shares of Restricted Stock
and Management Options not issued on the Effective Date shall be reserved
for issuance thereafter by Reorganized Edison pursuant and subject to the
Management Incentive Plan.
9.8. Employment Contracts. As of the Effective Date, the Debtors or
Reorganized Debtors will have entered into employment contracts or amended
employment contracts with certain key employees as described in the
Disclosure Statement.
9.9. Retention/Performance Bonuses. As of the Effective Date, Edison
or Reorganized Edison will have adopted a retention/bonus program which
will result in payments aggregating approximately $400,000 to certain key
executives if such executives remain employed with Reorganized Edison
through July 1, 1998. In addition, as of the Effective Date, in
recognition of the successful rehabilitation and turnaround of the Debtors,
Edison or Reorganized Edison will have adopted a bonus program which will
result in payments aggregating approximately $1,200,000 to certain key
executives instrumental to such turnaround.
ARTICLE X.
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN
10.1. Term of Bankruptcy Injunction or Stays. All injunctions or
stays provided for in the Chapter 11 Cases under sections 105 or 362 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date,
shall remain in full force and effect until the Effective Date.
10.2. Revesting of Assets.
(a) The property of the estates of the Debtors shall revest in the
Reorganized Debtors on the Effective Date, except as provided in Sections
5.1, 5.2 and 10.3 of the Plan.
(b) From and after the Effective Date, the Reorganized Debtors may
operate their businesses, and may use, acquire and dispose of property free
of any restrictions imposed under the Bankruptcy Code.
(c) As of the Effective Date, all property of the Debtors and
Reorganized Debtors shall be free and clear of all liens, claims and
interests of holders of Claims and Equity Interests, except as provided in
the Plan.
10.3. Causes of Action. Except as provided in Section 5.1 of the
Plan, as of the Effective Date, pursuant to section 1123(b)(3)(B) of the
Bankruptcy Code, any and all Causes of Action accruing to the Debtors and
Debtors in Possession, including, without limitation, actions under
sections 545, 549, 550 and 551 of the Bankruptcy Code, but excluding
avoidance or recovery actions under sections 544, 547, 548 and 553 of the
Bankruptcy Code, shall become assets of the Reorganized Debtors, and the
Reorganized Debtors shall have the authority to prosecute such Causes of
Action for the benefit of the estates of the Debtors. The Reorganized
Debtors shall have the authority to compromise and settle, otherwise
resolve, discontinue, abandon or dismiss all such Causes of Action without
approval of the Bankruptcy Court.
10.4. Discharge of Debtors. The rights afforded herein and the
treatment of all Claims and Equity Interests herein shall be in exchange
for and in complete satisfaction, discharge, and release of Claims and
Equity Interests of any nature whatsoever, including any interest accrued
on such Claims from and after the Commencement Date, against the Debtors
and the Debtors in Possession, or any of their assets or properties.
Except as otherwise provided herein, (a) on the Effective Date, all such
Claims against and Equity Interests in the Debtors shall be satisfied,
discharged, and released in full, and (b) all persons shall be precluded
from asserting against the Reorganized Debtors, their successors, or their
assets or properties any other or further Claims or Equity Interests based
upon any act or omission, transaction or other activity of any kind or
nature that occurred prior to the Confirmation Date.
10.5. Injunction. Except as otherwise expressly provided in the
Plan or the Confirmation Order, all entities who have held, hold or may
hold Claims against or Equity Interests in any or all of the Debtors, are
permanently enjoined, on and after the Effective Date, from (a) commencing
or continuing in any manner any action or other proceeding of any kind with
respect to any such Claim or Equity Interest, (b) the enforcement,
attachment, collection or recovery by any manner or means of any judgment,
award, decree or order against the Debtors on account of any such Claim or
Equity Interest, (c) creating, perfecting or enforcing any encumbrance of
any kind against the Debtors or against the property or interests in
property of the Debtors on account of any such Claim or Equity Interest,
and (d) asserting any right of setoff, subrogation or recoupment of any
kind against any obligation due from the Debtors or against the property or
interests in property of the Debtors on account of any such Claim or Equity
Interest. Such injunction shall extend to successors of the Debtors
(including, without limitation, the Reorganized Debtors) and their
respective properties and interests in property.
ARTICLE XI.
EFFECTIVENESS OF THE PLAN
11.1. Conditions Precedent to Effectiveness. The Plan shall not
become effective unless and until the following conditions shall have been
satisfied or waived pursuant to Section 11.3 of the Plan:
(a) the Confirmation Order, in form and substance reasonably
acceptable to the Debtors and the Creditors' Committee, shall have been
signed by the judge presiding over the Chapter 11 Cases, and there shall
not be a stay or injunction in effect with respect thereto;
(b) the Debtors shall have at least $25,000,000 in Cash as of July 5,
1997, after giving effect to the distributions of Cash projected to be made
under the Plan;
(c) the Reorganized Debtors shall have credit availability under a
working capital credit facility, in form and substance acceptable to the
Debtors and reasonably acceptable to the Creditors' Committee, to provide
the Reorganized Debtors with working capital sufficient to meet their
ordinary and peak requirements;
(d) the New Notes Indentures shall have been qualified under the
Trust Indenture Act of 1939, as amended;
(e) (i) the Funding Escrow shall have been established and the
Funding Escrow Agent under the Funding Escrow Agreement shall have been
appointed in accordance with Section 5.2 of the Plan; and (ii) subject to
Section 5.1 of the Plan, the EBS Claims, L.L.C. and the EBS Building,
L.L.C. shall have been established in accordance with the EBS Claims LLC
Members Agreement and the EBS Building LLC Members Agreement.
(f) subject to Section 5.1(c) of the Plan, the EBS Building, L.L.C.
shall have entered into the Corporate Headquarters Lease with Reorganized
Edison;
(g) all actions, documents and agreements necessary to implement the
Plan shall have been effected or executed;
(h) the Debtors shall have received all authorizations, consents,
regulatory approvals, rulings, letters, no-action letters, opinions or
documents that are determined by the Debtors to be necessary to implement
the Plan, including, without limitation, no-action letters from the
Securities and Exchange Commission and letter or other rulings from the
Internal Revenue Service; and
(i) each of the Amended Edison Certificate of Incorporation, the
Amended Edison Bylaws, the amended certificates of incorporation of the
Reorganized Subsidiaries, the amended bylaws of the Reorganized
Subsidiaries, the EBS Claims LLC Members Agreement, the EBS Building LLC
Members Agreement, the Funding Escrow Agreement, the New Notes, the New
Notes Indentures, the Corporate Headquarters Lease, the Registration Rights
Agreement and the Management Incentive Plan, in form and substance
reasonably acceptable to the Debtors and the Creditors' Committee, shall
have been effected or executed.
11.2. Effect of Failure of Conditions. In the event that one or
more of the conditions specified in Section 11.1 of the Plan have not
occurred on or before six months after the Confirmation Date, and upon
notification submitted by the Debtors to the Bankruptcy Court and counsel
for the Creditors' Committee and the Equity Committee, (a) the Confirmation
Order shall be vacated, (b) no distributions under the Plan shall be made,
(c) the Debtors and all holders of Claims and Equity Interests shall be
restored to the status quo ante as of the day immediately preceding the
Confirmation Date as though the Confirmation Date never occurred, and (d)
the Debtors' obligations with respect to the Claims and Equity Interests
shall remain unchanged and nothing contained herein shall constitute or be
deemed a waiver or release of any Claims or Equity Interests by or against
the Debtors or any other person or to prejudice in any manner the rights of
the Debtors or any person in any further proceedings involving the Debtors.
11.3. Waiver of Conditions. The Debtors may waive, by a writing
signed by an authorized representative of the Debtors and subsequently
filed with the Bankruptcy Court, one or more of the conditions precedent to
effectiveness of the Plan set forth in Sections 11.1 (b), (f) and (g)
(exclusive of those documents and agreements set forth in (i)) of the Plan.
The Debtors, with the written consent of the Creditors' Committee (which
consent shall not be unreasonably withheld), may waive, by a writing signed
by an authorized representative of the Debtors and subsequently filed with
the Bankruptcy Court, the conditions precedent to effectiveness of the Plan
set forth in Sections 11.1(a), (c), (d), (e), (h) and (i) of the Plan.
ARTICLE XII.
RETENTION OF JURISDICTION
The Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of, and related to, the Chapter 11 Cases and the Plan
pursuant to, and for the purposes of, sections 105(a) and 1142 of the
Bankruptcy Code and for, among other things, the following purposes:
(a) To hear and determine pending applications for the
assumption or rejection of executory contracts or unexpired leases, if
any are pending, and the allowance of Claims resulting therefrom;
(b) To determine any and all adversary proceedings, applications
and contested matters, including, without limitation, adversary
proceedings and contested matters arising in connection with the
prosecution by the EBS Claims, L.L.C. of the Unresolved Avoidance
Claims.
(c) To resolve all matters arising under or relating to the EBS
Claims, L.L.C. and the EBS Building, L.L.C., including, without
limitation, all disputes between the Reorganized Debtors and such
entities and with respect to the interpretation of the EBS Claims LLC
Members Agreement and EBS Building LLC Members Agreement;
(d) To resolve all matters arising under or relating to the
Funding Escrow, including, without limitation, all disputes between
the Reorganized Debtors and the Funding Escrow Agent and with respect
to the interpretation of the Funding Escrow Agreement;
(e) To hear and determine any objection to Administrative
Expense Claims, Claims or Equity Interests;
(f) To enter and implement such orders as may be appropriate in
the event the Confirmation Order is for any reason stayed, revoked,
modified or vacated;
(g) To issue such orders in aid of execution and consummation of
the Plan, to the extent authorized by section 1142 of the Bankruptcy
Code;
(h) To consider any amendments to or modifications of the Plan,
to cure any defect or omission, or reconcile any inconsistency in any
order of the Bankruptcy Court, including, without limitation, the
Confirmation Order;
(i) To hear and determine all applications for compensation and
reimbursement of expenses of professionals under sections 330, 331 and
503(b) of the Bankruptcy Code;
(j) To hear and determine disputes arising in connection with
the interpretation, implementation or enforcement of the Plan;
(k) To recover all assets of the Debtors and property of the
Debtors' estates, wherever located;
(l) To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146 of the
Bankruptcy Code;
(m) To hear any other matter not inconsistent with the
Bankruptcy Code; and
(n) To enter a final decree closing the Chapter 11 Cases.
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
13.1. Effectuating Documents and Further Transactions. Each of
the Debtors or Reorganized Debtors is authorized to execute, deliver, file
or record such contracts, instruments, releases, indentures and other
agreements or documents and take such actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of
the Plan and any notes or securities issued pursuant to the Plan.
13.2. Corporate Action. On the Effective Date, all matters
provided for under the Plan that would otherwise require approval of the
stockholders, directors or members of one or more of the Debtors or
Reorganized Debtors or their successors in interest under the Plan,
including, without limitation, the authorization to issue preferred stock,
the issuance of New Common Stock, Restricted Stock, New Notes, IDB Secured
Notes, United of Omaha Secured Notes, Warrants, Management Options, Class A
Membership Units and Class B Membership Units, the effectiveness of the
Amended Edison Certificate of Incorporation, the Amended Edison Bylaws and
the amended and restated certificates of incorporation and bylaws of the
Reorganized Subsidiaries, corporate mergers or dissolutions effectuated
pursuant to the Plan, the election or appointment, as the case may be, of
directors and officers of the Debtors pursuant to the Plan, the
authorization and approval of employment agreements, and the creation of
the EBS Claims, L.L.C., the EBS Building, L.L.C. and the Funding Escrow
shall be deemed to have occurred and shall be in effect from and after the
Effective Date pursuant to the applicable general corporation law of the
states in which the Debtors or Reorganized Debtors are incorporated,
without any requirement of further action by the stockholders or directors
of the Debtors or Reorganized Debtors. On the Effective Date or as soon
thereafter as is practicable, the Reorganized Debtors shall, if required,
file their amended certificates of incorporation with the Secretary of
State of the state in which each Reorganized Debtor is incorporated, in
accordance with the applicable general corporation law of such states.
13.3. Exemption from Transfer Taxes. Pursuant to section 1146(c)
of the Bankruptcy Code, the issuance, transfer or exchange of notes or
equity securities under the Plan, the creation of any mortgage, deed of
trust or other security interest, the making or assignment of any lease or
sublease, or the making or delivery of any deed or other instrument of
transfer under, in furtherance of, or in connection with the Plan,
including, without limitation, any merger agreements or agreements of
consolidation, deeds, bills of sale or assignments executed in connection
with any of the transactions contemplated under the Plan shall not be
subject to any stamp, real estate transfer, mortgage recording or other
similar tax.
13.4. Injunction Regarding Worthless Stock Deduction. At the
Confirmation Hearing, Edison shall request that the Bankruptcy Court
include in the Confirmation Order a provision enjoining any "50-percent
shareholder" of Edison within the meaning of section 382(g)(4)(D) of the
Internal Revenue Code of 1986, as amended, from claiming a worthless stock
deduction with respect to its Edison Equity Interest for any taxable year
of such shareholder ending prior to the Effective Date.
13.5. Exculpation. Neither the Debtors, the Reorganized Debtors,
the Creditors' Committee nor the Equity Committee nor any of their
respective members, officers, directors, employees, advisors or agents
shall have or incur any liability to any holder of a Claim or Equity
Interest for any act or omission in connection with, related to, or arising
out of, the Chapter 11 Cases, the pursuit of confirmation of the Plan, the
consummation of the Plan or the administration of the Plan or the property
to be distributed under the Plan, except for willful misconduct or gross
negligence, and, in all respects, the Debtors, the Reorganized Debtors, the
Creditors' Committee, the Equity Committee and each of their respective
members, officers, directors, employees, advisors and agents shall be
entitled to rely upon the advice of counsel with respect to their duties
and responsibilities under the Plan; provided, however, that nothing
contained herein shall exculpate, satisfy, discharge or release any
Avoidance Claims against present or former officers, directors or employees
of the Debtors in their capacities other than as present or former
officers, directors or employees.
13.6. Termination of Committees. The appointments of the
Creditors' Committee and the Equity Committee shall terminate on the later
of the Effective Date and the date of the hearing to consider applications
for final allowances of compensation and reimbursement of expenses.
13.7. Claims Resolution Committee.
(a) Function and Composition. Prior to the Effective Date, the
Creditors' Committee will have established the Claims Resolution Committee.
Its sole functions will be (i) to monitor the Reorganized Debtors' progress
in (a) reconciling and resolving Disputed Claims and (b) making
distributions on account of such Claims once such Claims become Allowed
Claims, (ii) to compromise, settle or otherwise resolve Disputed Claims,
and (iii) to review and assert objections to the reasonableness of
compromises, settlements or other resolutions of Disputed Claims, as
provided in Section 6.5(b) of the Plan. The Claims Resolution Committee
will consist of three holders of Claims each of whom previously has served
as a member of the Creditors' Committee.
(b) Procedures. The Claims Resolution Committee will adopt by-laws
that will control its functions. These by-laws, unless modified by the
Claims Resolution Committee, will provide the following: (i) a majority of
the Claims Resolution Committee will constitute a quorum; (ii) one member
of the Claims Resolution Committee will be designated by the majority of
its members as its chairperson; (iii) meetings of the Claims Resolution
Committee will be called by its chairperson on such notice and in such
manner as its chairperson may deem advisable; and (iv) the Claims
Resolution Committee will function by decisions made by a majority of its
members in attendance at any meeting.
(c) Employment of Attorneys and Reimbursement of Expenses. The
Claims Resolution Committee will be authorized to retain one law firm. The
role of the Claims Resolution Committee's attorneys will be strictly
limited to assisting the Claims Resolution Committee in its functions as
set forth herein. The Reorganized Debtors will pay the actual, necessary,
reasonable and documented fees and expenses of the attorneys retained by
the Claims Resolution Committee, as well as the actual, necessary,
reasonable and documented expenses incurred by each member of the Claims
Resolution Committee in the performance of its duties, in accordance with
the Reorganized Debtors' normal business practice for compensating and
reimbursing professionals. Other than as specified in the preceding
sentence, the members of the Claims Resolution Committee will serve without
compensation. If there is any unresolved dispute between the Reorganized
Debtors and the Claims Resolution Committee, its attorneys or its members
as to any fees or expenses, such dispute will be submitted to the
Bankruptcy Court for resolution.
(d) Dissolution. Subject to further order of the Bankruptcy Court,
the Claims Resolution Committee will dissolve upon the earlier to occur of
(i) the date that an officer of Reorganized Edison files with the
Bankruptcy Court and serves upon counsel to the Claims Resolution Committee
by overnight delivery service or facsimile transmission a certification
that the aggregate Disputed Claim Amounts of all remaining Disputed Claims
is equal to or less than $5,000,000, and (ii) the third anniversary of the
Effective Date. The Claims Resolution Committee may file with the
Bankruptcy Court and serve upon the Reorganized Debtors an objection to
such certification within 10 days of the receipt thereof, in which event
the aggregate Disputed Claim Amounts of all remaining Disputed Claims will
be determined by the Bankruptcy Court. The attorneys retained by, and
members of, the Claims Resolution Committee, will not be entitled to
compensation or reimbursement of expenses for services rendered after the
date of dissolution of the Claims Resolution Committee.
13.8. Post-Confirmation Date Fees and Expenses. From and after
the Confirmation Date, the Debtors and Reorganized Debtors shall, in the
ordinary course of business and without the necessity for any approval by
the Bankruptcy Court, pay the reasonable fees and expenses of professional
persons thereafter incurred by the Debtors and Reorganized Debtors,
including, without limitation, those fees and expenses incurred in
connection with the implementation and consummation of the Plan.
13.9. Payment of Statutory Fees. All fees payable pursuant to
section 1930 of the title 28 of the United States Code, as determined by
the Bankruptcy Court at the Confirmation Hearing, shall be paid on the
Effective Date.
