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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): January 1, 1994
Hanover Direct, Inc.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-12082 13-0853260
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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1500 Harbor Boulevard, Weehawken, New Jersey 07087
Address of principal executive offices) (Zip Code)
(201) 319-3400
(Registrant's telephone number, including area code)
--
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On January 1, 1994, Hanover Direct, Inc., acting through its subsidiary,
Hanover Ventures, Inc. ("Hanover"), entered into a License Agreement (the
"License") with Sears Shop At Home Services, Inc., a subsidiary of Sears,
Roebuck and Co. ("Sears"), pursuant to which Sears has granted to Hanover
certain rights to marketing lists owned by Sears, together with certain other
rights incidental thereto, in order to allow Hanover to conduct a number of
specialty catalog programs ("Programs") targeted at more than 24 million Sears
customers ("Customers"). As an inducement to Sears to enter into the License
and grant the rights thereunder, Hanover has issued to Sears a warrant (the
"Warrant") to purchase, subject to certain performance levels, shares of the
Company's Common Stock, par value $0.66% per share (the "Common Stock"). The
following is a summary description of the basic terms and conditions of the
License and the Warrant. The summary is qualified in its entirety by reference
to the License and the Warrant, a copy of each of which is attached hereto as
an Exhibit to this Form 8-K and incorporated herein by reference.
Under the License, Hanover is responsible for the manufacture or
acquisition of all products to be sold to Customers under the Programs; the
development, printing and mailing of catalogs; the processing of all Customer
orders; the sale of all products to Customers; and all customer service
matters, including the handling of all returns of products from Customers. In
connection with any Program, Hanover may utilize certain direct marketing
methods to solicit Customers for the Programs, including distribution of
catalogs, telemarketing and use of bouncebacks (product shipped to Customer
together with solicitation). Sears shall provide Hanover with a Customer list
for each Program and shall provide advice in connection with Hanover's
marketing efforts of any item of merchandise offering under any Program. The
specialty catalogs incorporated in the Programs will be based on Hanover
catalogs and contain new cover pages and will include "Show Place", featuring
bed and bathroom accessories; "Great Kitchens", offering kitchen accessories
and table-top appliances; and "Beautiful Style", with "after 5" women's apparel
in sizes 14 and larger. The initial term of the License is three years.
Thereafter, the License shall continue for an indefinite period, subject to
termination by either party upon 12-months prior written notice.
Under the terms of the Warrant, subject to the fulfillment of certain
conditions, Sears shall have the right, which may be exercised, in whole or in
part, to
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purchase from Hanover (i) up to 3,500,000 whole shares of Common Stock
in the event that Hanover shall have achieved under the Programs, during the
one year period commencing on January 1, 1998 and ending on December 31, 1998,
both (A) at least Two Hundred Fifty Million Dollars ($250,000,000) in Licensed
Sales Revenues (as defined in the Warrant) and (B) at least Thirty Million
Dollars ($30,000,000) of Licensed EBIT (as defined in the Warrant) or (ii) up
to 7,000,000 whole shares of Common Stock in the event that Hanover shall have
achieved under the Programs, during the one year period commencing on January
1, 1998 and ending on December 31, 1998, both (A) Five Hundred Million Dollars
($500,000,000) in Licensed Sales Revenues and (B) at least Sixty Million
Dollars ($60,000,000) of Licensed EBIT. The Warrant provides that the number
of shares purchasable thereunder is subject to appropriate adjustment in the
event of stock splits, subdivision, reclassifications and similar events and in
the event of business combinations in which Hanover is not the surviving party.
Under the Warrant, Hanover has also granted to Sears certain rights, under
certain circumstances, to request Hanover to register the shares of Common
Stock issued or issuable upon exercise of the Warrant. The Warrant is
exercisable at any time during the 90-day period commencing on January 1, 1999
for an exercise price per share equal to $10.57. The Warrant is nontransferable
except to certain affiliates of Sears under certain limited circumstances.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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Exhibit No. Page No.
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2.1 - Form of License Agreement 5
2.2 - Form of Warrant Agreement, 209
with Form of Warrant Certificate
attached thereto
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
HANOVER DIRECT, INC.
Date: January 10, 1994 By /s/ Michael P. Sherman
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Name: Michael P. Sherman
Title: Executive Vice President
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EXHIBIT INDEX
Exhibit No. Page No.
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2.1 - Form of License Agreement 5
2.2 - Form of Warrant Agreement, 209
with Form of Warrant Certificate
attached thereto
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Exhibit 2. 1
FORM OF LICENSE AGREEMENT
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LICENSE AGREEMENT
THIS LICENSE AGREEMENT (hereinafter "Agreement") is made effective as of
this 1st day of January, 1994, (hereinafter "Effective Date") by and between
HANOVER VENTURES, INC., a Delaware corporation (hereinafter "Licensee"), and
SEARS SHOP AT HOME SERVICES, INC., a Delaware corporation (hereinafter
"Licensor").
WHEREAS, Licensee is desirous of selling various Product(s) to certain
customers identified on Licensor's customer lists as well as other customers
(hereinafter "Customers") marketed under various specialty catalog program(s)
(hereinafter "Program");
WHEREAS, this Agreement will govern all Schedule(s), which will provide
the specific information concerning each Program;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
DEFINITIONS
1. The following words and phrases as used herein shall have the following
meanings.
a. "Annual/Seasonal Mail Plan" - Annual/Seasonal mailing and
circulation quantity mutually agreed upon by Licensor and Licensee for each
Program.
b. "Bounceback" - A solicitation for Product which is enclosed with a
Product shipped to a Program Customer.
c. "Catalog" - Any catalog or booklet bearing the Sears Mark,
and/or any Licensor Mark, produced pursuant to this Agreement and the
applicable Schedule and distributed to Program Customers.
d. "Computerized Elimination of Duplicate Names" - The elimination,
from a Customer List being considered for use in a Program, of names of persons
who are currently receiving a catalog with a similar merchandise assortment as
contemplated by the Program through a similar program operated by Licensee.
e. "Customer List" - Customer list(s) of Licensor prior to elimination
of duplicate names.
f. "Licensee Marks" - All trademarks, service marks, trade names,
slogans or tag-lines developed by Licensee for use in the Program.
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g. "Licensor Marks" - All trademarks, service marks, trade names,
slogans or tag-lines developed by Licensor for use in the Program and not
containing the word "Sears".
h. "Operating Policies and Procedures" - The policies and procedures
for the Program set forth in Exhibit A, attached hereto and made a part hereof,
as revised from time to time.
i. "Operating Standards" - The operating standards for the Program
set forth in Exhibit B, attached hereto and made a part hereof, as revised
from time to time.
j. "Product" - Any item(s) of merchandise offered in any Catalog.
k. "Program" - A specialty catalog program as described in any
Schedule attached hereto and referring to any Program and all Programs offered
under the Agreement, as the context requires.
l. "Program Customer" - Any customer who responds to any
Catalog/Program.
m. "Rollout" - Marketing efforts for the sale of a Product in the
event Licensor decides to market the Product after a Test.
n. "Sales Tax" - State sales/use tax, and any local sales/use tax or
other substantially similar tax imposed upon the sale of Product by Licensee
pursuant to any Program conducted by Licensee hereunder.
o. "Schedule" - An addendum incorporated into this Agreement, made a
part and governed by the terms hereof, providing specific information as to a
particular Program.
p. "Sears" - Sears, Roebuck and Co., parent company of Licensor and
grantor of license rights with respect to "Sears Marks" to Licensor.
q. "SearsCharge Credit Plan" - The credit plan operated by Sears,
Roebuck and Co. through which credit cards are issued to its customers.
r. "Sears Marks" - All trademarks, service marks, trade names, slogans
or tag-lines which use the word "Sears" and which have been granted to Licensor
for its use herein.
s. "Test" - The initial marketing effort for the sale of a Product to
determine if a Rollout is feasible.
THE PROGRAM
2. a. Licensor hereby grants to Licensee the right to conduct and operate
a certain specialty catalog program(s) ("Program"),
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and Licensee hereby agrees to conduct and operate said Program, pursuant to the
terms, provisions and conditions contained in this Agreement and to use the
Licensor Marks and the Sears Marks as provided in this Agreement. Each Program
shall be listed in a Schedule which shall describe the specific direct
marketing methods/media for the Program as mutually agreed to by the parties.
Licensee hereby acknowledges and agrees that (i) Licensor makes no
representations or guarantees with respect to any minimum number of Programs to
be granted to Licensee; and (ii) the decision to initiate a Rollout shall be at
the sole discretion of Licensor. Licensee acknowledges and agrees that no
promises or representations have been made as to the potential amount of
business Licensee can expect at any time during the Term of this Agreement.
b. The direct marketing methods used to solicit Customers for a
Program shall consist of the following: distribution of Catalogs;
telemarketing, including outbound telemarketing; and use of Bouncebacks. In no
event will the Program (i) distribute Catalogs or offer Product through the
retail stores of Sears; (ii) conduct any advertising through local newspapers,
radio or television; (iii) maintain a listing in the local telephone directory
or Yellow Pages; or (iv) solicit or take orders for Product through Sears or
request that Product be returned or serviced through Sears.
c. Licensee represents and warrants to Licensor that (i) the quality,
image and value relationship of Product will be consistent with Sears overall
public retail image; and (ii) the Licensee Program will not discriminate
against Program Customers and therefore the prices charged to Customers for
Product hereunder will not be greater than the prices charged by Licensee in
similar programs, if any. Nothing contained in this Agreement shall be
construed as giving Licensor any right or power to affect or control the prices
at which Product shall be offered, said right and power being retained by
Licensee.
d. Licensor represents and warrants that it has full rights and power
to grant the license granted by this Agreement and that such rights and power
shall continue and be maintained in full force and effect during the Initial
Term and any Extended Term.
TERM AND TERMINATION
3. The term (hereinafter "Initial Term") of the Agreement shall begin on the
Effective Date hereof and shall end at the close of business three (3) years
from said Effective Date. The Agreement shall thereafter continue in force
(hereinafter "Extended Term"), unless commencing at twelve (12) months prior to
the termination of the Initial Term, any party gives at least twelve (12)
months prior written notice (a "Notice of Termination") that the Agreement or
any individual Schedule will terminate at the end of the Initial Term or the
applicable Extended Term. If Licensor
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gives a Notice of Termination, then at Licensee's option the Initial/Extended
Term shall continue for up to an additional twelve (12) months, if Licensee in
good faith deems it necessary, beyond the expiration of the twelve (12) month
period following the giving of such Notice of Termination for the exclusive
purpose of continuing to wind down the business. The provisions of this
Section shall be subject to the terms of Sections 27 and 28 hereunder.
AUTHORIZED SALES ACTIVITIES
4. Licensor hereby grants to Licensee during the Initial/Extended Term of
this Agreement the right to conduct a Program for the specific Catalogs agreed
upon by Licensor and Licensee in the applicable Schedule(s). However, nothing
in this Agreement shall prohibit Sears or any subsidiary or affiliate of Sears,
other than Licensor, from offering, advertising, selling and/or continuing to
offer, advertise, or sell in any manner during any Term of this Agreement or
any Schedule(s), to any of its customers, including those who may be Program
Customers, items similar to or identical to Product. Terms of exclusivity, if
any, with respect to Product Categories/Catalogs as they relate to other
activities/agreements of Licensor, shall be as stated in applicable Schedules.
LICENSEE'S RESPONSIBILITIES FOR THE PROGRAM
5. a. Licensee will be responsible for the following functions and the
related expenses of any Test and Rollout:
(1) Licensee will manufacture or acquire all Product sold to
Program Customers. Licensee will, to the extent necessary, negotiate and
enter into royalty, purchase and other agreements with suppliers and others to
obtain all rights necessary to allow Licensee to offer and sell the Product
under this Agreement.
(2) The Licensee will:
(a) develop, print and mail the Catalog materials including
response vehicles and Bouncebacks;
(b) make available to Licensor for its inspection samples
of all promotional artwork, advertising copy, correspondence, order forms,
envelopes, brochures, Catalogs, Product, Bouncebacks and other materials, if
any, mailed and/or delivered to Program Customers by Licensee, to permit
Licensor to determine that all such materials are consistent in quality,
presentation and use of Sears Marks and/or Licensor Marks in accordance with
Licensor's Advertising Policies as stated in Exhibit C, attached hereto and
made a part hereof, in each case in accordance with the applicable Schedules.
Any change in the use of said Marks shall be submitted prior to use by Licensee
to
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Licensor. Nothing in this Agreement or in the exercise by Licensor of its
approval rights thereunder shall prevent Licensee from using Licensee's Marks
(a) in and on the back of a Catalog as long as the Catalog indicates that it is
being presented by Licensor, and (b) in connection with the sale of branded
merchandise bearing Licensee's Marks. Any use of Licensee's Marks on the cover
of a Catalog shall be subject to Licensor's approval;
(c) agree with respect to a Program with Licensor on a
Customer List circulation strategy and arrange for Computerized Elimination of
Duplicate Names and any other refinement to the Customer list prior to the
generation of names to be mailed. Names eliminated from the Customer List, as
well as names to which materials will be mailed, shall be protected under the
confidentiality provisions of Section 24 hereof.
(3) Licensee will be responsible for the sale of Product and all
activities incidental thereto, including but not limited to:
(a) processing all Customer orders
(b) shipping Product at specified intervals;
(c) maintaining shipment records and change of address
records as may be provided by Program Customers or Licensor;
(d) providing computer readable files of the Program
Customer information as listed in Exhibit D, attached hereto and made a part
hereof;
(e) providing Licensor with all necessary Program and
Program Customer information to enable Licensor to fulfill Licensor
responsibilities under this Agreement; and
(f) processing Customer returns, and handling all matters
related to Customer service, including maintaining Licensor policy of
Satisfaction Guaranteed, in accordance with Operating Standards.
(4) Licensee will implement and maintain during the
Initial/Extended Term of this Agreement transaction processing systems (both
hardware and software) as required by Licensor to directly link with Licensor's
electronic systems for the authorization, processing and settlement of
SearsCharge sales.
LICENSOR RESPONSIBILITIES FOR THE PROGRAM
6. Except as otherwise provided, Licensor will be responsible for the
following functions and the related expenses of any Test and Rollout:
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a. Licensor will provide an agreed upon Customer List in the format (as
requested by Licensee), of names and addresses of Customers selected for the
Program.
b. Licensor will provide advice in analyzing the specific results of
the Test including, but not limited to, segmentation and/or regression
analysis.
c. Licensor shall provide Licensee with access to Licensor's electronic
systems for the authorization, processing and settlement of SearsCharge sales.
SALE OF PRODUCT BY LICENSEE
7. a. Licensee hereby agrees to sell Product to Program Customers as
provided by this Agreement. Licensee agrees that Licensor makes no
representation as to the purchase of any minimum quantity of Product from
Licensee by Program Customers. Licensor shall have no obligation to purchase
or promote any surplus inventory of Product, if any, which may exist after a
Test or Rollout.
b. Product shall be merchantable and conform to applicable requirements
of all Federal, State and local laws, any regulations issued pursuant to such
laws, including but not limited to any Federal Trade Commission Rules, Guides
or Orders.
c. Licensee shall, to the extent practicable, make available for the
benefit of Licensor the warranties for Product which are provided to Licensee
under applicable purchase orders and arrangements, and provide to Licensor
copies of such certificates as it receives certifying or guaranteeing
compliance with applicable statutes, rules or regulations.
d. Licensee represents and warrants that (1) for all Product entering
United States commerce from a foreign country, Licensee has or will obtain all
U. S. Customs documentation necessary to have the Product enter United States
commerce; and (2) it will take all necessary steps to have the Product legally
enter the United States commerce.
e. Licensee shall comply with all packaging, packing, labeling and
shipping requirements as provided in the Operating Standards, industry
standards and/or established by applicable laws, regulations, carrier tariffs
and classifications.
OPERATING AND POLICY STANDARDS
8. The Operating Policies and Procedures and the Operating Standards
initially shall be as set forth in Exhibits A and B hereto, and may be changed
from time to time in a manner consistent with the operations of Licensor and
Licensee.
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PERMITS, LICENSES
9. Licensee, at its expense, shall obtain all permits and licenses which may
be required under any applicable Federal, State or local law, ordinance, rule
or regulation by virtue of any acts performed by Licensee in the performance of
this Agreement, and Licensee shall in the conduct of its business and in the
performance of this Agreement comply fully with all applicable Federal, State
and local laws, ordinances, rules and regulations, including without limiting
the foregoing, compliance with all rules and regulations of the Federal Trade
Commission.
FEES, TAXES
10. Licensee, at its expense, shall pay and discharge all license fees, sales
and use, gross receipts, income, property or other similar or different taxes
or assessments which may be properly charged or levied upon Licensee by reason
of Licensee's performance under this Agreement, excluding, however, all taxes
and assessments applicable to Licensor's income, or net revenues pursuant to
this Agreement.
TELEPHONE NUMBERS
11. Published telephone numbers used in the Program shall be unique to the
Program and shall not be used otherwise by Licensor or Licensee. Upon
termination of this Agreement for any reason, Licensee shall cease to use said
numbers and shall transfer said numbers to Licensor. The parties agree that
only "800" telephone numbers shall be used and there shall be no local
directory listings.
MEETING AND PUBLICITY
12. Neither Licensee nor Licensor will refer to the other party in
developing/soliciting other business ventures or issue any publicity or press
release regarding its contractual relations with the other party hereunder or
regarding other party's activities hereunder without obtaining the other
party's prior written approval and consent; provided, however, that the
foregoing shall not restrict the publication of information or the filing of
documents as required by applicable law, or commenting upon publicly available
information. In addition, after the termination of this Agreement, neither
Licensor nor Licensee will refer to the other party in any materials directed
at Program Customers including, but not limited to, marketing materials.
CREDIT SALES
13. The settlement and remittance for all sales of Product pursuant to
SearsCharge and authorized third party credit cards shall be made in accordance
with Exhibits E and F.
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CONSIDERATION
14. In consideration of the granting by Licensor to Licensee of the license
to develop and operate the Program pursuant to the terms of this Agreement,
Licensee shall pay Licensor as stipulated in Exhibit E, attached hereto and
made a part hereof.
SETTLEMENT
15. Settlement shall take place in accordance with the provisions of Exhibit
F, attached hereto and made a part hereof.
AUDIT RIGHT
16. Licensee shall keep and maintain books and records which accurately
reflect the sales, shipments, and other operations of Licensee under this
Agreement. Said books and records shall be kept and maintained according to
consistently applied standard and accepted accounting practices. Licensor has
the right to review and audit the Licensee's books and records relating to the
Program during normal business hours; provided, that Licensor shall have given
at least two (2) days notice to Licensee at Licensee's address provided herein
of the time of the audit at the offices where applicable books and records are
located. Such audit shall be at the sole expense of Licensor.
TITLE TO PRODUCT
17. Product shall be held by Licensee without risk or expense to Licensor or
Program Customers pending shipment by Licensee pursuant to shipping
instructions. Title to Product shall pass to Program Customer at that time.
TRADEMARKS, TRADE NAMES AND SERVICE MARKS
18. For purposes of this Section only, any use of "Marks" intending to include
Licensor's Marks shall also include Sears Marks. Any and all rights Licensor
may have to use Sears Marks are granted pursuant to a separate license
agreement between Sears and Licensor. Licensor will furnish a copy of said
license agreement to Licensee, upon request by Licensee. Licensor and Licensee
(hereinafter, "Party" or "Parties", as appropriate with respect to this Section
18) mutually recognize the value and importance of trademarks, trade names and
service marks (hereinafter, collectively called "Marks"), and agree that:
a. The Parties will use each other's Marks only in connection with the
conduct and operation of the Program under this Agreement, through which
neither Party shall acquire an interest or proprietary right in the Marks of
the other Party except the right to use said Marks pursuant to the terms and
conditions of this Agreement. Upon expiration or termination of this Agreement
for any reason, each Party will immediately cease
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using the Marks of the other Party and will not use such Marks thereafter;
however, this Agreement does not create for either Party any greater rights in
its Marks than existed prior to the execution of this Agreement, specifically
each Party may use any of the other Party's Marks which is descriptive or
generic to the same extent that the general public may use said Marks.
Neither Party will question, contest or challenge the ownership of any right,
title or interest in the other Party's respective Marks, nor will it seek
federal or state registration of, nor assert any common law right to use the
other Party's Marks for any reason, each Party mutually agrees to execute any
and all necessary or appropriate documents to confirm ownership by the other
Party in that other Party's Marks and/or to transfer any rights that may have
been acquired in the other Party's Marks.
b. The Parties mutually recognize the special, unique and extraordinary
character of each other's respective Marks and the difficulty in assessing
monetary damages sustained by the unauthorized use of said Marks. The Parties
recognize and agree that irreparable injury would be caused by the unauthorized
use of each other's Marks and agree that preliminary or permanent injunctive
relief would be appropriate in the event of a breach of this Section, provided
that such relief shall not be exclusive of other legal remedies otherwise
available.
c. The Parties agree that each is responsible for the protection,
including by legal action, of its respective Marks. Notwithstanding this, each
Party agrees to notify the other of any activity of which it receives notice
that would potentially infringe any of the other Party's Marks used in
connection with this Program. Such potentially infringing activity would
include, but not be limited to, the use by third party of names, symbols,
emblems, designs or colors which would be confusingly similar to the other
Party's Marks in the minds of the consuming public. The Parties each agree not
to undertake any protest or legal action involving the other Party's Marks
without first obtaining written permission to do so. Should one Party
undertake authorized legal action involving Marks of the other Party, such
legal action shall be at the sole expense, including attorney's fees, of the
Party undertaking such legal action. The Parties each agree to reasonably
cooperate in any legal action involving the other Party's Marks used in
connection with the Program at the expense of the Party undertaking such
action. All recovery in the form of legal damages or settlement amounts shall
belong to the Party undertaking the legal action. The Parties each agree that
upon the expiration or termination of the right to use the other Party's Marks
for any reason, nothing in this Agreement will be construed to bar either Party
from protecting its right against infringement of its Marks by anyone,
including the other Party.
d. The presentation of each Catalog shall be consistent with Licensor's
overall image, and reflect Licensor's marketing
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and advertising strategy, it being understood that Licensee may offer
Licensee's private label merchandise bearing Licensee's Marks in the Catalog,
provided such merchandise and presentation are consistent with the other
merchandise offered in the Catalog. Licensee shall not use Licensee's Marks as
a marketing device apart from its private label merchandise, provided however,
Licensee may use Licensee's Marks on the front cover, the back cover, the order
form (consistent with the manner set forth in the Catalog cover attached hereto
as Exhibit G), and in the Catalog (consistent with the manner set forth in the
attached Exhibit H) provided that such use shall be consistent with the image
of the Catalog and Licensor, shall be used in conjunction with Licensor's Marks
and shall not appear on more than twenty percent (20%) of the Catalog pages.
The intention of this paragraph is to make clear that a catalog is a Licensor
catalog (e.g. SHOW PLACE) and not a Licensee catalog (e.g. Domestications).
Subject to the foregoing, Licensor has the sole right to determine if
merchandise presentation, quality, and advertising meet Licensor's standards.
e. Each Party agrees to indemnify the other Party during and after the
Initial/Extended Term of this Agreement against all claims, liabilities, and
expenses (including reasonable attorney's fees) arising out of activities
hereunder which give rise to any claim of trademark, service mark or trade name
infringement, including claims of unfair competition, based upon the use of
such indemnifying Party's Marks. This indemnification shall include the
Parties, their officers, directors, employees, and agents.
COPYRIGHT NOTICES
19. Licensee shall not have any copyright ownership in that portion of
any format and/or materials which:
a. are prepared exclusively for Licensor;
b. contain the word "Sears", any Sears and/or Licensor Mark, or
any picture or reference to any Product having a Sears and/or Licensor Mark; or
c. any design, format or materials or part thereof that are listed
by Licensor on a Schedule as having originated with Licensor.
Licensee shall have the sole copyright ownership of any format and materials
prepared by or for Licensee, not including any items covered by categories (a)
through (c) in the preceding sentence, it being understood by the Licensor and
Licensee that Licensee will have copyright ownership in portions of some
formats and materials which contain words, pictures, designs, formats and
materials in which Licensee shall have no copyright ownership.
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Licensee shall not use the materials and formats prepared for distribution
under this Agreement in other programs without first deleting therefrom any
reference to "Sears", Sears and/or Licensor Mark, or any other material that is
specifically listed in a Schedule by Licensor or which was prepared exclusively
for Licensor.
Licensor and Licensee agree to the use of a Licensor copyright notice on all
printed materials prepared for distribution under this Agreement.
Notwithstanding the foregoing, Licensor and Licensee agree that such copyright
notice gives them no proprietary rights in the Sears Marks and any use of the
Sears Marks inures to the benefit of Sears, Roebuck and Co. through its license
to Licensor.
EMPLOYEES
20. a. Licensor shall not be liable for the employment of any persons
employed by Licensee with respect to performance under this Agreement and said
employees shall not be deemed to be employees or agents of Licensor. Licensee
shall have the sole and exclusive authority to determine the wages, hours and
other terms and conditions of employment of its employees.
b. Licensee shall comply with all applicable local, state and federal
employment, civil rights and labor requirements including, but not limited to,
compliance with Title VII of the Civil Rights Act, Age Discrimination in
Employment Act, Americans with Disabilities Act, Executive order 11246 as
amended, state and federal wage withholding laws, and state human rights laws.
RELATIONSHIP OF PARTIES
21. Nothing contained in or performed pursuant to this Agreement shall be
construed as creating an agency, partnership, or joint venture. Except as may
be otherwise expressly provided in this Agreement, neither party shall become
bound by any representation, act or omission of the other party hereto.
INSURANCE
22. a. Licensee and Hanover Direct, Inc. at their expense, agree to
maintain at all times during the Initial/Extended Term of this Agreement and
provide proof to Licensor as requested, the following insurance coverage, in
the minimum amounts stated, written by an insurance company rated at least A
VII by Best's Insurance Rating:
(1) Workers' Compensation and Employer's Liability Insurance
with limits of liability under the Employer's Liability Insurance portion of
not less than $500,000 combined single limit per accident or disease.
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(2) Automobile Liability Insurance in the Licensee's name including
owned, non-owned, leased and hired motor vehicle coverage. Limits of liability
for commercial vehicles used in the business shall be not less than $1,000,000
combined single limit per occurrence for bodily injury and property damage.
Limits of liability for any private passenger automobile shall be not less than
$500,000 per occurrence combined single limit.
(3) Commercial General Liability Insurance including, but not
limited to, coverage for bodily injury, property damage, personal and
advertising injury, contractual injury, and product liability, with a broad
form vendor's endorsement in favor of Licensor for all Product and materials
relating to this Agreement, with limits of not less than $1,000,000 combined
single limits for bodily injury and property damage per occurrence;
(4) (a) For the Test, Umbrella Excess Liability Insurance
including, but not limited to, product liability, blanket contractual
liability, personal injury and advertising liability with limits of not less
than $1,000,000 combined single limits for bodily injury and property damage
per occurrence; and
(b) For the Rollout, if any, Umbrella Excess Liability
Insurance including, but not limited to, products liability, blanket
contractual liability, personal injury and advertising liability with limits of
not less than $5,000,000 combined single limits for bodily injury and property
damage per occurrence.
b. Each insurance policy obtained by Licensee and/or Hanover Direct,
Inc. shall contain a severability of interest/cross liability endorsement. If
Licensee desires to use a formal program of self-insurance to comply with any
insurance requirement in the above Paragraph 22.a., Licensor shall have the
right to accept or reject such substitution after review of Licensee's audited
financial statements and description of such self-insurance program. Each
policy obtained by Licensee shall expressly provide that it shall not be
subject to change or cancellation without at least thirty (30) days prior
written notice to Licensor. Licensee shall furnish Licensor with certificates
evidencing the existence of the insurance described above concurrently with the
execution and delivery of this Agreement. Any approval by Licensor of any
insurance policies or additional insurance obtained by Licensor shall not
relieve Licensee of any responsibility hereunder including, but not limited to,
claims in excess of limits described above.
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<PAGE> 14
INDEMNIFICATION
23. a. Except as specifically provided in Section 18 and Subsection 23.d.
with respect to matters covered therein, Licensee shall protect, defend, hold
harmless and indemnify Licensor and its affiliates, successors, assigns,
directors, officers and employees, and their respective heirs and
representatives from and against any and all claims, demands, actions,
liabilities, damages, losses, fines, penalties, costs and expenses (including
attorneys' fees) of any kind whatsoever (including without limitation of the
foregoing, those relating to actual or alleged death of or injury to person and
damage to property), actually or allegedly, directly or indirectly, arising or
resulting from or connected with (a) any and all Product merchandised pursuant
to any Catalog/Program; (b) performance or failure of performance under this
Agreement by Licensee or any of its representatives, agents or employees; (c)
the omission or commission of any act, lawful or unlawful, by Licensee or any
of its representatives, agents or employees, whether or not such act is within
the scope of employment of such representatives, agents or employees; or (d)
the failure of Licensee to comply with any applicable law, ordinance, rule or
regulation.
b. Except as specifically provided in Section 18 and Subsection 23.d.
with respect to matters covered therein, Licensor shall protect, defend, hold
harmless and indemnify Licensee and its affiliates, successors, assigns,
directors, officers and employees, and their respective heirs and
representatives from and against any and all claims, demands, actions,
liabilities, damages, losses, fines, penalties, costs and expenses (including
attorneys' fees) of any kind whatsoever (including without limitation of the
foregoing, those relating to actual or alleged death of or injury to person
and damage to property), actually or allegedly, directly or indirectly, arising
or resulting from or connected with (a) performance or failure of performance
under this Agreement by Licensor or any of its representatives, agents or
employees; (b) the omission or commission of any act, lawful or unlawful by
Licensor or any of its representatives, agents or employees, whether or not
such act is within the scope of employment of such representatives, agents or
employees; or (c) the failure of Licensor to comply with any applicable law,
ordinance, rule or regulation.
c. (1) Promptly after receipt by an indemnified party of notice of the
commencement of any action which may result in a claim for indemnification
pursuant to this Agreement, the indemnified party will notify in writing the
indemnifying party thereof.
(2) An indemnified party shall have the right (i) to employ
separate counsel in any action as to which indemnification may be sought under
any provision of the Agreement and to participate in the defense thereof; or
(ii) to the extent that it
13
<PAGE> 15
may wish, jointly with any other indemnified party, to assume the defense of
any such action with counsel reasonably satisfactory to indemnifying party, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless the indemnifying party has agreed in writing to pay
such fees and expenses.
(3) The indemnifying party shall not be liable for any settlement
of any action effected without its written consent, which shall not be
unreasonably withheld. If any action is settled with such written consent, or
if there is a final judgment against any indemnified party in any such action,
the indemnifying party shall indemnify and hold harmless any indemnified party
to the extent provided above from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
d. Licensee shall collect Sales Tax in any jurisdiction in which
Licensee or Licensor have nexus and shall indemnify and hold Licensor harmless
for failure to do so. In the event that any claim is made by any state or
local governmental authority that Sales Tax is due and payable by
Licensee/Licensor; or that Licensee/Licensor is liable for failure to collect
and remit Sales Tax, which claim rests in whole or in part upon activity,
property, extension of credit or other relationship of Licensor or its
affiliates to the jurisdiction claiming the Sales Tax or persons therein or by
virtue of this Agreement, each party shall be liable for the payment of (i)
one-half of any such Sales Tax and any interest or penalties thereon; and (ii)
one-half of the costs of defending against such claim, including, but not
limited to, attorneys' fees, expert witness fees, court costs and other related
costs of such defense. Licensee shall promptly notify Licensor of all notices
or inquiries by state and local tax officials, including notices of intent to
audit, conduct an investigation or issue an assessment. Failure to timely
notify Licensor shall void Licensor's obligations under this Subsection.
CUSTOMER LISTS AND INFORMATION
24. a. Licensor shall compile all new customer information into the
Customer List within one (1) month of receipt of said information. Licensor
represents and warrants that it has complied with all laws and regulations in
the establishment and maintenance of the Customer lists.
b. Licensor will supply a Customer List to the Licensee for each
promotional mailing as mutually agreed upon for the applicable Program to be
used solely and exclusively for said promotional mailing. Licensee shall not
reproduce, release or in any way make available or furnish, either directly or
indirectly, to any person, firm, corporation, association or organization at
any time, any Customer List and/or information concerning any
14
<PAGE> 16
Customer receiving any promotional mailings, Product, or materials under this
Agreement, and upon demand by Licensor and/or termination of this Agreement for
any reason Licensee shall immediately deliver to Licensor all copies of
Customer List and information relating to said Customers. All papers, tapes,
discs and other retention or storage items bearing such Customer Lists and
information, shall be and remain the property of Licensor. Licensee agrees not
to use said Customer List and information concerning the Customers in any
manner except the performance of this Agreement. Licensee shall at all times
maintain any Customer List and information relating to the Customers physically
separate and distinct from any lists and information Licensee may maintain that
are unrelated to this Agreement. Licensee shall protect such Customer List and
information from destruction, loss or theft during the Initial/Extended Term of
this Agreement and until such Customer List and information are delivered to
Licensor. Notwithstanding the foregoing, Licensee may maintain and utilize
copies of that portion of said List and information consistent with Section 29
hereof. Thereafter, Licensee shall immediately deliver said Customer List and
information to Licensor. Upon the termination of this Agreement or any
Schedule, including the performance of any services pursuant to Section 29
hereof, the names of Program Customers shall be jointly owned by Licensor and
Licensee and may be used by them in their respective marketing efforts.
c. Licensee acknowledges Licensor's interests in maintaining Customer
List security and agrees to perform all Customer List processing operations
under the following conditions:
(1) Merge/Purge operations will be performed solely
for the purpose of eliminating duplicate names and addresses
from the Customer List. Licensee shall not employ the
merge/purge operation to create list enhancement, address
correction, or any other information, whether specific or
implied, which can or will be incorporated within Licensee's
house file. Retention of the Customer List for coding
enhancements, analysis or any other purpose is prohibited.
(2) Decoy names will be placed in the Customer List provided to
the Licensee by the Licensor. Licensee shall not employ any
method to detect, alter or eliminate the names so placed.
Licensee understands and consents to the presence of decoy names
within the Customer List.
(3) Licensee further agrees to place within the Customer List
additional "seed names" provided by the Licensor and maintained
by the Licensee (a) to establish the performance of delivery
agencies employed to distribute Catalog/promotions and to
15
<PAGE> 17
fulfill Program Customer orders; and (b) to monitor the
unauthorized distribution and/or use of names from the Customer
List provided to third party service bureaus.
d. Licensor hereby disclaims any guarantee, expressed or implied,
regarding the provided Customer List. Licensor makes no warranty or
representation of any nature as to the accuracy of the Customer List with
respect to the results obtained or the number of pieces which are
undeliverable. Under no circumstance shall the Licensor be liable for any
economic loss including, but not limited to loss of profits resulting from the
use of the Customer List.
e. Licensor reserves the right to make the Customer List available for
list rental. Licensee will have the right to approve the parties to whom
Program Customer names may be rented. Licensor and Licensee shall share
equally the pro-rata share of Customer List rental revenue attributable to the
number of Program Customers included in each rented Customer List.
STRICT CONFIDENCE
25. Each of Licensor and Licensee shall hold in strict confidence and
will not utilize otherwise than in connection with the performance of its
obligations under this Agreement all confidential information with respect to
the operations of the other parties hereto, and any plans and programs
furnished to the other parties hereunder or which becomes known to such party
because of services rendered hereunder.
NO ASSIGNMENTS
26. This Agreement is not transferable or assignable by Licensor or by
Licensee in whole or in part without the prior written consent of the other
party hereto, but the rights to receive funds hereunder may be assigned as
collateral for indebtedness. The sale of Licensor's or Licensee's business,
the change of beneficial ownership of the stock of Licensor or Licensee, or any
other transaction which shifts the right to another controlling interest shall
be such a transfer. Any attempt to transfer or assign or any transfer or
assignment, expressly or by operation of law, without compliance with the
provisions of this Section 26 shall be null and void.
DEFAULT BY LICENSEE
27. Upon the occurrence of any of the following (each, a "Licensee
Default") during the Initial/Extended Term:
(1) the material failure of Licensee to ship Product which is
merchantable substantially on the schedule for such Product set forth in the
Operating Standards, or other material failure by Licensee to substantially
comply with the Operating
16
<PAGE> 18
Standards and/or Advertising Policies with respect to the operations relating
to a Catalog/Product (i) which material failure is not cured within thirty (30)
days following written notice thereof to Licensee; or (ii) for which
documentation is not provided to Licensor within thirty (30) days following
written notice of default to Licensee that the applicable issues are being
resolved;
(2) material failure by Licensee to actively promote any
Annual/Seasonal Mail Plan;
(3) the material failure of Licensee to comply with any other
material provision of this Agreement (i) which material failure is not cured
within thirty (30) days following written notice thereof to Licensee; or (ii)
for which documentation is not provided to Licensor within thirty (30) days
following written notice of default to Licensee that the applicable issues are
being resolved;
(4) any bankruptcy or insolvency proceedings are commenced
against Licensee and remain undischarged for sixty (60) days, or any such
proceedings are commenced by Licensee; or
(5) Licensee admits, in writing, its inability to pay its debts
as they come due;
then, notwithstanding the provisions of Section 3 herein, in the
instance of a Licensee Default specified in Subsections 27.(1) and (2) with
respect to such Catalog, Licensor may immediately terminate this Agreement with
respect thereto, and in the instance of any Licensee Default specified in
Subsections 27. (3), (4) and (5), Licensor may immediately terminate this
Agreement upon the payment by Licensor of all sums owed by Licensor hereunder.
Upon such termination all rights of Licensee to use the Sears/Licensor Marks
and the Customer List in connection with any such Catalog or under this
Agreement, as the case may be, shall terminate. Whether or not such
termination occurs, Licensor shall be entitled to damages or other appropriate
relief for any breach of this Agreement.
DEFAULT BY LICENSOR
28. Upon the occurrence of any of the following (each, a "Licensor
Default") during the Initial/Extended Term:
(1) the material failure of Licensor to comply with any material
provision of this Agreement (i) which material failure is not cured within
thirty (30) days following written notice thereof to Licensor; or (ii) for
which documentation is not provided to Licensee within thirty (30) days
following written notice of default to Licensor that the applicable issues are
being resolved;
17
<PAGE> 19
(2) any bankruptcy or insolvency proceedings are commenced
against Licensor and remain undischarged for thirty (30) days, or any such
proceedings are commenced by Licensor; or
(3) Licensor admits, in writing, its inability to pay its debts
as they become due;
then, notwithstanding the provisions of Section 3 herein, Licensee
may terminate this Agreement upon the payment by Licensee of all sums owed by
Licensee hereunder. Upon such termination all rights of Licensee to use the
Sears/Licensor Marks and the Customer List in connection with any such Catalog
or under this Agreement, as the case may be, shall terminate. Whether or not
such termination occurs, Licensor shall be entitled to damages or other
appropriate relief for any breach of this Agreement.
COMPLETION OF OUTSTANDING ORDERS
29. In the event this Agreement and/or any Schedule(s) is terminated
pursuant to the provisions of Section 27 herein, and if requested in writing by
Licensor, Licensee shall faithfully and promptly fulfill all orders received
from Program Customers prior to the effective date of such termination
consistent with the provisions of this Agreement, and Licensor shall be
obligated to faithfully and promptly pay to Licensee the amount it has agreed
to pay hereunder with respect to such orders.
EXCUSED PERFORMANCE
30. Neither party shall be liable for any failure, inability or delay to
perform hereunder, if such failure, inability or delay is due to an act of God,
war, strike, lockout, labor disturbance, social conflict, fire, explosion, or
sabotage. If Licensee's performance shall be prevented, delayed or materially
impaired by any such cause, then Licensor may elect to suspend this Agreement,
in whole or in part, so long as such situation continues, but without thereby
effecting an extension of its Term.
NON-COMPETE
31. Upon the termination of this Agreement or a specific Schedule/Program,
other than for cause, Program Customer names shall not be used by either
Licensor or Licensee for any marketing purposes with respect to the
Product/Categories being terminated by the applicable Schedule(s) including,
but not limited to, any promotional mailings, for a period of sixty (60) days
from the drop date/mailing of the last Catalog for each specific Program. The
foregoing provisions shall not apply in the event of termination for cause.
18
<PAGE> 20
SOLICITATION OF EMPLOYEES
32. Licensor and Licensee hereby agree that during the Initial/Extended
Term of the Agreement neither party shall solicit or negotiate with a view
toward hiring or hire any of the officers or employees of the other party
without obtaining the prior written consent of said party.
CONFLICTING PROVISIONS
33. In the event of a conflict between the provisions of any Schedule and
the Agreement and/or any Exhibits thereto, the provisions of the Schedule shall
govern.
NOTICES
34. All notices herein provided for or which may be given in connection
with this Agreement shall be certified mail with postage prepaid and return
receipt requested. If any such notice be given by Licensee to Licensor, it
shall be addressed to:
Sears Shop at Home Services, Inc.
3333 Beverly Road
E4, 259B
Hoffman Estates, IL 60179
Attention: E. Vachel Pennebaker
with a copy to: The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, DE 19901
and if given by Licensor to Licensee, such notice shall be addressed to:
Hanover Ventures, Inc.
Attention: President
340 Poplar St.
Hanover, PA 17333
with a copy to: Hanover Direct, Inc.
Attention: Exec. VP, General Counsel and
Secretary
1500 Harbour Blvd.
Weehawken, NJ 07087
and such notices, if sent by United States mail, shall be deemed to have been
given when deposited in the United States mail. Either party may change the
address(es) to which future notices are to be given by giving the other party
notice thereof in accordance with this section.
CAT - 1.0
19
<PAGE> 21
WAIVER
35. No waiver of any provision or breach shall be implied by failure to
enforce any rights or remedy herein provided, and no express waiver shall
affect any provision or breach other than that to which the waiver is
applicable and only for that occurrence.
CUMULATIVE REMEDIES
36. All rights and remedies are cumulative, and the exercise of any right
or remedy herein provided shall be without prejudice to the right to exercise
any other right or remedy provided herein, by law, or by equity.
SEVERABILITY
37. The invalidity or unenforceability of any provision of this Agreement
shall not affect or impair the enforcement of any other provision, and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein.
SECTION HEADINGS
38. The Section headings in this Agreement have been placed thereon for
the mere convenience of the parties and shall not be considered in any
construction or interpretation of this Agreement.
GOVERNING LAW
39. This Agreement shall be interpreted and governed by the internal laws
of the State of Illinois.
ENTIRE AGREEMENT
40. This Agreement sets forth the entire agreement and understanding
between the parties with respect to the subject matter hereof. This Agreement
shall not be supplemented, modified or amended except by a written instrument
signed by a duly authorized officer of Licensee and by a duly authorized
representative of Licensor, and no other person has or shall have the authority
to supplement, modify or amend this Agreement in another manner.
20
<PAGE> 22
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written by their proper officers or representative duly
authorized thereunto.
SEARS SHOP AT HOME SERVICES, INC.
(LICENSOR)
By:
-----------------------------
Title:
--------------------------
Dated:
--------------------------
HANOVER VENTURES, INC. (LICENSEE)
By:
-----------------------------
Title:
--------------------------
Dated:
--------------------------
21
<PAGE> 23
SCHEDULE NO. 1
This Schedule is made and entered into as of this 1st day of January, 1994, by
and between Sears Shop at Home Services, Inc., a Delaware corporation
(hereinafter "Licensor"), and Hanover Ventures, Inc., a Delaware corporation
(hereinafter "Licensee"). This Schedule shall be governed by the terms and
conditions of the License Agreement between the parties dated January 1, 1994
(hereinafter "Agreement").
PROGRAM: [DOMESTICATIONS] SHOW PLACE
TERM: This Schedule shall be coterminous with the Agreement unless earlier
terminated as provided therein.
PRODUCT/CATEGORIES: Bed and Bath, as more fully described in Exhibit A,
attached hereto and made a part hereof.
ADDITIONAL LICENSOR MARK(S): SHOW PLACE
ADDITIONAL LICENSEE MARKS(S): DOMESTICATIONS
PRODUCT CLEARANCE: All Products presented to Licensor as of the date of this
Schedule and any Product of substantially the same type and quality is approved
by Licensor for the term of this Schedule. Licensor acknowledges that Product
selection is determined fifteen (15) weeks prior to the mail date and will
clear Product content prior to that date.
PRODUCT LITERATURE: All materials shall conform to Licensor's Advertising
Guidelines. Licensor acknowledges that copy reviews occur eleven (11) weeks
prior to printing and "Blues" reviews occur four (4) weeks prior to printing.
Licensor will clear all copy within five (5) working days of receipt and clear
"Blues" and covers five (5) working days from receipt. If Licensor fails to
respond by these time constraints, clearance is deemed to be received by
Licensee. Licensee will provide Licensor color copies of Catalog covers to
obtain approval.
MARKETING STRATEGY: Program catalogs will be mailed to the Customer List as
modified by marketing selections jointly agreed to by both parties.
Circulation decisions will be made jointly prior to each mailing within
sufficient time to enable Licensee to provide its services under the Agreement.
<PAGE> 24
ADDRESS: All promotional materials sent to Customers under the Program
described in Schedule and all response vehicles for mail orders therefor will
carry Licensor's name and the following address:
SHOWPLACE
89 Maple Avenue
Hanover, PA 17333-0001
IN WITNESS WHEREOF, the parties have signed this Schedule as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS SHOP AT HOME SERVICES, INC. HANOVER VENTURES, INC.
By By:
------------------------------- -------------------------
Vachel Pennebaker
President and CEO
2
<PAGE> 25
EXHIBIT A TO SCHEDULE 1
PROGRAM: [DOMESTICATIONS] SHOW PLACE
PRODUCT/CATEGORIES: Bed and Bath
Bath Accessories
Bedding
Blankets
Comforters
Mattress Cushions
Pillow Cases
Pillows
Quilts
Sheets
Slipcovers
Table Top Linens
Towels
TERMS OF EXCLUSIVITY:
I . The rights granted by Licensor are exclusive to Licensee with respect
to merchandise in the Product/Categories identified above. Item
exclusivity cannot be granted; however, duplication of items in
non-Licensee Programs shall be held to a minimum.
2. The following Product/Categories may be represented in this Program;
however, due to their limited exposure in the Program, Licensor does
not grant Licensee exclusive rights to these Product/Categories:
Accent Furniture
Flatware
Floor Coverings
Lighting
Window Coverings
3
<PAGE> 26
SCHEDULE NO. 2
This Schedule is made and entered into as of this 1st day of January, 1994, by
and between Sears Shop at Home Services, Inc., a Delaware corporation
(hereinafter "Licensor"), and Hanover Ventures, Inc., a Delaware corporation
(hereinafter "Licensee"). This Schedule shall be governed by the terms and
conditions of the License Agreement between the parties dated January 1, 1994
(hereinafter "Agreement").
PROGRAM: [COLONIAL GARDEN KITCHENS] GREAT KITCHENS
TERM: This Schedule shall be coterminous with the Agreement unless earlier
terminated as provided therein.
PRODUCT/CATEGORIES: Kitchenware, as more fully described in Exhibit A, attached
hereto and made a part hereof.
ADDITIONAL LICENSOR MARKS(S): GREAT KITCHENS
ADDITIONAL LICENSEE MARK(S): COLONIAL GARDEN KITCHENS
PRODUCT CLEARANCE: All Products presented to Licensor as of the date of this
Schedule and any Product of substantially the same type and quality is approved
by Licensor for the term of this Schedule. Licensor acknowledges that Product
selection is determined fifteen (15) weeks prior to the mail date and will
clear Product content prior to that date.
PRODUCT LITERATURE: All materials shall conform to Licensor's Advertising
Guidelines. Licensor acknowledges that copy reviews occur eleven (11) weeks
prior to printing and "Blues" reviews occur four (4) weeks prior to printing.
Licensor will clear all copy within five (5) working days of receipt and clear
"Blues" and covers five (5) working days from receipt. If Licensor fails to
respond by these time constraints, clearance is deemed to be received by
Licensee. Licensee will provide Licensor color copies of Catalog covers to
obtain approval.
MARKETING STRATEGY: Program catalogs will be mailed to the Customer List as
modified by marketing selections jointly agreed to by both parties.
Circulation decisions will be made jointly prior to each mailing within
sufficient time to enable Licensee to provide its services under the Agreement.
4
<PAGE> 27
ADDRESS: All promotional materials sent to Customers under the Program described
in this Schedule and all response vehicles for mail orders therefor will carry
Licensor's name and the following address:
GREAT KITCHENS
89 Maple Avenue
Hanover, PA 17333-0001
IN WITNESS OF, the parties have signed this Schedule as of the day and year
first written by their proper officers or representatives duly authorized
thereunto.
SEARS SHOP AT HOME SERVICES, INC. HANOVER VENTURES, INC.
By By
-------------------------------- --------------------------
Vachel Pennebaker
President and CEO
5
<PAGE> 28
EXHIBIT A TO SCHEDULE 2
PROGRAM: [COLONIAL GARDEN KITCHENS] GREAT KITCHENS
PRODUCT/CATEGORIES: Kitchenware
Kitchen Accessories
Table Top Appliances
TERMS OF EXCLUSIVITY:
1. The rights granted by Licensor are exclusive to Licensee with respect
to merchandise in the Product/Categories identified above. Item
exclusivity cannot be granted; however, duplication of items in
non-Licensee Programs shall be held to a minimum.
2. The following Product/Categories may be represented in this Program;
however, due to their limited exposure in the Program, Licensor does
not grant Licensee exclusive rights to these Product/Categories:
China
Closet Organization
Home Improvement
Flatware
Furniture
Table Linens
6
<PAGE> 29
SCHEDULE NO. 3
This Schedule is made and entered into as of this 1st day of January, 1994, by
and between Sears Shop at Home Services, Inc., a Delaware corporation
(hereinafter "Licensor"), and Hanover Ventures, Inc., a Delaware corporation
(hereinafter "Licensee"). This Schedule shall be governed by the terms and
conditions of the License Agreement between the parties dated January 1, 1994
(hereinafter "Agreement").
PROGRAM: [SILHOUETTES] BEAUTIFUL STYLE
TERM: This Schedule shall be coterminous with the Agreement unless earlier
terminated as provided therein.
PRODUCT/CATEGORIES: "After Five" Apparel, as more fully described in Exhibit A,
attached hereto and made a part hereof.
ADDITIONAL LICENSOR MARK(S): BEAUTIFUL STYLE
ADDITIONAL LICENSEE MARK(S): SILHOUETTES
PRODUCT CLEARANCE: All Products presented to Licensor as of the date of this
Schedule and any Product of substantially the same type and quality is approved
by Licensor for the term of this Schedule. Licensor acknowledges that Product
selection is determined fifteen (15) weeks prior to the mail date and will
clear Product content prior to that date.
PRODUCT LITERATURE: All materials shall conform to Licensor's Advertising
Guidelines. Licensor acknowledges that copy reviews occur eleven (11) weeks
prior to printing and "Blues" reviews occur four (4) weeks prior to printing.
Licensor will clear all copy within five (5) working days of receipt and clear
"Blues" and covers five (5) working days from receipt. If Licensor fails to
respond by these time constraints, clearance is deemed to be received by
Licensee. Licensee will provide Licensor color copies of Catalog covers to
obtain approval.
MARKETING STRATEGY: Program catalogs will be mailed to the Customer List as
modified by marketing selections jointly agreed to by both parties.
Circulation decisions will be made jointly prior to each mailing within
sufficient time to enable Licensee to provide its services under the Agreement.
10
<PAGE> 30
ADDRESS: All promotional materials sent to Customers under the Program
described in this Schedule and all response vehicles for mail orders therefore
will carry Licensor's name and the following address:
BEAUTIFUL STYLE
89 Maple Avenue
Hanover, PA 17333-0001
IN WITNESS OF, the parties have signed this Schedule as of the day and year
first written by their proper officers or representatives duly authorized
thereunto.
SEARS SHOP AT HOME SERVICES, INC. HANOVER VENTURES, INC.
By By
------------------------------- --------------------------
Vachel Pennebaker
President and CEO
11
<PAGE> 31
EXHIBIT A TO SCHEDULE 3
PROGRAM: [SILHOUETTES] BEAUTIFUL STYLE
PRODUCT/CATEGORIES: Women's "After Five" Apparel in Women's Sizes
TERMS OF EXCLUSIVITY:
NONE. However, during the term of this Program, Licensor shall not enter into
comparable programs with the following catalogs:
Brownstone Studio Woman
Regalia
Spiegel For You
Appleseed's Just Right
12
<PAGE> 32
SEARS SHOP AT HOME SERVICES, INC.
LICENSE AGREEMENT
EXHIBIT A
"OPERATING POLICIES AND PROCEDURES GUIDELINES"
TOTAL PAGES: 65
DATE: NOVEMBER 1993
SEARS SHOP AT HOME SERVICES, INC.
LICENSEE OPERATING
POLICIES AND PROCEDURES GUIDELINES
SEARS SHOP AT HOME SERVICES, INC. HEREINAFTER "LICENSOR"
<PAGE> 33
TABLE OF CONTENTS
I. INTRODUCTION
II. MERCHANDISING
III. CUSTOMER SERVICE
IV. CREDIT
V. FULFILLMENT
VI. REPORTING REQUIREMENTS
VII. INSURANCE REQUIREMENTS
<PAGE> 34
I. INTRODUCTION
I-1
<PAGE> 35
I. INTRODUCTION
A. PURPOSE
Sears Shop at Home Services, Inc.'s mission is to provide high quality products
and services that exceed our customers' expectations. Our Licensees have to
share this philosophy in each customer interaction.
The Licensee Operating Policies and Procedures Guidelines cover all aspects of
Specialty Catalog from Merchandising, Customer Service, Credit and Fulfillment
to Reporting. The purpose of these Guidelines is to:
1. Ensure that Quality and Performance Standards are uniform
across all licensees to provide the greatest marketing
opportunity for all.
2. Assure customer expectations are met.
3. Provide detailed operating procedures.
B. ORGANIZATION AND UPDATING
The Operating Policies and Procedures Guidelines are organized into seven
sections. Each section contains an Introduction, a Summary of the Standards
and Procedures, a detailed Definition, and Examples where required.
The sections are:
I. Introduction
II. Merchandising
III. Customer Service
IV. Credit
V. Fulfillment
VI. Reporting Requirements
VII. Insurance Requirements.
When revisions are made to a section, a replacement section will be sent to the
Licensees.
A Directory is included in the Introduction For Quick Reference.
I-2
<PAGE> 36
<TABLE>
<CAPTION>
C. DIRECTORY OF CONTACTS
<S> <C>
Sears Shop at Home Services, Inc.
List Services/Circulation 708-676-6181
Advertising 708-676-6332
Specialty Catalogs 708-676-6366
Softlines 708-676-6487
Hardlines 708-676-6275
Home 708-676-6143
Systems 708-676-7937
Finance 708-676-6163
OTHER SEARS DEPARTMENTS
Credit (Questions on existing SearsCharge 1-800-347-8480
Accounts & New Account Inquiries)
MCA (Merchant Credit Account) Inquiry 1-708-330-4626
Maintenance Agreements 1-800-827-6655
Repair Service 1-800-473-7247
Replacement Parts (Retail & Catalog) 1-800-366-7278
Sears Shop at Home Inquiries 1-800-366-3125
Sears Headquarters (Main Switchboard) 1-708-286-2500
Hoffman Estate, II
Sears National Customer Relations 1-312-875-5188
- Retail Store Complaints or Inquiries
- Old Catalog Inquiries
</TABLE>
I-3
<PAGE> 37
II. MERCHANDISING
II-1
<PAGE> 38
II. MERCHANDISING
A. INTRODUCTION:
It is the mission of Sears Specialty Catalog to offer products that
without exception consistently meet or exceed customer expectations,
backed by the Sears promise of "Satisfaction Guaranteed Or Your Money
Back."
B. SUMMARY
Merchandise offers and services are to be approved by Sears Shop at Home
Services, Inc. Merchandise and services are not to be offered to the
Customer List without prior agreement.
Quality and value are to be consistent with Sears image, standards and
Sears customers' expectations.
Promotional items must conform to Sears Shop at Home Services advertising
guidelines and be approved by Licensor.
All Catalog covers, art and copy are to be approved by Sears Shop at
Home Services prior to being released to the printer. Licensee should
allow five days from the date of receipt by Licensor for approval of the
proofs.
Color proofs should be provided for covers.
Licensee is to comply with state and federal requirements to maintain
warranty information and make it available to the customer upon request.
II-2
<PAGE> 39
III. CUSTOMER SERVICE
III-1
<PAGE> 40
III. CUSTOMER SERVICE
A. INTRODUCTION:
Sears Shop at Home Services goal is to consistently meet or exceed the
customer's expectations backed by the Sears promise of "Satisfaction
Guaranteed or Your Money Back." Our licensees have to share this
philosophy in each interaction with the customer from order entry,
shipment, presentation, returns processing and complaint processing.
B. SUMMARY:
A dedicated toll-free number for Sears Shop at Home order taking and
customer service is required.
Telephone representatives will answer specific to the Sears Specialty
Catalog Program. Example: "Good Morning, this is Sears Shop at Home."
Customer Service phone inquiries are to be acknowledged within 4 hours
of receipt and resolved within 24 hours.
Return instructions will be inserted into the customer's order, telling
the customer how to return the merchandise, including:
Return address
Customer Service phone number
Sears Shop at Home Services, Inc. has its National Customer Service
Center in Des Moines, IA. Licensees will provide contact names and fax
number to process customer inquiries.
Licensees will resolve customer inquiries and issue credit to the
customer's account as appropriate.
Correspondence:
Licensee is to respond to all correspondence within 24 hours.
Standard letter copy and format must be approved by Licensor.
Sears Shop at Home letterhead is to be used for all written
correspondence. The cost of this letterhead is to be borne by the
Licensee.
Miscellaneous customer correspondence such as SearsCharge payments,
product questions, requests for service or parts, etc., are to be
forwarded daily to:
Sears Customer Service Center
Attn: Latonya Miller
POB 9145
Des Moines, IA 50306-9145
III-2
<PAGE> 41
C. CUSTOMER SERVICE
"Satisfaction Guaranteed or Your Money Back," is the guiding principle
for our relationship with the customer. This guides us as follows:
Taking the customer's word.
Prompt and fair approach always to be exercised with each
customer.
Custom/personalized merchandise is to be included.
Goodwill gestures should be considered in extreme cases of
complaint handling.
The Licensee and Sears are obligated to satisfy our customers.
In all cases, Sears' "Satisfaction Guaranteed or Your Money Back" should
be the only guarantee in the Sears Shop at Home licensed catalog.