13.10. Amendment or Modification of the Plan. Alterations,
amendments or modifications of the Plan may be proposed in writing by the
Debtors at any time prior to the Confirmation Date, provided that the Plan,
as altered, amended or modified, satisfies the conditions of sections 1122
and 1123 of the Bankruptcy Code, and the Debtors shall have complied with
section 1125 of the Bankruptcy Code; provided, however, that, prior to the
date of the commencement of solicitation of votes to accept or reject the
Plan, no alteration, amendment or modification of the Plan that would
materially and adversely change the treatment of General Unsecured Claims
may be made without prior approval of the Creditors' Committee, which
approval shall not be unreasonably withheld. The Plan may be altered,
amended or modified at any time after the Confirmation Date and before
substantial consummation, provided that the Plan, as altered, amended or
modified, satisfies the requirements of sections 1122 and 1123 of the
Bankruptcy Code and the Bankruptcy Court, after notice and a hearing,
confirms the Plan, as altered, amended or modified, under section 1129 of
the Bankruptcy Code and the circumstances warrant such alterations,
amendments or modifications. A holder of a Claim or Equity Interest that
has accepted the Plan shall be deemed to have accepted the Plan, as
altered, amended or modified, if the proposed alteration, amendment or
modification does not materially and adversely change the treatment of the
Claim or Equity Interest of such holder.
13.11. Severability. In the event that the Bankruptcy Court
determines, prior to the Confirmation Date, that any provision in the Plan
is invalid, void or unenforceable, such provision shall be invalid, void or
unenforceable with respect to the holder or holders of such Claims or
Equity Interests as to which the provision is determined to be invalid,
void or unenforceable. The invalidity, voidness or unenforceability of any
such provision shall in no way limit or affect the enforceability and
operative effect of any other provision of the Plan.
13.12. Revocation or Withdrawal of the Plan. The Debtors reserve
the right to revoke or withdraw the Plan prior to the Confirmation Date.
If the Debtors revoke or withdraw the Plan prior to the Confirmation Date,
then the Plan shall be deemed null and void. In such event, nothing
contained herein shall constitute or be deemed a waiver or release of any
claims by or against the Debtors or any other person or to prejudice in any
manner the rights of the Debtors or any person in any further proceedings
involving the Debtors.
13.13. Binding Effect. The Plan shall be binding upon and inure to
the benefit of the Debtors, the holders of Claims and Equity Interests, and
their respective successors and assigns, including, without limitation, the
Reorganized Debtors.
13.14. Notices. All notices, requests and demands to or upon the
Debtors or the Reorganized Debtors to be effective shall be in writing and,
unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when actually delivered or, in the case of notice by
facsimile transmission, when received and telephonically confirmed,
addressed as follows:
If to the Debtors:
Edison Brothers Stores, Inc.
501 North Broadway
St. Louis, Missouri 63102
Attn: Alan A. Sachs, Esq.
Telephone: (314) 331-6565
Facsimile: (314) 331-6554
with a copy to:
Weil, Gotshal & Manges LLP Young, Conaway, Stargatt
767 Fifth Avenue & Taylor
New York, New York 10153 1110 N. Market Street
Attn: Richard P. Krasnow, Esq. P.O. Box 391
Telephone: (212) 310-8000 Rodney Square North, 11thFloor
Facsimile: (212) 310-8007 Wilmington, Delaware 19801
Attn: Laura Davis Jones, Esq.
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
If to the Creditors' Committee:
Jones, Day, Reavis & Pogue Richards, Layton & Finger, P.A.
77 West Wacker One Rodney Square
Chicago, Illinois 60601 Wilmington, Delaware 19899
Attn: David Kurtz, Esq. Attn: Thomas L. Ambro, Esq .
Telephone: (312) 782-3939 Telephone: (302) 651-7612
Facsimile: (312) 782-8585 Facsimile: (302) 658-6458
If to the Equity Committee:
Paul, Weiss, Rifkind, Wharton Duane Morris & Hekscher
& Garrison 1201 Market Street
1285 Avenue of the Americas Wilmington, Delaware 19801
New York, New York 10019 Attn: Teresa K.D. Currier, Esq.
Attn: Alan W. Kornberg, Esq. Telephone: (302) 657-4957
Telephone: (212) 373-3209 Facsimile: (302) 571-5560
Facsimile: (212) 373-2053
13.15. Governing Law. Except to the extent the Bankruptcy Code,
Bankruptcy Rules or other federal law is applicable, or to the extent an
Exhibit to the Plan provides otherwise, the rights and obligations arising
under this Plan shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect
to the principles of conflicts of law of such jurisdiction.
13.16. Withholding and Reporting Requirements. In connection with
the consummation of the Plan, the Debtors or the Reorganized Debtors, as
the case may be, shall comply with all withholding and reporting
requirements imposed by any federal, state, local or foreign taxing
authority and all distributions hereunder shall be subject to any such
withholding and reporting requirements.
13.17. Plan Supplement. Forms of the documents relating to the
Amended Edison Certificate of Incorporation, the Amended Edison Bylaws, the
EBS Claims LLC Members Agreement, the EBS Building LLC Members Agreement,
the Funding Escrow Agreement, the New Notes, the New Notes Indentures, the
IDB Secured Notes, the United of Omaha Secured Notes, the Management
Incentive Plan, the investment guidelines referred to in Sections 6.4(a)
and (b) of the Plan, Schedules 7.1(a)(x) and 7.1(a)(y) referred to herein,
the Warrants (including a Warrant agreement), the Corporate Headquarters
Lease and the Registration Rights Agreement shall be contained in the Plan
Supplement and filed with the Clerk of the Bankruptcy Court at least 10
days prior to the last day upon which holders of Claims and Equity
Interests may vote to accept or reject the Plan. Upon its filing with the
Bankruptcy Court, the Plan Supplement may be inspected in the office of the
Clerk of the Bankruptcy Court during normal court hours. Holders of Claims
or Equity Interests may obtain a copy of the Plan Supplement upon written
request to Edison in accordance with Section 13.14 of the Plan.
13.18. Allocation of Plan Distributions Between Principal and
Interest. To the extent that any Allowed Claim entitled to a distribution
under the Plan is comprised of indebtedness and accrued but unpaid interest
thereon, such distribution shall, for federal income tax purposes, be
allocated to the principal amount of the Claim first and then, to the
extent the consideration exceeds the principal amount of the Claim, to
accrued but unpaid interest.
13.19. Headings. Headings are used in the Plan for convenience and
reference only, and shall not constitute a part of the Plan for any other
purpose.
13.20. Exhibits. All Exhibits to the Plan, including the Plan
Supplement, are incorporated into and are a part of the Plan as if set
forth in full herein.
13.21. Filing of Additional Documents. On or before substantial
consummation of the Plan, the Debtors shall file with the Bankruptcy Court
such agreements and other documents as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan.
Dated: Wilmington, Delaware
March 31, 1997
EDISON BROTHERS STORES, INC., a Delaware
corporation
(for itself and on behalf of each of the
Subsidiaries)
By:
Name:
Title:
<TABLE>
EXHIBIT A TO PLAN
<CAPTION>
SUMMARY OF TERMS OF CORPORATE HEADQUARTERS LEASE
<S> <C>
LESSOR: Liquidation Trust
LESSEE: Reorganized Edison
TERM: 10 years, commencing on the Effective Date
RENT: Years one through three: $9.00 per square foot
Years 4 through 10: equal to the current market rate as
defined by Cushman & Wakefield
DISPOSITION: Any sale or other disposition of the Corporate Headquarters
Building by the Liquidation Trust shall be subject to the
Corporate Headquarters Building Lease and such other terms
as are acceptable to Reorganized Edison
OTHER TERMS Such other terms as may be mutually agreeable to the Debtors
and the Creditors' Committee
</TABLE>
<TABLE>
EXHIBIT B TO PLAN
<CAPTION>
SUMMARY OF TERMS OF 1976 IDB SECURED NOTES
<S> <C>
ISSUER: Reorganized Edison
AMOUNT: $2,482,000
TERM: June 1, 2001, unchanged from existing 1976 IDB Related
Instruments
INTEREST: Payable semiannually in arrears, unchanged from existing
1976 IDB Related Instruments
PRINCIPAL: Post-Effective Date repayments will be due on the same
repayment schedule as under the existing 1976 IDB Related
Instruments, but will be reduced proportionately (to 85% of
the originally scheduled amount) to reflect the ratio of the
Allowed Secured 1976 IDB Claims ($2,482,000) to the
principal amount outstanding under the 1976 IDB Related
Instruments as of the Commencement Date ($2,920,000)
SECURITY: Liens on the real property securing the Allowed Secured 1976
IDB Claims to the extent of each respective holder's 1976
IDB Secured Note
OTHER TERMS: Such other terms as may be mutually agreeable to the Debtors
and the respective holders of the Allowed Secured 1976 IDB
Claims
</TABLE>
<TABLE>
EXHIBIT C TO PLAN
<CAPTION>
SUMMARY OF TERMS OF 1985 IDB SECURED NOTES
<S> <C>
ISSUER: Reorganized Edison
AMOUNT: $4,235,000
TERM: November 1, 2010, unchanged from existing 1985 IDB Related
Instruments
INTEREST: Variable rate payable quarterly in arrears, unchanged from
existing 1985 IDB Related Instruments
PRINCIPAL: Post-Effective Date repayments will be due on the same
repayment schedule as under the existing 1985 IDB Related
Instruments, but will be reduced proportionately (to 77% of
the originally scheduled amount) to reflect the ratio of the
Allowed Secured 1985 IDB Claims ($4,235,000) to the
principal amount outstanding under the 1985 IDB Related
Instruments as of the Commencement Date ($5,500,000)
SECURITY: Liens on the real property securing the Allowed Secured 1985
IDB Claims to the extent of each respective holder's 1985
IDB Secured Note
OTHER TERMS: Such other terms as may be mutually agreeable to the Debtors
and the respective holders of the Allowed Secured 1985 IDB
Claims
</TABLE>
<TABLE>
EXHIBIT D TO PLAN
<CAPTION>
SUMMARY OF TERMS OF NEW NOTES
<S> <C>
ISSUER: Reorganized Edison
AMOUNT: $100,000,000
TERM: The later of the tenth anniversary of the Effective Date and
July 31, 2007
INTEREST: 11.0% per annum, payable semi-annually on January 31 and
July 31. Interest shall begin accruing on the earlier of
the Effective Date and July 31, 1997. The first interest
payment shall be made on January 31, 1998
MATURITY: 100% of outstanding principal amount payable on the later of
the tenth anniversary of the Effective Date and July 31,
2007
SECURITY: None
PREFUNDING: Through the Funding Escrow, the first three years of
interest payable shall be prefunded by the Debtors with $16
million in Cash and the Funding Escrow Properties
COVENANTS: Mandatory Principal Prepayment -- 50% of the net proceeds of
extraordinary asset sales not otherwise required to be paid
to working capital facility lenders; provided, however, that
such amount shall not be distributed unless in excess of $5
million
Optional Redemption -- In whole or in part at the option of
Reorganized Edison in increments of not less than $5 million
in accordance with the following schedule:
Effective Date - June 30, 1998: 100% of par
July 1, 1998 - June 30, 1999: 104% of par
July 1, 1999 - June 30, 2000: 103% of par
July 1, 2000 - June 30, 2001: 102% of par
July 1, 2001 - June 30, 2002: 101% of par
July 1, 2002 - Maturity: 100% of par
Mandatory Redemption Upon Change of Control -- Upon a
"Change in Control," at 101% of par. "Change of Control"
shall be defined in a manner mutually satisfactory to the
Debtors and the Creditors' Committee
Other Covenants -- Such other covenants as may be mutually
agreeable to the Debtors and the Creditors' Committee
OTHER TERMS: Such other terms as may be mutually agreeable to the Debtors
and the Creditors' Committee
</TABLE>
<TABLE>
EXHIBIT E TO PLAN
<CAPTION>
SUMMARY OF TERMS OF SIX YEAR WARRANTS
<S> <C>
WARRANTS: Warrants to purchase 5.0% of the issued New Common Stock, on a
fully diluted basis
EXERCISE PRICE: $22.10
TERM: The Six Year Warrants shall expire on the sixth anniversary
of the Effective Date
OTHER TERMS: Such other terms as may be typical for publicly held
warrants
</TABLE>
<TABLE>
EXHIBIT F TO PLAN
<CAPTION>
SUMMARY OF TERMS OF THREE YEAR WARRANTS
<S> <C>
WARRANTS: Warrants to purchase 4.0% of the issued New Common Stock, on
a fully diluted basis
EXERCISE PRICE:$13.85
TERM: The Three Year Warrants shall expire on the third
anniversary of the Effective Date
OTHER TERMS: Such other terms as may be typical for publicly held
warrants
</TABLE>
<TABLE>
EXHIBIT G TO PLAN
<CAPTION>
SUMMARY OF TERMS OF UNITED OF OMAHA SECURED NOTES
<S> <C>
ISSUE: Reorganized Edison
AMOUNT: For each schedule under the United of Omaha Instruments, the
amount of the Allowed Secured United of Omaha Claim
associated with such schedule
TERM: For each schedule under the United of Omaha Instruments, the
remaining term under such schedule
INTEREST: For each schedule under the United of Omaha Instruments, the
imputed annual interest rate payable under such schedule,
payable quarterly in arrears
PRINCIPAL: For each schedule under the United of Omaha Instruments, the
amount of the Allowed Secured United of Omaha Claim
associated with such schedule shall be amortized over the
remaining term for such schedule
SECURITY: Liens on the computer and related equipment securing the
Secured United of Omaha Claims to the extent of the United
of Omaha Secured Notes
OTHER TERMS: Such other terms as may be mutually agreeable to the Debtors
and the holders of the United of Omaha Secured Claims
</TABLE>
BANKAMERICA BUSINESS CREDIT, INC., as Agent and as Lender
40 East 52nd Street
New York, New York 10022
___________ __, 1995
EDISON BROTHERS STORES, INC.,
debtor-in-possession
EDISON BROTHERS APPAREL STORES, INC.,
debtor-in-possession
501 North Broadway
St. Louis, Missouri 63102
Re: Amendment to Loan Agreement dated as of November 9, 1995 (as amended,
restated, modified and supplemented from time to time, the "Loan
Agreement") by and among Edison Brothers Stores, Inc.,
debtor-in-possession ("Parent"), Edison Brothers Apparel Stores, Inc.,
debtor-in-possession ("Apparel", and together with Parent, jointly and
severally the "Borrower"), the Guarantors named therein, BankAmerica
Business Credit, Inc., as Agent (the "Agent") for the Lenders referred
to therein, and the Lenders
Gentlemen:
Reference is made to the (i) Loan Agreement referred to above; and (ii) the
Indemnification Agreement dated November 22, 1995 (as amended, modified and
supplemented from time to time, the "Indemnification Agreement") among the
Borrower, the Agent and Mercantile Bank of St. Louis National Association
("Mercantile"). Capitalized terms used but not defined herein shall have the
meaning set forth in the Loan Agreement.
The Borrowers have requested that the Loan Agreement be amended as set forth
below. Therefore, by their respective signatures below, the Borrower, the
Agent and the Lenders hereby agree that the Loan Agreement is hereby amended
as follows:
I.The definition of "Permitted Liens" as set forth in the Loan Agreement is
hereby amended by (x) relettering clause "(i)" thereof as clause "(j)"
thereof; and (y) inserting the following clause (i) therein:
"(i) Liens granted pursuant to an Agency Agreement to be entered
into between Parent and certain Guarantors on the one hand and Jubilee
Limited Partnership, Nassi Bernstein Company, Inc. and Alco Capital Group,
Inc. or other merchandise liquidators on the other hand (such Agency
Agreement to be satisfactory to the Agent), in Inventory and proceeds
thereof of Parent and such Guarantors, located in the stores to be
identified in a list submitted to and acceptable to the Agent, such Liens
to secure an amount not to exceed $3,000,000; and".
II.The definition of "Restricted Investment" as set forth in the Loan
Agreement is hereby amended by (x) relettering clause "(f)" thereof as
clause "(g)" thereof; and (y) inserting the following clause (f) therein:
"(f) In connection with its agreement with The Aetna Casualty and
Surety Company ("Aetna"), deposits in a maximum amount of $3,000,000 in the
Aetna Money Market Fund to assure Aetna reimbursement by the Borrower of
payments to be made by Aetna under customs bonds issued by Aetna; and".
III.The definition of "Termination Date" as set forth in the Loan Agreement
is hereby amended by deleting clause (iv) thereof in its entirety and by
substituting therefor the following:
"(iv) the effective date of a plan of reorganization in the
Chapter 11 case that has been confirmed by the Bankruptcy Court".
IV.Section 4.1(b) of the Loan Agreement is hereby amended by deleting the
following therefrom: "(but subject as to distribution among the Lenders to
the provisions of the Inter- Lender Agreement)".
V.Section 13.2 of the Loan Agreement is hereby amended by deleting clause (c)
thereof and substituting therefor the following:
"(c) the definition of Availability shall only be effective if
evidenced by a writing signed by all Lenders and the Borrower".
VI.Section 13.3(a) of the Loan Agreement is hereby amended by (x) renumbering
clause (iii) thereof as clause (iv) and (y) inserting the following clause
(iii) therein:
"(iii) the aggregate amount of the Commitment of the assigning Lender
being assigned shall in no event be less than (A) in the case of an assignment
by a Lender to an assignee that is an existing Lender, $1,000,000 and
integral multiples of $1,000,000 in excess of that amount, and (B) in the
case of an assignment by a Lender to an assignee that is not an existing
Lender, $10,000,000 and integral multiples of $1,000,000 in excess of that
amount, provided, that in either such case the aggregate amount of the
Commitment of the assigning Lender being retained shall in no event be less
than $10,000,000, unless such Lender has assigned all of its rights and
obligations under this Agreement, and".
VII.The Borrower, the Agent and the Lender hereby agree and confirm that all
amounts paid by the Agent under the Indemnification Agreement (including
without limitation under paragraph 2 thereof) may be charged by the Agent to
the Loan Account of the Borrower pursuant to Section 4.2(b) of the Loan
Agreement.
Except as specifically set forth above, all terms and conditions of the
Loan Agreement remain in full force and effect.
This letter amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be in an
original and all of which shall constitute one and the same letter amendment.
Delivery of an executed counterpart of a signature page to this letter
amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this letter amendment.
Very truly yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as Lender
By:______________________________
Title:
AGREED:
EDISON BROTHERS STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS APPAREL STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS SHOE STORES, INC.
EDISON PAYMASTER, INC.
EDISON BROTHERS REDEVELOPMENT CORPORATION
EDBRO MISSOURI REALTY COMPANY, INC.
EDISON ALABAMA STORES, INC.
EDISON ARKANSAS STORES, INC.
EDISON COLORADO STORES, INC.
EDISON BROTHERS COMPANY
EDISON HAWAII STORES, INC.
EDISON ILLINOIS STORES, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON LOUISIANA STORES, INC.
EDISON MARYLAND STORES, INC.
EDISON MASSACHUSETTS STORES, INC.
EDISON MICHIGAN STORES, INC.
EDISON MINNESOTA STORES, INC.
EDISON MISSISSIPPI STORES, INC.
EDISON NEBRASKA STORES, INC.
EDISON NEW JERSEY STORES, INC.
EDISON NEW MEXICO STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON OKLAHOMA STORES, INC.
EDISON OREGON STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TENNESSEE STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-MONTANA, INC.
EBSS-NORTH CENTRAL, INC.
EBSS-INDIANA, INC.
EBSS-IOWA, INC.
EBSS-KANSAS, INC.
EBSS-WISCONSIN, INC.
EBSS-NORTHEAST, INC.
EBSS-SOUTH, INC.
EBSS-MIDEAST, INC.
EBSS-MICHIGAN, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON PUERTO RICO STORES, INC.
EBSCAT, INC.
WEBSTER CLOTHES, INC.
Z&Z FASHIONS, LTD.
WEBSTER-ROSSVILLE, INC.
EDISON BROTHERS MALL ENTERTAINMENT, INC.
HORIZON ENTERTAINMENT
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISUR, INC.
EBS HOLDINGS CORP.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG #2, INC.
EDBRO MISSOURI USG #2, INC.
EDBRO CALIFORNIA USG #1, INC.
INDUSTRIAL DESIGN, INC.,
as debtors-in-possession and
as Guarantors
By:
Name:
Title:
for all Guarantors
BANKAMERICA BUSINESS CREDIT, INC., as Agent and as Lender
THE CIT GROUP/BUSINESS CREDIT INC., as Lender
FIRST NATIONAL BANK OF BOSTON, as Lender
HELLER FINANCIAL, INC., as Lender
IBJ SCHRODER BANK & TRUST COMPANY, as Lender
LASALLE BUSINESS CREDIT, INC., as Lender
PPM AMERICA, INC., as attorney-in-fact
for JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
c/o BANKAMERICA BUSINESS CREDIT, INC.
40 East 52nd Street
New York, New York 10022
January __, 1996
EDISON BROTHERS STORES, INC.,
debtor-in-possession
EDISON BROTHERS APPAREL STORES, INC.,
debtor-in-possession
501 North Broadway
St. Louis, Missouri 63102
Re: Second Amendment to Loan Agreement dated as of November 9, 1995 (as
amended, restated, modified and supplemented from time to time, the
"Loan Agreement") by and among Edison Brothers Stores, Inc.,
debtor-in-possession ("Parent"), Edison Brothers Apparel Stores, Inc.,
debtor-in-possession ("Apparel", and together with Parent, jointly and
severally the "Borrower"), the Guarantors named therein, BankAmerica
Business Credit, Inc., as Agent (the "Agent") for the Lenders referred
to therein, and the Lenders
Ladies and Gentlemen:
Reference is made to the Loan Agreement referred to above. Capitalized terms
used but not defined herein shall have the meaning set forth in the Loan
Agreement.
The Borrower has advised the Agent and the Lenders pursuant to the Motion of
Debtors for Authorization to Return Certain Goods to Suppliers under Sections
105(a), 363(c) and 546(g) of the Bankruptcy Code, dated December 14, 1995
(the "Motion"), that the Borrower and certain subsidiaries intend to return
certain "Returnable Goods" (as defined in the Motion) with an approximate
aggregate cost of $628,976.50 to the respective vendors of such Returnable
Goods as described in the Motion (the "Returned Goods Transaction"). In
connection with the Returned Goods Transaction, the Borrower has requested
that the Loan Agreement be amended as set forth below. Therefore, by their
respective signatures below, the Borrower, the Agent and the Lenders hereby
agree that the Loan Agreement is hereby amended as follows:
1. Section 1.1 of the Loan Agreement is hereby amended to insert
the following definition after the definition of "Reportable Event"
appearing therein:
"Returned Goods Transaction" means the return by the Borrower and
certain subsidiaries to certain vendors of certain goods with an approximate
aggregate cost of $628,976.50, pursuant to and as described in the Motion of
Debtors for Authorization to Return Certain Goods to Suppliers under Sections
105(a), 363(c) and 546(g) of the Bankruptcy Code, dated December 14, 1995."
2. Section 9.6 of the Loan Agreement is hereby amended by
(a) renumbering clause (iv) therein as clause (v) and (b) inserting the
following clause (iv) therein:
"(iv) the Returned Goods Transaction, and"
Except as specifically set forth above, all terms and conditions of
the Loan Agreement remain infull force and effect.
This letter amendment will be effective upon (i) receipt by the Agent
of signature pages hereto signed by the Agent, the Borrower, the Guarantors
and the Majority Lenders and (ii) receipt by the Agent of a Bankruptcy Court
order approving the Motion, such order to be in form and substance satisfactory
to the Agent.
This letter amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be in an original and all of which shall constitute one and the
same letter amendment.
Delivery of an executed counterpart of a signature page to this
letter amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this letter amendment.
Very truly yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as Lender
By:______________________________
Title:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Lender
By:_____________________________
Title:
FIRST NATIONAL BANK OF BOSTON,
as Lender
By:_____________________________
Title:
HELLER FINANCIAL, INC.,
as Lender
By:_____________________________
Title
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender
By:_____________________________
Title:
LASALLE BUSINESS CREDIT, INC.,
as Lender
By:____________________________
Title:
PPM AMERICA, INC., as attorney-
in-fact for JACKSON NATIONAL
LIFE INSURANCE COMPANY, as Lender
By:_____________________________
Title:
AGREED:
EDISON BROTHERS STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS APPAREL STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS SHOE STORES, INC.
EDISON PAYMASTER, INC.
EDISON BROTHERS REDEVELOPMENT CORPORATION
EDBRO MISSOURI REALTY COMPANY, INC.
EDISON ALABAMA STORES, INC.
EDISON ARKANSAS STORES, INC.
EDISON COLORADO STORES, INC.
EDISON BROTHERS COMPANY
EDISON HAWAII STORES, INC.
EDISON ILLINOIS STORES, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON LOUISIANA STORES, INC.
EDISON MARYLAND STORES, INC.
EDISON MASSACHUSETTS STORES, INC.
EDISON MICHIGAN STORES, INC.
EDISON MINNESOTA STORES, INC.
EDISON MISSISSIPPI STORES, INC.
EDISON NEBRASKA STORES, INC.
EDISON NEW JERSEY STORES, INC.
EDISON NEW MEXICO STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON OKLAHOMA STORES, INC.
EDISON OREGON STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TENNESSEE STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-MONTANA, INC.
EBSS-NORTH CENTRAL, INC.
EBSS-INDIANA, INC.
EBSS-IOWA, INC.
EBSS-KANSAS, INC.
EBSS-WISCONSIN, INC.
EBSS-NORTHEAST, INC.
EBSS-SOUTH, INC.
EBSS-MIDEAST, INC.
EBSS-MICHIGAN, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON PUERTO RICO STORES, INC.
EBSCAT, INC.
WEBSTER CLOTHES, INC.
Z&Z FASHIONS, LTD.
WEBSTER-ROSSVILLE, INC.
EDISON BROTHERS MALL ENTERTAINMENT, INC.
HORIZON ENTERTAINMENT
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISUR, INC.
EBS HOLDINGS CORP.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG #2, INC.
EDBRO MISSOURI USG #2, INC.
EDBRO CALIFORNIA USG #1, INC.
INDUSTRIAL DESIGN, INC.,
as debtors-in-possession and
as Guarantors
By:
Name:
Title:
for all Guarantors
BANKAMERICA BUSINESS CREDIT, INC., as Agent and as Lender
THE CIT GROUP/BUSINESS CREDIT INC., as Lender
THE FIRST NATIONAL BANK OF BOSTON, as Lender
HELLER FINANCIAL, INC., as Lender
IBJ SCHRODER BANK & TRUST COMPANY, as Lender
LASALLE BUSINESS CREDIT, INC., as Lender
JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
c/o BANKAMERICA BUSINESS CREDIT, INC.
40 East 52nd Street
New York, New York 10022
March 25, 1996
EDISON BROTHERS STORES, INC.,
debtor-in-possession
EDISON BROTHERS APPAREL STORES, INC.,
debtor-in-possession
501 North Broadway
St. Louis, Missouri 63102
Re: Third Amendment to Loan Agreement dated as of November 9, 1995
(as amended, restated, modified and supplemented from time to time,
the "Loan Agreement") by and among Edison Brothers Stores, Inc.,
debtor-in-possession ("Parent"), Edison Brothers Apparel Stores, Inc.,
debtor-in-possession ("Apparel", and together with Parent, jointly
and severally the "Borrower"), the Guarantors named therein,
BankAmerica Business Credit, Inc., as Agent (the "Agent") for the
Lenders referred to therein, and the Lenders
Ladies and Gentlemen:
Reference is made to the Loan Agreement referred to above. Capitalized
terms used but not defined herein shall have the meaning set forth in the
Loan Agreement.
The Borrower has advised the Agent and the Lenders that it desires to invest
(i) certain funds (the "Horizon Investment") with Pacific Horizon Funds, Inc.
("Horizon"), an affiliate of the Agent and an operator of mutual funds; and
(ii) certain funds in United States Treasury obligations (the "United States
Treasury Investment", and together with the Horizon Investment, the
"Investments"). In connection with the Investments and certain other matters,
the Borrower has requested that the Loan Agreement be amended as set forth
below. Therefore, by their respective signatures below, the Borrower, the
Agent and the Lenders agree as follows:
VIII.The definition of "Availability" in Section 1.1 of the Loan Agreement
is hereby amended by amending clause (i)(B)(y) thereof to read in its
entirety as follows: "ninety-five percent (95%) of the sum of (i) the amount
of cash deposited with Agent (which may be invested by the Agent in
investments permitted under the definition of "Restricted Investment") and
(ii) without duplication of amounts set forth in the foregoing clause (i),
the amount of cash invested by the Borrower in investments permitted under
clause "(c)," "(d)," "(e)," and/or clause "(f)" of the definition of
"Restricted Investment", in each case pursuant to one or more agreements (and
any necessary Bankruptcy Court order) in form and substance satisfactory to
the Agent (including, without limitation, an agreement that all withdrawals
or redemptions of such investments be remitted only to the Agent), minus".
IX.The definition of "Eligible Inventory" in Section 1.1 of the Loan
Agreement is hereby amended by inserting the words "Puerto Rico, The United
States Virgin Islands," immediately after the words "continental United
States,".
X.The definition of "Restricted Investment" in Section 1.1 of the Loan
Agreement is hereby amended by redesignating paragraph (f) therein as
paragraph (g) and by inserting the following new paragraph (f):
"(f) if no Revolving Loans are outstanding at the time of the acquisition,
and no Event or Event of Default has occurred and is continuing, investments
in mutual funds acceptable to the Agent that invest solely in
investments described in clauses "(c)," "(d)" and/or "(e)" of the definition
of "Restricted Investment".
XI.The Borrower hereby represents and warrants to the Agent that the
Investments have been authorized by all necessary corporate action of the
Parent and by all necessary Bankruptcy Court approvals.
XII.The Agent and the Lenders agree that the Application attached hereto as
Exhibit A and the Letter Agreement attached hereto as Exhibit B are
satisfactory agreements with respect to the Horizon Investment. The
Borrower, the Agent and the Lenders agree that (a) at all times prior to an
Event or Event of Default, the Agent shall follow all reasonable written
instructions of the Borrower with respect to the Investments (provided,
however, that all distributions, redemptions and/or payments of any kind
(whether in cash or other consideration) with respect to the Investments
shall at all times be delivered to the Agent) and (b) at all times on and
after an Event or Event of Default, the Agent shall be authorized to direct
the Borrower and/or any other person to liquidate the Investments. The
Borrower hereby agrees to execute and deliver all instruments and other
documents requested by the Agent in furtherance of this paragraph 5,
including, at the request of the Agent, an irrevocable power of attorney in
favor of the Agent.
Except as specifically set forth above, all terms and conditions of the
Loan Agreement remain in full force and effect.
This letter amendment will be effective upon receipt by the Agent of
signature pages hereto signed by the Agent, the Borrower, the Guarantors
and the Lenders.
This letter amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be
in an original and all of which shall constitute one and the
same letter amendment.
Delivery of an executed counterpart of a signature page to this letter
amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this letter amendment.
Very truly yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as Lender
By:______________________________
Title:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Lender
By:_____________________________
Title:
HELLER FINANCIAL, INC.,
as Lender
By:_____________________________
Title
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender
By:_____________________________
Title:
LASALLE BUSINESS CREDIT, INC.,
as Lender
By:____________________________
Title:
PPM AMERICA, INC., as attorney-
in-fact for JACKSON NATIONAL
LIFE INSURANCE COMPANY,
as Lender
By:_____________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as Lender
By:____________________________
Title:
AGREED:
EDISON BROTHERS STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS APPAREL STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS SHOE STORES, INC.
EDISON PAYMASTER, INC.
EDISON BROTHERS REDEVELOPMENT CORPORATION
EDBRO MISSOURI REALTY COMPANY, INC.
EDISON ALABAMA STORES, INC.
EDISON ARKANSAS STORES, INC.
EDISON COLORADO STORES, INC.
EDISON BROTHERS COMPANY
EDISON HAWAII STORES, INC.
EDISON ILLINOIS STORES, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON LOUISIANA STORES, INC.
EDISON MARYLAND STORES, INC.
EDISON MASSACHUSETTS STORES, INC.
EDISON MICHIGAN STORES, INC.
EDISON MINNESOTA STORES, INC.
EDISON MISSISSIPPI STORES, INC.
EDISON NEBRASKA STORES, INC.
EDISON NEW JERSEY STORES, INC.
EDISON NEW MEXICO STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON OKLAHOMA STORES, INC.
EDISON OREGON STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TENNESSEE STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-MONTANA, INC.
EBSS-NORTH CENTRAL, INC.
EBSS-INDIANA, INC.
EBSS-IOWA, INC.
EBSS-KANSAS, INC.
EBSS-WISCONSIN, INC.
EBSS-NORTHEAST, INC.
EBSS-SOUTH, INC.
EBSS-MIDEAST, INC.
EBSS-MICHIGAN, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON PUERTO RICO STORES, INC.
EBSCAT, INC.
WEBSTER CLOTHES, INC.
Z&Z FASHIONS, LTD.
WEBSTER-ROSSVILLE, INC.
EDISON BROTHERS MALL ENTERTAINMENT, INC.
HORIZON ENTERTAINMENT
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISUR, INC.
EBS HOLDINGS CORP.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG #2, INC.
EDBRO MISSOURI USG #2, INC.
EDBRO CALIFORNIA USG #1, INC.INDUSTRIAL DESIGN, INC.,
as debtors-in-possession and
as Guarantors
By:
Name:
Title:
for all Guarantors
Exhibit A
Form of application
Exhibit B
Form of Letter Agreement
BANKAMERICA BUSINESS CREDIT, INC., as Agent and as Lender
THE CIT GROUP/BUSINESS CREDIT INC., as Lender
THE FIRST NATIONAL BANK OF BOSTON, as Lender
HELLER FINANCIAL, INC., as Lender
IBJ SCHRODER BANK & TRUST COMPANY, as Lender
LASALLE BUSINESS CREDIT, INC., as Lender
JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
c/o BANKAMERICA BUSINESS CREDIT, INC.
40 East 52nd Street
New York, New York 10022
As of April 12, 1996
EDISON BROTHERS STORES, INC.,
debtor-in-possession
EDISON BROTHERS APPAREL STORES, INC.,
debtor-in-possession
501 North Broadway
St. Louis, Missouri 63102
Re: Fourth Amendment to Loan Agreement dated as of November 9, 1995 (as
amended, restated, modified and supplemented from time to time, the
"Loan Agreement") by and among Edison Brothers Stores, Inc.,
debtor-in-possession ("Parent"), Edison Brothers Apparel Stores, Inc.,
debtor-in-possession ("Apparel", and together with Parent, jointly and
severally the "Borrower"), the Guarantors named therein, BankAmerica
Business Credit, Inc., as Agent (the "Agent") for the Lenders referred
to therein, and the Lenders
Ladies and Gentlemen:
Reference is made to the Loan Agreement referred to above. Capitalized terms
used but not defined herein shall have the meaning set forth in the Loan
Agreement.
The Borrower has advised the Agent and the Lenders that the federal trademark
registrations held by the Parent with respect to the "Sacha" and "Sacha
London" trademarks (collectively, the "Sacha Trademarks") have expired and
that the Parent desires to (i) create a new Subsidiary of the Parent,
proposed to be named Edison Transaction, Ltd. (the "UK Subsidiary"), such UK
Subsidiary to be organized under the laws of England; and (ii) cause the UK
Subsidiary to register the Sacha Trademarks with the United States Patent
and Trademark Office and such other governmental agencies as the UK
Subsidiary shall deem appropriate. The Borrower has further advised the
Agent and the Lenders that it intends to sell the Sacha Trademarks promptly
after the registration of such Sacha Trademarks with such governmental
authorities and that the proceeds of such sale shall be promptly paid as a
dividend to the Parent.
The creation of the UK Subsidiary would require an amendment of (i) Section
8.5 of the Loan Agreement, which contains a representation regarding
Subsidiaries of the Borrower and (ii) Section 9.17 of the Loan Agreement,
which restricts the creation of new Subsidiaries by the Loan Parties.
The Borrower has requested that the Agent and the Majority Lenders agree to
amend the Loan Agreement to permit the creation of the UK Subsidiary. The
Agent and the Majority Lenders have, subject to the terms and conditions
hereof, agreed to so amend the Loan Agreement.
By their respective signatures below, the Borrower, the Guarantors, the Agent
and the Majority Lenders hereby agree that the Loan Agreement shall be
amended by:
1. Adding the information set forth on Schedule A hereto to
Schedule 8.5 of the Loan Agreement.