Customer service phone inquiries are to be acknowledged within 4 hours
of receipt. All customer complaints must be resolved within 24 hours.
Licensees are to have a dedicated toll-free number for Sears Shop at
Home order taking and customer service. One toll-free number may be
utilized for both services.
Telephone representatives are to answer specific to the Licensor
program/catalog. These will be scripted for each Licensee. Example:
"Good morning, this is Sears Shop at Home. My name is Joan, how may I
help you?"
The dedicated toll-free number is to be highlighted in the catalog copy,
customer invoices and correspondence.
Licensee is to maintain customer order history for a minimum of 13
months, unless a different time frame is mutually agreed to.
D. CALL CENTER STANDARDS AND OPERATION
Licensee is to provide 24 hour toll-free access, 365 days a year for
order taking and customer service.
90% of all calls are to be answered within 3 rings/20 seconds.
Telephone standard is a maximum 3% delay; 2% abandon rate.
Service levels are to be reported weekly by 800 #, and measured daily.
Message for hold will be developed by Sears Shop at Home and the
Licensee.
Third party answering services must meet all standards of the Licensee
and be monitored by the Licensee. Licensor has the right to approve all
third parties. Third parties must sign a confidentiality agreement.
III-3
<PAGE> 42
Sears Shop at Home and the Licensee will monitor performance and take
actions required to achieve standards:
Customer service
Complaints
Order taking
Fulfillment
3rd party answering services
Service level and abandoned calls
Sears Shop at Home and Licensee will establish customer service liaisons
to review and track all customer complaints and issues.
Sears Shop at Home will provide Licensee with referral list of all
pertinent 800 numbers. Pertinent numbers to include:
Credit Central
Sears Customer Service
Other Licensed Catalogs
The script for the first hold message is:
"Hello, and thank you for calling Sears Shop at Home. We will
give your call special attention as soon as one of our customer
service representatives is available. Please remain on the line;
someone will be with you shortly."
The script for the second hold message is:
"Thank you for holding. All of our customer service
representatives are still helping other customers. We apologize
for the delay. Please continue to hold, and your call will be
answered as soon as possible."
SEARS REFERRAL TELEPHONE LISTING
Credit (Questions on existing Sears Charge 1-800-347-8480
Accounts & New Account Inquiries)
MCA (Merchant Credit Account) Inquiry 1-708-330-4626
Maintenance Agreements 1-800-827-6655
Repair Service 1-800-473-7247
Replacement Parts (Retail & Catalog) 1-800-366-7278
Sears Shop At Home Inquiries 1-800-366-3125
Sears Headquarters (Main Switchboard) 1-708-286-2500
Hoffman Estates, IL
Sears National Customer Relations 1-312-875-5188
- Retail Store Complaints or Inquiries
- Old Catalog Inquiries
III-4
<PAGE> 43
SEARS LICENSED CATALOGS
<TABLE>
<CAPTION>
CATALOG NAME PRODUCT CATEGORY PHONE NUMBER
- ------------ ---------------- ------------
<S> <C> <C>
Auto Accessories Accessories for Trucks, Vans, Orders 1-800-500-5088
Cars, & Sport Vehicles Cust.Serv. 1-800-500-8085
Barbie Collectibles - Mattel Collectible Barbie Doll 1-800-366-3125
Beautiful Buys Women's Dresses Orders 1-800-776-0202
Cust.Serv. 1-800-800-0200
Beauty Boutique Health & Beauty Aids Orders 1-800-776-0202
Cust.Serv. 1-800-800-0200
Big & Tall Men's Big & Tall Apparel 1-800-679-5656
Colonial Gardens Kitchens Housewares 1-800-438-2615
Domestications Home Fashions 1-800-437-9686
Fashions Size 14 and Up Large Size Women's Apparel 1-800-944-1973
Hanover House Novelties 1-800-438-0490
Health Care Products Health Care 1-800-326-1750
Jodee After Surgery Mastectomy Products 1-800-225-8904
Inner Fashions
Leather Catalog Leather Apparel - Mens Orders 1-800-948-9300
Womens and Kids Cust.Serv. 1-800-923-5533
Mature Wisdom Apparel & Aids for 1-800-438-2616
Elderly Customers
Outdoor Grill Grills & Accessorie Orders 1-800-241-8981
Cust.Serv. 1-800-252-8248
Palm Beach Jewelry Costume Jewelry 1-800-443-2526
Personal Creations Personalized Gifts 1-800-326-6626
Philipe Marcel Women's Dresses Orders 1-800-776-0202
Cust.Serv. 1-800-800-0200
Silhouettes Large Size Women 1-800-438-2651
Simply Tops Women's Fashions 1-800-438-2710
Tapestry Home Accessories 1-800-414-4111
</TABLE>
III-5
<PAGE> 44
<TABLE>
<CAPTION>
CATALOG NAME PRODUCT CATEGORY PHONE NUMBER
- ------------ ---------------- ------------
<S> <C> <C>
The Starting Line-up Sport Licensed Apparel - All Sports 1-800-207-3277
Tools Craftsman Power & Hand Tools 1-800-377-7414
Uniforms Medical Uniforms 1-800-542-4380
Windsor Watch Costume Jewelry Orders 1-800-776-0202
Cust.Serv. 1-800-800-0200
Workwear Men's Work Clothing 1-800-305-1001
</TABLE>
III-6
<PAGE> 45
E. CUSTOMER SCRIPT
A telephone customer service representative in order to effectively
serve our customer inquiries should be trained about the products and
services Sears Shop at Home provides.
Licensor will help you customize your script to meet the Shop at Home
requirements. Your script should be tailored to your screen formats for
order processing efficiency.
Sample scripts are included for:
Ordering
Coupons/Gift certificates
MCA accounts
Callback for SearsCharge credit denial
Most frequently asked questions
Licensee finder file should be used to reduce order entry time. The
finder file should be loaded with the mail tape customer information,
including
Customer name
Bill-to address
Ship-to address
SearsCharge account number
Telephone number
Sears Household ID
The finder file should be updated with new customers as orders are
processed.
III-7
<PAGE> 46
SEARS SHOP AT HOME SERVICES, INC.
ORDERING SCRIPT
OPENING: Thank you for calling Sears Shop at Home. This is ____________.
May I place a _____ order for you today?
CUSTOMER: I'd like to order a _______________.
CSR: Certainly. May I have your home phone number, area code first,
please?
CUSTOMER: (000) 000-0000.
CSR: Thank you. May I charge this order to your SearsCharge account
today?
IF YES: That number, please?
CUSTOMER: 000000000000000
CSR: I'd like to restate that number, Mr./Mrs.___. That's
000000000000000.
IF NO: What credit card will you be using today?
CUSTOMER: A MasterCard, please.
CSR: Certainly, and that number, please?
CUSTOMER: 1234567890000000
CSR: I'd like to restate your MasterCard number, Mr./Mrs.___ That was
1234567890000000? And expiration date, please?
CUSTOMER 2/94.
CSR: Thank you. and may I have the name that appears on your
SearsCharge?
CUSTOMER: Mr./Mrs.___.
CSR: Thank you Mr./Mrs.___. May I have the billing address please?
CUSTOMER: 1234 Main Street, Chicago, Illinois 60000.
CSR: Thank you. May I have a daytime phone number with the area code
first, please?
CUSTOMER: (000) 000-0000.
III-8
<PAGE> 47
CSR: And will you be shipping to the Main Street address, Mr./Mrs.____?
IF YES: Go to next question.
IF NO: Ask for address customer would like merchandise shipped to.
CSR: May I have the ____ digit code on the back of your catalog,
Mr./Mrs.____? It's located above your name and address.
CUSTOMER: #0000
CSR: Thank you, and now may I have your first item number, please?
CUSTOMER: 00000
CSR: What size?
How many?
CUSTOMER: Responds to questions.
CSR: That item is in stock. OR
That item is back-ordered and we are expecting it in stock
(give date). Would it be all right to send it out to you
then?
CUSTOMER: For both responses of Yes and No.:
CSR: All right, may I have your next item number, please?
CUSTOMER: That will be all.
CSR: Thank you, Mr./Mrs.____. Your total comes to $_______, which
includes tax and shipping and handling. You should receive
your package within 5 - 7 days. And, thank you for ordering
from Sears Shop at Home Services, Inc., and have a great
day/evening. Good-bye.
III-9
<PAGE> 48
SEARS SHOP AT HOME SERVICES, INC.
COUPONS/GIFT CERTIFICATES SCRIPT
CSR: That total with tax and shipping and handling comes to $00.00,
Mr./Mrs____.
CUSTOMER: I have a coupon/gift certificate I'd like to use for this
order. Could I do that?
CSR: Certainly. I can charge this order to your SearsCharge today
and it will not delay processing. Please send the coupon/gift
certificate to us and when we receive it, we will credit your
account for the amount on the coupon/gift certificate. Will
that be all right?
IF YES: May I have your SearsCharge number, please?
IF NO: Mr./Mrs.___ please complete the order blank in your catalog and
sent it to ____ with the coupon/gift certificate and a check
for the difference.
CUSTOMER: 00000000000000
CSR: Thank you, Mr./Mrs.____. I'd like to restate your card number.
That's 00000000000000?
CUSTOMER: Yes.
CSR: Thank you, Mr./Mrs.____ your total comes to $_, which includes
tax and shipping and handling. You should receive your package
within 5 - 7 days.
Thank you for ordering from Sears Shop at Home Services, Inc.
and have a great day/evening. Good-bye.
III-10
<PAGE> 49
MCA (MERCHANT CREDIT ACCOUNTS) SCRIPT
CATALOG PURCHASE CHARGED TO CUSTOMER'S MCA:
CUSTOMER: I'd like to place an order and charge it to my Sears MCA
Account.
CSR: Certainly, I can help you with that. May I have your Merchant
Credit Account number, please?
CUSTOMER: __________________________________________.
CSR: I'd like to restate that number. That's ____________________.
Is that correct?
CUSTOMER: Yes.
CSR: Thank you. I also need some more information - first, the
full company name as it is found on the credit account;
Bill-to Address (where credit bill is to be sent)
Attn:
City
State
Zip Code
Business phone #
Tax exempt # (if you have one)
Ship-to Address (physical address)
Name of company
Street address
Attn:
City
State
Zip Code
CUSTOMER: The Four Sisters Company
Attn: Accounts Payable
12 N. West Avenue
Lindwood, Indiana 32155
317-XXX-XXXX
Tax Exempt # 3-215
The Ship-to is the same.
CSR: Thank you. And the authorized purchaser? This is the
individual whose name appears on the credit account.
CUSTOMER: Jane Doe.
CSR: And lastly, the purchase order number?
CUSTOMER: #ABOOO.
III-11
<PAGE> 50
Continue with the item information. After the order is complete, tell the
customer to write the Order Reference # on their purchase order for future
reference in case they need to contact us for any reason.
To inquire about your Merchant Account (MCA), please call 708-330-4626.
OPENING A NEW MCA ACCOUNT SCRIPT
CSR: Thank you for calling Sears Shop at Home. This is Sharon.
How may I help you today?
CUSTOMER: I'd like to open a Merchant Account.
CSR: Certainly. II be able to give you some information on that,
sir/ma'am. I can give you the number to call to request an
application. Do you have a pen or pencil handy to take down
the number?
CUSTOMER: Can't you take down the necessary information?
CSR: No, I'm very sorry, sir/ma'am -- we're not equipped to handle
that process. You'll get much better service by calling the
Sears MCA office directly.
CUSTOMER: Okay, what's the number?
CSR: That number is 1-708-330-4646. (PAUSE). If you would like to
purchase anything from the catalog today on a SearsCharge, or
other credit card, I could take that order for you.
IF NO: Thank you for calling Sears Shop at Home. Have a good
day/evening.
IF YES: Will you be using your SearsCharge for this order?
Continue ...
III-12
<PAGE> 51
CLERICAL HANDLING OF MCA ORDERS
After an MCA order is taken, Licensee must call and get credit authorization.
1 . Call 1-800-775-3172 (SEARS MCA) for credit authorization approval code.
Information needed:
a) Account #: _________________________________________
b) Company Name: ______________________________________
c) Purchase Order #: __________________________________
d) Name/Authorized Purchaser: _________________________
e) Total Sale: $ _________________
2. Credit settlement will be the same as SearsCharge orders, just a different
format.
3. Declines and Billing questions are to be handled the same as SearsCharge.
After the order is completed, call the Credit Central for authorization.
The authorization code is required during settlement.
If authorization is denied, call the customer, and obtain an alternative
method of payment.
III-13
<PAGE> 52
SEARSCHARGE DENIAL SCRIPT
All SearsCharge denials must be processed by calling the customer. After two
unsuccessful attempts to reach the customer, a letter requesting an alternate
method of payment is to be sent to the customer.
CSR: Hi, Mr./Mrs.____, I'm calling about your recent order for a
____ (item) ____. I'm sorry, but we could not get the proper
credit authorization to process your order.
Verify that the charge account number is correct. If not,
correct number and reprocess.
If it is correct, ask the customer:
Would you like to charge this to another credit card?
IF RESPONSE IS:
CUSTOMER: I don't understand, why wouldn't it go through?
CSR: I'm sorry, but I am unable to access that information at this
location. If you think there is an error or would simply like
to know the reason, I can give you an 800 number to call.
Would you like to take down that number?
IF YES:
CSR: All right, Mr./Mrs.____, that number is 800-347-8480.
IF RESPONSE IS YES (to charge to another credit card):
CSR: Thank you, and what card would you like this charged to?
CUSTOMER: Visa/MasterCard/Discover/American Express
CSR: That number, please?
CUSTOMER: 000000000000000000000
CSR: And the expiration date please?
CUSTOMER 4/94.
CSR: I'd like to restate that number please. That was Visa/Master
Card/Discover/American Express, 000000000000000000000, and the
expiration is 4/94?
CUSTOMER: Yes.
CSR: Thank you, Mr./Mrs.____ and have a great day/afternoon/evening.
III- 14
<PAGE> 53
CATALOG REQUEST
If the customer would like a catalog mailed to them, take the customers name,
complete address, SearsCharge account number and their telephone number.
Indicate the catalog requested and tell the customer one will be mailed in
three to five days.
DAILY FAX OR OVERNIGHT MAIL REQUEST TO:
SEARS SHOP AT HOME, INC.
CATALOG REQUEST
7447 SKOKIE BLVD.
SKOKIE, IL 60077-3386
FAX NUMBER IS: (708) 676-7883
LICENCED CATALOG
The licensee should mail the customer a catalog within 3 days of receipt.
In the future, this process will be accomplished using an electronic mail.
III-15
<PAGE> 54
CATALOG REQUEST FORM
FROM:
CUSTOMER NAME:
SEARS CHARGE ACCOUNT:
PHONE NUMBER:
MAILING ADDRESS:
STREET
SECOND STREET
CITY, STATE, ZIP
CATALOG ORDERED:
FAX TO LICENSEE:
FAX TO: SEARS SHOP AT HOME
708-676-5440
ATT. L. FRISCH
CATALOG REQUEST FORM
FROM:
CUSTOMER NAME:
SEARS CHARGE ACCOUNT:
PHONE NUMBER:
MAILING ADDRESS:
STREET
SECOND STREET
CITY, STATE, ZIP
CATALOG ORDERED:
FAX TO LICENSEE:
FAX TO: SEARS SHOP AT HOME
708-676-5440
ATT. L FRISCH
III-16
<PAGE> 55
F. FREQUENTLY ASKED QUESTIONS, AND ANSWERS
1 Why did Sears discontinue the catalog?
Mr./Mrs.____, Sears made the decision to exit the unprofitable General
Catalog business. Sears will continue to serve your Shop at Home needs
through selected Specialty Catalogs.
2. Why does it take so long for me to get my order?
The normal processing of an order should get the merchandise to you within
7 days. If there is an out-of-stock condition on the merchandise, explain
that the merchandise is out of stock and give the customer a tentative
ship date and a tentative date they should expect to receive the
merchandise, based on when you expect it to be back in stock. Be
realistic, and cancel the order if the customer doesn't want to wait.
3. Can I return my merchandise to my local Sears store?
Sears Shop at Home merchandise is not the same as the retail stores and
the stores are not equipped to handle returns for this merchandise.
Please return it by mail to the address provided on the packing slip.
4. When will I be billed?
Mr./Mrs.____, You will be billed when the merchandise is shipped. And
you will only be billed for what is shipped.
5. I received a letter from Sears stating that they were unable to authorize
my purchase using my SearsCharge. How do I find out about this?
Mr./Mrs.____, If you have questions regarding credit authorization,
please call the 800 number shown on your most recent billing statement. If
you don't have a billing statement, please call 1-800-347-8480.
6. What is the relationship between Sears and Sears Shop at Home Services,
Inc.?
Mr./Mrs.____, Sears Shop at Home Services, Inc. is a wholly owned
subsidiary of Sears. We offer merchandise through licensed arrangements
with industry leaders sent directly to your home or business.. Most of the
merchandise is not available through Sears stores.
7. Can you please delete my name from your mailing list?
Mr./Mrs.____, Yes, I can. May I please have your Sears account number,
name, and address and telephone number (Refer to the circulation
instructions for handling.) Thank you Mr./Mrs.____.
III-17
<PAGE> 56
8. Are you Sears?
"Sears Shop at Home and ________ are proud partners in bringing you
quality merchandise in the convenience of your home."
"Sears would like to continue to offer you the convenience of shopping by
mail, and have researched and selected ________as an outstanding catalog
they think you will enjoy shopping from.'
"Sears has selected our company to work with you and continue to bring you
quality merchandise and service through the ________ catalog.'
"We are continuing the Sears tradition of offering a wide variety of
merchandise at reasonable prices while providing you with excellent
service.'
9. What is the telephone number of the Sears store nearest me?
Mr./Mrs.____, I do not have that information. You will need to consult
your Telephone Directory or call Directory Assistance.
10. Are the clothes true to size?
Mr./Mrs.____ That is a good question. Give the customer the
information you have on how true to size the clothing is. By being as
helpful as possible, you can avoid a return.
11. How long does delivery take?
Mr./Mrs.____, It will be normally 7 days for delivery to your home or
business.
12. Why can't I have my order sent back to the retail store?
That is a good question Mr./Mrs.____. Sears Shop at Home Services, Inc.
offers most of our customers the convenience of shopping at home for
merchandise not available in the stores. The stores are not equipped to
handle returns for this merchandise. Please return it by mail to the
address provided.
13. Do you have a _________ Product Catalog?
Mr./Mrs.____, Yes, there is a__________. If you will call 1-800 ___ ____,
they can take your order. If you would like to receive that catalog I
will have one sent to you. I will need your name, telephone number,
SearsCharge and your complete mailing address. (Refer to Catalog Request
for complete handling.) Or, Mr./Mrs.____, I am sorry, but currently Sears
Shop at Home Services, Inc. does not have that ________ product catalog
available.
Any questions you get that are about one of our other programs, refer to the
list of programs and phone numbers in Section D. If you can't identify what
program the customer is asking about, refer them to the Sears Shop at Home
Customer Service at 1 800-355-3125 for further assistance.
III-18
<PAGE> 57
IV. CREDIT
IV-1
<PAGE> 58
IV. CREDIT
A. INTRODUCTION
This section contains the Sears Credit/Method of Payment Guidelines,
SearsCharge applications, and the Credit Authorization Procedures.
The preferred method of payment is SearsCharge, and the order-taking
process is to offer SearsCharge first.
B. SUMMARY
CREDIT POLICY/METHOD OF PAYMENT
Initial offer of payment is the SearsCharge. "May I put this
order on your SearsCharge?"
Licensee should also accept Discover, American Express, Visa,
MasterCard and cash (Cash/check/money order).
Licensee private label credit cards are not an acceptable method
of payment for the purchase of Sears Shop at Home merchandise
and/or services.
Licensee is responsible for establishment and maintenance of
authorization and settlement for non-Sears credit cards.
Sears Credit assumes the credit risk and provides collection on
all authorized SearsCharge transactions.
Licensee is responsible for all elements associated with customer
service complaints/satisfaction,
Licensor will provide billing descriptors for SearsCharge and
other credit cards. A separate billing descriptor should be used
for the Sears Shop at Home business.
For cash orders, checks are to be made payable to the licensed
program catalog name.
. Licensee is to establish a separate bank account
for licensed program catalog.
. Licensee is responsible for bad check collection.
MCA (Merchant Credit Accounts) and Sears Deferred Payment Plan
will be offered whenever appropriate. Scripting is in Customer
Service Section.
Sears Coupons
Licensee is to accept Sears coupons.
Customer is charged full amount, mails in coupon and
receives a credit for coupon on their SearsCharge.
Gift Certificates
Licensee is to accept (same as cash).
IV-2
<PAGE> 59
C. CREDIT CENTRALS
There are nine (9) SEARS Credit Centrals throughout the United States.
These units are responsible for handling customer accounts by designated
areas.
The Credit Central customer assistance phone number is located in the
blue section of the customer's billing statements. Customers should
first call this number when they feel there is a problem with their
bill. The Credit Central can tell the customer where the charge
originated. If the customer doesn't have a billing statement, ask them
to call 1-800-347-8480 for assistance.
A Credit Central may call or send a licensee a written request or fax
for information on a sale or a credit on a customer's account. These
requests must be processed immediately. On the 15th day after the
request, the Credit Central will issue a chargeback and a credit to the
customer's account. Therefore, it is extremely important to handle the
requests at once.
D. CUSTOMER CREDITS
When issuing credit, you must inform the customer it takes from 1 to 2
billing statements before the credit appears on their account. This
depends on the customer's billing cycle and the day credit was issued.
The customer can call the credit central to verify a credit has been
issued.
Any finance charge adjustments will be automatically adjusted by the
Credit Department when the credit is posted to the account. Finance
charges are adjusted from the original charge date and not the credit
date.
You are not part of the credit organization and cannot give out advice
to the customer. If a customer is issued credit and wants to know about
paying their bill, you must refer them to Sears Credit. You cannot tell
them to disregard their bill. They can get advice by calling the 800
number on their billing statement or 1-800-347-8480.
E. CREDIT DECLINES
A customer's credit may be declined for various reasons. Do not
speculate with the customer as to why they were declined. They must
contact Sears Credit for an explanation. They may either call the 800
number on their billing statement or call 1-800-347-8480 and ask about
their account.
IV-3
<PAGE> 60
F. COUPONS
Discount coupons, gift certificates, and bonus club coupons should be
honored. Sears coupons will be redeemed by Sears at face value.
Advise the customer to mail in the coupon to receive credit. If the
customer is mailing in a cash order, advise the customer to mail the
coupon with the order. Coupons mailed in with cash orders should be
treated as discounts against the order. Enclosed are copies of the most
frequently used coupons and certificates. If you are in doubt about
accepting a coupon, call the Sears Shop at Home Customer Service Center
at 1-800-366-3125 for guidance.
G. CREDIT - CHARGED FOR/NOT RECEIVED
Any customer that calls stating he has been billed and has not received
merchandise should be given credit twenty days after date of shipment.
The order should be traced to find out where the merchandise went.
Always verify the address to which the merchandise was shipped.
Remember to ask for apartment number, lot number, etc. Some customers do
not offer this information unless asked.
You can ask for an alternative address if the customer has a history of
not receiving packages.
H. CREDIT AUTHORIZATION PROCESS
The Credit Authorization Process is critical to provide superior
customer service. A new licensee must follow specific steps which
require three to four weeks to implement, prior to the mailing of a
catalog. Exhibit IV-I is an overview of the credit process.
CREDIT AUTHORIZATION PROCEDURE:
Credit Authorization files can be received 24 hours a day, seven days a
week. There is no limit to how many files come in each day, or how many
records are in each file. Records are authorized seven days a week,
from 5:15 a.m. (Central) to 1:15 a.m. (Central) the following morning.
During this four hour off time, files can still be received, but they
will not be processed until after 5:15 a.m. (Central).
Headers and trailers must be included with each batch. More than one
batch can be contained within a file, as long as each batch is separated
by proper headers and trailers. We report daily and weekly by batch
number. Duplicate batch numbers will combine the records of these
batches.
Our control system keeps track on the record level. For each store, or
Licensee, the ACCOUNT NUMBER plus the ORDER NUMBER must be unique. To
have two or more valid orders for the same account number, the order
numbers must be unique. If a duplicate record is encountered, it will
automatically receive a response code of "DP" and be sent back to the
Licensee. When a record receives a final disposition, the control
reference is deleted at the end of the day. The control system
would not flag another record as a duplicate, once a reference is
deleted.
IV-4
<PAGE> 61
A "BB" or a "ID" response code is considered a soft decline. This
response is sent back to the Licensee, and this record is automatically
put into a Pending area. The Licensee doesn't need to do anything.
Within 48 hours the Licensee will receive a final disposition for the
same record. During that time, the control system will keep track of
these soft declines, and the Licensee should not recycle or resubmit
these records.
Exhibit IV-2 is an overview of the credit authorization and settlement
specifications.
Before implementing this process, contact the Sears Shop at Home
Services, Inc. Systems Group at 708-676-7937.
I. DAILY SETTLEMENT PROCESS
The daily settlement process the Licensee follows for third party credit
should be used for Sears credit.
The daily settlement process for SearsCharge includes the Licensee
transmitting a settlement file which includes Sales, Credits for
Returns, and Allowances.
The Licensee should balance the daily settlement process to identify
discrepancies. If differences cannot be accounted for, the differences
should be reviewed with Sears Shop At Home Services, Inc. It is the
Licensee's responsibility to resolve out-of-balance conditions
immediately.
IV-5
<PAGE> 62
EXHIBIT IV-I
SEARS SHOP AT HOME
CREDIT AUTHORIZATION AND SETTLEMENT
<TABLE>
<S> <C> <C> <C>
LICENSED
PARTNERS SEARS SEARS CREDIT
DIRECT RESPONSE
CATALOGS SYSTEM
RECORDS
FOR
AUTHORIZATION
CONTROL SYSTEM
-------------- SEARS CATALOGS
SEARS CATALOGS ONLINE
BATCH CREDIT AUTHORIZATION
AUTHORIZATION SYSTEM
SYSTEM FOR CREDIT
AUTHORIZATION
FILE
REFERRALS
SEARS CATALOGS
BATCH CREDIT
AUTHORIZATION
SYSTEM SEARS CATALOGS
------------- ONLINE
REFERRAL
SYSTEM FOR
CONTROL SYSTEM CREDIT
CENTRAL
AUTHORIZATION
ACKNOWLEDGEMENTS
SETTLEMENT/
BILLING
FILE
CREDIT
BILLING
</TABLE>
IV-6
<PAGE> 63
EXHIBIT IV-2
SEARS SHOP AT HOME SERVICES, INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
VERSION: 00
11/3/93
SETTLEMENT/AUTHORIZATION FILE ORGANIZATION
AUTHORIZATION:
The file must contain the following types of records:
Control Header Record - The header record contains Store
Number, the date and batch Id number. The date and batch id
number will be used by Sears for control purposes. Different
files containing the same date and batch id will not be
processed for authorization.
Detail Record - The detail records contain the sales (debit) to
be authorized to the Sears cardholders.
File Trailer - The trailer record will contain matching control
information from the Control Header Record and total detail
record count and total detail dollar accumulators.
SETTLEMENT:
The file must contain the following types of records:
Detail Record - The detail records contain the sales (debit),
returns (credit) and allowance amounts to be settled to the
Sears cardholders. The settlement file may have debit and credit
information intermixed.
Control Record - The control record will contain total detail
record count and total detail dollar accumulators. A control
record must be the final record on the settlement file if the
record is not present the file will not be processed. If the
control total do not balance back to the number and amounts on
the detail records the file will not be processed.
IV-7
<PAGE> 64
EXHIBIT
SEARS SHOP AT HOME SERVICES. INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
VERSION: 00
11/3/93
<TABLE>
<CAPTION>
SEARS DIRECT RESPONSE RECORD LAYOUT
SETTLEMENT CONTROL RECORD
DATA
POSITION LENGTH TYPE FIELD NAME COMMENTS
-------- ------ ---- ---------- --------
<S> <C> <C> <C> <C>
1 5 X Store Number Default to ' '
6 4 X Record Id Default to 'CRED'
10 1 X Record Type 'C' for Control Record
11 8 X Record Count Total Records Excluding Header
19 12 9 Total Sales (Debit) Dollars Batch sales total. Rightmost
digits are assumed to be cents.
31 12 9 Total Returns (Credit) Batch returns total. Rightmost
Dollars digits are assumed to be cents
43 12 9 Total Allowance (Credit) Batch allowances total. Right.
Dollars two digits are assumed to be
55 146 X Filler Blanks
</TABLE>
IV-8
<PAGE> 65
EXHIBIT
SEARS SHOP AT HOME SERVICES, INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
Version: 00
11/3/93
<TABLE>
<CAPTION>
SEARS DIRECT RESPONSE RECORD LAYOUT
SETTLEMENT CONTROL RECORD
DATA
POSITION LENGTH TYPE FIELD NAME COMMENTS
-------- ------ ---- ---------- --------
<S> <C> <C> <C> <C>
1 5 X Store Number Default to ' '
6 4 X Record Id Default to 'CRED'
10 1 X Record-Type 'D' for Detail Record
11 2 X Charge Type '03' Sears Charge
13 7 X Order Reference Number Order Reference number Left
Justified Blank Filled
20 6 Filler Blanks
26 13 X Account Number Sears Charge Number. Must p
MOD 10 verification.