2. Deleting such Section 9.17 in its entirety and substituting, in
lieu thereof, the following:
SECTION 9.17 New Subsidiaries. The Borrower shall not, directly or
indirectly, organize or acquire any Subsidiary other than (i) those existing on
the Closing Date and (ii) Edison Transaction, Ltd. (the "UK Subsidiary"), a
corporation organized under the laws of England and formed solely for the
purpose of registering with the United States Patent and Trademark Office
the "Sacha" and "Sacha London" Trademarks (the "Sacha Trademarks") to be
transferred by the Parent to the UK Subsidiary; provided, however, that the UK
Subsidiary shall own no assets, engage in no business activity of any kind
(other than the ownership, registration and sale of the Sacha Trademarks) and
incur no indebtedness or liabilities of any nature; and provided, further,
that the proceeds of the sale of the Sacha Trademarks by the UK Subsidiary
shall be paid as a dividend to Edison Brothers and shall be applied as
required pursuant to Section 6.10 of the Loan Agreement.
This letter amendment shall be effective upon receipt by the Agent of (i)
drafts of all organizational documents to be in existence with respect to
the UK Subsidiary, as certified by the UK Subsidiary and the Borrower and
(ii) signature pages hereto signed by the Agent, the Borrower, the Guarantors
and the Majority Lenders.
Except as specifically set forth above, all terms and conditions of the Loan
Agreement remain in full force and effect.
This letter amendment may be executed by the parties hereto individually or in
combination, in one or more counterparts, each of which shall be an original
and all of which shall constitute one and the same letter amendment.
Delivery of an executed counterpart of a signature page to this letter
amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this letter amendment.
Very truly yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as Lender
By:______________________________
Title:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Lender
By:_____________________________
Title:
HELLER FINANCIAL, INC.,
as Lender
By:_____________________________
Title
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender
By:_____________________________
Title:
LASALLE BUSINESS CREDIT, INC.,
as Lender
By:____________________________
Title:
PPM AMERICA, INC., as attorney-
in-fact for JACKSON NATIONAL
LIFE INSURANCE COMPANY,
as Lender
By:_____________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as Lender
By:_____________________________
Title:
AGREED:
EDISON BROTHERS STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS APPAREL STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS SHOE STORES, INC.
EDISON PAYMASTER, INC.
EDISON BROTHERS REDEVELOPMENT CORPORATION
EDBRO MISSOURI REALTY COMPANY, INC.
EDISON ALABAMA STORES, INC.
EDISON ARKANSAS STORES, INC.
EDISON COLORADO STORES, INC.
EDISON BROTHERS COMPANY
EDISON HAWAII STORES, INC.
EDISON ILLINOIS STORES, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON LOUISIANA STORES, INC.
EDISON MARYLAND STORES, INC.
EDISON MASSACHUSETTS STORES, INC.
EDISON MICHIGAN STORES, INC.
EDISON MINNESOTA STORES, INC.
EDISON MISSISSIPPI STORES, INC.
EDISON NEBRASKA STORES, INC.
EDISON NEW JERSEY STORES, INC.
EDISON NEW MEXICO STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON OKLAHOMA STORES, INC.
EDISON OREGON STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TENNESSEE STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-MONTANA, INC.
EBSS-NORTH CENTRAL, INC.
EBSS-INDIANA, INC.
EBSS-IOWA, INC.
EBSS-KANSAS, INC.
EBSS-WISCONSIN, INC.
EBSS-NORTHEAST, INC.
EBSS-SOUTH, INC.
EBSS-MIDEAST, INC.
EBSS-MICHIGAN, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON PUERTO RICO STORES, INC.
EBSCAT, INC.
WEBSTER CLOTHES, INC.
Z&Z FASHIONS, LTD.
WEBSTER-ROSSVILLE, INC.
EDISON BROTHERS MALL ENTERTAINMENT, INC.
HORIZON ENTERTAINMENT
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISUR, INC.
EBS HOLDINGS CORP.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG #2, INC.
EDBRO MISSOURI USG #2, INC.
EDBRO CALIFORNIA USG #1, INC.
INDUSTRIAL DESIGN, INC.,
as debtors-in-possession and
Guarantors
By:
Name:
Title:
for all Guarantors
Schedule A to Fourth Amendment
(Information to be added to Schedule 8.5
of Loan Agreement
BANKAMERICA BUSINESS CREDIT, INC., as Agent and as Lender
THE CIT GROUP/BUSINESS CREDIT INC., as Lender
THE FIRST NATIONAL BANK OF BOSTON, as Lender
HELLER FINANCIAL, INC., as Lender
IBJ SCHRODER BANK & TRUST COMPANY, as Lender
LASALLE BUSINESS CREDIT, INC., as Lender
JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
c/o BANKAMERICA BUSINESS CREDIT, INC.
40 East 52nd Street
New York, New York 10022
September __, 1996
EDISON BROTHERS STORES, INC.,
debtor-in-possession
EDISON BROTHERS APPAREL STORES, INC.,
debtor-in-possession
501 North Broadway
St. Louis, Missouri 63102
Re: Fifth Amendment to Loan Agreement dated as of November 9, 1995 (as
amended, restated, modified and supplemented from time to time, the
"Loan Agreement") by and among Edison Brothers Stores, Inc.,
debtor-in-possession ("Parent"), Edison Brothers Apparel Stores, Inc.,
debtor-in-possession ("Apparel", and together with Parent, jointly and
severally the "Borrower"), the Guarantors named therein, BankAmerica
Business Credit, Inc., as Agent (the "Agent") for the Lenders referred
to therein, and the Lenders
Ladies and Gentlemen:
Reference is made to the Loan Agreement referred to above. Capitalized
terms used but not defined herein shall have the meaning set forth in the
Loan Agreement.
The Borrower has requested that the Agent and the Lenders agree to amend
the Loan Agreement to, inter alia, (i) modify the definition of "Restricted
Investments" contained therein; and (ii) modify the timetable for delivery
of certain monthly financial statements under Section 7.2(c) of the Loan
Agreement. Therefore, by their respective signatures below, the Borrower,
the Agent and the Lenders agree as follows:
XIII. The definition of "Availability" in Section 1.1 of the Loan
Agreement is hereby amended by amending clause (i)(B)(y) thereof to read in
its entirety as follows: "ninety-five percent (95%) of the sum of (i) the
amount of cash deposited with Agent (which may be invested by the Agent in
investments permitted under the definition of "Restricted Investment") and
(ii) without duplication of amounts set forth in the foregoing clause (i),
the amount of cash invested by the Borrower in investments permitted under
clause "(c)," "(d)," "(e)," and/or clause "(f)" of the definition of
"Restricted Investment" (provided, however, that for the purposes of this
clause (i)(B)(y)(ii) the investments under clause "(f)" referred to above
shall be restricted to investments in mutual funds acceptable to the Agent
that invest solely in investments described in clauses "(c)," "(d)" and/or
"(e)" of the definition of "Restricted Investment"), in each case pursuant
to one or more agreements (and any necessary Bankruptcy Court order) in
form and substance satisfactory to the Agent (including, without
limitation, an agreement that all withdrawals or redemptions of such
investments be remitted only to the Agent), minus".
XIV. The definition of "Obligations" is hereby amended by adding the words
"or in connection with any foreign exchange forward contracts arranged by
the Agent or any Lender" immediately after the words "arising under this
Agreement, any Loan Document or the Pre-Petition Loan Documents" contained
therein.
XV. The definition of "Restricted Investment" in Section 1.1 of the Loan
Agreement is hereby amended by deleting such definition in its entirety and
by substituting, in lieu thereof, the following:
" Restricted Investment' means any acquisition of Property by any
Loan Party or any of its Subsidiaries in exchange for cash or other
Property, whether in the form of an acquisition of stock, indebtedness or
other obligation, or by loan, advance, capital contribution, or otherwise,
except the following:
(a) Property to be used in the business of the
Borrower and its Subsidiaries and other investments existing on the
Closing Date as reflected in the Financial Statements of the Parent
and its Subsidiaries referred to in Section 8.6(b);
(b) current assets arising from the sale or lease of
goods or rendition of services in the ordinary course of business of
the Parent and its Subsidiaries;
(c) if no Revolving Loans are outstanding at the time
of the acquisition and no Event or Event of Default has occurred and
is continuing, direct obligations of the United States of America, or
any agency thereof, or obligations guaranteed by the United States of
America, provided that such obligations mature within one year from
the date of acquisition thereof and provided further that on the date
of acquisition thereof there shall exist an active secondary market
with respect to such obligations;
(d) if no Revolving Loans are outstanding at the time
of the acquisition and no Event or Event of Default has occurred and
is continuing, certificates of deposit, bankers acceptances, bank
holding company commercial paper, time deposits, or overnight bank
deposits, in each case maturing within one year from the date of
acquisition, and issued by, created by, or with (i) a bank or trust
company organized under the laws of the United States or any state
thereof, (ii) a foreign branch of a bank or trust company organized
under the laws of the United States or any state thereof, or (iii) a
branch located in the United States of a bank or trust company
organized outside of the United States, in each instance having
capital and surplus aggregating at least $100,000,000 and a long-term
debt rating greater than or equal to A (or its equivalent) as listed
by either Standard and Poor's Corporation or Moody's Investors
Service; provided, however, that no investment with respect to any
bank or trust company permitted under this clause (d) may, (x) when
aggregated with all other investments permitted under this clause (d),
exceed an aggregate of $20,000,000 or (y) when aggregated with all
other investments permitted under the clause (d) with respect to such
bank or trust company, exceed five-percent (5%) of the combined
capital and surplus of such bank or trust company;
(e) if no Revolving Loans are outstanding at the time
of the acquisition, and no Event or Event of Default has occurred and is
continuing, commercial paper issued by corporations organized under the
laws of the United States or any State thereof or by a corporation
qualified to do business under the laws of the United States or any state
thereof, in each case given a commercial paper rating of A-1 or P-1 as
listed either by Standard and Poor's Corporation or Moody's Investors
Service and issued by an issuer with a long-term debt rating of A or
greater, as listed by either Standard and Poor's Corporation or Moody's
Investor's Service; provided, however, that such commercial paper shall not
mature more than 270 days from the date of creation thereof; and provided,
further, that the aggregate investment per issuer permitted under this
clause (e) shall not exceed $20,000,000.
(f) if no Revolving Loans are outstanding at the time
of the acquisition, and no Event or Event of Default has occurred and is
continuing, investments in professionally managed institutional money-market
mutual funds which comply with SEC Rule 2a-7, provided, however,
that such funds must also (x) be listed in IBC/Donoghue's First-Tier
Institutions-Only category; (y) be in existence for at least three years
and (z) have total average assets (for all share classifications) under
management equal to or greater than $2,000,000,000;
(g) if no Revolving Loans are outstanding at the time
of acquisition, and no Event or Event of Default has occurred and is
continuing, repurchase agreements with respect to investments permitted
under clauses (c), (d) and (e) above, provided, however, that Borrower
shall, directly or through its agents or custodians, take physical
possession of any certificated securities that are subject to the
repurchase agreement or appropriate book-entries shall be made with respect
to non-certificated securities that are subject to the repurchase
agreement; provided, further, that the term of any such repurchase
agreement shall not exceed seven (7) days; and provided, further, that the
aggregate investment per issuer permitted under this clause (g) shall not
exceed an aggregate of $5,000,000;
(h) loans made by a Borrower or any Subsidiary to a
Borrower or another Subsidiary permitted under Section 9.10(g) or Section
9.10(h)."
XVI. Section 7.2(c) of the Loan Agreement is hereby amended by deleting the
words "not later than twenty-five (25) days after the close of each fiscal
month of the Parent" and by substituting, in lieu thereof, the words "not
later than the due date indicated on Schedule 7.2(c) hereto with respect to
each fiscal month of the Parent".
XVII. Schedule 7.2(c) to this Amendment shall be added as Schedule
7.2(c) to the Loan Agreement.
XVIII. The Borrower hereby represents and warrants to the Agent and the
Lenders that (i) the execution, delivery and performance of this letter
amendment has been authorized by all necessary corporate action of the
Parent and its Subsidiaries and by all necessary Bankruptcy Court
approvals; and (ii) neither the Parent nor any of its Subsidiaries shall
acquire any Property in exchange for cash or other Property, whether in the
form of an acquisition of stock, indebtedness or other obligation, or by
loan, advance, capital contribution or otherwise (each of the foregoing, an
"Investment") unless such Investment (x) is permitted by the terms of the
Loan Agreement and (y) shall have been duly authorized by all necessary
corporate action of the Parent and its Subsidiaries and by all necessary
Bankruptcy Court approvals.
XIX. The Borrower, the Agent and the Lenders agree that (a) at all times
prior to an Event or Event of Default, the Agent shall follow all
reasonable written instructions of the Borrower with respect to the
Investments (provided, however, that all distributions, redemptions and/or
payments of any kind (whether in cash or other consideration) with respect
to the Investments shall at all times be delivered to the Agent) and (b) at
all times on and after an Event or Event of Default, so long as any
Obligations shall be outstanding (including, without limitation, Loans,
Letters of Credit or any other amounts), the Agent shall be authorized to
direct the Borrower and/or any other person to liquidate the Investments to
the extent necessary to provide cash collateral in an amount equal to such
outstanding Obligations. The Borrower hereby agrees to execute and deliver
all instruments and other documents requested by the Agent in furtherance
of this paragraph 7 including, at the request of the Agent, an irrevocable
power of attorney in favor of the Agent.
Except as specifically set forth above, all terms and conditions
of the Loan Agreement remain in full force and effect.
This letter amendment will be effective upon receipt by the Agent
of signature pages hereto signed by the Agent, the Borrower, the Guarantors
and the Lenders.
This letter amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be in an original and all of which shall constitute one and the same
letter amendment.
Delivery of an executed counterpart of a signature page to this
letter amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this letter amendment.
Very truly yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as Lender
By:______________________________
Title:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Lender
By:_____________________________
Title:
HELLER FINANCIAL, INC.,
as Lender
By:_____________________________
Title
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender
By:_____________________________
Title:
LASALLE BUSINESS CREDIT, INC.,
as Lender
By:____________________________
Title:
PPM AMERICA, INC., as attorney-
in-fact for JACKSON NATIONAL
LIFE INSURANCE COMPANY,
as Lender
By:_____________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as Lender
By:____________________________
Title:
AGREED:
EDISON BROTHERS STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS APPAREL STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS SHOE STORES, INC.
EDISON PAYMASTER, INC.
EDISON BROTHERS REDEVELOPMENT CORPORATION
EDBRO MISSOURI REALTY COMPANY, INC.
EDISON ALABAMA STORES, INC.
EDISON ARKANSAS STORES, INC.
EDISON COLORADO STORES, INC.
EDISON BROTHERS COMPANY
EDISON HAWAII STORES, INC.
EDISON ILLINOIS STORES, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON LOUISIANA STORES, INC.
EDISON MARYLAND STORES, INC.
EDISON MASSACHUSETTS STORES, INC.
EDISON MICHIGAN STORES, INC.
EDISON MINNESOTA STORES, INC.
EDISON MISSISSIPPI STORES, INC.
EDISON NEBRASKA STORES, INC.
EDISON NEW JERSEY STORES, INC.
EDISON NEW MEXICO STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON OKLAHOMA STORES, INC.
EDISON OREGON STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TENNESSEE STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-MONTANA, INC.
EBSS-NORTH CENTRAL, INC.
EBSS-INDIANA, INC.
EBSS-IOWA, INC.
EBSS-KANSAS, INC.
EBSS-WISCONSIN, INC.
EBSS-NORTHEAST, INC.
EBSS-SOUTH, INC.
EBSS-MIDEAST, INC.
EBSS-MICHIGAN, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON PUERTO RICO STORES, INC.
EBSCAT, INC.
WEBSTER CLOTHES, INC.
Z&Z FASHIONS, LTD.
WEBSTER-ROSSVILLE, INC.
EDISON BROTHERS MALL ENTERTAINMENT, INC.
HORIZON ENTERTAINMENT
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISUR, INC.
EBS HOLDINGS CORP.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG #2, INC.
EDBRO MISSOURI USG #2, INC.
EDBRO CALIFORNIA USG #1, INC.
INDUSTRIAL DESIGN, INC.,
as debtors-in-possession and
as Guarantors
By:
Name:
Title:
for all Guarantors
Schedule 7.2(c) to Amendment and to Loan Agreement
Fiscal Month Ending Due Date
May 4, 1996 June 18, 1996
June 1, 1996 July 1, 1996
July 6, 1996 August 5, 1996
August 3, 1996 September 17, 1996
August 31, 1996 September 30, 1996
October 5, 1996 November 4, 1996
November 2 1996 December 17, 1996
November 30, 1996 December 30, 1996
January 4, 1997 February 3, 1997
February 1, 1997 May 2, 1997
BANKAMERICA BUSINESS CREDIT, INC., as Agent and as Lender
THE CIT GROUP/BUSINESS CREDIT INC., as Lender
THE FIRST NATIONAL BANK OF BOSTON, as Lender
HELLER FINANCIAL, INC., as Lender
IBJ SCHRODER BANK & TRUST COMPANY, as Lender
LASALLE BUSINESS CREDIT, INC., as Lender
JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
c/o BANKAMERICA BUSINESS CREDIT, INC.
40 East 52nd Street
New York, New York 10022
January __, 1997
EDISON BROTHERS STORES, INC.,
debtor-in-possession
EDISON BROTHERS APPAREL STORES, INC.,
debtor-in-possession
501 North Broadway
St. Louis, Missouri 63102
Re: Sixth Amendment to Loan Agreement dated as of November 9, 1995 (as
amended, restated, modified and supplemented from time to time, the
("Loan Agreement") by and among Edison Brothers Stores, Inc.,
debtor-in-possession ("Parent"), Edison Brothers Apparel Stores, Inc.,
debtor-in-possession ("Apparel", and together with Parent, jointly
and severally the "Borrower"), the Guarantors named therein,
BankAmerica Business Credit, Inc., as Agent (the "Agent") for the
Lenders referred to therein, and the Lenders
Ladies and Gentlemen:
Reference is made to the Loan Agreement referred to above. Capitalized terms
used but not defined herein shall have the meaning set forth in the Loan
Agreement.
The Borrower has requested that the Agent and the Lenders agree to amend
Section 9.6(iii) of the Loan Agreement to increase the number of store
closings permitted thereunder from 850 to 1100. Therefore, by their
respective signatures below, the Borrower, the Agent and the Lenders agree
as follows:
XX. Section 9.6(iii) of the Loan Agreement is hereby amended by deleting the
number "850" therein and substituting, in lieu thereof, the number "1100".
XXI. The Borrower hereby represents and warrants to the Agent and the
Lenders that the execution, delivery and performance of this letter
amendment has been authorized by all necessary corporate action of the Parent
and its Subsidiaries and by all necessary Bankruptcy Court approvals.
Except as specifically set forth above, all terms and conditions of
the Loan Agreement remain in full force and effect.
This letter amendment will be effective upon receipt by the Agent of
signature pages hereto signed by the Agent, the Borrower, the Guarantors and
the Majority Lenders.
This letter amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be an original and all of which shall constitute one and the same
letter amendment.
Delivery of an executed counterpart of a signature page to this letter
amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this letter amendment.
Very truly yours,
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent and as Lender
By:______________________________
Title:
THE CIT GROUP/BUSINESS CREDIT INC.,
as Lender
By:_____________________________
Title:
HELLER FINANCIAL, INC.,
as Lender
By:_____________________________
Title
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender
By:_____________________________
Title:
LASALLE BUSINESS CREDIT, INC.,
as Lender
By:____________________________
Title:
PPM AMERICA, INC., as attorney-
in-fact for JACKSON NATIONAL
LIFE INSURANCE COMPANY,
as Lender
By:_____________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as Lender
By:____________________________
Title:
AGREED:
EDISON BROTHERS STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS APPAREL STORES, INC.,
a Debtor in Possession, as Borrower
and as a Guarantor
By: ______________________________________
Name:
Title:
EDISON BROTHERS SHOE STORES, INC.
EDISON PAYMASTER, INC.
EDISON BROTHERS REDEVELOPMENT CORPORATION
EDBRO MISSOURI REALTY COMPANY, INC.
EDISON ALABAMA STORES, INC.
EDISON ARKANSAS STORES, INC.
EDISON COLORADO STORES, INC.
EDISON BROTHERS COMPANY
EDISON HAWAII STORES, INC.
EDISON ILLINOIS STORES, INC.
EDISON KANSAS STORES, INC.
EDISON KENTUCKY STORES, INC.
EDISON LOUISIANA STORES, INC.
EDISON MARYLAND STORES, INC.
EDISON MASSACHUSETTS STORES, INC.
EDISON MICHIGAN STORES, INC.
EDISON MINNESOTA STORES, INC.
EDISON MISSISSIPPI STORES, INC.
EDISON NEBRASKA STORES, INC.
EDISON NEW JERSEY STORES, INC.
EDISON NEW MEXICO STORES, INC.
EDISON NEW YORK STORES, INC.
EDISON OHIO STORES, INC.
EDISON OKLAHOMA STORES, INC.
EDISON OREGON STORES, INC.
EDISON PENNSYLVANIA STORES, INC.
EDISON TENNESSEE STORES, INC.
EDISON TEXAS STORES, INC.
EDISON UTAH STORES, INC.
EDBRO OHIO REALTY, INC.
EBSS-MONTANA, INC.
EBSS-NORTH CENTRAL, INC.
EBSS-INDIANA, INC.
EBSS-IOWA, INC.
EBSS-KANSAS, INC.
EBSS-WISCONSIN, INC.
EBSS-NORTHEAST, INC.
EBSS-SOUTH, INC.
EBSS-MIDEAST, INC.
EBSS-MICHIGAN, INC.
EBSS-EAST, INC.
EBSS-OHIO, INC.
EBSS-PENNSYLVANIA, INC.
EBSS-TEXAS, INC.
EBSS-WEST, INC.
EDISON PUERTO RICO STORES, INC.
EBSCAT, INC.
WEBSTER CLOTHES, INC.
Z&Z FASHIONS, LTD.
WEBSTER-ROSSVILLE, INC.
EDISON BROTHERS MALL ENTERTAINMENT, INC.
HORIZON ENTERTAINMENT
TIME-OUT FAMILY AMUSEMENT CENTERS, INC.
TOFAC OF PUERTO RICO, INC.
EDISON BROTHERS STORES INTERNATIONAL, INC.
EDISUR, INC.
EBS HOLDINGS CORP.
SACHA SHOES LTD.
MANDEL'S OF CALIFORNIA
EDISON WHITTIER WAREHOUSE, INC.
EDBRO CALIFORNIA USG #2, INC.
EDBRO MISSOURI USG #2, INC.
EDBRO CALIFORNIA USG #1, INC.
INDUSTRIAL DESIGN, INC.,
as debtors-in-possession and
s Guarantors
By:
Name:
Title:
for all Guarantors
<TABLE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
(000S)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Income (Loss) from continuing
operations ($143,216) ($222,042) $20,470
Preferred stock dividends 0 (2) (10)
Net income (Loss) applicable to common
stock (143,216) (222,044) 20,460
SIMPLE AND PRIMARY
Weighted average shares outstanding 22,185 22,070 22,007
Net effect of dilutive stock options
- based on the treasury method 0 0 90
TOTAL 22,185 22,070 22,097
Per common share amounts:
Simple Net Income (Loss)
applicable to common stock ($6.46) ($10.06) $0.93
Per common share amounts:
Primary Net Income (Loss)
applicable to common stock ($6.46) ($10.06) $0.93
FULLY DILUTED
Weighted average shares outstanding 22,185 22,070 22,007
Net effect of dilutive stock options
- based on the treasury method 0 10 120
TOTAL 22,185 22,080 22,127
Per common share amounts:
Fully diluted Net Income (Loss)
applicable to common stock ($6.46) ($10.06) $0.92
</TABLE>
ANNUAL REPORT
1996: The Year in Brief
Edison Brothers Stores Inc. operates apparel and footware stores focused on
serving the youth and special-size markets with a selection of quality name
brand and private-label merchandise. With more than 1,700 locations and
17,000 employees in the United States, Canada and Puerto Rico, Edison is
one of the largest mall-based specialty retailers in North America.
Apparel
1,253 Stores
J. Riggings
Coda
JW/Jeans West
REPP Ltd
Oaktree
Phoenix Big & Tall catalog
Shifty's
5-7-9 Shops
Footwear
490 Stores
Bakers/Leeds
Wild Pair
<TABLE>
<CAPTION>
1996 1995
(52 weeks) (53 weeks)
<S> <C> <C>
Net sales $1,090,400,000 $1,389,400,000
Net loss (143,200,000) (222,000,000)
Net loss per share (6.46) (10.06)
Cash flow from operations 85,500,000 85,400,000
<fn7>
A discussion of results is included in Management's Discussion and Analysis
on page 18.
</fn7>
</TABLE>
To Our Shareholders,
Edison Brothers' financial performance in 1996 reflected a company in the
midst of a dramatic restructuring and repositioning. While sales trends
improved during the fourth quarter and our losses narrowed, we have much
more to do before our transformation is complete. If all goes as planned,
Edison will emerge from Chapter 11 in 1997 having made measurable progress
toward becoming a stronger, more focused specialty retailer.
Restructuring Initiatives
Edison took aggressive actions necessary for the survival of the company
and began a comprehensive restructuring process immediately after filing
for Chapter 11 in November 1995. Our efforts included consolidating our
store base and selling our entertainment division to generate an immediate
infusion of needed cash.
During the next phase of our turnaround process, we clearly identified the
company's strengths and weaknesses, and initiated programs to help us adopt
best practices and implement improvements. These initiatives have included:
Conducting market research for most of our chains.
Improving merchandise quality and assortments.
Reducing our emphasis on discount pricing to improve sales and margins.
Investing $13 million to upgrade our stores' physical appearance in 1996
and earmarking $16 million for 1997. Giving store staffs more time to
serve customers by eliminating and streamlining "backroom" operations.
Implementing company-wide standards for compensation, scheduling, sales,
service, merchandise returns, and more. Developing stronger relationships
with our vendors to improve merchandise quality and further streamline
our allocation and distribution processes. Reducing overhead and other
costs.
These initiatives provide a solid base from which Edison can now execute
its strategic business plan - the first the company has produced in a
number of years. The plan outlines a focus on two key markets - youth and
special size - which fit the company's current profile and offer strong
opportunities for growth. This new strategic focus will allow us to
continue to build our existing businesses and provide opportunities for
carefully targeted expansion.
1996 Performance
Edison Brothers reported a net loss excluding special charges of $32.9
million for the 52 weeks ended February 1, l997, compared to $63.9 million
for the 53 weeks of 1995. Including $110.3 million in special charges in
1996 and $167.1 million ($158.1 million after-tax) of special charges in
1995, the full-year net losses were $143.2 million, or $6.46 per share, and
$222.0 million, or $10.06 per share, respectively.
Special charges in 1996 included $74.0 million in noncash charges resulting
from the recognition of an impairment loss on long-lived assets,
principally real estate and intangibles, pursuant to Statement of Financial
Accounting Standards 121. The remaining $36.3 million in special chargers
were restructuring and reorganization expenses, primarily reserves for
store closings, and legal and consulting fees.
Same-store sales for 1996 declined by 1.9 percent to $1.02 billion from
$1.04 billion in 1995. Total sales for 1996 were $1.09 billion compared
with $1.39 billion the year before, a decrease of 20.4 percent, reflecting
a 23.4 percent decrease in the average number of stores operated by Edison
during the period.
Plan of Reorganization
On February 27, 1997, Edison Brothers filed its proposed plan of
reorganization with the U.S. Bankruptcy Court. This was followed by the
filing of an amended plan and a proposed disclosure statement on March 31,
1997. The plan is designed to provide Edison with a capital structure to
support its business strategy and reduce the company's long-term debt
level, allowing us to focus our financial resources on improving our
operations.
Edison's proposed plan of reorganization would provide unsecured creditors,
including suppliers, lenders and factors, with a combination of cash, new
corporate debt, equity and other assets representing an estimated payment
of 92 cents on the dollar for the approximately $444 million in total
unsecured claims. All of Edison's current common stock would be canceled
and 10 million shares of new common stock would be distributed to the
unsecured creditors. Current shareholders would receive two sets of
warrants that would entitle them to purchase a total of approximately 9
percent of the new stock, on a fully diluted basis, at predetermined
prices. Edison's proposed plan of reorganization and disclosure statement
are subject to further amendment and revisions before approval of the
disclosure statement.
Once the disclosure statement is approved, all creditors and shareholders
will have an opportunity to review the plan of reorganization and
disclosure statement, and vote on the plan. The court will then hold a
hearing to determine whether to confirm the plan of reorganization. If it
is confirmed, Edison will then emerge from Chapter 11.
Edison has used the Chapter 11 process to rehabilitate its business and lay
a strategic foundation for the future. We are encouraged by our results to
date, but clearly need to maintain our momentum and make the most of our
opportunities if this initial progress is to translate into sustainable
success for Edison over the long term.
Sincerely,
/s/Alan Miller
Chairman and President
April 25, 1997
<TABLE>
Consolidated Statements of Operations
(Dollars in millions, except per share data)
<CAPTION>
1996 1995 1994
(52 weeks) (53 weeks) (52 weeks)
<S> <C> <C> <C>
Net Sales $1,090.4 $1,389.4 $1,476.4
Cost of goods sold, occupancy,
and buying expenses 794.9 1,033.3 1,017.4
Store operating and administrative
expenses 281.4 352.1 360.3
Depreciation and amortization 41.2 62.8 69.6
Interest expense, net (excludes contractual
interest of $35.0 in 1996 and $9.1 in 1995) 2.4 25.2 19.0
Restructuring and reorganization
expenses 36.3 167.1 -
Impairment of long-lived assets 74.0 - -
Other operating - - (22.3)
1,230.2 1,640.5 1,444.0
Income (Loss) before Income Taxes (139.8) (251.1 32.4
Income tax provision (benefit) 3.4 (29.1) 11.9
Net Income (Loss) $ (143.2) $ (222.0) $ 20.5
Net Income (Loss) per Common Share $ (6.46) $ (10.06) $ .93
<fn8>
See accompanying notes
</fn8>
</TABLE>
<TABLE>
Consolidated Balance Sheets
(Dollars in millions)
<CAPTION>
1996 1995
year-end year-end
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $125.6 $139.6
Investments 78.5 -
Merchandise inventories 210.7 250.5
Income tax receivable 0.8 42.8
Prepaid expenses 5.0 10.2
Other current assets 4.8 9.4
Total Current Assets 425.4 452.5
Assets Held for Sale 10.9 -
Property and Equipment, net 146.0 209.0
Intangible Assets, net - 50.3
Prepaid Pension Expense 41.3 38.4
Other Assets 10.2 11.3
Total Assets $633.8 $761.5
LIABILITIES AND COMMON STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 69.2 $ 64.8
Payroll and vacations 10.7 13.4
Other taxes 5.7 6.9
Other current liabilities 23.1 26.0
Total Current Liabilities 108.7 111.1
Liabilities Subject to Settlement under
Reorganization Proceedings 508.3 489.8
Other Liabilities 18.9 20.2
Common Stockholders' Equity (Deficit):
Common stock, par value $1 22.2 22.1
Capital in excess of par value 76.9 76.7
Retained earnings (deficit) (101.6) 41.6
Foreign currency translation adjustment
and other .4 -
Total Common Stockholders' Equity
(Deficit) (2.1) 140.4
Total Liabilities and Equity
(Deficit) $633.8 $761.5
<fn9>
See accompanying notes
</fn9>
</TABLE>
<TABLE>
Consolidated Statements of Cash Flows
(Dollars in Millions)
<CAPTION>
1996 1995 1994
(52 weeks) (53 weeks) (52 weeks)
Cash Flows from Operating Activities:
<S> <C> <C> <C>
Net income (loss) $(143.2) $(222.0) $20.5
Adjustments to reconcile net income
(loss) to net cash provided by
Operating activities:
Depreciation and amortization 41.2 62.8 69.6
Provision for deferred income taxes,
net of valuation allowance and
acquisitions - 4.5 8.8
Restructuring and reorganization
expenses 11.7 111.3 -
Impairment of long-lived assets 74.0 - -
Changes in assets and liabilities,
net of effects from acquisitions
and dispositions:
Merchandise inventories 39.9 71.0 (26.7)
Income tax receivable, prepaid
expenses,and other assets 49.9 (16.8) (24.9)
Accounts payable, accrued expenses,
and other liabilities 5.4 67.7 (5.0)
Other 6.6 6.9 7.6
Total Operating Activities 85.5 85.4 49.9
Cash Flows from Investing Activities:
Payment for companies and assets purchased,
net of cash acquired - (14.1) (11.8)
Capital expenditures (21.9) (37.2) (61.7)
Increase in investments (78.5) - -
Net proceeds from disposal of
subsidiaries - 17.1 -
Other 0.8 2.7 (0.9)
Total Investing Activities (99.6) (31.5) (74.4)
Cash Flows from Financing Activities:
Proceeds from prepetition debt
issuance - 60.0 15.0
Prepetition long-term debt
payments - (0.1) (35.7)
Net prepetition short-term debt
borrowings - 11.4 71.1
Net postpetition borrowings
(payments) under short-term credit
facility (0.2) 0.2 -
Dividends on common stock - (9.3) (27.3)
Other 0.3 6.1 1.0
Total Financing Activities 0.1 68.3 24.1
Effect of exchange rate changes
on cash - (9.6) (5.2)
Cash Provided (Used) (14.0) 112.6 (5.6)
Beginning cash and cash
equivalents 139.6 27.0 32.6
Ending Cash and Cash Equivalents $125.6 $ 139.6 $27.0
Cash Payments (Receipts) for:
Interest expense $ 0.4 $ 23.9 $20.4
Income taxes $(37.9) $ (0.7) $ 4.5
<fn10>
See accompanying notes
</fn10>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
(Dollars in millions, except per share data)
<CAPTION>
Foreign
Currency
Capital in Retained translation
Common excess of earnings adjustment
stock par value (deficit) and other
<S> <C> <C> <C> <C>
Balance at Beginning of 1994 $22.0 $75.6 $310.6 ($0.3)
Net income - - 20.5 -
Stock options exercised and
employee benefit plans - 1.0 - 0.1
Common stock purchased - 9,000
shares - (0.1) - -
Foreign currency translation
adjustment - - - (14.9)
Dividends on common stock
$1.24 per share - - (27.3) -
Balance at End of 1994 22.0 76.5 303.8 (15.1)
Net loss - - (222.0) -
Stock options exercised and
employee benefit plans 0.1 0.2 - -
Spin-off of subsidiary - - - (30.9)
Foreign currency translation
adjustment - - - 15.1
Dividends on common stock
$.42 per share - - (9.3) -
Balance at End of 1995 22.1 76.7 41.6 -
Net loss - - (143.2) -
Employee benefit plans 0.1 0.2 - -
Foreign currency translation
adjustment - - - 0.4
Balance at End of 1996 $22.2 $76.9 ($101.6) $0.4
<fn11>
See accompanying notes
</fn11>
</TABLE>
Notes to Consoldiated Financial Statements
(Dollars im Millions, except per share data)
Note 1: Proceedings under Chapter 11
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. In addition, the U.S. Trustee appointed an Equity
Committee during the fourth quarter of 1996. 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 consolidated financial statements.
The accompanying 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 consolidated balance sheet could materially change
because of the 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.
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. For financial reporting purposes, those liabilities and
obligations whose disposition 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 consolidated balance
sheets. Generally, 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.
Differences between amounts reflected in such schedules and claims filed by
creditors will be investigated and either amicably resolved or adjudicated.
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 prepetition 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 real estate leases.
The Company will continue to analyze its executory contracts and may assume
or reject additional contracts.
On February 27, 1997, the Debtors filed a proposed Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code, which was amended
by a subsequent filing on March 31, 1997 (the plan as amended, the "Plan").