39 1 X Transaction Type 'S' Sale (Debit)
'R' Return (Credit)
'A' Allowance
40 2 X Media Code Default to '77'
42 4 X Filler Blanks
46 4 X Date of Sale MMDD Original Sale Date
50 8 9 Transaction Amount Rightmost two digits are assumed
to be cents.
58 143 X Filler Blank
</TABLE>
IV-9
<PAGE> 66
EXHIBIT
SEARS SHOP AT HOME SERVICES, INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
VERSION: 00
11/3/93
<TABLE>
<CAPTION>
SEARS DIRECT RESPONSE RECORD LAYOUT
AUTHORIZATION CONTROL RECORD
DATA
POSITION LENGTH TYPE FIELD NAME COMMENTS
-------- ------ ---- ---------- --------
<S> <C> <C> <C> <C>
1 5 X Store Number Default to
6 4 X Record Id Default to 'AHDR'
10 1 X Record Type 'C' for Control Record
11 6 X Authorization Date Current system date. MMDDYY
17 18 X Filler Blanks
35 4 9 Batch Id Number Sequential Number unique for
38 162 X Filler Blanks
</TABLE>
IV-10
<PAGE> 67
EXHIBIT IV
SEARS SHOP AT HOME SERVICES. INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
VERSION: 00
11/3/93
SEARS DIRECT RESPONSE RECORD LAYOUT
AUTHORIZATION DETAIL RECORD
<TABLE>
<CAPTION> DATA
POSITION LENGTH TYPE FIELD NAME COMMENTS
- -------- ---- ---------- --------
<S> <C> <C> <C> <C>
1 7 x Order Reference Number Order Reference number Left
Justified Blank Filled
8 2 x Charge Type '03' Sears Charge
10 5 x Store Number Default to ' ,
15 6 X Filler Blanks
21 13 x Account Number Sears Charge Number. Must pa
MOD 10 verification.
34 10 9 Authorization Amount Rightmost two digits are assumed
to be cents.
44 4 x Transaction Date MMYY
48 48 x Filler Blanks
96 2 x Authorization Response see response codes attached
Code
98 102 x Filler Blanks
</TABLE>
IV - 11
<PAGE> 68
EXHIBIT
SEARS SHOP AT HOME SERVICES, INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
VERSION: 00
11/3/93
SEARS DIRECT RESPONSE RECORD LAYOUT
AUTHORIZATION CONTROL TRAIL OR RECORD
<TABLE>
<CAPTION> DATA
POSITION LENGTH TYPE FIELD NAME COMMENTS
- -------- ------ ---- ---------- --------
<S> <C> <C> <C> <C>
1 5 x Store Number Default to
6 4 x Record Id Default to 'ATRL'
10 1 x Record Type 'C' for Control Record
11 6 x Authorization Date Current system date. MMDDY
17 6 9 Record Count Total Authorization Records
22 12 9 Total Auth. Dollars Batch Authorization total total
dollars. Rightmost two digits
are assumed to be cents.
35 4 9 Batch Id Number Sequential Number unique for c
38 162 X Filler Blanks
</TABLE>
IV - 12
<PAGE> 69
EXHIBIT IV
SEARS SHOP AT HOME SERVICES, INC.
CREDIT AUTHORIZATION AND SETTLEMENT SPECIFICATIONS
Version: 00
11/3/93
SEARS MOD 10 VERIFICATION
Mod 10 is a verification method which Sears uses to reduce the number
of incorrect account numbers in its system. It will catch the
majority of incorrect account numbers. Its combines all the digits in
an account number using a mathematical formula, and if the result of
this formula is divisible by 10 (hence Mod 10), it passes the
verification. This formula works by alternately multiplying the
digits of the account number by one and two, starting with the last
digit which is multiplied by one, and then adding this product
together for a total to be divided by ten. If any number multiplied
by two results in a number of ten or greater, this resulting product
has its digits added together. For example, 6 * 2 = 12, since 12 is
greater than ten, the digits are added together, 1 + 2 = 3.
Note: This method means that if the account number has an odd number of
digits, the first and last digits are multiplied by one, but if the
account number has and even number of digits, the first digit is
multiplied by two, the last digit by one.
An example of an account number with an even number of digits.
549436
The Mod 10 is calculated as follows:
5 * 2 = 10. Since 10 is equal to ten, the digits are totaled giving
1. The other digits are calculated as follows:
4 * 1 = 4, 9 * 2 = 18 = 1 + 8 = 9, 4 * 1 = 4, 3 * 2 = 6, 6 * 1 = 6
These products are then added together.
1 + 4 + 9 + 4 + 6 + 6 = 30
Since 30 is divisible by 10, this account passes the Mod 10
verification.
An example of an account number with an odd number of digits.
9473448
The Mod 10 is calculated as follows:
9 * 1 = 9, 4 * 2 = 8, 7 * 1 = 7, 3 * 2 = 6, 4 * 1 = 4, 4 * 2 = 8,
8 * 1 = 8
These products are then added together.
9 + 8 + 7 + 6 + 4 + 8 + 8 = 50
Since 50 is divisible by 10, this account number passes the Mod 10
test.
An example of an account number which fails the Mod 10 test.
99871
The Mod 10 is calculated as follows:
9 * 1 = 9, 9* 2 = 18 = 1 + 8 = 9, 8 * 1 = 8, 7 * 2 = 14 = 1 + 4 = 5,
1 * 1 = 1
Adding the above products together results in:
9 + 9 + 8 + 5 + 1 = 32
Since 31 is not divisible by 10, this number fails the MOD 10 test.
IV - 13
<PAGE> 70
V. FULFILLMENT
V-1
<PAGE> 71
V. FULFILLMENT
A. INTRODUCTION
Sears Shop at Home Services goal is to consistently meet or exceed the
customer's expectations. The performance level required will be Industry
Best Practices. This section contains the Guidelines for Order
Processing, Pick, Pack, and Ship activities, and Returns Processing.
B. SUMMARY
FULFILLMENT STANDARDS
Initial fill rate should be 85% at a minimum.
Credit-approved and cash orders are to be shipped within 24 hours (1
business day) from the time the order is taken.
Customer should receive order within 7 calendar days, which includes the
day the order is taken.
Customer is not to be charged for any merchandise until merchandise is
shipped.
Cash Orders (check/cash/money orders) are to be accepted.
Customers must be told of back orders or out-of-stock situations at time
of order. If this occurs later, after order taking, customer is to be
notified in writing (post card) or called within 24 hours.
Back Orders and Out-of-Stock
All FTC rules and regulations must be followed.
Partial shipments will be allowed.
Substitute orders - should be kept at a minimum. Licensee may
offer customers a Sears Shop at Home approved item of equal or
greater value. A letter of explanation is to accompany all
substitute orders and will include full return privileges.
PACKAGING AND LABELING
Shipment packaging, labeling, and all paperwork sent to the
customer must be designed or approved by Sears Shop at Home
Services, Inc.
Return label must clearly state the customer is not to return the
merchandise to a Sears Retail store.
Package inserts are to be approved by Sears Shop at Home Services,
Inc.
V-2
<PAGE> 72
RETURNS
Customer must be credited/refunded the same day the merchandise is
received by the Licensee.
Equal value exchanges - Licensee is to replace item(s) at no charge (for
item or S&H) within 24 hours.
Misdirected returns are to be forwarded to the Sears Shop at Home Returns
Center.
Licensee will refund inbound and outbound S&H upon customer request only.
C. SHIPMENT OF ORDERS
All customer orders should be consolidated when possible. The shipping
container must provide product protection and security.
All customer orders are to have:
A shipping label attached to the outside of the carton identifying
"Sears Shop at Home Services, Inc."
A customer packlist/invoice included in the package that shows the
items ordered and shipped, and the amount of the order. The
invoice must identify:
'Sears Shop at Home Services, Inc.'
Customer cannot return merchandise to a Sears Retail store.
A customer return form is to be included in each customer shipment, The
return form is to provide complete instructions on how to make a return.
D. PACKAGE INSERTS
A supply of package inserts may be provided for insertion with the
customer's order. Only Sears Shop at Home approved material is to be
inserted into Licensor shipments.
E. RETURN PROCESSING
Customer returns should be processed the same day they are received, to
avoid customer inquiries. If you receive merchandise that you do not
sell, pack it up with all correspondence received and send it via UPS
to:
Sears Shop at Home Services, Inc.
7440 Santa Fe Drive
Hodgkins, IL 60525
These shipments should be consolidated, and sent at least once per week.
Customers should be credited, or a refund check generated, the same day
the return is received.
V-3
<PAGE> 73
A letter or post card should be sent to the customer indicating that the
account will be credited $X.XX for Order Number 9999 which was returned.
Shipping and handling and return postage are only to be credited upon
request. The policy is not to reimburse those items.
If a customer says he returned the merchandise and has not received
credit, check your system for the date you issued the credit. Inform the
customer of the 1-2 billing cycles required to post the credit to their
account.
If your Distribution Center has not received the merchandise, verify the
return address with the customer, and advise the customer to provide
proof of return. If the return merchandise was lost in shipment, the
customer must make a claim with the company they used to return the
merchandise (UPS or Post Office). That company will reimburse the
customer for the value of the merchandise. Tell the customer that they
should keep the return receipt from UPS/USPS for six (6) months.
Every effort should be made to avoid a confrontation with the customer.
In cases of customer conflict the customers word should be honored and a
credit issued.
V-4
<PAGE> 74
VI. REPORTING REQUIREMENTS
VI-1
<PAGE> 75
VI. REPORTING REQUIREMENTS
A. INTRODUCTION
This section defines the Sales, Operations, and Invoicing requirements of
Sears Shop at Home Services, Inc. The reporting requirements provide
information to evaluate performance and to settle with the Licensee.
The information required should all be readily available from the
Licensee's current Operating, Management and Financial Reporting systems.
B. SUMMARY
SALES REPORTING
Sales are to be reported daily, weekly, and monthly, in a mutually
agreed upon format. The data required is identified on the sample
reporting formats.
Gross Sales Cancellations will be reported in a mutually agreed
upon format.
OPERATIONS REPORTING
Customer Service and Distribution activity are to be reported
daily, weekly, and monthly, in a mutually agreed upon format.
Sample reporting formats identify the data requirements.
WEEKLY INVOICING
Weekly invoices will be submitted to Sears Shop at Home Services,
Inc.
This invoice will be balanced to the daily settlement activity and
used to pay the Licensee.
Sears Shop at Home will issue a check for the net due based on the
weekly invoice.
SALES TAX IS TO BE COLLECTED/PAID IN STATE(S) THE LICENSEE HAS NEXUS, AND
ILLINOIS.
C. SALES REPORTING
Sales are to be reported daily, weekly, and monthly. The following
reports identify the minimum required information. The specific reporting
forms will be mutually agreed to with each Licensee.
The Gross Sales Summary is to be reported daily, weekly, and monthly.
Exhibit VI-I is a sample format. This report provides Gross Merchandise
Sales by day, Shipped Sales by day, Back-orders, Pending Orders, and
Returns Dollars.
Weekly Revenue and Order information by source code and circulation
segment is required. Exhibit VI-2 is a sample format defining the
required information.
VI-2
<PAGE> 76
EXHIBIT VI-I
SEARS SHOP AT HOME
GROSS SALES SUMMARY
This report will be provided daily.
The Orders written section lists by day the following information:
<TABLE>
<S> <C>
1. Dollars - The gross merchandise sales dollars for the day.
2. Orders - The number of orders taken for the day's gross
merchandise sales.
3. Average Order - The gross merchandise sales dollars divided by the
number of orders.
4. % Done - Partner estimate of the % completed based on current
demand and historical trends.
5. - 6. - Elements 5 and 6 apply to each column, and are
month to date totals.
7. Shipped Sales - The sales dollars for merchandise shipped that day.
8. Back-orders - The dollar value of unshipped back-orders at the
end-of-each reporting period.
9. Pending - The dollar value of orders pending for credit, checks, etc.
10. Omits - The daily dollar value of gross demand that could not be
filled, or the customers would not wait until merchandise
was available.
11. Returns - The dollars of returns, by day credited to customer's
account or refunded.
</TABLE>
VI-3
<PAGE> 77
12-Oct-93
SEARS SHOP AT HOME
GROSS SALES SUPPORT
PARTNER:
BOOK NAME
<TABLE>
<CAPTION>
1 2 3 4 7 8 9 10 11
DOLLARS ORDERS AVERAGE % SHIPPED BACK- PENDING OMITS RETURNS
ORDER DONE SALES ORDERS
<S> <C> <C>
01-OCT-93
WEEK 1 $0.00 0
04-OCT-93
05-OCT-93
06-OCT-93
07-OCT-93
08-OCT-93
WEEK 2 $0.00 0
11-OCT-93
12-OCT-93
12-OCT-93
13-OCT-93
13-OCT-93
WEEK 3 $0.00 0
18-OCT-93
19-OCT-93
20-OCT-93
21-OCT-93
22-OCT-93
WEEK 4 $0.00 0
25-OCT-93
26-OCT-93
27-OCT-93
28-OCT-93
29-OCT-93
WEEK 5 $0.00 0
MONTH TO DATE $0.00 0
</TABLE>
Frequency: Daily All Media
VI-4
<PAGE> 78
EXHIBIT VI-2
SEARS SOURCE ANALYSIS
The Weekly Sears Source Analysis Report provides information by circulation
segment. This information is used to analyze performances of each segment.
This report is provided weekly and is a media to date total through the week.
<TABLE>
<S> <C>
1. Circulation - The planned total circulation for the book.
2. Source # - The source number for each specific set of list selection criteria or segment.
3. Description - The description of the specific selection criteria or segment.
4. Circ - The actual circulation for each segment.
5. Orders - The total number of orders taken media to date by segment.
6. Total Revenue - The total gross demand media to date by segment.
7. Average Order - Calculated by dividing the total revenue (6) by the number of orders (5).
B. Actual $/Book - Calculated by dividing the total revenue (6) by the circulation (4).
9. Project $/Book - Projected dollars per book (actual circulation) developed based on the actual $/Book to
date and the estimate of the % the media is complete.
10. Total Actual to Date - The totals for each column 4 through 8 media to date.
11. Original Estimate - The total original estimate of each column 4 through 8.
12. % Complete Projection - Estimated to complete the media is at this date and is used to project the total media
or columns 5 through 8.
13. Percent to Original Estimate - Calculation or the % of the current projection is of the original estimate
</TABLE>
VI-5
<PAGE> 79
PARTNER: SEARS SOURCE ANALYSIS
MEDIA:
CIRCULATION: MAIL DATE
DATE:
<TABLE>
<CAPTION>
TIME: Total Average Actual Projected
Source# Description Circ. Orders Revenue Order $/Book $/Book
<S> <C> <C> <C> <C> <C> <C> <C>
[2] [3] [4] [5] [6] [7] [8] [9]
</TABLE>
TOTALS ACTUAL TO DATE [10]
ORIGINAL ESTIMATE [11]
% COMPLETE
PROJECTION [12]
PER CENT TO ORIGINAL ESTIMATE [13]
VI-6
<PAGE> 80
D. OPERATIONS REPORTING
Operations Reporting includes daily, weekly, and monthly Customer Service
and Distribution Activity Reporting. The sample reports identify the
minimum information requirements. The specific formats of the reports will
be mutually agreed to with the Licensee.
The Call Volume Summary Report Exhibit VI-3 is a daily and weekly report.
Exhibit VI-4 is the Weekly Fulfillment Statistics Report.
E. CIRCULATION REPORTING
This section defines the flow of information and data required to enrich
and maintain the Licensors Proprietary Customer Database.
The Licensor will produce list based on specific request for each mailing
per the time tables in Exhibit D Program Customer Information Transfer
requirements.
The Licensee will provide Licensor the following information defined in
detail in Exhibit D as follows:
<TABLE>
<CAPTION>
INFORMATION TYPE FREQUENCY
<S> <C>
1. Promotion History - o Sent concurrent with mail
Net Mail Transations file
o Load finder file
with mail file
2. Name and Address Changes o Monthly
3. Customer order and item o Monthly
level transations
4. Customer Catalog requests o Monthly
and Do Not Promote requests
</TABLE>
The Licensor will update the Customer Database monthly with all Licensees
information.
VI - 7
<PAGE> 81
EXHIBIT VI-3
CALL VOLUME SUMMARY REPORT
The Call Volume Summary Report is to be submitted daily for the first two weeks
after the drop of a media, and on a weekly basis thereafter.
The following defines each element of information required. A separate report
is required for each 800 number, and a total for the partner.
The number of calls section includes elements 1 through 4.
<TABLE>
<S> <C>
1. Offered - The number of total calls to a number during a 24 hour period.
2. Handled - The number of calls actually handled during a 24 hour period. The number of calls and number of orders on
the gross demand summary should be for the same 24 hour period. If they are not, indicate the number of
orders taken for the calls handled.
3. Abandoned - The number of calls abandoned before a call consultant answers the call.
4. % Abandoned - The number of abandoned calls divided by the total calls offered.
5.- 6. - Elements 5 and 6 apply to each column, and are the totals for the week and month-to-date.
</TABLE>
The average time-to section of the report is the time in seconds related to the
number of calls. This section includes elements 7 - 11.
<TABLE>
<S> <C>
7. Handle - The average time to handle the call, calculated by dividing the total seconds from the operator answering
until the operator hangs up.
8. Talk - The average talk time is calculated by dividing the total talk time by the number of calls.
9. Answer - The average time to answer is calculated by dividing the total seconds from the initial answer until an
operator answers (i.e., hold time) by the number of calls put on hold.
10. Abandon - The average time to abandon is calculated by dividing the total seconds of calls on hold that are not
answered by the number of calls not answered.
11. Service Level - The % of calls answered within 20 seconds on 3 rings.
</TABLE>
VI-8
<PAGE> 82
EXHIBIT VI-3
Partner: MONTH OCTOBER 1993 06-Oct-93
Media /1-800_________________ CALL VOLUME SUMMARY REPORT
<TABLE>
<CAPTION>
NUMBER OF CALLS AVERAGE TIME TO (SECONDS)
DATE OFFERED HANDLED ABANDONED % HANDLE * TALK ANSWER ABANDON SERVICE **
ABANDONED LEVEL
[1] [2] [3] [4] [7] [8] [9] [10] [11]
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-OCT-93 ERR
02-OCT-93 ERR
WEEK 1 0 0 0 ERR 0 0 0 0
03-OCT-93 ERR
04-OCT-93 ERR
05-OCT-93 ERR
06-OCT-93 ERR
07-OCT-93 ERR
08-OCT-93 ERR
09-OCT-93 ERR
WEEK 2 0 [5] 0 0 ERR 0 0 0 0
10-OCT-93 ERR
11-OCT-93 ERR
12-OCT-93 ERR
13-OCT-93 ERR
14-OCT-93 ERR
15-OCT-93 ERR
16-OCT-93 ERR
WEEK 3 0 0 0 ERR
17-OCT-93 ERR
18-OCT-93 ERR
19-OCT-93 ERR
20-OCT-93 ERR
21-OCT-93 ERR
22-OCT-93 ERR
23-OCT-93 ERR
WEEK 4 0 0 0 ERR
24-OCT-93 ERR
25-OCT-93 ERR
26-OCT-93 ERR
27-OCT-93 ERR
28-OCT-93 ERR
29-OCT-93 ERR
30-OCT-93 ERR
31-OCT-93 ERR
WEEK 5 0 0 0 ERR 0 0 0 0
MONTH TO
DATE 0 [6] 0 0 ERR 0 0 0 0
</TABLE>
* TOTAL TIME BUSY WITH CALL (including all processing time)
** % OF CALLS ANSWERED WITHIN 20 SECONDS OR 3 RINGS
Frequency Daily All Media
VI-9
<PAGE> 83
Exhibit VI-4
WEEKLY FULFILLMENT STATISTICS
(IN UNITS)
The Weekly Fulfillment Statistics Report is to be submitted weekly. The report
provides the orders shipped, backlog and returns statistics. This information
should be provided by distribution center if multiple facilities are used.
The following defines each element of information required.
<TABLE>
<S> <C>
1. Shipped Orders - The total number of orders ship for the day.
2. Shipped Packages - The total number of packages shipped for the day. The shipped packages will be > (or =) the number
of shipped orders.
3. Backlog - The number of orders available to ship that were not scheduled or shipped.
4. B/O Holding - The number of total units back ordered waiting merchandise that day.
</TABLE>
Elements 5-8 are related to customer return activity.
<TABLE>
<S> <C>
5. Refused - The customer refused delivery and the carrier returned the package to the shipped.
6. Undeliverable - The carrier could not deliver the package because of a bad address, no longer lives at address, etc. and
the carrier returned the package to the shipper.
7. Other - Other includes all returns except for refused and undeliverable. The total number of returns for a
day/week is the sum of elements 6 and 7.
8. Credit Issued - The number of customers issued credit that day/week. Customers are to issued credit daily for returns
which are elements 5, 6, and 7.
9. - 10. - Elements 9 and 10 apply to each column, and are the totals for the week and month to date.
</TABLE>
VI-10
<PAGE> 84
EXHIBIT VI-4
FULFILLMENT STATISTICS
(IN UNITS)
LICENSEE:_________________________
<TABLE>
<CAPTION>
RETURNS
WEEK SHIPPED SHIPPED BACKLOG B/O REFUSED UNDELIV- OTHER CREDIT
ORDERS PACKAGES HOLDING ERABLE ISSUED
[1] [2] [3] [4] [5] [6] [7] [8]
<S> <C>
01-NOV-93
02-NOV-93
03-NOV-93
04-NOV-93
05-NOV-93
06-NOV-93
WEEK 1 [9]
07-NOV-93
08-NOV-93
09-NOV-93
10-NOV-93
11-NOV-93
12-NOV-93
13-NOV-93
WEEK 2
14-NOV-93
15-NOV-93
16-NOV-93
17-NOV-93
18-NOV-93
19-NOV-93
20-NOV-93
WEEK 3
21-NOV-93
22-NOV-93
23-NOV-93
24-NOV-93
25-NOV-93
26-NOV-93
27-NOV-93
WEEK 4
28-NOV-93
29-NOV-93
30-NOV-93
WEEK 5
MONTH TO
DATE [10]
</TABLE>
VI-11
<PAGE> 85
VII. INSURANCE REQUIREMENTS
VII - 1
<PAGE> 86
VII. INSURANCE REQUIREMENTS
A. INTRODUCTION
It is Sears policy to sell only high-quality, well designed, safe, reliable
products. All licensees are required to protect Sears against all product
liability claims. Sears requires Licensees to provide us with evidence of
their insurance coverage in accordance with the provisions of their current
License Agreement.
The limits of liability and the required insurance company rating vary by
product line.
B. SUMMARY
GENERAL REQUIREMENTS
o Sears, Roebuck & Co. included as additional insured
o Certificate of products liability insurance required
MINIMUM REQUIREMENTS FOR ALL PRODUCT LINES
o Combined single limit of $ 1,000,000 per occurrence
o Carrier rating of at least "B + VI"
REQUIREMENTS FOR SPECIFIED PRODUCT LINES
o Combined single limit per occurrence, minimums determined by product line
o Minimum aggregate coverage limits determined by product line
o Carrier rating of at least "A-VII"
SELF-INSURANCE REQUIREMENTS
o Acceptable under certain conditions
o Must be approved by Sears Risk Management Department
SPECIAL CASES
o Coverage required for
o Distributors, manufacturer's representatives, or buyer agents
o Vendors of re labeled or repackaged products.
o Licensee
VII - 2
<PAGE> 87
C. GENERAL REQUIREMENTS
The following requirements apply to products liability insurance policies for
all Sears Shop at Home Services, Inc. product lines.
1. ADDITIONAL INSURED
All products liability insurance policies must include the
Additional Insured - Vendors endorsement (insurance Services Office
Form CG 20 15 11 88 shown in Exhibit VII-1, or its equivalent. This
endorsement obligates the insurance carrier to provide coverage and
a defense for Sears Shop at Home, Inc. if a claim or lawsuit arises
from the trading partner's products.
2. CERTIFICATE OF INSURANCE
Evidence of products liability insurance coverage, in the form of a
Certificate of Insurance, must be submitted to the following address
when a policy is renewed.
Sears, Roebuck and Co.
Attention: Vendor Insurance
Dept. 768 B5-235A
Hoffman Estates, IL 60179
Initial certificates for products liability insurance coverage are
to be directed to Sears Shop at Home Services, Inc.
The standard ACORD Certificate of Insurance is acceptable. The
certificate should state that Sears, Shop at Home Services, Inc.
is to be provided with 30 days' notice of cancellation. A new
Certificate of Insurance must be furnished each year prior to the
expiration of your products liability insurance policy.
D. MINIMUM REQUIREMENTS FOR ALL PRODUCT LINES
The minimum allowable products liability insurance requirements for all
product lines not shown in the Exhibit VII-2 are as follows:
1. SINGLE OCCURRENCE LIMITS
The minimum allowable coverage limits per occurrence for bodily
injury and property damage is $1,000,000.
2. CARRIER RATING
The insurance carrier providing products liability insurance for any
product lines not shown in Exhibit VII-2 is to have a rating of at
least "B + VI" as published in the latest edition of Best's
Insurance Reports.
VII - 3
<PAGE> 88
EXHIBIT VII-1
POLICY NUMBER; COMMERCIAL GENERAL LIABILITY
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
ADDITIONAL INSURED--VENDORS
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART
SCHEDULE
Name of Person or Organization [Vendor]:
Your Products:
(If no entry appears above information required to complete this endorsement
will be shown in the Declarations as applicable to this endorsement.)
WHO IS AN INSURED (Section II) is amended to include as an insured any person
or organization (referred to below as "vendor") shown in the Schedule but only
with respect to "bodily injury" or "property damage" arising out of "your
products" shown in the Schedule which are distributed or sold in the regular
course of the vendor's business, subject to the following additional
provisions:
1. The insurance afforded the vendor does not apply to:
a. "Bodily injury" or "property damage" for which the vendor is
obligated to pay damages by reason of the assumption of liability in
a contract or agreement. This exclusion does not apply to liability
for damages that the vendor would have in the absence of the
contract or agreement;
b. Any express warranty unauthorized by you;
c. Any physical or chemical change in the product made intentionally by
the vendor;
d. Repackaging, unless unpacked solely for the purpose of inspection,
demonstration, tasting, or the substitution of parts under
instructions from the manufacturer, and then repackaged in the
original container;
e. Any failure to make such inspections, adjustments, tests or
servicing as the vendor has agreed to make or normally undertakes to
make in the usual course of business in connection with the
distribution or sale of the products;
f. Demonstration, installation, servicing or repair operations, except
such operations performed at the vendor's premises in connection
with the sale of the product;
g. Products which, after distribution or sale by you, have been labeled
or relabeled or used as a container, part or ingredient of any other
thing or substance by or for the vendor.
2. This insurance does not apply to any insured person or organization, from
whom you have acquired such products or any ingredient, part or container,
entering into, accompanying or containing such products.
Copyright Insurance Services Office, Inc. 1986, 1988
ISO FORM CG 20 15 11 88
VII - 5
<PAGE> 89
1. SINGLE OCCURRENCE LIMITS
The minimum allowable coverage limits per occurrence for bodily
injury and property damage is $1,000,000.
2. CARRIER RATING
The insurance carrier providing products liability insurance for any
product lines not shown in Exhibit VII-2 is to have a rating of at
least "B + VI" as published in the latest edition of Best's
Insurance Reports
E. REQUIREMENTS FOR SPECIFIED PRODUCT LINES
Certain product lines require distinct products liability insurance
requirements. For these products, increased products liability insurance
coverage is required. These product lines are shown in the Exhibit VII-2.
NOTE: IF A VENDOR SELLS TO SEARS SHOP AT HOME SERVICES, INC. EVEN A SINGLE
ITEM SPECIFIED IN EXHIBIT VII-2, THAT VENDOR MUST COMPLY WITH THE INSURANCE
REQUIREMENTS DESCRIBED IN THIS SECTION
The minimum allowable products liability insurance requirements for
specified product lines are as follows:
1. COMBINED SINGLE LIMIT PER OCCURRENCE
The minimum allowable coverage limits per occurrence for bodily
injury and property damage are shown in the middle column of the
table in Exhibit VII-2. These limits may be satisfied by any
combination of primary and excess or umbrella liability insurance
policies.
2. AGGREGATE LIMITS
The minimum allowable aggregate limits for bodily injury and
property damage are shown in the far right column of the table in
Exhibit VII-2. These limits may be satisfied by any combination of
primary and excess or umbrella liability insurance policies.
3. CARRIER RATING
The insurance carrier providing products liability insurance for any
product lines shown in Exhibit VII-2 is to have a rating of at least
"A-VII" as published in the latest edition of Best's Insurance
Reports.