On March 31, 1997, the Debtors also filed a Disclosure Statement pursuant
to Section 1125 of the Bankruptcy Code. The Court has set a hearing date of
May 13, 1997, for consideration of the adequacy of the Debtors' Disclosure
Statement. If the Disclosure Statement is approved by the Court, the
Company will then solicit acceptances of the Plan for those holders of
claims and equity interests entitled to vote thereon under the terms of the
Plan. A confirmation hearing will thereafter be held by the Bankruptcy
Court to determine whether the Plan satisfies all of the requirements for
confirmation specified in Section 1129 of the Bankruptcy Code, among which
are that the Plan be: (i) accepted by all impaired classes of claims and
equity interests or, if rejected by an impaired class, that the Plan "does
not discriminate unfairly" and is "fair and equitable" as to such class;
(ii) feasible; and (iii) in the "best interests of creditors and
stockholders that are impaired under the Plan."
The Plan and Disclosure Statement may be subject to further amendment and
revisions before the process is completed. As currently drafted, the Plan
provides for a distribution to creditors of a combination of cash, new
corporate debt, new Company common stock and other assets. General
unsecured creditors would receive: (i) a cash payment of $119 (subject to
certain adjustments); (ii) ten year, 11% unsecured notes in the principal
amount of $100 (with the first three years of interest prefunded and no
scheduled principal payments until maturity in 2007); (iii) new common
stock of the Company, which would be issued at the time of emergence and
replace all existing shares; (iv) title to the Company's headquarters
building in downtown St. Louis, which the Company would continue to occupy
under the terms of a ten year lease; and (v) excess cash of approximately
$43 from the Company's overfunded pension plan. Holders of existing equity
interests in the Company would receive a combination of three- and six-year
warrants to purchase a total of approximately nine percent of the new
common stock.
The Plan will not become effective unless and until certain conditions
specified therein have been satisfied or waived. Among these conditions are
that: (i) an order confirming the Plan, in form and substance reasonably
acceptable to the Debtors and the statutory Creditors' Committee, shall
have been signed by the Bankruptcy Court and there shall not be a stay or
injunction in effect with respect thereto; (ii) the Debtors shall have at
least $25 in cash as of July 5, 1997, after giving effect to the
distributions of cash projected to be made under the Plan; (iii) the
Debtors shall have credit availability under a working capital credit
facility providing the Debtors with working capital sufficient to meet
their requirements; and (iv) various other actions, documents and
agreements necessary to implement the Plan shall have been effected or
executed.
The Company anticipates using fresh start accounting once the Plan is
consummated.
Note 2: Description of Business and Summary of Significant Accounting
Policies
Business: The Company owns and operates chains of specialty retailing
stores located in 49 states, Puerto Rico, the Virgin Islands, and Canada.
The Company conducts its principal operations through subsidiaries in two
segments, apparel and footwear.
Consolidation: The financial statements include the accounts of all
subsidiaries; intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents: Short-term investments with maturities of three
months or less at the time of purchase are reported as cash equivalents.
Investments: Investments consist of U.S. government debt securities which
mature in less than one year, and are classified as available-for-sale. The
amortized cost, which approximates fair value, of these securities is
adjusted for amortization of premiums and accretions of discounts to
maturity. Amortization, interest and dividends are included in interest
income.
Inventories: A portion of the inventories (76%) is determined using the
retail method and is based on the lower of cost or market. The other
portion (24%) is stated at the lower of cost, mainly average costs, or
market, based principally on anticipated realizable values.
Long-Lived Assets: Depreciation and amortization of property and
equipment and intangible assets are computed principally on a straight-line
basis. The Company follows Statement of Financial Accounting Standards 121,
"Accounting for Long-Lived Assets and for Long-Lived Assets to be Disposed
of" (SFAS 121), in evaluating the recoverability of long-lived assets.
Income Taxes: The liability method is used to compute deferred income
taxes resulting from temporary differences in the recognition of income and
expense items for tax and financial reporting purposes.
Interest Expense: Interest expense for 1995 and 1994 has been reduced by
interest income of $1.8 (earned prior to the Petition Date), and $1.6,
respectively. Interest earned subsequent to the Petition Date of $8.2 in
1996 and $0.9 in 1995 is included in restructuring and reorganization
expenses.
Store Opening and Closing Costs: Store preopening costs are charged
against income as incurred. Closing costs are accrued when the decision is
made to close a store.
Earnings Per Share: Earnings per common share are based on the weighted
average number of shares outstanding (22,185,000 in 1996; 22,070,000 in
1995; and 22,007,000 in 1994). Shares issuable under stock option plans did
not have a significant dilutive effect on earnings per common share.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and revenues and expenses during the reporting period. Actual
amounts could differ from these estimates.
Reclassifications: Certain prior-year items have been reclassified to
conform to the current-year presentation.
Fiscal Year: The Company's fiscal year ends on the Saturday closest to
January 31. References to 1996, 1995, and 1994 are to the 52 weeks ended
February 1, 1997, the 53 weeks ended February 3, 1996, and the 52 weeks
ended January 28, 1995.
Note 3: Restructuring and Reorganization Expenses
The Company records restructuring and reorganization expenses in accordance
with AICPA Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code." Restructuring and reorganization
expenses for the fiscal years ended February 1, 1997, and February 3, 1996,
respectively, were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Estimated costs for store closings $13.7 $101.6
Loss on sale of subsidiaries 0.9 33.0
Accelerated goodwill amortization - 15.1
Consulting fees 15.4 2.2
Legal fees 4.4 1.5
Interest income (8.2) (0.9)
Other 10.1 14.6
Restructuring and reorganization
expenses $36.3 $167.1
</TABLE>
During 1996 and 1995, the Company recognized store closing provisions
relating to a restructuring plan designed to close unprofitable stores. In
1996, sales and store contribution for stores closed during 1996 were
$128.7 and $(2.8). Sales and store contribution recorded in 1995 for the
stores closed during 1995 were $177.2 and $(26.1). The Company is
continuing to evaluate store operating performance to determine the need
for additional store closings.
Store closing costs of $13.7 and $101.6 in 1996 and 1995, respectively,
represent a provision to cover early lease termination claims and the
write-off of fixtures and equipment, leasehold improvements, and related
intangible assets. Charges of $19.2 in 1996 and $59.2 in 1995, representing
the net book value of fixed and intangible assets that have been disposed
of, have been made to the reserve. Lease termination claims totaling $42.8
and $38.6 at the end of 1996 and 1995, respectively, have been reclassified
to liabilities subject to settlement under reorganization proceedings.
In 1995 the Company recorded a $24.7 loss related to the sale of
substantially all the assets of its mall entertainment division. In
addition, the Company recorded provisions of $0.9 and $8.3 in 1996 and
1995, respectively, to cover the costs associated with the disposal of the
remaining operations. The two remaining entertainment locations are
expected to close in the fall of 1997.
The Company recorded a $15.1 charge in 1995 for the accelerated
amortization of Zeidler & Zeidler goodwill. An evaluation of the carrying
value of the goodwill in relation to the operating performance of the
underlying business, coupled with store closings in 1995 and provisions for
1996 closings, indicated that such goodwill had declined in value.
The Company incurred consulting and legal fees for bankruptcy activity,
restructuring efforts and the plan of reorganization. These professional
fees were for services provided to the Company, the Creditors' Committee
and the Equity Committee.
Other reorganization expense of $10.1 for 1996 and $14.6 for 1995 represent
expenses related to an early retirement program, payroll and severance
costs, retention bonuses, liquidator fees and other expenses incurred as a
result of the Chapter 11 filing. 1995 expenses also include costs related
to the closing of the Company's distribution center in Rome, Georgia.
Of the $203.4 restructuring and reorganization expenses incurred since the
petition date, $123.0 were noncash charges. Total cash payments were $20.7
in 1996 and $3.7 in 1995, primarily for professional fees. Charges of $56.0
represent payments to be made in the future, mostly for lease termination
claims.
Note 4: Property and Equipment
<TABLE>
Property and equipment are recorded at cost as follows:
<CAPTION>
1996 1995
year-end year-end
<S> <C> <C>
Land $ 4.9 $ 5.8
Buildings 24.0 69.7
Leasehold improvements 170.3 189.7
Fixtures and equipment 137.3 147.5
Property held under capital
leases, principally
buildings 9.6 9.6
Total cost 346.1 422.3
Accumulated depreciation
and amortization (200.1) (213.3)
Property and equipment,
net $146.0 $209.0
</TABLE>
Depreciation and amortization expense for 1996, 1995, and 1994 was $35.3,
$52.1, and $56.9, respectively. In 1996, the Company decided to dispose of
specific corporate properties no longer used in the business. The value of
the land and buildings of $10.9 has been reclassified to assets held for
sale in the consolidated balance sheet.
Effective for fiscal 1996 and in accordance with SFAS 121, the Company
reviews long-lived assets, identifiable intangibles and goodwill for
impairment whenever events or changes in business circumstances indicate
the carrying amount of the assets may not be fully recoverable. The Company
generally performs non-discounted cash flow analyses to determine if an
impairment exists. If impairment is determined to exist, the related
impairment loss is calculated based on the present value of cash flows
using discount rates which reflect the inherent risk of the underlying
business. Impairment losses on assets to be disposed of (if any) are based
on the estimated proceeds to be received less costs of disposal.
In 1996, Apparel and Footwear long-lived assets were compared to current
estimates of the associated future cash flows over the average remaining
lease terms for the stores within those segments. For those assets
determined to be impaired, future cash flows were then discounted at a 14%
rate, which the Company believes to be consistent with current business
risk. Corporate properties were evaluated based on a review of independent
appraisals.
As a result, the $74.0 charge in 1996 represents write-downs of $39.4 for
the apparel segment and $34.6 for corporate properties. The write-downs
consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Assets held for sale (corporate
land and buildings) $ 4.8
BuildingS 21.5
Leasehold improvements and other 2.0
Fixtures and equipment 3.3
Intangibles 42.4
Impairment of long-lived assets $ 74.0
</TABLE>
<TABLE>
Note 5: Intangible Assets
<CAPTION>
1995
year-end
<S> <C>
Leasehold rights $ 10.1
Goodwill 34.0
Covenant not to compete 12.0
Other 15.3
Total 71.4
Accumulated amortization (21.1)
Intangible assets, net $ 50.3
</TABLE>
During 1996 the remaining net book value of intangibles of $42.4 was
written off and was included in impairment of long-lived assets in the
consolidated statements of operations. See Note 4 for discussion of asset
impairment adjustments determined in accordance with SFAS 121.
Intangibles are amortized over useful lives ranging from 2 to 30 years.
Amortization expense for 1996, 1995, and 1994 was $5.9, $10.7, and $12.7,
respectively. In 1995 an additional charge of $15.1 was recorded for the
accelerated amortization of Zeidler & Zeidler goodwill and was included in
restructuring and reorganization expenses in the consolidated statements of
operations.
Note 6: Employee Benefit Plans
The qualified pension plan covers employees who have met age and service
eligibility requirements. Benefits are based on each employee's highest
average compensation for any 5 consecutive full calendar years out of the
last 15 years of credited service preceding separation. The Company funds
at least the minimum amount required by funding standards. Currently, the
pension plan on an actuarial basis is overfunded and there is no current
funding by the Company.
The current qualified plan will be terminated effective May 31, 1997 and a
new plan implemented concurrent with the termination. The Company will seek
approval from the Pension Benefit Guarantee Corporation in order to
terminate the plan. The Company filed a determination letter with the
Internal Revenue Service on March 24, 1997 to assess the tax status of the
termination. Plan participants have been notified of the termination.
Participants currently receiving benefits under the qualified plan will
have annuity contracts purchased on their behalf. All participants who are
not currently receiving benefits will become fully vested upon plan
termination. The participants will have the option to have the net present
value of their vested benefits transferred into the new qualified plan, or
converted into an annuity contract. The specific terms of the new qualified
plan have not yet been finally determined.
In determining the actuarial present value of projected future benefits for
1996 and 1995, the weighted-average discount rate was 7.5% and 7.0%,
respectively, and the rate of increase in future compensation levels was
5.65% for both years. For 1996, 1995, and 1994, the assumed rate of return
on assets was 9.5%. Plan assets consist primarily of fixed income and
equity securities.
The plan's funded status is as follows:
<TABLE>
<CAPTION>
1996 1995
year-end year-end
<S> <C> <C>
Actuarial present value:
Vested benefit obligation $ 45.8 $ 45.8
Nonvested benefit obligation 3.4 4.2
Accumulated benefit obligation $ 49.2 $ 50.0
Projected benefit obligation $(60.0) $(62.2)
Plan assets at market value 137.9 118.1
Plan assets in excess of
projected benefit obligation 77.9 55.9
Unrecognized net asset (36.6) (17.4)
Unrecognized prior service cost - (0.1)
Prepaid pension expense $ 41.3 $38.4
</TABLE>
<TABLE>
Net pension income includes the following components:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Service cost $(1.9) $(1.5) $(2.0)
Interest cost (4.2) (3.5) (3.5)
Actual return on assets 24.3 30.7 2.5
Partial recognition of
prior period net gain 0.7 0.7 0.1
Net (gains) losses deferred
to future periods (14.3) (22.2) 5.4
Net pension income $ 4.6 $4.2 $ 2.5
</TABLE>
The Company provides supplemental pension benefits under other
non-qualified plans which are not funded. The total liability for these
plans was $5.5 in 1996 and $4.6 in 1995. Net pension expense for these
plans for the years 1996, 1995, and 1994 was $1.1, $1.0, and $1.4,
respectively. The non-qualified pension liability is classified as
liabilities subject to settlement under reorganization proceedings for 1996
and 1995.
The Company provides an employee savings plan that permits employees to
make contributions in accordance with Internal Revenue Code Section 401(k).
Employees who meet age and service requirements are eligible to participate
by contributing up to 15% of their pretax compensation. The Company matches
a portion of the employee's contribution under a predetermined formula
based on the Company's return on equity. Company contributions to the plan
may be remitted in the form of cash or Company common stock. The Company's
expense related to the plan was $.4 for 1996, $.2 for 1995, and $.3 for
1994.
Note 7: Financing Arrangements
The Company and its subsidiary, 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,
subject to collateral restrictions, to fund ongoing working capital needs.
The DIP Facility, which has been approved by the Bankruptcy Court, has a
sublimit of $150.0 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 through
the emergence date.
At the Company's option, the Company may borrow under the DIP Facility at
the Reference Rate (as defined) plus .25% or at the Eurodollar Rate (as
defined) plus 1.5%. The current borrowing rate is 8.5%. The maximum
borrowing, up to $200.0, is limited to 50% of the value of eligible
inventory (as defined) 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 1,100 (as amended), 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 February 1,
1997, 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
reorganization plan that is confirmed by the Bankruptcy Court.
There were no outstanding borrowings at February 1, 1997. As of February 3,
1996, the Company had $.2 outstanding under the DIP Facility. As of
February 1, 1997 and February 3, 1996, outstanding letters of credit were
$84.5 and $112.6 and available borrowings under the DIP were $41.1 and
$56.9, respectively.
Note 8: Liabilities Subject to Settlement Under Reorganization Proceedings
The principal categories of claims classified as liabilities subject to
settlement under reorganization proceedings are identified below. All
amounts below 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 resulting from rejection of additional
executory contracts by the Company.
<TABLE>
<CAPTION>
1996 1995
year-end year-end
<S> <C> <C>
Long-term senior notes payable $150.0 $150.0
Notes payable-banks 205.9 205.9
Cash set-off applied to debt (3.6) (3.6)
Capital lease obligations 12.4 8.4
Accrued interest payable 4.3 3.5
Deferred debt costs (4.3) (6.7)
Postretirement benefit/Pension
accrual 47.7 45.6
Accounts payable 36.1 35.9
Lease termination claims 42.8 38.6
Taxes 6.0 4.3
Other 11.0 7.9
Liabilities subject to
settlement under
reorganization proceedings $508.3 $489.8
</TABLE>
As a result of the bankruptcy filing, no principal or interest payments
will be made on any prepetition debt without Bankruptcy Court approval or
until a reorganization plan defining the repayment terms has been approved.
Interest on prepetition obligations has generally not been accrued after
the Petition Date.
Prior to the bankruptcy filing and certain agreements discussed below, the
Company's debt consisted of senior notes held by various institutional
lenders amounting to $150.0. 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 has outstanding borrowings under a $125.0 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 in 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
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 and agreed to increase the interest rate on the outstanding debt to
9.75%.
As of the bankruptcy filing, the Company had outstanding $150.0 of senior
notes, $125.0 under its $125.0 revolving credit facility, $80.9 of
short-term and demand notes under its uncommitted bank lines, $8.4 of
capital lease obligations, and $21.6 under its $75.0 secured revolving line
of credit facility. The Company received authorization from the Bankruptcy
Court to make a $21.6 payment on the secured revolving line of credit
facility. In addition, $3.6 of cash was set-off by the banks against
outstanding principal and accrued interest balances.
As part of the Chapter 11 reorganization process, the Company has attempted
to notify all known or potential creditors of the Chapter 11 filing for the
purpose of identifying all prepetition claims against the Company.
Generally, creditors whose claims arose prior to the Petition Date had
until August 1, 1996 ("Bar Date") to file claims or be barred from
asserting claims in the future. Claims arising from rejection of executory
contracts by the Company on or after July 1, 1996, and claims related to
certain other items were permitted to be filed by other dates set by the
Bankruptcy Court. Differences between amounts shown by the Debtors and
claims filed by creditors are being investigated and will either be
amicably resolved or adjudicated. The ultimate amount of and settlement
terms for such liabilities are subject to the plan of the reorganization
when confirmed, and accordingly are not presently determinable.
Note 9: Postretirement Benefits
The Company at its discretion provides a defined dollar benefit health and
life plan to its retirees and their eligible spouses and dependents. To
qualify, an employee must retire at age 55 or later with at least 15 years
of credited service under the pension plan. The health care portion of the
plan is contributory, with retiree contributions subject to adjustment
annually. The life insurance portion of the plan is noncontributory. The
Company funds, as needed, plan costs in excess of retiree contributions.
The Company reserves the right to modify or terminate these benefits.
<TABLE>
The plan's funded status is as follows:
<CAPTION>
1996 1995
year end year end
Accumulated postretirement
benefit obligation:
<S> <C> <C>
Retirees $35.7 $37.1
Fully eligible active plan
participants 1.9 3.7
Other active plan participants 3.3 4.1
Unrecognized net gain (loss) 1.4 (3.7)
Prior service cost (0.1) (0.1)
Accrued postretirement benefit
cost $42.2 $41.1
</TABLE>
The accrued benefit cost was classified as liabilities subject to
settlement under reorganization proceedings for year end 1996 and 1995.
<TABLE>
Net periodic postretirement benefit cost consists of:
<CAPTION>
1996 1995
<S> <C> <C>
Service cost $0.2 $0.2
Interest cost 3.1 3.2
Net periodic postretirement
benefit cost $3.3 $3.4
</TABLE>
An increase in the cost of covered health care benefits of 9% for pre age
65 participants and 9% for post age 65 participants was assumed for fiscal
year 1997. This rate is assumed to decrease gradually to 6% by the year
2003 and remain at that level thereafter. A 1% increase in the health care
cost trend rate would increase the accumulated postretirement benefit
obligation by $2.9 at year end 1996 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for
1996 by $.3. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.5% and 7.0% at year-end
1996 and 1995, respectively.
Note 10: Income Taxes
<TABLE>
The provision (benefit) for income taxes consists of:
<CAPTION>
1996 1995 1994
Current expense (benefit):
<S> <C> <C> <C>
Federal $ 0.5 $(35.6) $ 0.4
Foreign 0.7 0.3 2.6
State and local 2.5 1.7 0.1
Deferred expense (benefit) (13.5) (39.0) 8.8
Deferred tax valuation
allowance 13.2 43.5 -
Income tax provision(benefit) $ 3.4 $(29.1) $11.9
</TABLE>
Significant components of the deferred tax liabilities and assets in the
consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
year end year end year end
<S> <C> <C> <C>
Accelerated depreciation $ 4.9 $ 9.3 $11.1
Pension income 15.6 14.9 12.2
Other 2.6 9.8 21.2
Total deferred tax
liabilities 23.1 34.0 44.5
Inventory capitalization 5.2 4.8 4.6
Rent expense accruals 6.3 7.7 8.0
Postretirement benefits 16.6 16.1 13.0
Acquisition-related reserves - 1.3 2.6
Restructuring reserves 17.9 20.6 -
Net operating loss carry
forward 18.8 13.9 -
Other 20.0 13.1 22.2
Total deferred tax assets 84.8 77.5 50.4
Less: Deferred tax valuation
allowance 61.7 43.5 -
Net deferred tax assets $ - $ - $ 5.9
</TABLE>
During 1996 and 1995 the Company 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 $61.7 and $43.5, respectively, and
charges to income tax expense of $13.2 and $43.5, are reflected in the
consolidated financial statements.
<TABLE>
Reconciliation of federal statutory rates to effective income tax rates:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Federal corporate statutory rate (35.0%) (35.0%) 35.0%
State & local income taxes, net of
federal benefit 0.5% (0.4%) 3.5%
Goodwill amortization and
write-off 4.5% 3.3% -
Deferred tax valuation allowance 32.4% 17.3% -
Other - 3.2% (1.6%)
Income tax provision (benefit) 2.4% (11.6%) 36.9%
</TABLE>
Pretax earnings from foreign subsidiaries were $1.9 in 1996, $0 in 1995,
and $8.4 in 1994.
As of year-end 1996 the Company has a net operating loss carryforward for
federal income tax purposes of approximately $48.2, which is available to
offset future taxable income through 2011. The Company also has a capital
loss carryforward for federal income tax purposes of $11.9 which is
available to offset future capital gains through 2001. In addition, the
Company has an alternative minimum tax credit carryforward of approximately
$2.7, which is available to reduce future regular income taxes over an
indefinite period. Implementation of the Company's plan of reorganization
may significantly reduce the various carryforward items; additionally, a
significant change in ownership as a result of the Company's plan of
reorganization could limit the use of any remaining carryforwards.
<TABLE>
Note 11: Common Stock
<CAPTION>
1996 1995
Year end Year end
Shares:
<S> <C> <C>
Issued (100,000,000 authorized) 27,554,232 27,554,232
Less held in treasury 5,352,454 5,466,742
Outstanding 22,201,778 22,087,490
Stockholders of record 4,000 4,000
</TABLE>
The Company has elected to follow Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options. Under APB 25,
because the exercise price of the Company's employee stock options
generally equals the market price of the underlying stock at the date of
grant, no compensation expense is generally recognized.
Because the effect of applying the fair value method under Statement of
Financial Accounting Standards 123, "Accounting For Stock Based
Compensation" (SFAS 123) to the Company's stock based awards results in net
income and earnings per share that are not materially different from
amounts reported under APB 25, pro forma disclosures have been omitted.
The 1986 and 1992 stock option plans authorize the sale of 1.5 and 1.0
million common shares, respectively, to executives and store managers. No
options were granted under the 1986 plan subsequent to adoption of the 1992
plan. Options are exercisable over various options terms not exceeding 10
years following the date of grant.
Activity under these plans was as follows:
<TABLE>
1996
Number of Option
Options price pershare
<S> <C> <C>
Outstanding at beginning
of year 1,108.096 $4.31-27.98
Granted - -
Exercised - -
Canceled (478,495) 11.13-27.98
Outstanding at end of year 629,601 4.31-27.98
Shares exercisable at end of
year 195,391
Shares issues for options
exercised 0
1995
Outstanding at beginning of
year 1,068,231 $16.13-37.35
Granted 902,080 4.31-27.98
Exercised - -
Canceled (862,215) 11.13-37.25
Outstanding at end of year 1,108,096 4.31-27.98
Shares exercisable at end of
year 321,153
Shares issues for options
exercised 0
1994
Outstanding at beginning of
year 570,521 $11.38-37.25
Granted 711,700 23.75-29.81
Exercised (44,078) 11.38-27.15
Canceled (169,912) 11.38-37.25
Outstanding at end of year 1,068,231 16.13-37.25
Shares exercisable at end of
year 260,091
Shares issues for options
exercised 44,078
</TABLE>
Outstanding stock options under all plans were adjusted on June 29, 1995,
as a result of the Dave & Buster's, Inc. spin-off. The number of shares
subject to each option was increased by 33.1% and the exercise price was
reduced by 24.9%.
During 1995, 175,050 options with exercise prices ranging from $25.38 to
$37.25 were canceled and reissued at an exercise price of $14.81.
At February 1, 1997, 1,449,044 shares of common stock were reserved for
issuance under the stock option plans.
Each share of outstanding common stock includes a right that entitles the
holder to purchase one share of common stock for $93. Rights attach to all
new shares of common stock issued and become exercisable only under certain
conditions involving actual or potential acquisitions of the Company's
common stock. Depending on the circumstances, all holders except the
acquiring person may be entitled to purchase at the exercise price
additional shares of common stock of the Company and/or of the acquiring
person having a market value equal to two times the exercise price. The
rights remain in existence until January 26, 1998, unless they are redeemed
(at five cents per right) or terminated.
Note 12: Leases
Most operations are conducted in leased premises. Some of the leases
include options for renewal or extension on various terms. For 1996, 1995,
and 1994, respectively, minimum rentals for operating leases were $101.2,
$136.3, and $140.6; additional percentage rentals based on sales were $2.0,
$3.5, and $4.8. Most leases also require the payment of common area
expenses and real estate taxes.
At year-end 1996 future minimum lease payments required under operating
leases are $83.8, 1997; $75.7, 1998; $68.0, 1999; $57.3, 2000; $43.6, 2001;
and $406.1, total.
Note 13: Business Segments:
<TABLE>
<CAPTION>
Net sales Operating profit (loss)
1996 1995 1994 1995 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Apparel $765.9 $952.3 $975.8 ($44.4) ($129.5) $7.7
Footwear 320.7 367.9 400.2 (15.5) (8.9) 28.7
1,086.6 1,320.2 1,376.0 (59.9) (138.4) 36.4
Corporate
& other 3.8 69.2 100.4 (85.8) (87.5) 16.6
Interest
expense - - - 5.9 (25.2) (20.6)
$1,090.4 $1,389.4 $1,476.4 ($139.8) ($251.1) $32.4
</TABLE>
<TABLE>
<CAPTION>
Identifiable assets Depreciation and amortization
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Apparel $259.1 $362.2 $492.1 $28.6 $36.9 $39.9
Footwear 97.8 131.2 155.5 9.4 10.1 9.6
356.9 493.4 647.6 38.0 47.0 49.5
Corporate
& other 276.9 268.1 246.2 3.2 15.8 20.1
$633.8 $761.5 $893.8 $41.2 $62.8 $69.6
</tabel>
</TABLE>
<TABLE>
<CAPTION>
Capital expenditures
1996 1995 1994
<S> <C> <C> <C>
Apparel $15.7 $11,2 $28.1
Footwear 5.0 10.4 14.8
20.7 21.6 42.9
Corporate
& other 1.2 15.6 18.8
$21.9 $37.2 $61.7
</TABLE>
Note 14: Acquisitions and Dispositions
During 1995 the Company made acquisitions for an aggregate cash
consideration of $14.1. Assets of $19.9 and liabilities of $5.8 were
recorded in connection with the acquisitions. The acquisitions were
accounted for by the purchase method, and operating results of the acquired
entities have been included in the consolidated financial statements since
their respective acquisition dates.
Effective June 29, 1995, the Company distributed all of the outstanding
shares of common stock of Dave & Buster's, Inc. owned by the Company to
Edison Brothers' stockholders of record as of June 19, 1995. Prior to the
distribution, Dave & Buster's had been a majority-owned subsidiary engaged
in the ownership and operation of restaurant/entertainment complexes. No
gain or loss was recorded as a result of the distribution. The distribution
was recorded as a dividend and, accordingly, the Company reduced retained
earnings by the net book value distributed. Through the distribution date,
Dave & Buster's reported 1995 net income of $1.0. As of June 29, 1995, it
had total assets of $49.2 and a net book value of $30.9. For fiscal year
1994, Dave & Buster's reported a net income of $2.4. As part of the
transaction, the Company guaranteed certain Dave & Buster's lease
obligations. As a February 1, 1997, the Company's only remaining obligation
was with respect to one lease containing a $2.8 construction allowance
repayment provision. Dave & Buster's has agreed, among other things, to
indemnify the Company from loss under the lease guarantees and has granted
the Company a subordinated security interest in Dave & Buster's leasehold
interests in the guaranteed leases and all real and personal property owned
by Dave & Buster's on the date of the agreement. The Company believes it
has adequate security against loss under the guarantee.
In January 1996 the Company entered into an agreement to sell substantially
all of the assets of its mall entertainment division to Namco
Cybertainment. The Company received approval for the sale from the
Bankruptcy Court and completed the sale in January 1996. As of the sale
date, the entertainment division had total assets of $51.8 and a net book
value of $44.9. The Company recorded a loss of $24.7 in 1995 in connection
with the sale. The Company intends to dispose of its remaining
entertainment operations by September, 1997 and recorded provisions of $.9
in 1996 and $8.3 in 1995 related to the remaining assets to be disposed of.
For fiscal years 1996, 1995, and 1994, the mall entertainment division
reported a net loss of $.5, $1.8 and $1.8, respectively.
Note 15: Other Operating
The $22.3 reported as other operating in the 1994 Consolidated Statements
of Operations represents the benefit resulting from recovery of
countervailing duties.
Stockholders and Board of Directors
Edison Brothers Stores, Inc.
We have audited the consolidated balance sheets of Edison Brothers Stores,
Inc. (the Company and its principal operating subsidiaries in
reorganization under Chapter 11 of the United States Bankruptcy Code since
November 3, 1995, see Note 1 to the consolidated financial statements) as
of February 1, 1997, and February 3, 1996, and the related consolidated
statements of operations, common stockholders' equity (deficit), and cash
flows for each of the three years in the period ended February 1, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Edison
Brothers Stores, Inc. at February 1, 1997, and February 3, 1996, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended February 1, 1997, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates continuity of the Company's
operations and realization of its assets and payment of its liabilities in
the ordinary course of business. As described more fully in Note 1, on
November 3, 1995, Edison Brothers Stores, Inc. filed a voluntary petition
for relief under Chapter 11 of the United States Bankruptcy Code and is
currently operating its business as a debtor-in-possession under the
supervision of the Bankruptcy Court. The Chapter 11 filing was the result
of violation of certain debt covenants, recurring operating losses,
deterioration of vendor support, and cash flow problems. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans to finance operating activities and further
reorganize operations are also described in Notes 7 and 3. The
appropriateness of using the going concern basis is dependent upon, among
other things, approval of a plan of reorganization by the Bankruptcy Court,
attainment by the Company of profitable future operations, and its ability
to generate sufficient cash from operations and other financing sources to
support its business activities. As a result of the reorganization
proceedings, the Company may sell or otherwise dispose of assets and
liquidate or settle liabilities for amounts other than those reflected in
the financial statements referred to above. Further, a plan of
reorganization, as finally approved by the Bankruptcy Court, could
materially change the amounts currently recorded. The accompanying
consolidated financial statements do not reflect further adjustments that
might be necessary to the carrying value of assets and the amounts and
classification of liabilities or stockholders' equity (deficit) as a
consequence of these bankruptcy proceedings.
As discussed in Note 4, in fiscal 1996, the Company changed its method of
accounting for the impairment of long-lived assets and for long-lived
assets to be disposed of.
St. Louis, MO
March 14, 1997
Management's Responsibility for Financial Information
Management is responsible for the integrity and objectivity of the
financial statements and other information included in this annual report.
The financial statements have been prepared in conformity with generally
accepted accounting principles. Information that is not subject to
objective determination has been developed based upon management's best
judgment.
The Company maintains accounting systems that management believes are
sufficient to provide reasonable assurance of reliable financial statements
and to maintain accountability for assets. These systems are supported by
careful selection and training of qualified personnel. The extent of
internal accounting controls implemented must be related to the benefits
derived, and the balancing of the cost of controls to the benefits derived
requires management's estimates and judgments. In addition, as part of its
audit of the Company's financial statements, Ernst & Young LLP completed a
study and evaluation of selected internal accounting controls to establish
a basis for reliance thereon in determining the nature, timing, and extent
of audit tests to be applied.
The Board of Directors has an Audit Committee, which is comprised totally
of members of the board who are not employees of the Company. The committee
meets with the independent auditors and representatives of management to
discuss auditing and financial reporting matters. The independent auditors
meet with the Audit Committee, with and without management representatives
present, to discuss the scope and results of their examinations, the
quality of financial reporting, and the propriety of management's conduct
of the business.
Management is committed to conducting its business affairs in accordance
with the highest ethical standards and in conformity with the law.
Management's Discussion and Analysis
On November 3, 1995, Edison Brothers Stores, Inc. (the Company) and 65 of
its subsidiaries and affiliates filed petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. The Company has continued to
conduct business in the ordinary course as a debtor-in-possession under the
protection of the Bankruptcy Court. A plan of reorganization has been filed
with the Bankruptcy Court, but the plan has not yet been confirmed. For
further discussion of the Chapter 11 proceedings, see Note 1 to the
consolidated financial statements.
Business: The Company owns and operates chains of specialty retailing
stores located in 49 states, Puerto Rico, the Virgin Islands and Canada.
Operations in Mexico were closed during 1996, as the Mexican peso
devaluation significantly reduced the Company's ability to generate
operating income in this market. The Company conducts its principal
operations through subsidiaries in two segments: apparel and footwear.
Stores within the apparel and footwear segments, with the exception of the
REPP Ltd chain of big-and-tall menswear stores, are almost exclusively
mall-based and generally range in average size from 1,700 to 3,000 square
feet. Merchandise for all segments is acquired from many vendors and the
Company is not dependent on any one supplier. Three main distribution
centers serve as receiving points for merchandise and coordinate the
distribution of shipments to the stores via common or contract carriers.
The Company sold substantially all of its remaining entertainment
operations in January 1996 but continues to operate two mall-based
entertainment centers. The Company intends to dispose of the remaining
entertainment operations by September 1997.
During 1996, the Company closed 419 apparel and footwear stores. The
Company has identified another group of approximately 75 stores that will
be closed during 1997, and has recorded a charge associated with these
closings in the 1996 consolidated financial statements. Store performances
will continue to be monitored during the remainder of the Chapter 11
process to evaluate the need for further store closings. The Company
consolidated its Precis operations with Bakers/Leeds during 1996,
eliminating duplicate responsibilities in merchandising and buying
operations. In addition, the Zeidler & Zeidler concept was discontinued in
1996, with some desirable mall locations being converted for use by other
Company chains.
At year-end 1996, the apparel segment operated 1,253 stores in nine chains.
Six chains focus on menswear: JW/Jeans West; J. Riggings; Oaktree; CODA;
REPP Ltd; and Phoenix, the Company's catalog operation. Each menswear chain
targets a specific age group of men, with a different product mix. The
womenswear chain, 5-7-9 Shops, primarily markets casual wear and
accessories to teens and preteens. The Company also has two experimental
concepts that market to both men and women. Shifty's targets teenagers who
want to set trends with fashionable and branded merchandise. Terrasystems
provides casual wear and high performance outdoor gear and clothing to
young adults. The Company announced in April 1997 that the Terrasystems
concept will be phased out during 1997. The footwear segment operated 490
stores in three chains at the end of fiscal 1996. The footwear chains are
Bakers/Leeds and Precis, which offers popular- priced women's fashion
shoes, and Wild Pair, which focuses on advanced shoe fashion for young men
and women.
The Company's fiscal year ends on the Saturday closest to January 31.
References to 1996, 1995, and 1994 are to the 52 weeks ended February 1,
1997, the 53 weeks ended February 3, 1996, and the 52 weeks ended January
28, 1995, respectively.
Financial Condition: Cash, cash equivalents and investments at year-end
1996 increased $64.5 over the prior year and included an income tax refund
of $37.6 received in February 1996. In
addition, continued deferral of principle and interest payments on
prepetition debt increased these balances. Consistent with the prior year
presentation, prepetition liabilities of $508.3 have been classified as
liabilities subject to settlement under reorganization proceedings in the
consolidated balance sheet as of February 1, 1997 (see Notes 1 and 8 to the
consolidated financial statements).
Merchandise inventories decreased by 15.9% between 1995 and 1996 due to the
numerous store closings and tighter inventory control. The decrease in
income tax receivable is due to the receipt of the refund discussed above.