VII - 6
<PAGE> 90
EXHIBIT VII-2
PRODUCTS LIABILITY REQUIREMENTS
SPECIFIED PRODUCT LINES
<TABLE>
<CAPTION>
Per Occurrence Aggregate
Product Line Limit of Liability Limit of Liability
------------ ------------------ ------------------
<S> <C> <C>
Air Conditioners (Window) 1,000,000 3,000,000
Air Compressors 1,000,000 3,000,000
All Terrain Vehicles (see ATVs)
Ammunition (see Guns & Ammunition)
Apparel
- Kids' Sleepwear 1,000,000 3,000,000
- Women's Sleepwear 1,000,000 3,000,000
Appliances
- Dishwashers 1,000,000 3,000,000
- Dryers 3,000,000 10,000,000
- Freezers 1,000,000 3,000,000
- Microwave Ovens 1,000,000 3,000,000
- Ovens 3,000,000 10,000,000
- Refrigerators 1,000,000 3,000,000
- Stoves 3,000,000 10,000,000
- Televisions 1,000,000 3,000,000
- Trash Compactors 1,000,000 3,000,000
- Washing Machines 1,000,000 3,000,000
- Vacuum Cleaners 1,000,000 3,000,000
ATVs 3,000,000 10,000,000
Auto Jacks (see Automotive)
Automotive
- Auto Jacks 3,000,000 10,000,000
- Auto Ramps 3,000,000 10,000,000
- Batteries, Auto & Trucks 3,000,000 10,000,000
- Battery Chargers 1,000,000 3,000,000
- Cruise Control 1,000,000 3,000,000
- Exhaust Systems 1,000,000 3,000,000
- Leaf Springs 1,000,000 3,000,000
- Leaf Helper Springs 1,000,000 3,000,000
- Seat Sells 1,000,000 3,000,000
- Seats, Replacement 1,000,000 3,000,000
- Shock Absorbers 3,000,000 10,000,000
- Struts 3,000,000 10,000.000
- Suspension Kits 3,000,000 10,000,000
- Tires 3,000,000 10,000,000
- Tire Valves 1,000,000 3,000,000
- 4 X 4 Off-Road Vehicle Tops 3,000,000 10,000,000
Baby Equipment
- Car Seats 1,000,000 3,000,000
- Cribs 1,000,000 3,000,000
- High Chairs 1,000,000 3,000,000
</TABLE>
VII - 7
<PAGE> 91
EXHIBIT VII-2
PRODUCTS LIABILITY REQUIREMENTS
SPECIFIED PRODUCT LINES
<TABLE>
<CAPTION>
Per Occurrence Aggregate
Product Line Limit of Liability Limit of Liability
------------ ------------------ ------------------
<S> <C> <C>
Baby Equipment (Continued)
- Infant Seats 1,000,000 3,000,000
- Mattresses 1,000,000 3,000,000
- Strollers 1,000,000 3,000,000
- Swings 1,000,000 3,000,000
- Walkers 1,000,000 3,000,000
Batteries (see Automotive)
Battery Chargers (see Automotive)
Bicycles 1,000.000 3,000,000
Blankets - Electric 1,000,000 3,000,000
Boats or Boat Motors 1,000,000 3,000,000
Boilers 3,000,000 10,000,000
Bottle Jacks 3,000,000 10,000,000
Brush Whackers (see Garden Tools)
Sunk Beds (see Furniture)
Camping Equipment
- Cook Stoves 3,000,000 10,000,000
- Lanterns 3,000,000 10,000,000
- Space Heaters 3,000,000 10,000,000
- Tents 3,000,000 10,000,000
Car Seats (see Baby Equipment)
Chain Saws (see Tools)
Chairs (see Furniture)
Chisels (see Tools)
Compressors (See Air Compressors)
Cook Stoves (See Camping Equipment)
Cooking Equipment (see Appliances)
Cribs (see Baby Equipment)
Cutters (see Tools)
Dishwashers (See Appliances)
Drills (see Tools)
Dryers (see Appliances)
Drugs & Pharmaceutical Products 3,000,000 10,000,000
Electric Blankets (see Blankets)
Exhaust Systems (See Automotive)
Exercise Equipment
- Rowing Machines 1,000,000 3,000,000
- Stationary Bikes 1,000,000 3,000,000
- Step Climbers 1,000,000 3,000,000
- Treadmills 1,000,000 3,000,000
Fireplaces 1,000,000 3,000,000
Fireplace Accessories 1,000,000 3,000,000
Freezers (see Appliances)
</TABLE>
VII - 8
<PAGE> 92
EXHIBIT VII-2
PRODUCTS LIABILITY REQUIREMENTS
SPECIFIED PRODUCT LINES
<TABLE>
<CAPTION>
Per Occurrence Aggregate
Product Line Limit of Liability Limit of Liability
------------ ------------------ ------------------
<S> <C> <C>
Fun Karts (see Go Karts)
Furnaces
- All Types 3,000,000 10,000,000
- Thermostats 3,000,000 10,000,000
Furniture
- Sunk Beds 1,000,000 3,000,000
- Chairs (Motion Recliners) 1,000,000 3,000,000
- Cribs & Crib Mattresses 1,000,000 3,000.000
Garage Door Openers 3,000,000 10,000,000
Garbage Disposers 1,000,000 3,000,000
Garden Tools - Brush Wackers 1,000,000 3,000,000
Generators 1,000,000 3,000,000
Go Karts (Motorized) 3,000,000 10,000,000
Grills - Gas/Electric 3,000,000 10,000,000
Grinders (see Tools)
Guns & Ammunition 3,000,000 10,000,000
Gym Sets 3,000,000 10,000,000
Hammers (see Tools)
Helmets (Bicycles or Motorcycle) 1,000,000 3,000,000
Home Health Aids 3,000,000 10,000,000
High Chairs (See Baby Equipment)
Infant Seats (See Baby Equipment)
Jacks - Auto or Bottle 3,000,000 10,000,000
Joiners (see Tools)
Ladders 3,000,000 10,000,000
Lanterns (see Camping Equipment)
Lawn Mowers and Accessories 3,000,000 10,000,000
Lawn Tillers 3,000,000 10,000,000
Lawn Tractors and Accessories 3,000,000 10,000,000
Leaf Springs (see Automotive)
Leaf Helper Springs (see Automotive)
Medical Products 3,000,000 10,000,000
Mini-Bikes (Motorized) 3,000,000 10,000,000
Mowers (see Lawn Mowers)
Outdoor Furniture 3,000,000 10,000,000
Ovens (see Appliances)
Pharmaceutical (see Drugs)
Planers (see Tools)
Pliers (see Tools)
Propane Tanks 3,000,000 10,000,000
Ranges (See Appliances - Stoves)
Refrigerators (See Appliances)
</TABLE>
VII - 9
<PAGE> 93
EXHIBIT VII-2
PRODUCTS LIABILITY REQUIREMENTS
SPECIFIED PRODUCT LINES
<TABLE>
<CAPTION>
Per Occurrence Aggregate
Product Line Limit of Liability Limit of Liability
------------ ------------------ ------------------
<S> <C> <C>
Respirators 1,000,000 3,000,000
Routers (See Tools)
Rubber Products - Tub Mats 1,000,000 3,000,000
Sanders (see Tools)
Saws (see Tools)
Screwdrivers (see Tools)
Shock Absorbers (see Automotive)
Sleepwear (see Apparel)
Smoke Detectors 11000.000 3,000,000
Snow Throwers 3,000,000 10,000,000
Space Heaters - All Types 3,000,000 10,000,000
Stationary Bikes (see Exercise Equipment)
Step Climbers (see Exercise Equipment)
Stoves (see Appliances)
Strollers (See Baby Equipment)
Strut (see Automotive)
Sump Pumps (See Water Pumps)
Suspension Kits (See Automotive)
Swimming Pools 1,000,000 3,000,000
Swing Sets 3,000,000 10,000,000
Televisions (see Appliances)
Tillers (See Lawn Tillers)
Tires (see Automotive)
Tire Valves (see Automotive)
Tools
- Non-Power 1,000,000 3,000,000
- Garden (see Garden Tools)
- Power 3,000,000 10,000,000
Toys - Motorized Riding Toys 1,000,000 3,000,000
Tractors (See Lawn Tractors)
Trash Compactors (See Appliances)
Treadmills (See Exercise Equipment)
Truck Caps (see Automotive)
Vacuum Cleaners (See Appliances)
Ventilators 3,000,000 10,000,000
Washing Machines (see Appliances)
Water Heaters
- All Types 3,000,000 10,000,000
- Control Valves 3,000,000 10,000,000
- Pressure Valves 3,000,000 10,000,000
- Thermostats 3,000,000 10,000,000
Water Pumps 1,000,000 3,000,000
Wrenches (See Tools)
</TABLE>
VII - 10
<PAGE> 94
F. SELF-INSURANCE REQUIREMENTS
In some special situations, Sears Shop at Home Services, Inc. will allow
levels of self-insurance. Self-insurance is subject to approval, provided
that the vendor meets certain conditions.
To request approval, the vendor must submit a Request for Approval of
Self-Insurance (Form 11239). The Risk Management Department will review
the risk potential of all the vendor's product lines, as well as its
financial position and record of handling claims. If the Risk Management
Department approves, the vendor submits an Amendment to document the terms
and conditions of the self-insurance agreement.
If a vendor is not approved for self-insurance, or is unwilling to execute
a selfinsurance amendment the vendor must provide evidence of insurance
coverage in order to do business with Sears Shop at Home Services, Inc.
G. SPECIAL CASES
Unique product liability insurance requirements apply to the following
special cases:
1. DISTRIBUTORS, MANUFACTURER'S REPRESENTATIVES AND BUYER'S AGENTS
All distributors, manufacturer's representatives, or buyer's agents
must provide evidence of products liability insurance. They may
either arrange for the manufacturer to provide coverage or purchase
it themselves.
2. VENDORS PROVIDING RE LABELED OR REPACKAGED PRODUCTS
If a vendor provides re labeled or repackaged products to Sears Shop
at Home Services, Inc., it must provide its own coverage.
3. CLAIMS-MADE COVERAGE
While Sears Shop at Home Services, Inc. prefers coverage to be
purchased on an occurrence basis, Claims-Made Coverage may be
permitted if approved by Sears Risk Management Department.
H. INSURANCE REPRESENTATIVE INSTRUCTIONS
In order to expedite this process, specifically with respect to Product
Liability Insurance, we ask the licensee to send the Sears Certificate of
Insurance form and sample copies of Vendors Endorsements to your insurance
representative. Include the following requirements in a letter.
1. The Certificate of Insurance should show specifically that the
policy covers Products Liability, that Sears is included under the
Vendors Endorsements and that the policy is written with limits of
no less than $1,000,000 combined single limits for Bodily Injury and
Property Damage per occurrence.
VII - 11
<PAGE> 95
2. If Sears Certificate of Insurance is used, the applicable Vendors
Endorsement must be checked for all goods sold in accordance with
the License Agreement.
3. If your insurance representative elects to issue a Certificate of
Insurance other than Sears Form, the applicable Vendors Endorsement
must be attached specifically naming Sears, Roebuck and Co. as an
additional insured.
Note: If your Products Liability Insurance is written on a claims
made basis, Vendors Endorsement CG 20 15 11 88 must be
attached.
Note: Sears will accept only the standard wording of these
endorsements as attached -- we will not accept any negligence
provision.
4. Sears required a definitive 30-day Notice of Cancellation. The
Cancellation Clause must read as follows:
"Should any of the above described policies be canceled before
the expiration date thereof, the issuing company will mail 30
days written notice to the below named Certificate holder."
If a Certificate of Insurance, with Vendors Endorsement, cannot be issued
because a policy number has not been assigned, Sears requires that a
Binder be issued. The Binder must specify the following:
1. The inception and expiration dates of the Binder.
2. That the Standard Broad Form, Standard Limited Form of Standard
Additional Insured-Vendors Form CG 20 15 11 88 is included.
3. Limits of Liability must be no less than what Sears has requested in
this letter.
4. If the policy is a claims made policy, the retroactive date must be
stated.
NOTE: A Binder is only good for 30 days and must be reissued at
the end of the 30 day period if the Certificate of
Insurance still cannot be issued because the Policy Number
has not been assigned.
Please return the Certificate of Insurance (and Vendors Endorsement if
other than the Sears form is used), as soon as possible to:
Ms. Candi Downing
Sears Shop At Home Services, Inc.
7447 Skokie Blvd.
Skokie, IL 60077
(708) 676-5717
VII - 12
<PAGE> 96
PRODUCTS LIABILITY
<TABLE>
<CAPTION>
THIS CERTIFICATE IS TO BE COMPLETED AND RETURNED TO:
<S> <C>
SEARS, ROEBUCK AND CO. (ADDRESS)
INSURANCE/RISK MANAGEMENT DEPT. 768RM SEARS TOWER, BSC 45.32 - CHICAGO, ILL 60684
NAME OF INSURED
ADDRESS CITY STATE ZIP CODE
SUBSIDIARIES OR AFFILIATED COMPANIES ALSO COVERED UNDER THE POLICIES
</TABLE>
<TABLE>
<CAPTION>
GENERAL LIABILITY INSURANCE LIMITS OF LIABILITY
<S> <C> <C>
NAME AND ADDRESS OF INSURANCE CO. BODILY INJURY:
EACH
POLICY NO. EFFECTIVE DATE EXPIRATION DATE $ OCCURENCE
Products Liability with Vendors Endorsement for all goods or products sold to $
Sears, Roebuck and Co. and /or Sears Buying Services, Inc. Check applicable box
[ ] Standard Broad From 2015 PROPERTY DAMAGE:
EACH
[ ] Additional Insured Vendors Form CG 2015 11/85 $ OCCURENCE
IF OTHER THAN BUREAU POLICY OR ENDORSEMENTS, ATTACH COPY TO THIS CERTIFICATE.
$ AGGREGATE
If this is a Claims-Made Policy, Check Here: [ ] OR COMBINED SINGLE LIMITS
EACH
CLAIMS-MADE RETROACTIVE DATE _____/____/_____ OCCURENCE
</TABLE>
<TABLE>
<CAPTION>
EXCESS LIABILITY INSURANCE
<S> <C> <C> <C>
TYPE OF POLICY COMBINED SINGLE LIMITS
EACH
NAME AND ADDRESS OF INSURANCE COMPANY $ OCCURENCE
POLICY NO. EFFECTIVE DATE EXPIRATION DATE If following Form Type Policy
Check here: [ ]
</TABLE>
THIS IS TO CERTIFY THAT:
1. Policies of insurance described above have been issued to the above
named insured and are in force; and
2. If any such policy is canceled or changed so as to affect the coverage
evidenced by this Certificate, at least thirty days prior written
notice of such cancellation or change will be sent to the Sears,
Roebuck and co., at the above address.
Dated this _____________ day of _________________, 19 _____ at
_____________________________,_________________________________,____________
(City) (State) (Zip Code)
____________________________________________________________________________
(Name of Agent or Broker)
____________________________________________________________________________
(Address of Agent or Broker) (City) (State) (Zip Code)
BY______________________________________
(Authorized Representative)
12314 REV. 2/87
SEARS FORMS MANAGEMENT (CORP) RETAIN 10 YEARS
FROM DATE OF EXPIRATION
VII - 13
<PAGE> 97
Sears Shop at Home Services, Inc.
License Agreement
Exhibit 8 "Operating Standards"
Total Number of Pages - 3
Date - November 1993
OPERATING STANDARDS
SEARS SHOP AT HOME SERVICES, INC. HEREINAFTER "LICENSOR"
MERCHANDISE:
o All merchandise offers and services should be the result of agreement
with Sears Shop at Home Services, Inc. Merchandise and services are
not to be offered to Customer list without prior agreement.
o Quality and value are to be consistent with Sears, Roebuck & Co.
(hereinafter "Sears") image, standards and with Sears customers
expectations.
CUSTOMER SERVICE:
o "Satisfaction guaranteed or your money back", is the guiding principle
for our relationship with the Customer.
o Customer service inquiries are to be acknowledged promptly. An
Customer complaints should be resolved within 24 hours.
HOURS OF OPERATION:
o Licensee is to provide 24 hour toll-free access, 365 days a year for
order taking and Customer service.
CALL STANDARDS:
o The guiding principle for response to calls is that 90% of all calls
must be answered within 3 rings/20 seconds.
o Telephone standard is a maximum 3% delay: 2% abandon rate.
o Performance will be measured using the Call Volume Summary Report
Exhibit VI-3 of Exhibit A.
CORRESPONDENCE:
o Licensee is to respond to all correspondence within 24 hours.
PACKAGING, LABELING AND CUSTOMER COMMUNICATIONS:
o Packaging, labeling and printed Customer communications must be
designed or approved by Licensor.
<PAGE> 98
CREDIT POLICY:
o Initial offer of payment is SearsCharge.
o Licensee private label credit cards are not an acceptable payment
method for the purchase from Sears Shop at Home Services, Inc. Licensed
Catalogs.
o Licensee is responsible for establishment and maintenance of
authorization and settlement for non-SearsCharge credit cards.
FULFILLMENT:
o Initial and final fill rates will vary by catalog and minimum standards
will be effective July 1994.
<TABLE>
<CAPTION>
INITIAL FINAL
CATALOG ------- ------
------- MIN. GOAL MIN. GOAL
<S> <C> <C> <C> <C>
DOMESTICATION - SHOW PLACE 75 85 92 95
TAPESTRY 70 80 90 95
COLONIAL GARDEN KITCHEN - GREAT KITCHENS 85 85 95 90
MATURE WISDOM 85 85 95 98
HANOVER HOUSE 85 95 95 98
SILHOUETTES - BEAUTIFUL STYLES 70 80 90 95
SIMPLY TOPS - UNIQUE EXPRESSION 70 80 90 95
</TABLE>
o Every conceivable effort will be made to achieve the initial and final
fill rate goals. Licensee and Licensor agree, the spirit of this
agreement is to achieve the above customer service goals.
o Credit approved orders are to be shipped within 24 hours, or the next
business day from the time the order is credit approved.
o Customer should receive order within 7 calandar days which includes the
day the credit is approved.
o Customers must be told of back orders or out-of-stock situations at time
of order. If backorders occur later, after order taking, customer is
to be notified in writing (postcard) or called 24 hours.
RETURNS:
o Customer must be credited/refunded the same day the merchandise is
received by the Licensee.
o Equal value exchanges - Licensee is to replace item(s) at no charge
(for item or S&H) within 24 hours.
<PAGE> 99
PERFORMANCE MEASUREMENT
An on-going process will measure actual performance vs the operating standards.
If performance is continually less than the standard and no progress has been
made to reach the standard, then the Licensee has materially failed to achieve
an acceptable level of performance.
The following table defines the performance area, operating standard and the
method of measurement.
<TABLE>
<CAPTION>
PERFORMANCE AREA OPERATING STANDARD METHOD OF MEASUREMENT
- ---------------- ------------------ ---------------------
<S> <C> <C>
Merchandising o Consistently meets o Customer Survey's and
Requirements of Shopping
Exhibit A, Section II
Call Center o 24 Hour Toll-Free o Independent Survey
Access, 365 days
o Call Standards o Weekly Call Volume
Summary Report
Credit o Initial offer SearsCharge o Shopping Survey
o No Private Label o Independent Survey
Credit Cards
Fulfillment o The initial and final fill o Weekly Report
rates will vary by catalog
and be measured by week in units
o Effective July 1, 1994 and thereafter
the minimum standards will vary
by catalog:
</TABLE>
<TABLE>
<CAPTION>
MINIMUM
CATALOG: Initial Fill Final Fill
------- ------------ ----------
<S> <C> <C> <C>
Domestications/Show Place 75% 92%
Tapestry 70% 90%
Colonial Garden Kitchen/
Great Kitchens 85% 95%
Silhouettes/Beautiful Style 70% 90%
Simply Tops/Uniques Expressions 70% 90%
o 90% In Stock at Book o In-Stock Report
Release
o 90% of Orders Received o Independent Survey
Within 7 Days of Order
Date and Credit Approval o Shopping Survey
Reporting o Complete, Accurate o Received When Due
and Timely
</TABLE>
<PAGE> 100
SEARS
SHOP AT HOME SERVICE
Sears Shop at Home Services, Inc.
(Herein after Sears Shop at Home
or Licensor)
License Agreement
Exhibit C "Advertising Policy"
Total No. Pages - 46
Date - November, 1993
SEARS SHOP AT HOME SERVICES, INC.
ADVERTISING POLICIES AND STYLE
7447 Skokie Boulevard Skokie, Illinois 60077 A Sears Roebuck Company
<PAGE> 101
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
LICENSOR ADVERTISING POLICIES AND STYLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Merchandise Descriptions, Claims and Substantiation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Regulatory Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Definition of Licensed Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
BASICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Illustrations and Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Price Displays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Catalog Merchandise in Newspapers or Magazines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Keying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Page Numbers (folios) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
item Numbers, SKU's and Catalog Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Color Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Wearing Apparel Size Charts and Measuring Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Shipping Weights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Mailing Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Advertising References to Laboratories,
Organizations Government and Industry Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Advertising Various Claims and Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Brag Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Age Notices for Merchandise Intended for Use by Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Sweepstakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Factory, Manufacturer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Flags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Geographical Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Imported Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Imported Textile Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Imported Non-Textiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Coins, Paper Money, Stamps, Government Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Safe, Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Surveys, Test Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Testimonials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Unassembled, Partly Assembled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Pesticide Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
General Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
General Environmental Benefit Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Degradable, Biodegradable and Photodegradable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Compostable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Recyclable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Recycled Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Source Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Refillable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Ozone Safe and Ozone Friendly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Tax Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ENERGY RELATED PRODUCT CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Substantiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
FTC Energy Labeling Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
FTC Home Insulation Guides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FURNITURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Wood or Materials Resembling Wood in Furniture,
Wall Paneling and Other Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
HEALTH/FITNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ELECTRONICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Power Output Claims for Amplifiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SAVINGS CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Fundamentals of Savings Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Catalog Comparative Price Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Terms That Imply a Price Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Price Comparisons with Other Catalogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Same Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Comparable Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Accuracy of Price Reductions and Savings Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Price Comparisons of Identical Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Price Comparisons for New Colors, Patterns, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Price Comparisons with Similar Items Having Identified Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Price Comparisons with Improved Items at a Lower Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
"Free" Conditional Offers: Free, 1 Cent Sale, 1/2 Price,
2 For 1, Gift, Bonus, Buy 1 ... get 1 Free, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Savings Based on Purchase of Multiple Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Combination Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Use of "Special Buy" and "Special Purchase" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Use of "Our Lowest Price ..." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Use of "Save", "Sale", "Reduced" Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Guidelines for Using "Sale" in Catalog Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Clearance Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
TEXTILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Fiber Content Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Variations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Use of Fiber Names Not Present . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Sectional Disclosures (including reinforcement fibers) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Down and Feathers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Care Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
FUR AND FUR PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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LEATHER PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
TIRES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Retreaded, Remanufactured tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Blemished Tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Tire Pricing Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Proper Use of Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Satisfaction Guaranteed or Your Money Back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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November, 1993
ADVERTISING POLICIES AND STYLE
Licensor has always approached its advertising with the theory that a repeat
customer is its most valuable asset. Therefore we will respond to the wants
and needs of the customer with advertising that is complete, informative,
accurate and above all honest.
We will conform to all applicable Federal, State and local guides, laws, etc.
But mere compliance with the law does not improve our value to the customer.
only advertising that gives our customers enough information with which to make
an informed buying decision quickly and confidently will do that.
We should not rely on "Satisfaction Guaranteed or Your Money Back" to make
amends for incomplete or erroneous advertising. _For instance, the appearance
of an item may be accurate, but still be deceptive or confusing because the
surface is not what it appears to be (veneer or plastic instead of solid wood;
vinyl instead of leather; unassembled instead of ' assembled). In these cases,
clarifying copy is needed. In other words, if what you see is not what you
get, explain it.
We will extend courtesy and respect to our competitors. If we mention them, we
will do so with accurate and complete comparisons.
MERCHANDISE DESCRIPTIONS, CLAIMS AND SUBSTANTIATION REQUIREMENTS
The Federal Trade Commission may require advertisers to submit on demand,
documentation to support claims regarding the performance, safety, efficacy,
quality or comparative prices of products advertised.
It is our long-standing policy to document claims prior to use by lab reports,
shopping comparisons, sales receipts or other adequate means. Claims must be
reviewed and documented to reflect changes in the merchandise or other parts of
the claim. Documents must be available to Sears upon request.
One of the best ways to eliminate exaggeration is to avoid absolute terms by
using qualifiers such as, aids, helps, designed to, may, etc.
REGULATORY AGENCIES
The Federal Trade Commission is an agency created by Congress to administer
various trade regulation statutes.
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Under the provisions of the Federal Trade Commission Act, the FTC is empowered
and directed to prevent "unfair methods of competition and unfair or deceptive
acts or practices" in interstate commerce. The Commission may institute
investigations upon complaints by a consumer, or by a business person, or upon
its own motion. it may issue complaints charging violations of the FTC Act. If
violations are found, the Commission may issue an Order to "Cease and Desist".
Should that Order be violated, the FTC can charge up to $10,000 for each
violation. Each advertisement, in each catalog that it appears, and each day
that it runs can be considered a separate violation.
The following subjects are covered by FTC Guides and Regulations. Licensor and
Licensee are responsible for following all FTC guidelines.
. Appliance Energy Labels and Advertising
. Comparative Advertising
. Endorsements and Testimonials
. Extension Ladders
. Free
. Home Entertainment Amplifiers
. Home Insulation
. Household Furniture
. Jewelry (includes precious metals, stones and pearls)
. Leather, Leather Shoes, Handbags and Luggage
. Mail Order Sales
. Pricing Practices
. Radio and Television Sets
. Textile, Wool and Fur Products
. Tires
. Warranties
. Watches (including cases and bands)
. Wood Products, Wall Panels
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State Regulations and Statures are also designed to protect the public against
false advertising. If there are any questions about State regulations, contact
your Licensor's Media manager.
Note: "Licensee's Regular Media" refers to catalogs distributed to the
Licensee's customer list under the Licensee's name only.
"Licensor Licensed Catalog" refers to catalogs created by Sears
Licensee for Sears. These are distributed to Sears customer list under
the Sears (and Licensee's) name.
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EDITORIAL
Any advertising which bears the Licensor's name must adhere to Federal Trade
Commission regulations as well as to other governmental agencies dealing with
truth in advertising. Therefore, it is necessary for Licensor and Licensee to
adhere to FTC regulations as well as other governmental agencies dealing with
truth in advertising.
Licensor advertising and media management will review and approve all
Licensee's advertising before it is printed. Licensor will monitor Licensee's
use of Sears TM's to insure they are used correctly.
Licensor must have at least five (5) working days to review all copy, art, etc.
before it is printed. All changes are at Licensee's expense.
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INDEX
Usually, the first contact a customer has with a catalog is the index. So, the
more accurate and complete an index we can give the customer, the more readily
she can find the merchandise and make a purchase.
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BASICS
Catalog descriptions must be especially detailed since customers generally do
not have the opportunity to inspect the merchandise before it is delivered.
And, if what they get is what they expect, customers will be satisfied and
returns will be reduced.
ILLUSTRATIONS AND PHOTOGRAPHS
It is Licensor's policy to photograph and illustrate only merchandise received
from the same source as will supply us with the merchandise sent to the
customers. In this context, removing other manufacturer's markings or logos
from a product for photographic purposes is unlawful.
Merchandise which Licensor would ordinarily sell that is used as a prop or
background should be available from Licensor or Licensee.
An illustration must accurately portray an item as to size, quality, design,
etc. Enlarged illustrations must clearly be identified, for example, "Diamond
rings enlarged to show detail."
When two or more items are shown together, relativity and proportion must be
maintained.
"Before and After" illustrations should not exaggerate the results of using the
product.
Advertising of merchandise normally used in the preparation and consumption of
alcoholic beverages should be done with good taste and discretion.
Illustrations of people drinking should be avoided. Props should not be
identifiable as to type or brand. Do not show people smoking.
Illustrations should not portray any product being used in an unsafe or illegal
manner.
PRICE DISPLAYS
When a display price is used, our basic policy is to display the price of the
item shown.
A display price must be qualified if confusion about the merchandise or price
may result, for example:
. When an item has several models with exterior differences and various
prices and:
1. Only one model is shown. Display the price of that model, or show
the range of prices.
2. All models are equally illustrated. Show the range of prices, or
the lowest price qualified by "and up" or a qualifier ($18.95
2-drawer).
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3. Color is the only difference. Illustrate the higher price color and
use the lower price qualified, "Low as $699 White".
o When an illustration is representative of various models at various
prices which are the same in exterior features, you may display the
range of prices, or show the lowest price qualified as above.
o When an item is shown with various attachments, the display price for
the basic unit may be shown with a qualifier listing items not
included, for example. "Saw without motor, belt or guard." Also use
for separate items such as a saw shown with a case but sold separately.
o If the price of an item does not include accessories necessary for its
use, the display price need not be qualified, but that information must
appear in the body copy, for example, "needs 4 AA batteries sold on
page OOO."
CATALOG MERCHANDISE IN NEWSPAPERS OR MAGAZINES
Unless otherwise indicated, all advertisements must carry the information that
catalog prices do not include Licensor's usual shipping and handling charges.
KEYING
Keys should be used to clarify the relationship between art and copy. Use the
keys as part of the original layout to make the trade-up clear. The sequence
of keys should be logical and easy to follow, usually left to right and top to
bottom. When using letters, avoid I, O, Q.
PAGE NUMBERS (FOLIOS)
It is good cataloging and will facilitate customer use of the index to put a
page number in the lower outside corner of each page. All layouts should be
planned with this in mind. Front and back covers do not use page numbers.
ITEM NUMBERS, SKU'S AND CATALOG NUMBERS
An item number identifies an article of merchandise. A SKU (stock keeping
unit) is a further division; it may be the item number if there are no other
choices, or it may be the numerical designation for a size, color, etc.
If the customer has a choice of color, style, size, pattern, etc. we request
that information in one of two ways:
1. A separate catalog number for each choice.
2. One catalog number with a suffix which asks the customer for additional
information.
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COLOR NAMES
Describe colors as clearly as possible. Use "light", "medium", "dark", etc.
whenever it will be useful to the customer. If promotional names are used, a
descriptive color name should also be used.
Do not use names of gems, wood, precious metals, etc. unless they are qualified
by "look", "color", etc. if it is not obvious that a color (gold towel) is
meant.
DIMENSIONS
State all dimensions clearly, indicating which is height, width, and length if
they are not apparent from the illustration. Be as precise as possible. For
example, 6Wx26Hx3D inches.
Be sure to indicate dimensions that customer must have before ordering, such as
size of opening item will fit, or room needed to use item.
Follow a standard style for listing dimensions of related merchandise. Use
accepted industry practice where possible-.
We usually say 8 1/2 inches, not 8.5 inches.
WEARING APPAREL SIZE CHARTS AND MEASURING INSTRUCTIONS.
We recommend that reference to size charts or measuring instructions should be
made several times throughout the catalog.
SHIPPING WEIGHTS
We recommend that separate weights should be shown for each catalog number.
However, one weight may be used if a series of similar items with separate
numbers have the same weight.
If sold as "each" with a multiple, or only as a multiple, weight for the "each"
should be listed.
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MAILING LISTS
Mailing list information should be in the ordering information section.
Licensed media should contain Licensor's list service information only. List
information should be similar to the following:
We make our customer list available to a few reputable and carefully screened
firms whose products you may find of interest. If you would prefer not to be
advised of these offers and services, please write to:
Scars Shop at Home Services, Inc. List Maintenance
Privacy
E-4 - 266B
3333 Beverly Road
Hoffman Estates, IL 60179
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CLAIMS
ADVERTISING REFERENCES TO LABORATORIES, ORGANIZATIONS GOVERNMENT AND INDUSTRY
STANDARDS
When referring to any outside organization, the copy must comply with their
advertising requirements, and in some cases their permission must be obtained
before using their name. If there are questions, contact a Licensor's Media or
Advertising Manager.
ADVERTISING VARIOUS CLAIMS AND CONCEPTS
According to the Better Business Bureau, there are two types of claims:
o Objective Claims are concerned with the tangible qualities and
performance values of a product or service which can be measured
against accepted standards or tests. As statements of fact, Objective
Claims are susceptible to proof or disproof.
o Subjective Claims on the other hand constitute expressions of opinions
or personal evaluations of the intangible qualities of a service or
product. In general, they can neither be proved or disproved.
Objective Claims regarding safety, performance, efficacy, quality or
comparative price must have substantiating facts and figures documented prior
to release of the page to the printer. They must be available to Licensor and
the FTC upon request.
If there is any question about the validity of the claim, modifiers should be
used.
Avoid use of dangling comparisons, such as, "Better", "Stronger", "Longer
Lasting" unless you state the basis for comparison.
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BRAG CLAIMS
The purpose of this "Brag Claims" list is to offer suggestions when there is
not time to verify claims or to make tests. However, there should be some
basis for all these types of statements.
o You probably won't find a better ______ because ______.
o Sold only at Sears Shop at Home Services, Inc.; Available only at Sears,
Shop at Home Services, Inc.; Exclusive
o Unsurpassed
o Equal to
o Among the best
o We tried to ... we're getting there
o We set out to ... we're almost there
o Our goal was ...
o We challenge you to ...
o Where else can you find ... ?
o Absolutely superb
o New
o Improved
o The (largest, biggest, most efficient ...) we've ever offered
o Pay more if you like ... but why?
o Could you pay more? ... Probably
o Know why we've sold _____ million widgets? Here are the free facts.
o Virtually ______
o (Meets or Exceeds) industry standards
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AGE NOTICES FOR MERCHANDISE INTENDED FOR USE BY CHILDREN.
If, because of the Federal Hazardous Substance Act, a minimum recommended age
must appear on packing or labeling; that same information should appear in the
catalog.
1. For Electrically Operated Toys. "Not Recommended For Ages Under _____.
2. For Chemistry Sets or items containing Chemicals. "Not Recommended For
Ages Under ____. The chemicals in these sets, if misused, may be harmful
and should not be used except under adult supervision."
3. For toys containing Small Parts. "For Ages _____ to _____ Not
Recommended For Ages Under 3 Because of Small Parts."
SWEEPSTAKES
There is always the danger that a sweepstakes may be advertised as a lottery,
which is illegal in many States. Before running a sweepstakes promotion
Licensor's Law Department must completely review and approve all sweepstakes
before printing.
FACTORY, MANUFACTURER
Do not use statements which claim or imply that Licensor owns a factory or is a
manufacturer.
FLAGS
Do not use the American Flag in advertising unless it is being sold.
GEOGRAPHICAL NAMES
Geographical names should accurately relate the origin of an item. If the name
is descriptive of a style or design, it should be qualified, "Danish Style",
Oriental Design".
IMPORTED MERCHANDISE
*Made in the USA" may be used only if the item is made in the USA of 100%
domestic parts.
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IMPORTED TEXTILE PRODUCTS
Country of origin disclosure of textile products is required by law. One of
the following is required for every textile product. The country of origin may
be used rather than "Imported".
1. MADE IN USA, when made entirely in the USA.
2. IMPORTED, when made entirely outside the USA.
3. IMPORTED (USA MATERIALS), when fabricated materials are sent abroad to
be assembled into finished goods and imported back into the USA.
4. USA (IMPORTED MATERIALS), when an item is assembled in the USA of
imported material.
5. MADE IN USA OR IMPORTED, when the same item is made entirely in the USA
or outside the USA.
IMPORTED NON-TEXTILES
A product made entirely in a foreign country must be identified either as
"Imported" or the country of origin must be stated.
No disclosure is required if at least 50% of the cost of the item is
contributed in this country and the manufacturing or assembly is completely
here. If a selling feature, foreign components or parts may be mentioned,
"Sheffield steel blade", "Sweater of Scottish wool".
If less than 50% of the product's cost is contributed here, foreign disclosure
is required, "Imported", "Imported parts finished in USA."
COINS, PAPER MONEY, STAMPS, GOVERNMENT SECURITIES
Federal law makes it illegal at times to use currency in advertising without
certain precautions. Call the Licensor's Media or Advertising Manager if there
is a question on this matter.
SAFE, SAFETY
Do not describe an item as "safe". Instead, talk about its safety features.
Do not suggest or illustrate unsafe use of products. Do not illustrate any
usage prohibited in the owners' manual.
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SURVEYS, TEST RESULTS
All copy based on surveys or test must be reviewed by Licensor's Law
Department. Documentation must be made available upon request.
According to the Federal Trade Commission:
o Qualified persons must conduct and design the survey, and evaluate the
results in an objective manner.
o Advertising based on survey, data must accurately and conspicuously
disclose all qualifications that would describe the type of survey
(whether a sampling of representative respondents or a census of all),
and identify the group surveyed and their biases, if any. Plus any
other information needed to accurately describe the survey results.
TESTIMONIALS
All copy based on testimonials must be reviewed by Licensor's Advertising or
Media Manager. Documentation must be made available upon request.
UNASSEMBLED, PARTLY ASSEMBLED
In most cases, if an item is illustrated fully assembled and significant
assembly is required, the copy must indicate that "Assembly is Required" or
that the item comes unassembled. Exceptions would include kits, yard buildings
or any item where it should be clear that assembly is needed. Do not say "Easy
to Assemble" without some explanation of what it entails.
PESTICIDE CLAIMS
The Federal Insecticide, Fungicide and Rodenticide Act prohibits advertising of
products intended to prevent, destroy, repel or mitigate any pest (as defined
by the EPA) including those used as plant regulators, defoliant or desiccant,
unless the item is registered with the EPA. The act is concerned only with
pests on environmental surfaces.
A pest may be an insect, rodent, nematode, fungus (mildew), weed, etc.
Whether or not we intend to market the product as a pesticide is irrelevant.
If any claims are made that are construed as pesticide claims, that product is
considered a pesticide, and we are subject to fines if it is not registered.
Pesticide claims include:
"Kills rats and mice"
"Kills weeds and germs"
"Repels mosquitoes"
"Sanitizes while it cleans"
"Retards growth of algae"
"Disinfects as it cleans"
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These are not considered pesticide claims:
"Sani-Gard to help control odor"
"Neutralizes odors"
If an item has been treated with a pesticide, claims made about the item could
turn it into a pesticide subject to the law. For example: A carpet treated
with a fungicide would not be able to claim that it will prevent the spread of
fungus. The claim can be that the treatment will protect the carpet against
deterioration.
Claims for registered products must not exceed the label claims.
ENVIRONMENTAL CLAIMS
The following is a summary of the Federal Trade Commission's Environmental
Marketing Guidelines.
GENERAL CONCERNS
As for any advertising claim, the FTC guides specify that any objective
environmental claims, whether explicit or implied, must be substantiated by
competent and reliable evidence. For environmental claims, that evidence often
will have to be competent and reliable scientific evidence. Documentation must
be readily available upon request.
The guides outline four other general concerns.
1. Qualifications and disclosures should be sufficiently clear
and prominent to prevent deception.
2. Environmental claims should make clear whether they apply to
the product, the package, or a component of either. Claims
need not be qualified with regard to minor, incidental
components of the product or package.
3. Environmental claims should not overstate the environmental
attribute or benefit. Avoid implying a significant benefit
where it is negligible.
4. A claim comparing environmental attributes of one product with
another should make the comparison clear and be substantiated.
The FTC guides then discuss particular claims. The full text also includes
examples.
GENERAL ENVIRONMENTAL BENEFIT CLAIMS
Unqualified general environmental claims are difficult to interpret, and may
have a wide range of meanings. Every expressed and implied claim about an
objective quality should be substantiated. Unless they can be substantiated,
broad claims should be avoided or qualified.
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DEGRADABLE, BIODEGRADABLE AND PHOTODEGRADABLE
Unqualified claims should be substantiated by evidence that the product will
completely break down and return to nature, that is, decompose into elements
found in nature within a reasonably short time after being disposed of in the
customary way. Such claims should be qualified to avoid deception about; a)
the product or package' s ability to degrade in the environment where it is
usually disposed; and b) the extent and rate of degradation.
COMPOSTABLE
Unqualified claims should be substantiated by evidence that all the materials
will break down into, or otherwise become part of, usable compost in a safe and
timely manner in an appropriate composing program or facility, or in a home
pile. Claims should be qualified to the extent necessary to avoid deception:
1) if municipal composting facilities are not available to a substantial
majority of consumers or communities where the product is sold; 2) if the claim
misleads about the benefit provided when the product is disposed of in a
landfill; or 3) if consumers misunderstand the claim to mean that the package
can be safely composted in their own pile or device, when, in act, it cannot.
RECYCLABLE
A product or package should not be marketed as recyclable unless it can be
collected, separated, or otherwise recovered from the solid waste stream for
use in the form of raw materials in the manufacture or assembly of a new
product or package. Unqualified claims may be made if the entire item,
excluding incidental components, is recyclable. If incidental components
significantly limit recycling, the claim must be qualified. Qualification may
be necessary if recycling collection sites are not available to a substantial
majority of consumers or communities.
RECYCLED CONTENT
Claims of recycled content should only be made for materials that have been
recovered or diverted from the solid waste stream, either during the
manufacturing process (pre-consumer) or after consumer waste (post-consumer).
An advertiser should be able to substantiate that pre-consumer content would
otherwise have entered the solid waste stream. Distinctions made between pre
and post- consumer content should be substantiated. Unqualified claims may be
made if the entire product or package, excluding minor, incidental components,
is made from recycled material. Products or packages only partially made of
recycled material should be qualified to indicate the amount, by weight, in the
finished product or package.
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SOURCE REDUCTION
Claims that a product or package has been reduced or is lower in weight, volume
or toxicity should be qualified to the extent necessary to avoid consumer
deception about the amount of reduction and the basis for any comparison
asserted.
REFILLABLE
An unqualified claim should not be made unless a system is provided for: 1) the
collection and return of the package for refill; or 2) the later refill of the
package by consumers with product subsequently sold in another package. The
claim should not be made if it is up to the consumers to find ways to refill
the package.
OZONE SAFE AND OZONE FRIENDLY
A product should not be advertised as such, or as not containing CFC's if the
product contains any ozone-depleting chemical. Claims about the reduction of a
product's ozone-depletion potential may be made if adequately substantiated.
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CREDIT
Use of any Sears Credit Plans must be done in accordance with Sears advertising
policies. Questions concerning these policies should be directed to Licensor
Media or Advertising Manager.
TAXES
Any tax collecting issues should be communicated to Licensor Media Manager.
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ENERGY RELATED PRODUCT CLAIMS
SUBSTANTIATION
Like all other product performance claims, advertisers must have substantiation
for any energy saving claims prior to publication.
The general rule on the kind of documentation required is: The more precise the
claim, the more rigorous the test. If you make specific energy dollar saving
claims, you'll need controlled scientific tests, and the claims made will have
to be qualified by describing the material conditions of the test unless it is
based on U.S. Government test procedures. In addition, the claim must be
qualified by saying that individual results may vary.
General savings claims "Reduce your fuel bills" can be substantiated by
government studies, reports, or articles.
Results of tests must be made available upon Sears request.
FTC ENERGY LABELING RULE
Any representations concerning energy consumption or efficiency of the products
listed below must be based on tests performed by the manufacturer according to
the U.S. Dept. of Energy test procedures and must accurately represent the
results of those test.
<TABLE>
<S> <C>
*Electric Refrigerators Clothes Dryers
*Refrigerators/Freezers Ranges and Ovens
*Freezers Dehumidifiers
*Dishwashers Humidifiers
*Water Heaters Televisions
*Air Conditioners Space Heaters, Room and Central
*Dual Heat Cooling Systems *Central Furnaces
*Clothes Washers *Heat Pumps
</TABLE>
The asterisked items must be labeled in accordance with the FTC rule.
Therefore on each page listing these items, we must include:
1. The capacity or size as determined by the FTC for each model.
2. The estimated annual energy cost or energy efficiency rating for
each model.
3. The range of operating energy costs or efficiency ratings for
industry models in each category of comparable sized models.
4. A reference to the page in the same catalog containing the
address to which the customer can write for more information.
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FTC HOME INSULATION GUIDES
FTC's Trade Regulation Rule on the advertising of home insulation must be
adhered to completely.
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FURNITURE
WOOD OR MATERIALS RESEMBLING WOOD IN FURNITURE, WALL PANELING AND OTHER
PRODUCTS
It is our basic policy to disclose all features and facts that would go into
making an informed buying decision by the customer. In the case of household
furniture, the FTC says we must also state the facts when exposed surfaces of
furniture are not what they appear to be. In other words, we must not let the
illustration speak for itself if the surface appears to be solid wood when it
is not even wood. All such descriptions must be consistent with the label.
This can be done in a couple of ways.
1. Saying what the surface is. Door panels of polystyrene; walnut
veneer.
2. Saying what the surface is not. Simulated wood door panels.
Wood finishes having the appearance of another wood may be qualified in these
ways.
1. Indicating the name or type of wood the finish has been applied
to.
2. Indicating color or stain.
When "stuffing", "padding", "filling", or similar terms are used, the materials
must be mentioned.
Foam used in bedding and furniture must be identified as to type, for example,
"Polyurethane Foam", "Latex Foam", etc.
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HEALTH/FITNESS
Any advertising of fitness or exercise equipment must include the following
disclaimer at least once:
"Important exercise note. Before starting any fitness or exercise program,
consult your physician for a complete checkup. Proper use of the equipment
sold in this catalog may result in minor soreness only. If further discomfort
results, discontinue exercise and consult your physician."
Benefit claims should be limited to what the equipment is designed for, i.e.
"For toning lower body.", "For cardiovascular workouts.", "An in-home aerobic
workout." Overall benefits should not include phrases such as, *Get that
healthy look."
Weight loss claims must not be made without mentioning a diet program.
Any advertising of health monitoring or testing equipment must include a
disclaimer similar to the following: "See your doctor before using any product
designed to monitor a medical condition. These products should be used in
conjunction with regular medical supervision."
We can reproduce government forms such as Medicare and Medicaid only with
written permission from the agency involved.
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ELECTRONICS
POWER OUTPUT CLAIMS FOR AMPLIFIERS
Based on FTC regulations, whenever any representation of the power output of
home entertainment products is made, we must give the following information.
1. Average power output in watts per channel.
2. The load impedance in OHMS.
3. The rated power band or frequence.
4. The rated percentage of maximum total harmonic distortion.
Example: 00 watts minimum RMS per channel at 0 OHMs from 00 HZ to 00 KHZ with
no more than 0.00 harmonic distortion.
TELEVISION
The advertised size of a TV picture must be that of the actual viewable area
and not the overall dimension of the picture tube.
If pictures shown on TV screens are not actual photos of the TV in operation,
we must mention "simulated reception".
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SAVINGS CLAIM
FUNDAMENTALS OF SAVINGS CLAIMS
Licensee's must establish prices in Licensor's media before any savings can be
claimed.
o Generally, any price used as the basis for a price reduction must be either
the:
1. Last regular price if from an expired medium that had been current within
the last 12 months. Or
2. The lowest price current within the previous 15 days.
In other words, the "Was" price is always the latest and lowest.
o Merchandise should be at a regular price more than 55% of the
time it is actively offered.
o The reduction must be at least 5% or $10 before a savings can
be claimed.
o The "Was" price and its medium must always be stated in copy.
o To avoid refunding, introductory Offers should end before the
higher priced medium releases.
o ECO's are OK if the cut off date is before the end of the media
it is listed in.
o Early-cut offs for sale items lasting longer than half the life of a medium
releases.
" $ or % thru ..."
Those for less than half the life, may use:
"Save $ or % thru ..."
o Generally speaking, a sale item has not been offered in the catalog before.
o Stated amounts of savings ($ or %) must be rounded down, if not exact.
o How to know which regular price catalog to use for "Was" prices:
For sale media that release during the transition of one regular price
catalog to another, two dates are important:
- The release date of the new regular-price catalog (when lower prices are
effective).
- The re-list price cut-off mentioned in the expiring regular price catalog
(when higher prices become effective).
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o For media releasing prior to the release of the new regular-price catalog,
use the old regular-price catalog, use the old regular-price catalog.
o For media releasing between the regular-price catalog release date and the
re-list price cut-off, use the lower of the two general prices.
o For media releasing after the re-list price cut-off date, use the new
regular-price catalog.
CATALOG COMPARATIVE PRICE ADVERTISING
This subject concerns statements in catalogs implying that the price of an item
is lower than the price of the same or similar item in a previously issued (or,
about to be issued) catalog. The term "catalog" as used here includes sale
media and supplements, as well as regular-price catalogs, specialty catalogs
and other media given region-wide distribution.
The item must be offered at regular price for at least 30 days. An early
cut-off (ECO) can be used for first time offerings if the cut-off allows 30
days at regular price before it is offered again at a lower price.
Prices in a new regular-price catalog which are less than the last regular
listing represent a re-adjustment of prices thereby establishing new regular
prices. That difference in price is to be represented by phrases such as:
"$___ (___%) less than in our (name of immediately prior catalog)."
Do not use "sale" terms unless with an early-cut off lasting less than half the
book.
TERMS THAT IMPLY A PRICE REDUCTION
The words and phrases listed below imply a price reduction or savings that must
not be used unless the merchandise involved has actually been reduced in price.
Save
Save $___
Save ___%
$___ Savings
Was $___
Separately Total $___
Reduced
Reduced To $___
Cut
Now $___
Now Only $___
Special
Special Price
Price Cut
Bargain
Bargain Priced
Exceptionally Low Priced
Unusual Low Price
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PRICE COMPARISONS WITH OTHER CATALOGS
Price comparisons with the same or comparable merchandise offered in major,
nationwide competitor's catalogs can be an excellent way of emphasizing our
pricing. in order to maximize the benefit and minimize any counter-advertising,
and so on, these guidelines have been established. The comparison will be with
competitor's latest, current regular prices. If more than one edition, use
lowest regular price.
A major competitor for a licensed catalog must not be the Licensee's regular
catalogs.
Our prices must be lower than all major catalogs selling that particular
merchandise:
o Compare with same or closest comparable merchandise.
o Same means same brand and model number.
o Comparable means similar in all significant material, functional aspects
and of at least like grade and quality.
o Major nationwide competitor's catalog means major in that business.
However, Penney and Spiegel must always be considered and beaten if they
carry the merchandise.
o A record must be kept of compared catalog, page number, item number, and
price.
o Competition will not be named.
o Promotional wording may be similar to these. A range of prices may be used.
SAME MERCHANDISE
Other major catalogs offer at $00
$00 in a major competitor's (season) catalog
Priced $00 less than other major catalogs
COMPARABLE MERCHANDISE
Comparable value in other major catalogs is $00
Comparable value is $00 in another major catalog
Priced $00 less than comparable value in other major catalogs
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A policy statement similar to this will be used in the Customer Information.
section:
"In this catalog you may find comparisons to same or comparable merchandise
from catalogs of our major competitors. The prices being compared are the
regular offering prices from their latest catalogs at our time of
preparation. Sears Shop at Home Services, Inc. has no information about
sales made at these prices."
Price comparisons must be confined to comparisons with our own (or major
competitor's catalog prices. We will show no comparisons to Sears Retail or
other, retail store prices. Also, we will make no comparisons based on
"Manufacturer's suggested prices" List prices, "Appraised value" or similar.
Sears Shop at Home Services, Inc. licensed catalogs must not use the Licensee's
other catalogs as a basis for price comparison.
ACCURACY OF PRICE REDUCTIONS AND SAVINGS CLAIMS.
Where a group of items is offered at different price reductions, the maximum
and minimum savings must be stated, for example:
"Save 15% to 16%"
Do not promote a minimum saving that is less than 5% unless the majority of
the items in the promotion are reduced 5% or more.
PRICE COMPARISONS OF IDENTICAL ITEMS
Current or Prior Media: If there is no intermediate price reduction in effect,
a simple "Was $00 in our _______" is all that is required in body copy. Price
must be cut from licensed media only. Prices may not be reduced from Licensee's
regular media.
If the item is currently sale priced, a further price reduction can be compared
to the original higher price if the intermediate catalog and price is
identified.
For example:
$90 less than in our 1990 Fall Catalog
Cut $40 in our ___ ... now save $50
Price comparisons may be repeated if subsequent media are within the life of
the first.
Only if the catalog number has been changed due to renumbering may a comparison
be made between different catalog numbers.
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INTRODUCTORY OR PRE-SEASON PROMOTIONS: Introductory offers may mention future,
higher prices. Which catalog should contain the offer is a marketing decision.
However, to avoid refunding, offer should NOT run concurrently with the future
higher priced catalog. Body copy should simply state: '(medium) will be $00."
PRICE COMPARISONS FOR NEW COLORS, PATTERNS, ETC.
When an item is re-listed in new patterns or colors at a lower price, that
price may be compared with the original. For example:
"Save $2 ... Shoes were $12 ... Now in all new fall colors only $10"
"Save 15% ... Draperies were $12 ... now with may new patterns only $10"
PRICE COMPARISONS WITH SIMILAR ITEMS HAVING IDENTIFIED DIFFERENCES
Where a functional feature of a former item has been changed or omitted in a
new item, a price comparison may be made.
o Do not use "Save", "Cut", and so on. Use $ or % less than ...
o All significant functional differences must be clearly stated in promotion
or copy, not in a footnote.
PRICE COMPARISONS WITH IMPROVED ITEMS AT A LOWER PRICE
o Promotions for these items may use "Save" in the usual manner while
promoting improvements.
"FREE" CONDITIONAL OFFERS: FREE, 1 CENT SALE, 1/2 PRICE, 2 FOR 1, GIFT, BONUS,
BUY 1...GET 1 FREE, ETC.
o "Free", or similarly worded offers mean that the customer is to be charged
no more than the "Regular" price for an item, and for that price is to
receive additional merchandise.
o A second (different) item does not need a regular price to be offered
"Free" or at "1 cent-Sale," the customer will be charged for the
transportation of all component items.
To avoid any possibility that customers will be misled by such offers, the
following rules apply:
o The regular price of the item for which the customer is paying is the
lowest ..price during the last 30 days it was offered.
o A free offer may be an introductory offer. The regular price must then be
established after the sale.
o All conditions must be clear and conspicuous (not in a footnote).
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o Free offers should not total more than 180 days for items being sold
regularly for a year. Items only in semi-annual catalogs may have free
offers totaling 90 days. There must be 30 days between offers.
o Free can also be used when there is no charge for the item advertised, for
example, free catalog; free sample.
Do not use Free when the cost of the item or service is included in the regular
price.
"Without extra charge" means the same as free.
SAVINGS BASED AN PURCHASE OF MULTIPLE UNITS
GENERAL POLICY: When an item is offered at an "Each" and at a reduction when
multiples are purchased, that reduction may be promoted as a savings. For
example:
"Each $1; 2 for $1.50 ... Buy 2, save $.50" or
"Each $1; any 2 or more $.75 each ... Save 25% when you buy any 2 or more."
If the price reduction is less than 5% or $10, a savings claim will not be
used. Subsequent reductions of multiples and other specific subjects are
covered below.
SAVINGS CLAIMS BASED ON "WAS" PRICES WITH MULTIPLES
o If only the "Each" is reduced, the comparison is with the each. That price
must be 5% below the old "Each" price and 1% below the lowest unit price of
the prior multiple. "Was" price should be worded similar to this, "Single
item was ___ in our ___."
o If an "Each" and multiples are reduced, the comparison is with them. Those
prices must be 5% below prior prices. Show "Was" prices.
o If only the multiple price is reduced, the comparison is with that
multiple. The prior multiple should be the "Was" price.
o If additional multiples are added, the new promotion must include the
original multiples. Savings are based on the original "Each" price.
o If "Each" and multiples are re-listed at same prices in a subsequent
medium, the saving claim may also be repeated.
COMBINATION OFFERS
A savings claim may be based upon the difference between the total separate
prices of two or more items and a special price when sold in combination.
o The individual items in the combination have been offered within the past
12 months.
o The separate prices used as the basis for the combination have been offered
within the past 12 months.
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o The basis of the saving is clearly stated. If components are from a
different catalog, identify it.
"Save $4 on combination offer. Prices separately total $22 (in our ...)
Only $18."
USE OF "SPECIAL BUY" AND "SPECIAL PURCHASE"
The qualifying copy for "Special Buy" (or "Special Purchase") need not be
included with the merchandise description.
The sentence "A Special Buy, though not reduced, is an exceptional value" will
appear in the "Customer information" section of all sale media.
USE OF "OUR LOWEST PRICE ..."
When used in catalogs, "Season"; as in "No Lower Price This Season" is until
the price effective date of the next catalog. In Christmas books, Season is
until the end of the book.
"Season" used in other media means the price-effective life of the catalog or
media.
Any promotion using "Our Lowest Price ... " must be price at least 1% or $10
below the lowest previous price or the specific item or category.
These terms should only be used in connection with current merchandise that has
been listed in a catalog which expired within 12 months of release of new
catalog.
Such phrases as:
"Our new low price for this ..."
"Our lowest price ..."
may be used for re-listed catalog numbers.
Similar phrases may be used as a price comparison between a new item and the
entire class of comparable items sold by Sears. For example:
"Our lowest price ... for any 3-speed washer"
"First time under $50. A Craftsman Rotary Mower with a 23-inch cut."
"OUR LOWEST PRICE IN 19 ... ": The item must be offered at least twice at
higher prices in other media (past or future) before this claim may be made for
its strictly calendar-year.
34
<PAGE> 134
In media releasing in one year and expiring the following year use a promotion
that refers only to past pricing and one that does not dictate future pricing;
for example,
"Our lowest price in 12 months"
"Our lowest price since (year)"
"Our lowest price in a year"
Don't use " ... this year."
"OUR LOWEST PRICE IN (MONTH)(YEARS)": The time is the number of months (or
years) between the expiration-date of one medium and the beginning of another.
During this time, the same item or similar item must have been offered at least
twice at higher prices. And if the comparison is with the same item, one of
the offerings must have been a sale reduction if the time is a year or longer.
"OUR LOWEST PRICE EVER ... ": Such phrases as:
"Our new low price"
"Our record-breaking low price"
"Our lowest price ever"
may be used only when the same item or category of items has never been offered
at the same price or at a lower price in any licensed catalog. If the
comparison is with the same item, it should be used only if the item has been
reduced from regular price at least once previously. Only licensed media
comparisons can be made. (A Licensor's price can not be compared to a price in
a Licensee's regular media).
"NEVER PRICED LOWER AT SEARS SHOP AT HOME SERVICES": This and similar phrases
may be used when we are repeating the latest "lowest price ever ..." price.
The phrase may be used only once after the new lowest price is established.
USE OF "SAVE ", "SALE", "REDUCED", PROMOTIONS
Promotions containing the words "Save", "Sale", "Prices Cut", etc. may be used
without qualification only if all items are actually reduced in price.
1. If the title of the medium contains a term implying price reductions, for
example, "Sears Shop at Home Services, Inc. Anniversary Sale," and not
all items are reduced, then the cover must be qualified to indicate that
fact, as for example, "Most Items Reduced"; "Sale ... Plus Many Great
Values". Also see, 'Guidelines for Using Sale in Catalog Titles".
An alternate location for "Most Items Reduced" would be as part of the
Index on page 2 or 3 of "Sale" media.
35
<PAGE> 135
If a non-reduced item is under a "Sale" heading within a book, a qualifier is
also necessary, as covered in 2 and 3 below.
2. If a section, page or group offering has a "Sale" heading, it must be
immediately qualified similar to 1, and each item under that heading
which is not reduced must also have a disclaimer.
3. If the heading connotes price reductions only on specific items, the
other items need not have a disclaimer.
For example, If a page heading reads "Typewriter Sale", a non-reduced
copy machine would not need a disclaimer.