In 1996, the Company identified $10.9 of corporate properties that it will
attempt to sell. These assets have been classified as assets held for sale
on the consolidated balance sheets.
The decreases in property and equipment, net and intangible assets, net are
primarily due to the recognition of an asset impairment loss of $74.0 for
1996 recorded in accordance with Statements of Financial Accounting
Standards 121, "Accounting for Long-Lived Assets and for Long-Lived Assets
to be Disposed of" (SFAS 121). Specifically, an analysis of the projected
cash flows of the apparel segment indicated that certain long-lived assets,
principally REPP Ltd goodwill, were impaired. Additionally, independent
appraisals of corporate properties identified cases where the carrying
value exceeded fair value. Furthermore, property and equipment, net was
reduced by store closings. Also, capital expenditures decreased by 41.1%
from 1995 to 1996.
Capital Resources and Liquidity: Subsequent to the Chapter 11 filing, the
Company entered into a loan agreement (the DIP Facility) with BankAmerica
Business Credit, Inc. under which the Company may borrow up to $200.0
subject to collateral restrictions, to fund ongoing working capital needs.
The DIP Facility has a sublimit of $150.0 for the issuance of letters of
credit. The DIP Facility contains restrictive covenants including
limitations on store closings, capital expenditures and restrictions on
dividend payments. As of February 1, 1997, the Company had $41.1 available
for borrowing under the DIP Facility and $204.1 of cash, cash equivalents
and investments. The Company expects that its cash and investments and the
DIP Facility will continue to provide it with sufficient liquidity to
conduct its operations and pay for merchandise shipments through the course
of the Chapter 11 process. At February 1, 1997, the Company had utilized
$84.5 of the DIP Facility to issue letters of credit, but had no borrowings
outstanding under the DIP Facility.
Total cash and cash equivalents decreased by $14.0 from 1995 to 1996, as a
result of excess cash being moved into investments which are not considered
cash equivalents. Including the $78.5 increase in investments, cash, cash
equivalents and short-term investments increased by $64.5 or 46.2% from
1995 to 1996. This increase compares to a $112.6 increase from 1994 to
1995, which included $60.0 of proceeds from prepetition debt issuance.
Overall cash provided from operating activities remained constant between
1995 and 1996, although the components varied from 1995 to 1996.
Merchandise inventories decreased during 1996, but not to the same extent
as in 1995, when the Company experienced inventory flow disruptions after
the Chapter 11 filing. Cash flow from operations increased in 1996 because
of the receipt of the income tax refund. Cash flow from operations in 1995
increased $35.5 or 71.1% over 1994. The increase was primarily attributable
to a $71.0 decrease in inventory in 1995 and a $26.7 increase in inventory
in 1994, offset by the deterioration in 1995 net income.
Cash flow from operations is expected to decline in 1997 from the 1996
levels, primarily because 1996 operating cash flow included the $37.6
nonrecurring income tax refund. In addition, capital expenditures are
expected to increase by 80% from 1996 levels. Over the last two years the
Company has focused on eliminating unprofitable stores and conserving cash
whenever possible. With updated concepts in chains, such as 5-7-9 Shops
"super" stores and REPP Ltd's "showcase" stores, the Company intends to
undertake significant remodeling of existing stores. Current business plans
anticipate approximately 100 new stores for 1997 that will require new
fixtures. In addition, the Company will begin implementation in 1997 of a
new "enterprise-wide" information system encompassing merchandising,
inventory, financial systems and other areas. Normal seasonal inventory
requirements will create additional demands on Company funds. Overall,
cash, cash equivalents and investments are expected to be reduced
significantly when the Company emerges from Chapter 11 given that a
substantial amount of cash is expected to be distributed to the creditors
under the plan of reorganization (see Note 8 to the consolidated financial
statements).
Operating Results: Net sales for the 52 weeks of fiscal 1996 decreased
$299.0 or 21.5% from the 53 weeks of fiscal 1995 attributable in part to
the numerous store closings that occurred at the end of 1995 and throughout
1996. The Company averaged approximately 600 or 23.4% fewer stores in
operation during 1996 as compared to 1995. Net sales for 1995 decreased by
$87.0 or 5.9% from the 52 weeks of fiscal 1994. Same-store sales (sales
reported by stores operating for the same periods during both years) were
down 1.9% in 1996 from 1995. This compares to a 4.9% decline in same-store
sales between 1995 and 1994. The footwear segment experienced a larger
decrease in same-store sales during 1996 than the apparel segment.
Cost of goods sold, including occupancy and buying expenses, was 72.9% of
sales in 1996, compared with 74.4% and 68.9% in 1995 and 1994,
respectively. The improvement from 1995 to 1996 primarily came from
reductions in occupancy and buying costs throughout the year. The Company
successfully renegotiated approximately 300 leases during 1996, which
contributed to the reduction of occupancy and buying costs as a percentage
of sales by 1.6%. Reductions of 7% in markdowns were offset by a 7%
increase in actual merchandise costs. The increase in cost of goods sold
from 1994 to 1995 was due primarily to higher promotional markdowns needed
to stimulate sales during 1995. Markdowns as a percentage of sales were
23.6% in 1995 compared to 19.0% in 1994.
Store operating and administrative expenses were 25.8% of sales in 1996,
compared to 25.3% in 1995 and 24.4% in 1994. The majority of the 1996
change was due to an 0.8% increase in administrative costs as a percentage
of sales, even though total administrative expenses declined 10.4% from
1995 to 1996. Store expenses as a percentage of sales were 0.2% lower than
in 1995, as underperforming stores were closed at the end of 1995 and
throughout 1996. The increase between 1995 and 1994 was due to the benefit
in 1994 of nonrecurring items. Store expenses for the total Company
remained constant between 1994 and 1995. Both the apparel and footwear
segments had slight increases but store expenses within the entertainment
operations decreased as a result of there being only a partial year of
results for Dave & Buster's in 1995 (due to the spin-off. See Note 14 to
the consolidated financial statements), which had significantly higher
store expenses as a percentage of sales compared to the Company's other
operations.
Depreciation and amortization has continued to decline since 1994.
Reductions have resulted from store closings in both 1995 and 1996.
Depreciation and amortization for 1997 should continue to decrease due to
the 1996 impairment loss. This decrease is expected to be partially offset
by depreciation on capital expenditures planned for 1997.
Interest expense decreased by $22.8 in 1996 from 1995, as no expense was
recognized on prepetition liabilities. Higher interest expense in 1995 as
compared to 1994 was attributable to higher interest rates on a larger
borrowing base. Interest would have been $9.1 higher in 1995 had interest
on prepetition obligations after the petition date been accrued. Interest
income earned on the Company's cash, cash equivalents and investment
balances subsequent to the Chapter 11 filing of $8.2 in 1996 and $0.9 in
1995 was recorded as a credit against restructuring and reorganization
expenses in the consolidated statements of operations. Interest expense is
expected to increase significantly when the Company emerges from Chapter
11.
Restructuring and reorganization expenses totaling $36.3 for 1996 include
$13.7 for early lease termination costs and write-offs of fixtures and
equipment, leasehold improvements and related intangible assets: $19.8 for
legal and consulting fees; and $11.0 for various other bankruptcy and
reorganization related expenses, reduced by $8.2 of interest income.
Restructuring and reorganization expenses for 1995 totaled $167.1 and
consisted of $101.6 relating to store closings, a $24.7 loss on the sale of
the remaining mall entertainment division and an $8.3 reserve to cover the
costs associated with the disposal of the remaining units, $15.1 for the
accelerated amortization of Zeidler & Zeidler goodwill, and $17.4 for
expenses related to an early retirement program, costs related to the
closing of the Rome, Georgia distribution center, liquidator fees and other
fees and expenses related to bankruptcy and reorganization. Of the $203.4
restructuring and reorganization expense incurred since the petition date,
$123.0 were noncash charges. Total cash payments of $20.7 and $3.7 were
made in 1996 and 1995, respectively.
In 1996 the Company recorded a charge of $74.0 to recognize the impairment
of certain long-lived assets in accordance with SFAS 121. Furniture and
fixtures, goodwill and several corporate properties were written down to
their fair value. See Note 4 to the consolidated financial statements.
During the fourth quarter of 1994, a dispute involving certain
countervailing duties on imported footwear, and accrued interest thereon,
was resolved in the Company's favor. All previous accruals of duties and
interest expense were reversed, resulting in a credit to income of $22.3.
Pretax income for 1996, excluding restructuring and reorganization expense
and charges for impairment of long-lived assets, improved by $54.5 from
1995, primarily due to reductions in depreciation, amortization and
interest expense. Pretax income for 1995, excluding the restructuring and
reorganization expenses, decreased from 1994 pretax income excluding the
benefit resulting from the recovery of countervailing duties. The decrease
resulted from lower sales, lower gross margins due to higher markdowns, and
higher interest expense.
Reorganization expenses will be incurred by the Company throughout the
remainder of the Chapter 11 process. In addition, as the Company continues
to monitor store performance in 1997 and identifies further store closings,
additional charges to income may occur. As discussed above and in Note 1 to
the consolidated financial statements, the financial condition of the
Company raises substantial doubt about its ability to continue as a going
concern. However, with the closing of underperforming stores and focused
attention on improving merchandising and sales strategies, the Company
believes it should experience improved results going forward.
Forward-looking statements in this report, in particular statements
regarding cash and debt projections, capital expenditures, depreciation,
amortization, interest and reorganization expenses, and general
expectations, are made pursuant to the provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve various risks and uncertainties. Factors
that could cause actual results to differ materially from the Company's
projections include the following:
1. Interest and restructuring and reorganization expenses are dependent
upon the timing of emergence from Chapter 11. The plan of reorganization,
as and when approved, may result in a different cash and capital structure
than currently anticipated.
2. Exit financing secured may carry different terms than those currently
anticipated in projections.
3. The number of store closings are subject to change based upon the
Company's actual performance and negotiations with landlords.
4. New store assumptions may change depending upon the Company's ability to
identify and secure new mall locations. Projected rent expense relating to
new stores will be affected by actual leasing arrangements negotiated with
landlords.
5. Costs incurred for remodeling and new store fixtures, actual number of
stores remodeled, potential acquisitions and success of store remodeling
can alter future capital expenditures.
6. The Company's ability to secure the right merchandise, in the proper
season, at competitive prices will affect operating results. Market demand
fluctuations, in style and product mix, raise the risk of inventory
obsolescence.
7. With 70% of its merchandise purchased from foreign vendors, merchandise
purchases are subject to fluctuations in currency values, customs duty
increases, quota limitations and other foreign developments that could
cause a supply disruption.
The Company is also subject to other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission. Results actually achieved thus may differ materially from
expected results in these statements.
On a seasonal average basis the Company employed approximately 17,700
people during 1996. Salaries and wages in 1996, 1995 and 1994 were $196.4,
$241.9 and $252.6, respectively.
<TABLE>
FIVE YEAR FINANCIAL SUMMARY
(Dollars in millions, except per-share data)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Stores at the end of the year 1,745 2,077 2,761
Net sales $1,090.4 $1,389.4 $1,476.4
Income (loss) from continuing
operations (143.2) (222.0) 20.5
Net income (loss) (143.2) (222.0) 20.5
Total assets 633.8 761.5 893.8
Long-term debt - - 173.5
Common stockholders' equity
(deficit) (2.1) 140.4 387.2
Per common share:
Income (loss) from continuing
operations ($6.46) ($10.06) $0.93
Net income (loss) (6.46) (10.06) 0.93
Dividends on common stock - 0.42 1.24
Common stockholders' equity
(deficit) (0.09) 6.36 17.58
</TABLE>
Long-term debt has been reclassed to liabilities subject to settlement
under reorganization proceedings in 1996 and 1995 (see Note 8 to the
consolidated financial statements).
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Stores at the end of the year 2,866 2,787
Net Sales $1,462.9 $1,508.8
Income (loss) from continuing
operations 20.9 70.4
Net income (loss) 20.9 47.3
Total assets 873.1 850.2
Long term debt 159.2 194.4
Common stockholders'
equity(deficit) 407.9 415.6
Per common share:
Income (loss) from continuing
operations $0.95 $3.24
Net income (loss) 0.95 2.18
Dividends on common stock 1.24 1.15
Common stockholders' equity
(deficit) 18.56 18.91
</TABLE>
Long term debt has been reclassified to liabilities subject to settlement
under reorganization proceedings in 1996 and 1995 (see Note 8 to the
consolidated financial statements).
<TABLE>
QUARTERLY INFORMATION
(Dollars in millions, except per-share unaudited data)
<CAPTION>
Quarter
1st 2nd
13 weeks 13 weeks
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $258.1 $318.1 $268.8 $334.7
Cost of goods sold,
occupancy and buying
expenses 183.7 218.9 207.3 244.2
Net (loss) (17.7) (6.4) (25.2) (25.7)
Per common share:
Net loss (0.80) (0.29) (1.14) (1.17)
Dividends - 0.31 - 0.11
Common stock market price:
High 2.94 15.75 3.88 16.75
Low 1.31 12.38 1.63 10.25
</TABLE>
<TABLE>
<CAPTION>
Quarter
3rd 4th
13 weeks 13 wks 14 wks
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $255.2 $319.8 $308.3 $416.8
Cost of goods sold,
occupancy and buying
expenses 182.9 246.4 221.0 323.8
Net loss (11.5) (83.3) (88.8) (106.6)
Per common share:
Net loss (0.52) (3.77) (4.00) (4.83)
Dividends - - - -
Common stock market price:
High 1.81 10.25 2.19 4.00
Low 1.06 2.88 1.06 1.38
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year
1996 1995
<S> <C> <C>
Net Sales $1,090.4 $1,389.4
Cost of goods sold, occupancy
and buying expenses 794.9 1,033.3
Net loss (143.2) (222.0)
Per common share:
Net loss (6.46) (10.06)
Dividends - 0.42
Common stock market price:
High 3.88 16.75
Low 1.06 1.38
</TABLE>
The company recorded charges of $74.0 relating to the impairment of long lived
assets during the fourth quarter of 1996. Fourth quarter 1995 results
include charges of $97.8, primarily related to store closing reserves and
reorganization expenses.
Board of Directors
Alan Miller - Chairman, President and CEO
Bart A. Brown, Jr.- President and CEO, Main Street and Main
David B. Cooper, Jr. - Executive Vice President and Chief Financial Officer
Julian I. Edison
Jane Evans - President and Chief Operating Officer, Smart TV
Richard C. Marcus - InterSolve Group, Director
Karl W. Michner - Senior Executive Vice President
Alan A. Sachs - Executive Vice President, General Counsel and Secretary
Craig D. Schnuck - Chairman and CEO, Schnuck Markets, Inc.
Corporate Headquarters
Edison Brothers Stores Inc.
501 N. Broadway
St.Louis, Missouri 63102
(314) 331-6000
Transfer Agent and Registrar
Boatmen's Trust Company
510 Locust St.
St.Louis, Missouri 63101
Independent Auditors
Ernst & Young LLP
St.Louis, Missouri
Common Stock
The common stock of Edison Brothers Stores Inc. is listed and traded on the
New York Stock Exchange under the
trading symbol "EBS".
Information Requests
To obtain copies of Edison Brothers' news releases, sales releases and
financial reports (including form 10-K), please call (314) 331-5555.
Additional queries may be directed to Shareholder Relations at the
Company's corporate headquarters address listed above.
EXHIBIT 21 - SUBSIDIARIES
EDISON BROTHERS STORES, INC.
AND SUBSIDIARIES
FEBRUARY 1, 1997
The following is a grouping of subsidiary corporations by segment. All of the
outstanding capital stock of the subsidiaries is owned, directly or indirectly,
by the Company. All of the subsidiaries are included in the consolidated
financial statements filed herein.
<TABLE>
<CAPTION>
No. of
Principal State of subsidiary
Segment business names incorporation corporations
<S> <C> <C> <C>
Apparel JW/Jeans West, Oaktree Maryland 1
J. Riggings, CODA Missouri 3
REPP Ltd Big & Tall, California 1
5-7-9 Shops, Phoenix Delaware 1
Footwear Bakers/Leeds, Precis Various 46
Wild Pair
Other Entertainment and Corporate
Related Functions Various 13
Foreign subsidiaries Canada 2
involved in retail Mexico 3
operations or acquisition Taiwan 1
of merchandise for Hong Kong 1
Apparel and Footwear Philippines 1
segments
73
</TABLE>
Exhibit 23 - Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Edison Brothers Stores, Inc. of our report dated March 14, 1997, included in
the 1996 Annual Report to Stockholders of Edison Brothers Stores, Inc.
Our audits also included the financial statement schedule of Edison Brothers
Stores, Inc. listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in Registration Statements
(Form S-8 Number 33-13297) pertaining to the Edison Brothers Stores, Inc. 1986
Stock Option Plan and (Form S-8 Number 33-54754) pertaining to the Edison
Brothers Stores, Inc. 1992 Stock Option Plan and the related Prospectuses of
our report dated March 14, 1997, with respect to the consolidated financial
statements incorporated herein, by reference, and our report included in the
preceding paragraph with respect to its financial statements and schedule
included in the Annual Report (Form 10-K) of Edison Brothers Stores, Inc. for
the year ended February 1, 1997.
St. Louis, Missouri
May 1, 1997
ERNST & YOUNG LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet as of February 1, 1997, and the
consolidated statement of income for the 52 weeks ended February 1, 1997, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> FEB-01-1997
<CASH> 125,600
<SECURITIES> 78,500
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 210,700
<CURRENT-ASSETS> 425,400
<PP&E> 346,100
<DEPRECIATION> (200,100)
<TOTAL-ASSETS> 633,800
<CURRENT-LIABILITIES> 108,700
<BONDS> 0
0
0
<COMMON> 22,200
<OTHER-SE> (24,300)
<TOTAL-LIABILITY-AND-EQUITY> 633,800
<SALES> 1,090,400
<TOTAL-REVENUES> 1,090,400
<CGS> 794,900
<TOTAL-COSTS> 322,600
<OTHER-EXPENSES> 110,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,400
<INCOME-PRETAX> (139,800)
<INCOME-TAX> 3,400
<INCOME-CONTINUING> (143,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143,200)
<EPS-PRIMARY> (6.46)
<EPS-DILUTED> (6.46)
</TABLE>