NOTE: In addition, the Ordering Information section will carry the
following explanation. "If an item description does not include our
"Was" price or any other basis for savings, that item is at our regular
price."
4. Titles or headings such as "Fall Festival of Value", "Great Buys on
Furniture", "Tire Round-Up", are not considered to be representations of
price reductions, and where used do not bring into play the heading and
item disclaimer requirements referred to in items 1, 2, and 3 above.
GUIDELINES FOR USING "SALE" IN CATALOG TITLES
100% of items reduced - use "Sale" unqualified.
75% of items reduced - use "Sale" qualified.
For example:
SEARS SHOP AT HOME SERVICES CATALOG SALE
Full of selected price cuts and great values at everyday low prices.
SEARS SHOP AT HOME SERVICES CATALOG APPLIANCE SALE
Plus a great selection of home fashions, and cloths.
SHOP AT HOME SERVICES CATALOG SALE
75 Items Reduced.
50% or less of items reduced - should not use "Sale", use "EVENT", "VALUE", and
so on. For example:
SEARS SHOP AT HOME SERVICES CATALOG VALUE DAYS
Look for selected items at great reductions.
SEARS SHOP AT HOME SERVICES CATALOG VALUE DAYS
Featuring our great appliance sale.
Multiples, combinations, free offers, count as sale items, special purchases do
not.
36
<PAGE> 136
CLEARANCE PROMOTIONS
The unqualified term "Clearance" means a close-out of Licensor's merchandise at
reduced prices. (A "Close-out" means that the items will not be listed again in
any subsequent catalog medium.)
If the anticipated response to a clearance promotion is likely to exceed the
available stock of the items, the listing should clearly and conspicuously
indicate "While Quantities Last" or "Limited Quantities".
When merchandise is listed which has been discontinued by the manufacturer, it
should be represented as a "Manufacturer's Close-out" and not as a Sears Shop
at Home Services, Inc. clearance, unless the merchandise was previously listed
in a Licensor's catalog at a higher price. Do not use a price comparison or
saving claim unless the merchandise was formerly listed in a Licensor's
catalog at a higher price. Do not compare Licensor's catalog prices to
Licensee's regular media prices.
REBATES
If rebate instructions are included with the item, catalog copy need only
include these points:
1. Last date to order merchandise; last date to mail rebate request
(post-mark).
2. Follow instructions included with item.
3. Void where prohibited.
4. Who is offering rebate.
Listing line price must be qualified, "Pull Price". Any display prices must
also be qualified clearly.
"$37.99 after rebate"
37
<PAGE> 137
TEXTILES
Federal law must be followed for:
o Major textile products ranging from wearing apparel and draperies to
dishcloths and floorcoverings.
o All products containing wool.
o Wearing apparel linings if used for warmth.
o Whenever fiber content representations are made.
FIBER CONTENT DISCLOSURES
o Stating the percentage of each fiber is not generally required by
law.
o All fibers in an amount of 5% or more must be listed by generic name
in order of predominance by weight.
o Fibers less than 5% must be listed last as "other fibers". If the
fiber has a clear and definite functional significance, it may be
identified with its percentage and purpose.
VARIATIONS
OUTER COVERINGS OF FURNITURE
Fiber less than 5% does not need to be functional to be stated with a
percentage.
WOOL PRODUCTS (other than floorcoverings and upholstery).
If percentages are stated, the fibers can be listed in any order. The
percentage of wool must be stated if less than 5%.
ORNAMENTATION FIBERS need not be named if 5% or less of product weight. If
mentioned, include the percentage.
DECORATION (lace trim, embroidery, decorative patterns, etc.) need not be named
if 15% or less of surface area.
USE OF FIBER NAMES NOT PRESENT
When referring to the look, texture, feel, etc. of a fiber not present, the
description of the actual fiber must appear with it. For example: "Linen-look
rayon", "Rayon with the look of linen", "Polyester and nylon with the look of
wool".
38
<PAGE> 138
SECTIONAL DISCLOSURES (INCLUDING REINFORCEMENT FIBERS)
If an item has two or more sections which are distinct and with a different
fiber content, the copy should indicate the fiber content by section. When
wool is present, the fiber content of any linings, interlinings, trimmings, and
facings need not be mentioned. "Shell, all wool, interlined".
TRADEMARKS
A trademark with its generic name should appear once. The mark can be used
alone in a heading as long as it is used with the generic in the copy. Use the
trademark symbol required by the owner.
READINGS
When an item has more than one fiber, only one need be mentioned in the heading
if that fiber is significant. If the heading is clear that more than one fiber
is present, "Dacron blend" etc., complete disclosure should then be given in
the copy.
DOWN AND FEATHERS
When a product's content label indicates it is filled with down, with no stated
percentage, "down" may be used in advertising without qualification.
When the label states a percentage of down and feathers, you may use "Down
blend", "Down and feathers", "Feathers and down" or whatever is appropriate.
The percentages, as they appear on the label, must be in copy.
The following phrases must not be used unless documented verification is
available.
<TABLE>
<S> <C>
Goose down All down
Duck down 100% down
Prime northern down Pure down
Prime down Our finest insulation
Fine feathers Nature's finest insulation
Genuine down Provides warmth without weight
White down The weight of the filling used
White feathers Any comparison with synthetic filling
Our finest down
</TABLE>
Any claims regarding features or benefits of down filling should be in general
terms about being warm, light-weight, comfortable, soft, etc.
CARE INSTRUCTIONS
Wearing apparel and home fashion copy should include care instructions
consistent with the care labels on the item.
IMPORTS
See "Claims" Chapter.
39
<PAGE> 139
FUR AND FUR PRODUCTS
The following points must be disclosed in advertising fur products.
o Name of fur.
o Whether fur is natural, dyed, bleached or otherwise processed.
o If 10% or more of surface area is pieces other than backs, the
pieces must be specifically identified.
o Country of origin of imported furs.
40
<PAGE> 140
LEATHER PRODUCTS
"Leather" alone or the unqualified name of a leather such as, cowhide or
pigskin, may be used only to describe the outside or hair side of the hide or
skin of animals, reptiles, and certain birds, mammals, and fish.
Any layer below the top should be called "Split leather", etc.
The Better Business Bureau's "Do's and Don'ts has the FTC's guides for Luggage,
Handbags, and Shoes in addition to a general discussion of all leather
products.
The basic rule is one of full disclosure. If what you see is not what you get,
explain it.
41
<PAGE> 141
TIRES
The following information must appear in each catalog:
o A New-Passenger-Car Tire Load Limit chart. This can be on one page
with references to it.
o A New-Passenger-Car Tire Grading chart. This can be on one page
with references to it from the same catalog and from other media.
The actual number of plies should be stated for each tire. Radial tires need
only say that they are radial ply.
RETREADED, RE-MANUFACTURED TIRES
The act that these tires are retreads or re-manufactured must be clearly
stated. Copy must explain what a re-manufactured tire is.
BLEMISHED TIRES
These tires must carry a description similar to the following: "Tires have
minor cosmetic blemishes only, total useful life or performance is not
affected".
Any savings claim must indicate savings are off regular tires.
TIRE PRICING NOTE
The following note should be with all tire advertisements:
"Various State and local fees and or taxes may apply to the sale of tires."
42
<PAGE> 142
TRADEMARKS
A trademark is a word or symbol used by a business to identify its goods or
services. The trademark identifies them as originating from some particular
organization. As a result, it will convey that source's reputation for value,
quality, reliability, style, etc. It may also identify the goods or services
as being suited for some particular purpose or having some particular feature.
An effective trademark, with public acceptance, can sum up in one word or
phrase an entire paragraph of advertising copy.
As a result of their importance, Licensor's trademarks must be used properly as
well as those of our sources. We must also be sure that any names used as
trademarks are not owned by another company.
PROPER USE OF TRADEMARKS
A trademark should be used as an adjective followed by the descriptive name of
the product, for example, "Diehard Batteries". If this creates awkward copy,
we should have a prominent, technically correct usage at least once in the
merchandise description.
The first letter of the name must be capitalized, and the whole name may be
capitalized.
The trademark must not be used as a noun or in a possessive or plural form.
Source names should be checked with the buyer to see what style the source
prefers, or how to use their logo.
Use of the trademark symbol indicates that the trademark has been registered
for specific merchandise, and should only be used for that merchandise.
Never use one company's trademark to describe another's merchandise.
Licensor's Legal Department will continuously monitor all Licensee's use of
trademarks to insure they are used correctly.
43
<PAGE> 143
COPYRIGHTS
All Licensor's catalogs should be copyrighted. The copyright notice on page 2
or 3 should read "(symbol), the year of first publication or release, Sears
Shop at Home Services, Inc."
All licensed books must have the Sears Shop at Home Services, Inc. copyright.
The statement, "Sears Shop at Home Services, Sears, and the Sears logo are
trademarks of Sears, Roebuck and Co.", is required on all licensed media that
use these trademarks. It should be positioned near the copyright notice.
As with trademarks, copyrighted material of others should not be used without
their permission and direction.
Licensor may stop distribution of any catalog which infringes upon its
copyrights.
44
<PAGE> 144
WARRANTIES
SATISFACTION GUARANTEED OR YOUR MONEY BACK
Licensor's basic policy of "Satisfaction Guaranteed or Your Money Back" applies
to all merchandise and services. It should appear in all caps, or as shown
above, with all words beginning with a cap except "or".
"Satisfaction Guaranteed or Your Money Back" should never be varied or
paraphrased in any way. The statement should not be used in such a way as to
imply that it is limited to particular aspects of any product, or that it
applies only to certain products.
"Satisfaction Guaranteed or Your Money Back" should be the only guarantee in
Licensor's catalogs.
WARRANTIES
In 1975 Congress enacted the Magnuson-Moss Act which requires written
warranties to meet certain disclosure requirements and to be made available
prior to sale. This act does not require that every item have a written
warranty; it only requires certain disclosures when advertising merchandise
having a written warranty.
ALL ITEMS WARRANTIES MUST BE DISCLOSED OR REFERRED TO IN ADVERTISING IN ONE OF
SEVERAL WAYS:
1. Printing of complete warranty. The copy should not be paraphrased
or summarized without the approval of Licensor. However, the
warranty may be altered to refer to several types of merchandise
using the same basic warranty with varying durations.
2. Using a condensed version which has been approved by Licensor's Law
Department, the copy should begin "Information on (type of warranty
for item)". And should end "Write for free copy, see page 00".
3. Printing some aspects of the warranty without the full or condensed
version. For example, "Parts have a full one-year warranty;
Warranted by manufacturer. Write for free copy, see page 000
Always mention, A) whether the warranty is full or limited, B) the
duration, C)what part of the item is covered if not the whole item.
4. Just saying that the item is "Warranted by manufacturer. write for
free copy, see page 00."
In all cases, the address referred to MUST be in the same catalog, and usually
will be in the Customer Information section.
Always say whose lifetime is meant when referring to a "Lifetime warranty".
For example, "Full lifetime warranty for as long as you own the car."
45
<PAGE> 145
Examples of warranty representations NOT to be used without Licensor's Law
Department's approval.
o Guaranteed to save you money.
o Guaranteed never to be undersold.
o Guaranteed lowest prices
o We guarantee it.
o Gives up to 00 miles of use.
In licensed catalogs, all manufacturer's warranties should be disclosed to the
customer in one of the forms mentioned on the previous page. A page reference
must be included for warranty information and an address/phone must be provided
in regard to where the customer can call or write for a copy of the warranty.
The warranty must be provided (by the Licensee) to the customer upon request
prior to the sale.
46
<PAGE> 146
EXHIBIT D
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
SEARS SHOP AT HOME SERVICES, INC.
TOTAL NUMBER OF PAGES: 44
NOVEMBER 8,1993
This exhibit defines the Program Customer information transfer requirements
referenced by Paragraph 5. a. (3) (d) of the Licensing Agreement.
This Exhibit specifies file requirements and associated record formats for the
following Customer List Transactions:
1. Customer Name and Address Maintenance Transactions
2. Customer Order and Item Level Transactions
3. Promotion History - Net Mail Transactions
4. Mailing Do Not Promote Requests
11/8/93 Program Customer Information Transfer Requirements Ver. 1.1
<PAGE> 147
Sears Shop at Home Services, Inc. Licensing Agreement
1. CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS
Scope: o Program Customer Address Changes not accompanied by
order information
Key Elements: o Transaction Sort Elements
o Customer DD Elements
o Existing Customer Name and Address
o New Customer Name and Address
2. CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS
Scope: o All New Orders
o All Exchanges
o All Returns
Key Elements: o Transaction Sort Elements
o Customer ID Elements
o Order Addresses
o Order Header Information
o Order Item Information
3. PROMOTION HISTORY - NET MAIL TRANSACTIONS
Scope: o Each Completed Promotion
Key Elements: o Transaction Sort Elements
o Customer ID Elements
o Promotion Addresses
o Promotion Information
4. MAILING / DO NOT PROMOTE REQUESTS
Scope: o All Mailing / Do Not Promote Requests
Key Elements: o Transaction Sort Elements
o Customer ID Elements
o Customer Addresses
o Request Information
11/8/93 Program Customer Information Transfer Requirements Ver. 1.1
<PAGE> 148
SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
RECORD TYPE: ADDRESS RECORDS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C> <C>
AD Licensee ID 5 A 1 5 Left Adjust, Blank Fill AD-1
Filler 12 A 6 17
Record Type 2 A 18 19 Constant = 'AD'
Filler 3 A 20 22
SearsCharge Account Type 2 A 23 24 Left Adjust, Blank Fill AD-2
SearsCharge Account Number 16 A 25 40 Right Adjust, Zero Fill AD-3
Licensor Household ID 10 A 41 50 Left Adjust, Blank Fill AD-4
Licensor Customer ID 6 A 51 56 Left Adjust, Blank Fill AD-5
Licensor Matchback Code 28 A 57 84 Left Adjust, Blank Fill AD-6
Licensor Offer Version 6 A 85 90 Left Adjust, Zero Fill AD-7
Licensor Reference Number 10 N 91 100 Right Adjust, Zero Fill AD-8
Existing Name Prefix 5 A 101 105 Left Adjust, Blank Fill AD-9
Existing First Name 12 A 106 117 Left Adjust, Blank Fill AD-10
Existing Middle Initial 1 A 118 118 Left Adjust, Blank Fill AD-11
Existing Last Name 20 A 119 138 Left Adjust, Blank Fill AD-12
Existing Name Suffix 5 A 139 143 Left Adjust, Blank Fill AD-13
Existing Professional Suffix 5 A 144 148 Left Adjust, Blank Fill AD-14
Existing Address Line 1 30 A 149 178 Left Adjust, Blank Fill AD-15
Existing Address Line 2 30 A 179 208 Left Adjust, Blank Fill AD-16
Existing City 15 A 209 223 Left Adjust, Blank Fill AD-17
Existing State 2 A 224 225 Left Adjust, Blank Fill AD-18
Existing Zip+4 9 A 226 234 Left Adjust, Blank Fill AD-19
Existing Country 3 A 235 237 Left Adjust, Blank Fill AD-20
Existing Area Code (Home) 3 N 238 240 Left Adjust, Zero Fill AD-21
Existing Phone Number (Home) 7 N 241 247 Left Adjust, Zero Fill AD-22
Existing Area Code (Work) 3 N 248 250 Left Adjust, Zero Fill AD-23
Existing Phone Number (Work) 7 N 251 257 Left Adjust, Zero Fill AD-24
</TABLE>
Version 1.1 11/8/93 2:00 PM Page 3
<PAGE> 149
SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
RECORD TYPE: ADDRESS RECORDS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C>
New Name Prefix 5 A 258 262 Left Adjust, Blank Fill Ad-25
New First Name 12 A 263 274 Left Adjust, Blank Fill Ad-26
New Middle Initial 20 A 275 275 Left Adjust, Blank Fill Ad-27
New Last Name 5 A 276 295 Left Adjust, Blank Fill Ad-28
New Name Suffix 5 A 296 300 Left Adjust, Blank Fill Ad-29
New Professional Suffix 5 A 301 305 Left Adjust, Blank Fill Ad-30
New Address Line 1 30 A 306 335 Left Adjust, Blank Fill AD-31
New Address Line 2 30 A 336 365 Left Adjust, Blank Fill AD-32
New City 15 A 366 380 Left Adjust, Blank Fill AD-33
New State 2 A 381 382 Left Adjust, Blank Fill AD-34
New Zip+4 9 A 383 391 Left Adjust, Blank Fill AD-35
New Country 3 A 392 394 Left Adjust, Blank Fill AD-36
New Area Code (Home) 3 N 395 397 Left Adjust, Zero Fill AD-37
New Phone Number (Home) 7 N 398 404 Left Adjust, Zero Fill AD-38
New Area Code (Work) 3 N 405 407 Left Adjust, Zero Fill AD-39
New Phone Number (Work) 7 N 408 414 Left Adjust, Zero Fill AD-40
Address Date 8 D 415 422 YYYYMMDD AD-41
</TABLE>
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<PAGE> 150
SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
RECORD TYPE: ADDRESS RECORDS FOR ORDERS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C> <C>
O1 Licensee ID 5 A 1 5 Left Adjust, Blank Fill O1-1
Licensee Order Number 12 A 6 17 Right Adjust, Blank Fill O1-2
Record Type 2 A 18 19 Constant = 'O1'
Address Type - Shipping/Billing 1 A 20 20 Left Adjust, Blank Fill O1-3
Filler 2 A 21 22
SearsCharge Account Type 2 A 23 24 Left Adjust, Blank Fill O1-4
SearsCharge Account Number 16 A 25 40 Left Adjust, Zero Fill O1-5
Licensor Household ID 10 A 41 50 Left Adjust, Blank Fill O1-6
Licensor Customer ID 6 A 51 56 Left Adjust, Blank Fill O1-7
Licensor Matchback Code 28 A 57 84 Left Adjust, Blank Fill O1-8
Licensor Offer Version 6 A 85 90 Left Adjust, Zero Fill O1-9
Licensor Reference Number 10 N 91 100 Right Adjust, Zero Fill O1-10
Name Prefix 5 A 101 105 Left Adjust, Blank Fill O1-11
First Name 12 A 106 117 Left Adjust, Blank Fill O1-12
Middle Initial 1 A 118 118 Left Adjust, Blank Fill O1-13
Last Name 20 A 119 138 Left Adjust, Blank Fill O1-14
Name Suffix 5 A 139 143 Left Adjust, Blank Fill O1-15
Professional Suffix 5 A 144 148 Left Adjust, Blank Fill O1-16
Address Line 1 30 A 149 178 Left Adjust, Blank Fill O1-17
Address Line 2 30 A 179 208 Left Adjust, Blank Fill O1-18
City 15 A 209 23 Left Adjust, Blank Fill O1-19
State 2 A 224 225 Left Adjust, Blank Fill O1-20
Zip+4 9 A 226 234 Left Adjust, Blank Fill O1-21
Country 3 A 235 237 Left Adjust, Blank Fill O1-22
Area Code (Home) 3 N 238 240 Left Adjust, Zero Fill O1-23
Phone Number (Home) 7 N 241 247 Left Adjust, Zero Fill O1-24
Area Code (Work) 3 N 248 250 Left Adjust, Zero Fill O1-25
Phone Number (Work) 7 N 251 257 Left Adjust, Zero Fill O1-26
Date of Order 8 D 258 265 YYYYMMDD O1-27
Change Indicator 1 A 266 266 Left Adjust, Blank Fill O1-28
</TABLE>
Ver. 1.1 11/8/93 2:00 PM Page 5
<PAGE> 151
SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
RECORD TYPE: ORDER SUMMARY RECORDS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C> <C>
O2 Licensee ID 5 A 1 5 Left Adjust, Blank Fill O2-1
Licensee Order Number 12 A 6 17 Left Adjust, Blank Fill O2-2
Record Type 2 A 18 19 Constant = 'O2'
Filler 3 A 20 22
SearsCharge Account Type 2 A 23 24 Left Adjust, Blank Fill O2-3
SearsCharge Account Number 16 A 25 40 Left Adjust, Zero Fill O2-4
Licensor Household ID 10 A 41 50 Left Adjust, Blank Fill O2-5
Licensor Customer ID 6 A 51 56 Left Adjust, Blank Fill O2-6
Licensor Matchback Code 28 A 57 84 Left Adjust, Blank Fill O2-7
Licensor Offer Version 6 A 85 90 Left Adjust, Zero Fill O2-8
Licensor Reference Number 10 N 91 100 Right Adjust, Zero Fill O2-9
Licensee Source Code 10 A 101 110 Right Adjust, Zero Fill O2-10
Order Date 8 D 111 118 YYYYMMDD O2-11
Line Item Amount 8 N 119 126 999999.99=9999999 O2-12
Discount Amount 8 N 127 134 999999.99=9999999 O2-13
Shipping and Hanlding Amount 8 N 135 142 999999.99=9999999 O2-14
Tax Amount 8 N 143 150 999999.99=9999999 O2-15
Number of Line Items 3 N 151 153 Right Adjust, Zero Fill O2-16
Payment Code 1 A 154 154 Left Adjust, Blank Fill O2-17
Payment Account Type 2 A 155 156 Left Adjust, Blank Fill O2-18
Payment Account # 16 A 157 172 Right Adjust, Zero Fill O2-19
Shipment Method 3 A 173 175 Left Adjust, Blank Fill O2-20
Shipping Weight 5 N 176 180 4.5 Pounds = 045 O2-21
Order Source - Mail/Phone/Store/etc. 1 A 181 181 Left Adjust, Blank Fill O2-22
Credit Code 1 A 182 182 Left Adjust, Blank Fill O2-23
Gift Code 1 A 183 183 Left Adjust, Blank Fill O2-24
Order Status 1 A 184 184 Left Adjust, Blank Fill O2-25
</TABLE>
Ver. 1.1 11/8/93 2:01 PM Page 6
<PAGE> 152
SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENT
RECORD TYPE: LINE ITEM RECORDS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C> <C>
O3 Licensee ID 5 A 1 5 Left Adjust, Blank Fill O3-1
Licensee Order Number 12 A 6 17 Left Adjust, Blank Fill O3-2
Record Type 2 A 18 19 Constant = 'O3'
Line # 3 N 20 22 Right Adjust, Zero Fill O3-3
SearsCharge Account Type 2 A 23 24 Left Adjust, Blank Fill O3-4
SearsCharge Account Number 16 A 25 40 Right Adjust, Zero Fill O3-5
Licensor Household ID 10 A 41 50 Left Adjust, Blank Fill O3-6
Licensor Customer ID 6 A 51 56 Left Adjust, Blank Fill O3-7
Licensor Matchback Code 28 A 57 84 Left Adjust, Blank Fill O3-8
Licensor Offer Version 6 A 85 90 Left Adjust, Zero Fill O3-9
Licensor Reference Number 10 N 91 100 Right Adjust, Zero Fill O3-10
Line Item Status 1 A 101 101 Left Adjust, Blank Fill O3-11
Item Number 10 A 102 111 Right Adjust, Blank Fill O3-12
Item Description 25 A 112 136 Left Adjust, Blank Fill O3-13
Licensor Category 4 N 137 140 Left Adjust, Zero Fill O3-14
Licensor Sub-Category 2 N 141 142 Left Adjust, Zero Fill O3-15
Licensor Size Class Designation 2 A 143 144 left Adjust, Blank Fill O3-16
Licensor Size Code 5 A 145 149 Left Adjust, Blank Fill O3-17
Order Quantity 6 N 150 155 999999=999999 O3-18
Unit Price 8 N 156 163 999999.99=99999999 O3-19
Extended Line Item Amt 8 N 164 171 999999.99=99999999 O3-20
Discount Amount 8 N 172 179 999999.99=99999999 O3-21
Net Extended Line Item Amt 8 N 180 187 999999.99=99999999 O3-22
Shipped Quantity 6 N 188 193 999999=999999 O3-23
Back Ordered Quantity 6 N 194 199 999999=999999 O3-24
Licencee Category 12 A 200 211 Right Adjust, Blank Fill O3-25
Licensee Size Code 12 A 212 223 Right Adjust, Blank Fill O3-26
Sales Item Code 2 A 224 225 Left Adjust, Blank Fill O3-27
</TABLE>
Version 1.1 11/8/93 2:01 PM Page 7
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SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
RECORD TYPE: PROMOTION HISTORY - NET MAIL TRANSACTIONS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C> <C>
MH Licensee ID 5 A 1 5 Left Adjust, Blank Fill MH-1
Filler 12 A 6 17
Record Type 2 A 18 19 Constant = 'O1'
Filler 3 A 20 22
SearsCharge Account Type 2 A 23 24 Left Adjust, Blank Fill MH-2
SearsCharge Account Number 16 A 25 40 Right Adjust, Zero Fill MH-3
Licensor Household ID 10 A 41 50 Left Adjust, Blank Fill MH-4
Licensor Customer ID 6 A 51 56 Left Adjust, Blank Fill MH-5
Licensor Matchback Code 28 A 57 84 Left Adjust, Blank Fill MH-6
Licensor Offer Version 6 A 85 90 Left Adjust, Zero Fill MH-7
Licensor Reference Number 10 N 91 100 Right Adjust, Zero Fill MH-8
Name Prefix 5 A 51 55 Left Adjust, Blank Fill MH-9
First Name 12 A 56 67 Left Adjust, Blank Fill MH-10
Middle Initial 1 A 68 68 Left Adjust, Blank Fill MH-11
Last Name 20 A 69 88 Left Adjust, Blank Fill MH-12
Name Suffix 5 A 89 93 Left Adjust, Blank Fill MH-13
Professional Suffix 5 A 94 98 Left Adjust, Blank Fill MH-14
Address Line 1 30 A 99 148 Left Adjust, Blank Fill MH-15
Address Line 2 30 A 149 178 Left Adjust, Blank Fill MH-16
City 15 A 179 193 Left Adjust, Blank Fill MH-17
State 2 A 194 195 Left Adjust, Blank Fill MH-18
Zip+4 9 N 196 204 Left Adjust, Blank Fill MH-19
Country 3 A 205 207 Left Adjust, Blank Fill MH-20
Area Code (Home) 3 N 208 210 Left Adjust, Zero Fill MH-21
Phone Number (Home) 7 N 211 217 Left Adjust, Zero Fill MH-22
Area Code (Work) 3 N 218 220 Left Adjust, Zero Fill MH-23
Phone Number (Work) 7 N 221 227 Left Adjust, Zero Fill MH-24
Promotion Date 8 D 228 235 YYYYMMDD MH-25
Licensee Source Code 10 A 236 245 Left Adjust, Blank Fill MH-26
</TABLE>
Version 1.1 11/8/93 2:01 PM Page 8
<PAGE> 154
SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
RECORD TYPE: MAILING / DO NOT PROMOTE REQUESTS
<TABLE>
<CAPTION>
Rec Field Coding
ID Field Name Length Type Start End Format Notes Notes
<S> <C> <C> <C> <C> <C> <C> <C>
RQ Licensee ID 5 A 1 5 Left Adjust, Blank Fill RQ-1
Filler 12 A 6 17
Record Type 2 A 18 19 Constant = 'O1'
Filler 3 A 20 22
SearsCharge Account Type 2 A 23 24 Left Adjust, Blank Fill RQ-2
SearsCharge Account Number 16 A 25 40 Right Adjust, Zero Fill RQ-3
Licensor Household ID 10 A 41 50 Left Adjust, Blank Fill RQ-4
Licensor Customer ID 6 A 51 56 Left Adjust, Blank Fill RQ-5
Licensor Matchback Code 28 A 57 84 Left Adjust, Blank Fill RQ-6
Licensor Offer Version 6 A 85 90 Left Adjust, Zero Fill RQ-7
Licensor Reference Number 10 N 91 100 Right Adjust, Zero Fill RQ-8
Name Prefix 5 A 101 105 Left Adjust, Blank Fill RQ-9
First Name 12 A 106 117 Left Adjust, Blank Fill RQ-10
Middle Initial 1 A 118 118 Left Adjust, Blank Fill RQ-11
Last Name 20 A 119 138 Left Adjust, Blank Fill RQ-12
Name Suffix 5 A 139 143 Left Adjust, Blank Fill RQ-13
Professional Suffix 5 A 144 148 Left Adjust, Blank Fill RQ-14
Address Line 1 50 A 149 198 Left Adjust, Blank Fill RQ-15
Address Line 2 30 A 199 228 Left Adjust, Blank Fill RQ-16
City 15 A 229 243 Left Adjust, Blank Fill RQ-17
State 2 A 244 245 Left Adjust, Blank Fill RQ-18
Zip Code 9 A 246 254 Left Adjust, Blank Fill RQ-19
Country 3 A 255 257 Left Adjust, Blank Fill RQ-20
Area Code (Home) 3 N 258 260 Left Adjust, Zero Fill RQ-21
Phone Number (Home) 7 N 261 267 Left Adjust, Zero Fill RQ-22
Area Code (Work) 3 N 268 270 Left Adjust, Zero Fill RQ-23
Phone Number (Work) 7 N 271 277 Left Adjust, Zero Fill RQ-24
Date of Request 8 D 278 285 YYYYMMDD RQ-25
Request Type 1 A 286 286 Left Adjust, Blank Fill RQ-26
Request Code 1 12 A 287 298 Left Adjust, Blank Fill RQ-27
Request Code 2 12 A 299 310 Left Adjust, Blank Fill RQ-28
Request Code 3 12 A 311 322 Left Adjust, Blank Fill RQ-29
</TABLE>
Version 1.1 11/8/93 2:02 PM Page 9
<PAGE> 155
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
AD-1 Licensee ID o Hard Coded o ID Provided by Licensor
AD-2 SearsCharge Account o Finder file Match o Transfer from Finder File Field o SS, SP, blank
Type
o Finder file No Match o Leave Blank
AD-3 SearsCharge Account o Field provided by Customer: o Transfer from Finder File Field o Mod 10 Check Digit
Number Finder file Match o Account Look-Up
o Field provided by Customer: o Leave Blank
Finder file No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 10
<PAGE> 156
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
AD-4 Licensor Household ID o Field provided by Customer (e.g. o Transfer from Finder File Field
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Fill from Entry Screen o HH ID Look-Up
from back of book): Finder file
No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
AD-5 Licensor Customer ID o Field provided by Customer (e.g. o Transfer from Finder File Field o Customer ID Look-Up
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Leave Blank
from back of book): Finder file
No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 11
<PAGE> 157
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
AD-6 Licensor Matchback o Match to finder File. o Transfer from Finder File Field
Code
o No Match to Finder File. o Leave Blank
AD-7 Licensor Offer Version o Source Code determined o Translate from Source code-
from Customer. Offer Version Table.
AD-8 Licensor Reference o Match to Finder File. o Transfer from Finder File Field.
Number
o No Match to Finder File. o Leave Blank
AD-9 Existing Name Prefix o Match to Finder file o Transfer from Finder File Field o Mr., Mrs., Ms.,
Dr., Rev.
o No Match to Finder file: o Fill from Name and Address
Field provided by Customer entry Screen
o No Match to Finder file: o Leave Blank
Field not provided by
Customer
AD-10 Existing First Name o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: o Fill from Name and Address
Filed provided by Customer Entry Screen
o No Match Finder file: o Leave Blank
Field not provided by
Customer
</TABLE>
11/8/93 Ver 1.1 Page 12
<PAGE> 158
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
AD-11 Existing Middle Initial o Match to Finder o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-12 Existing Last Name o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-13 Exiting Name Suffix o Match to Finder file o Transfer from Finder File Field o Jr.,Sr.,II,III
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-14 Existing Professional o Match to Finder file o Transfer from Finder file Filed o MD,DDS,Ph.D.
Suffix
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 13
<PAGE> 159
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C>
AD-15 Existing Address Line 1 o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-16 Existing Address Line 2 o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-17 Existing City o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-18 Existing State o Match to Finder file o Transfer form Finder File filed
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 14
<PAGE> 160
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
AD-19 Existing Zip+4 o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-20 Existing Country o Match to Finder file o Transfer from Finder File Field o USA,CAN,MEX,
others to follow
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-21 Existing Area Code o Match to Finder file o Transfer from Finder File Field
(Home)
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-22 Existing Phone o Match to Finder file o Transfer from Finder File Field
Number (Home)
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 15
<PAGE> 161
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
AD-23 Existing Area Code o Match to Finder file o Transfer from Finder File Field
(Work)
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-24 Existing Phone Number o Match to finder file o Transfer from Finder File Field
(Work)
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
AD-25 New Name Prefix o Field provided by Customer o Fill from Name and Address o Mr.,Mrs.,Ms.,Dr.,
Entry Screen Rev.
o Field not provided by Customer o Leave Blank
AD-26 New First Name o Field provided by Customer o Fill from Name and Address o Required
Entry Screen
AD-27 New Middle Initial o Field provided by Customer o Fill from Name and Address
Entry Screen
o Field not provided by Customer o Leave Blank
AD-28 New Last Name o Field provided by Customer o Fill from Name and Address o Required
Entry Screen
</TABLE>
11/8/93 Ver 1.1 Page 16
<PAGE> 162
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
AD-29 New Name Suffix o Field provided by Customer o Fill from Name and Address o Jr., Sr., II, III
Entry Screen
o Field not provided by Customer o Leave Blank
AD-30 New Professional Suffix o Field provided by Customer o Fill from Name and Address o MD, DDS, PhD
Entry Screen
o Field not provided by Customer o Leave Blank
AD-31 New Address Line 1 o Field provided by Customer o Fill from Name and Address o Required
Entry Screen
AD-32 New Address Line 2 o Field provided by Customer o Fill from Name and Address
Entry Screen
o Field not provided by Customer o Leave Blank
AD-33 New City o Field provided by Customer o Fill from Name and Address o Required
Entry Screen
AD-34 New State o Field provided by Customer o Fill from Name and Address o Required
Entry Screen ST Look-Up in USA
AD-35 New Zip+4 o Field provided by Customer o Fill from Name and Address o 5 Digit Zip Required
Entry Screen
AD-36 New Country o Field provided by Customer o Fill from Name and Address o Default = USA
Entry Screen
</TABLE>
11/8/93 Ver 1.1 Page 17
<PAGE> 163
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER NAME AND ADDRESS MAINTENANCE TRANSACTIONS RECORD TYPE: ADDRESS RECORD
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
AD-37 New Area Code (Home) o Field provided by Customer o Fill from Name and Address o Entry highly
Entry Screen desirable
o Field not provided by Customer o Leave Blank
AD-38 New Phone Number o Field provided by Customer o Fill from Name and Address o Entry highly
(Home) Entry Screen desirable
o Field not provided by Customer o Leave Blank
AD-39 New Area Code (Work) o Field provided by Customer o Fill from Name and Address o Entry highly
Entry Screen desirable
o Field not provided by Customer o Leave Blank
AD-40 New Phone Number o Field provided by Customer o Fill from Name and Address o Entry highly
(Work) Entry Screen desirable
o Field not provided by Customer o Leave Blank
AD-41 Address Date o System Generated Field. o Required
</TABLE>
11/8/93 Ver 1.1 Page 18
<PAGE> 164
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-1 Licensee ID o Hard Coded o ID Provided by Licensor o Required
O1-2 Licensee Order Number o System Generated o Must be unique for each order. o Required
Only subsequent transactions for
same order can have same order
number.
O1-3 Address Type o System Generated Field. o Required
Requires proper identification by
operator. o S=Shipping
o B=Binding (if
different from
Mailing)
o M=Mailing
O1-4 SearsCharge Account o Finder file Match o Transfer from Finder File Field o SS, SP, blank
Type
o Finder file No Match o Leave Blank
O1-5 SearsCharge Account o Field provided by Customer: o Transfer from Finder File Field o Mod 10 Check Digit
Number Finder file March o Account Look-Up
o Field provided by Customer: o Leave Blank
Finder file No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 19
<PAGE> 165
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-6 Licensor Household ID o Field provided by Customer (e.g. o Transfer from Finder file Field
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Fill from Entry Screen o HH ID Look-Up
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
O1-7 Licensor Customer ID o Field provided by Customer (e.g. o Transfer from Finder File Filed o Customer ID Look-Up
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Leave Blank
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 20
<PAGE> 166
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-8 Licensor Matchback o Match to Finder File. o Transfer from Finder File Field
Code
o No Match to Finder File. o Leave Blank
O1-9 Licensor Offer o Source Code determined from o Translate from Source Code-
Version Customer. Offer Version Table.
O1-10 Licensor Reference o Match to Finder File. o Transfer from Finder File Field
Number
o No Match to Finder File. o Leave Blank
O1-11 Name Prefix o Match to Finder file o Transfer from Finder File Field o Mr., Mrs., Ms., Dr.,
Rev.
o No match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-12 First Name o Match to Finder file o Transfer from Finder File Field o Required
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match to Finder file: Field o Leave Blank
not provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 21
<PAGE> 167
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-13 Middle Initial o Match to Finder file. o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-14 Last Name o Match to Finder file. o Transfer from Finder file Field o Required
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-15 Name Suffix o Match to Finder file o Transfer from Finder File Field o Jr., Sr., II, III
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-16 Professional Suffix o Match to Finder file o Transfer from Finder File Field o MD, DDS, PhD
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match to Finder file: Field o Leave Blank
not provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 22
<PAGE> 168
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-17 Address Line 1 o Match to Finder file o Transfer from Finder File Field o Required
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-18 Address Line 2 o Match to Finder file o Transfer from Finder file Field
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-19 City o Match to Finder file o Transfer from Finder File Field o Required
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-20 State o Match to Finder file o Transfer from Finder File Field o Required
ST Look-Up in USA
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match to Finder file: Field o Leave Blank
not provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 23
<PAGE> 169
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-21 Zip+4 o Match to Finder file o Transfer from Finder File Field o 5 Digit Zip Required
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-22 Country o Match to Finder file o Transfer from Finder file Field o Default = USA
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-23 Area Code (Home) o Match to Finder file o Transfer from Finder File Field o Entry highly
desirable
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-24 Phone Number (Home) o Match to Finder file o Transfer from Finder File Field o Entry highly
desirable
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match to Finder file: Field o Leave Blank
not provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 24
<PAGE> 170
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ADDRESS RECORDS FOR ORDERS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O1-25 Area Code (Work) o Match to Finder file o Transfer from Finder File Field o Entry highly
desirable
o No Match to Finder file: Field o Fill from Name and Address
provided by Customer Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-26 Phone Number (Work) o Match to Finder file o Transfer from Finder File Field o Entry highly
desirable
o No Match to Finder file: Field o Fill from Name and
provided by Customer Address Entry Screen
o No Match Finder file: Field not o Leave Blank
provided by Customer
O1-27 Date of Order o System Generated Field. o Required.
O1-28 Change Indicator o System Generated Field. o Required for Changes
Requires proper identification by to Finder File address
operator. information.
o C=Change of Address
X=Correction
blank=No Change
</TABLE>
11/8/93 Ver 1.1 Page 25
<PAGE> 171
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ORDER SUMMARY RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES / EDITS
<S> <C> <C> <C> <C>
O2-1 License ID o Hard Coded o ID Provided by Licensor o Required
O2-2 Licensee Order Number o System Generated o Must be unique for each order. o Required
Only subsequent transaction for
same order can have same order
number.
O2-3 SearsCharge Account o Finder file Match o Transfer from Finder File Field o SS, SP, blank
Type
o Finder file No Match o Leave Blank
O2-4 SearsCharge Account o Field provided by Customer: o Transfer from Finder File Field o Mod 10 Check Digit
Number Finder file Match o Account Look-Up
o Field provided by Customer: o Leave Blank
Finder file No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 26
<PAGE> 172
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ORDER SUMMARY RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O2-5 Licensor Household ID o Field provided by Customer (e.g. o Transfer from Finder File Field
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Fill from Entry Screen o HH ID Look-Up
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
O2-6 Licensor Customer ID o Field provided by Customer (e.g. o Transfer from Finder File Field o Customer ID Look-Up
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Leave Blank
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 27
<PAGE> 173
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ORDER SUMMARY RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O2-7 Licensor Matchback o Match to Finder File. o Transfer from Finder File Field
Code
o No Match to Finder File. o Leave Blank
O2-8 Licensor Offer Version o Source Code determined from o Translate from Source Code-
Customer. Offer Version Table.
O2-9 Licensor Reference o Match to Finder File. o Transfer from Finder File Field
Number
o No Match to Finder File. o Leave Blank
O2-10 Licensee Source Code o Entry from operator. o Fill from Order Entry Screen o Required
o Source Code Look-
Up.
O2-11 Order Date o System Generated o Required
O2-12 Line Item Amount o System Generated. Sum of Line o Required
Item Amounts.
O2-13 Discount Amount o System Generated. Order o Required
Discount Amount.
O2-14 Shipping and Handling o System Generated. Shipping and o Required
Handling Amount.
O2-15 Tax Amount o System Generated. Tax Amount. o Required
O2-16 Number of Line Items o System Generated. Count of o Required
Lines in Order.
</TABLE>
11/8/93 Ver 1.1 Page 28
<PAGE> 174
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ORDER SUMMARY RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O2-17 Payment Code o Entry from operator. o Required
o P=Prepaid (Check)
C=Credit Card
S=Searscharge
H=House Credit
O2-18 Payment Account Type o Entry from operator. o Required
o SC=Searscharge
MC=Mastercard
V=Visa
AX=AmEx
D=Discover
DC=Diners Club
CB=CarteBlanche
others as assigned
O2-19 Payment Account # o Entry from operator. o Required for non-
Prepaid orders
O2-20 Shipment Method o Entry from operator. o Required.
o UPS=United Parcel
PP=Parcel Post
EXP=FedEx, Etc.
1CL=1st Class Mail
3CL=3rd Class Mail
others as assigned
O2-21 Shipping Weight o System Generated Field o (in tenths of pounds, Max=9999.9
pounds)
</TABLE>
11/8/93 Ver 1.1 Page 29
<PAGE> 175
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: ORDER SUMMARY RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C>
O2-22 Order Source - o Entry from operator. o Required
Mail/Phone/Store/etc.
o M=Mail
P=Phone (Inbound)
T=Phone (Outbound)
F=Fax
S=In Store
O2-23 Credit Code o Entry from operator or System o Required for non-
Generated. Prepaid orders
o A=Approved on first
attempt
P=Pending
D=Declined on
Previous attempt
O2-24 Gift Code o Entry from operator. o G=Gift
blank otherwise
O2-25 Order Status o System Generated Field. o Required
o C=Complete
P=Partial
B=Back Order
</TABLE>
11/8/93 Ver 1.1 Page 30
<PAGE> 176
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: LINE ITEM RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O3-1 Licensee ID o Hard Coded o ID Provided by Licensee o Required
O3-2 Licensee Order Number o System Generated o Must be unique for each order. o Required
Only subsequent transactions for
same order can have same order
number.
O3-3 Line # o System Generated o Required
O3-4 SearsCharge Account o Finder file Match o Transfer from Finder File Field o SS, SP, blank
Type
o Finder file No Match o Leave Blank
O3-5 SearsCharge Account o Field provided by Customer: o Transfer from Finder File Field o Mod 10 Check Digit
Number Finder file Match o Account Look-Up
o Field provided by Customer: o Leave Blank
Finder file No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 31
<PAGE> 177
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: LINE ITEM RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O3-6 Licensor Household ID o Field provided by Customer (e.g. o Transfer from Finder File Field
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Fill from Entry Screen o HH ID Look-Up
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
O3-7 Licensor Customer ID o Field provided by Customer (e.g. o Transfer from Finder File Field o Customer ID Look-Up
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Leave Blank
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 32
<PAGE> 178
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: LINE ITEM RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O3-8 Licensor Matchback o Match to Finder File. o Transfer from Finder File Field
Code
o No Match to Finder File. o Leave Blank
O3-9 Licensor Offer Version o Source Code determined from o Translate from Source Code-
Customer. Offer Version Table.
O3-10 Licensor Reference o Match to Finder File. o Transfer from Finder File Field
Number
o No Match to Finder File. o Leave Blank
O3-11 Licensee Source Code o System Generated o Required
o S=Sale/Gross Demand
E=Exchange
R=Return for credit
O3-12 Licensee Item Number o Entry from operator. o Fill from Order Entry Screen o Required
O3-13 Licensee Item o System Generated. o Fill from Order Entry Screen o Required
Description
O3-14 Licensor Category o System Generated. Translates o Fill from Order Entry Screen o Required
Licensee Category into Sears and/or Item Master
Product Category. o Valid Categories in
Exhibit A, Appendix 1
O3-15 Licensor Sub-Category o System Generated. Translates o Fill from Order Entry Screen o Required
Licensee Category into Sears and/or Item Master
Product Sub-Category. o Valid Sub-Categories
in Exhibit A,
Appendix 1
</TABLE>
11/8/93 Ver 1.1 Page 33
<PAGE> 179
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: LINE ITEM RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O3-16 Licensor Size Class o System Generated. Translates o Fill from Order Entry Screen o Required
Designation Licensee Size Classes into Sears and/or Item Master
Size Classes. o Valid Size Classes
in Exhibit A,
Appendix 2
O3-17 Licensor Size Code o System Generated. Translates o Fill from Order Entry Screen o Required
Licensee Sizes into Sears Sizes and/or Item Master
o Valid Sizes in
Exhibit A, Appendix 2
O3-18 Ordered Quantity o Entry from operator. o Fill from Order Entry Screen o Required
O3-19 Unit Price o Entry from operator. o Fill from Order Entry Screen o Required
and/or Item Master
O3-20 Extended Line Item o System Generated. o Ordered Quantity X Unit Price o Required.
Amount
O3-21 Discount Amount o Entry from operator./System o Required
generated.
O3-22 Net Extended Line Item o System Generated. o Extended Line Item Amount - o Required
Amt Discount Amount
O3-23 Shipped Quantity o System Generated. o Required
O3-24 Back-Ordered Quantity o System Generated. o Ordered Quantity - Shipped o Required for Partial
Quantity and/or Backordered
Items
</TABLE>
11/8/93 Ver 1.1 Page 34
<PAGE> 180
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
CUSTOMER ORDER AND ITEM LEVEL TRANSACTIONS RECORD TYPE: LINE ITEM RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
O3-25 Licensee Category o System Generated. Translates o Fill from Item Master o As determined by
Item Number into Licensee licensee.
Product Categories.
O3-26 Licensee Size Code o Entry from Customer. o Fill from Order Entry Screen. o Required for Apparel
Categories
O3-27 Sale Item Code o System Generated. o S=Sale Item
blank otherwise
</TABLE>
11/8/93 Ver 1.1 Page 35
<PAGE> 181
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
PROMOTION HISTORY TRANSACTIONS RECORD TYPE: NET MAIL RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C>
MH-1 Licensee ID o From Promotion File.
MH-2 SearsCharge Account o From Promotion File.
Type
MH-3 SearsCharge Account o From Promotion File.
Number
MH-4 Licensor Household ID o From Promotion File.
MH-5 Licensor Customer ID o From Promotion File.
MH-6 Licensor Matchback o From Promotion File.
Code
MH-7 Licensor Offer Version o From Promotion File.
MH-8 Licensor Reference o From Promotion File.
Number
MH-9 Name Prefix o From Promotion File.
MH-10 First Name o From Promotion File.
MH-11 Middle Initial o From Promotion File.
MH-12 Last Name o From Promotion File.
MH-13 Name Suffix o From Promotion File.
MH-14 Professional Suffix o From Promotion File.
</TABLE>
11/8/93 Ver 1.1 Page 36
<PAGE> 182
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
PROMOTION HISTORY TRANSACTIONS RECORD TYPE: NET MAIL RECORDS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
MH-15 Address Line 1 o From Promotion File.
MH-16 Address Line 2 o From Promotion File.
MH-17 City o From Promotion File.
MH-18 State o From Promotion File.
MH-19 Zip +4 o From Promotion File.
MH-20 Country o From Promotion File.
MH-21 Area Code(Home) o From Promotion File.
MH-22 Phone Number(Home) o From Promotion File.
MH-23 Area Code(Work) o From Promotion File.
MH-24 Phone Number(Work) o From Promotion File.
MH-25 Promotion Date o Entry from Licensee List o Drop date of promotion. o Required.
Processing.
MH-26 Licensee Source Code o Entry from Licensee List o Assigned against Offer-Version o Required.
Processing and List Selections.
</TABLE>
11/8/93 Ver 1.1 Page 37
<PAGE> 183
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING/DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-1 Licensee ID o Hard Coded o ID Provided by Licensor
RQ-2 SearsCharge Account o Finder file Match o Transfer from Finder File Field o SS, SP, blank
Type
o Finder file No Match o Leave Blank
RQ-3 SearsCharge Account o Field provided by Customer: o Transfer from Finder File Field o Mod 10 Check Digit
Number Finder file Match o Account Look-Up
o Field provided by Customer: o Leave Blank
Finder file No Match:
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 38
<PAGE> 184
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING/DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-4 Licensor Household ID o Field provided by Customer (e.g. o Transfer from Finder File Field o HH ID Look-Up
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Fill from Entry Screen
from back of book): Finder file
No Match:
o Field not provided by Customer: Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
RQ-5 Licensor Customer ID o Field provided by Customer (e.g. o Transfer from Finder File Field o Customer ID Look-UP
from back of book): Finder file
Match
o Field provided by Customer (e.g. o Leave Blank
from back of book): Finder file
No Match
o Field not provided by Customer: o Transfer from Finder File Field
Match to Finder File through
other access path
o Field not provided by Customer: o Leave Blank
No Match to Finder File through
other access path
</TABLE>
11/8/93 Ver 1.1 Page 39
<PAGE> 185
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING/DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-6 Licensor Matchback o Match to Finder File. o Transfer from Finder File Field
Code
o No Match to Finder File. o Leave Blank
RQ-7 Licensor Offer Version o Source Code determined from o Translate from Source Code-
Customer. Offer Version Table.
RQ-8 Licensor Reference o Match to Finder File. o Transfer from Finder File Field
Number
o No Match to Finder File. o Leave Blank
RQ-9 Name Prefix o Match to Finder file o Transfer from Finder File Field o Mr., Mrs., Ms., Dr.,
Rev.
o No Match to Finder file: Field o Fill from Request Entry Screen
provided by Customer
o No Match Finder file: Field not o Leave Blank
provided by Customer
RQ-10 First Name o Match to Finder file o Transfer from Finder File Field o Required.
o No Match to Finder file: Field o Fill from Request Entry Screen.
provided by Customer
RQ-11 Middle Initial o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Request Screen
provided by Customer
o Leave Blank
o No Match Finder file: Field not
provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 40
<PAGE> 186
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING/DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-12 Last Name o Match to Finder file o Transfer from Finder File Field o Required
o No Match to Finder file: Field o Fill from Request Entry Screen
provided by Customer
RQ-13 Name Suffix o Match to Finder file o Transfer from Finder File Field o Jr., Sr., II, III
o No Match to Finder file: Field o Fill from Request Entry Screen
provided by Customer
o No Match Finder file: Field not o Leave Blank
provided by Customer
RQ-14 Professional Suffix o Match to Finder file o Transfer from Finder File Field o MD, DDS, Ph.D.
o No Match to Finder file: Field o Fill from Request Entry Screen
provided by Customer
o No Match Finder file: Field o Leave Blank
not provided by Customer
RQ-15 Address Line 1 o Match to Finder file o Transfer from Finder File Field o Required
o No Match Finder file: Field o Fill from Request Entry Screen
provided by Customer
RQ-16 Address Line 2 o Match to Finder file o Transfer from Finder File Field
o No Match to Finder file: Field o Fill from Request Entry Screen
provided by Customer
o No Match Finder file: Field not o Leave Blank
provided by Customer
</TABLE>
11/8/93 Ver 1.1 Page 41
<PAGE> 187
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING / DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-17 City o Match to Finder file o Transfer from Finder File o Required
Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
RQ-18 State o Match to Finder file o Transfer from Finder File o Required
Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
RQ-19 Zip Code o Match to Finder file o Transfer from Finder File o Required
Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
RQ-20 Country o Match to Finder file o Transfer from Finder File o USA, CAN,
Field MEX, others
to follow
o No Match to Finder file: o Fill from Request Entry o USA=default
Field provided by Screen
Customer
RQ-21 Area Code o Match to Finder file o Transfer from Finder File o Highly desirable
(Home) Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
o No Match Finder file: o Leave Blank
Field not provided by
Customer
</TABLE>
11/8/93 Ver. 1.1 Page 42
<PAGE> 188
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING / DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-22 Phone Number o Match to Finder file o Transfer from Finder File o Highly desirable
(Home) Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
o No Match Finder file: o Leave Blank
Field not provided by
Customer
RQ-23 Area Code o Match to Finder file o Transfer from Finder File o Highly desirable
(Work) Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
o No Match Finder file: o Leave Blank
Field not provided by
Customer
RQ-24 Phone Number o Match to Finder file o Transfer from Finder File o Highly desirable
(Work) Field
o No Match to Finder file: o Fill from Request Entry
Field provided by Screen
Customer
o No Match Finder file: o Leave Blank
Field not provided by
Customer
RQ-25 Date of o System Generated. Entry o Required.
Request from Request Processing
RQ-26 Request Type o Entry from Licensee List o Fill from Entry Screen o Required.
Processing
o P=Do Not Promote
T=Do Not Phone
M=Mailing Request
</TABLE>
11/8/93 Ver. 1.1 Page 43
<PAGE> 189
EXHIBIT D: SEARS SHOP AT HOME SERVICES, INC.
PROGRAM CUSTOMER INFORMATION TRANSFER REQUIREMENTS
<TABLE>
<CAPTION>
MAILING / DO NOT PROMOTE REQUESTS RECORD TYPE: DO NOT PROMOTE REQUESTS
NOTE ID FIELD PROCESSING LOGIC CODING NOTE VALUES/EDITS
<S> <C> <C> <C> <C>
RQ-27 Request Code o Entry from Licensee List o Fill from Entry Screen o Name of Desired
1 Processing Publication
RQ-28 Request Code o Entry from Licensee List o Fill from Entry Screen o Name of Desired
2 Processing Publication
RQ-29 Request Code o Entry from Licensee List o Fill from Entry Screen o Name of Desired
3 Processing Publication
</TABLE>
11/8/93 Ver. 1.1 Page 44
<PAGE> 190
EXHIBIT E
FINANCIAL CONSIDERATION SCHEDULE TO LICENSE AGREEMENT BETWEEN HANOVER VENTURES,
INC. AND SEARS SHOP AT HOME SERVICES, INC.
FINANCIAL CONSIDERATION:
PROFIT & LOSS:
Licensor and Licensee shall be responsible for generating revenue by mailing
catalogs developed by Licensee and its parent, Hanover Direct, Inc. to list
selections provided by Licensor. These revenues will be off-set by the
following costs for the determination of profits or losses. The guiding
principle is for Licensee and Licensor to share equally in the contribution to
fixed expenses generated from the shipment of merchandise under this Agreement.
After procedures for computing profit and loss enumerated below have been
completed, Licensor will receive 50% of the net profit, and Licensee will
receive 50% of the net profit. If there are losses, Licensor will be
responsible for 50%, and Licensee will be responsible for 50%.
COMPUTATION OF PROFIT AND LOSS
Net profit will result from gross revenues from the shipment of merchandise,
including postage and handling charges, by Licensee to customers (herein "gross
revenues from shipments") less:
1. Returns (including postage and handling expenses, and the
central returns processing center charges);
2. Cost of goods sold including but not limited to merchandise
cost, freight-in, obsolescence, markdowns, and shrinkage;
3. Merchandise out-bound expense;
4. Catalog costs including but not limited to: list rental
expense, list maintenance expense, paper cost, printing cost,
catalog postage, internal and external preparation costs,
package inserts, catalog wraps and catalog inserts and return
postage;
5. Fixed direct cost including: salaries, wages, benefits, and
other costs associated with employees who spend more than 90%
of their time on activities resulting in gross revenues from
shipments; third party costs identifiable as related to
activities resulting in gross revenues from shipments (such as
outside audit fees, legal fees, etc.); and depreciation on
assets that were acquired specifically to support activities
resulting in gross revenues from shipments;
<PAGE> 191
6. Fulfillment Costs - Licensor and Licensee will agree each year on
standard variable costs for the following services:
a. Pick, pack and ship (including receiving and
preparation) Mail order processing,
b. Correspondence related postage,
c. Return processing, and
d. Outbound telemarketing;
7. Telephone order processing and customer service telephone costs
will be charged on a standard cost per minute of actual on line
time based on variable costs;
8. Bank fees and credit fees based on actual charges; and
9. Interest Expense charged monthly based on Hanover Direct, Inc.
annual borrowing cost plus 3% based on the cash flow statements
included as Exhibit E-1 hereto.
1O. Other taxes: will include taxes, other than those based on
income, such as sales/use taxes, gross receipt taxes, payroll
taxes, property or similar taxes attributable to any
transaction between Licensee and Licensor, or any transaction
whose costs (as determined above) are includable in the profit
and loss or asset is includable on the balance sheet.
Licensor and Licensee shall calculate their respective income taxes based on
their individual tax situation, and such taxes shall not be taken into account
in computing profit and loss herein.
ACCOUNTING INFORMATION
Licensor and Licensee may, from time to time, prepare joint statements of
financial position reflecting assets and liabilities resulting from the manner
in which profit and loss to each party from the License Agreement is
calculated. The following guidelines will be used to prepare such statements.
1. Inventories - since Licensee will fill orders from the same
inventory pool as the base Hanover Direct, Inc. businesses,
inventories attributable to each Program will be calculated
based on a 12 month rolling combined turn rate of the Program
and its comparable Hanover Direct, Inc. catalog business
(updated quarterly) applied to the estimated future months'
cost of merchandise sold for the Program.
2. Inventory valuation account (obsolescence, shrinkage, etc.)
balances will be established based on charges to made in
determining net revenue, described above.
<PAGE> 192
3. Prepaid accounts will be based on billings or liabilities
directly attributable to activities resulting in gross
revenues from shipments.
4. Accounts Payable (merchandise only) will be calculated by
Program based on the Program's inventory as a percentage of
the total inventory of the Program and the comparable Hanover
Direct, Inc. catalog business.
5. Other expense accounts payable/ reserves (e.g., payroll),
return reserves, and catalog costs will be based on billings
or liabilities directly attributable to activities resulting
in gross revenues from shipments.
6. Cash will represent that amount of cash in the bank accounts
of Licensee and Licensor attributable to activities resulting
in gross revenues from shipments.
7. Third party credit cards, SearsCharge and other receivables
will be based on actual balances attributable to activities
resulting in gross revenues from shipments. For purposes of
calculating interest expense, the SearsCharge balance will be
the average daily balance, not the month-end balance.
8. Any incremental fixed asset charges are reflected in the
standard cost. No additional fixed cost will be allocated or
charged to the Licensee by Hanover Direct, Inc.
Profit and loss for purposes of computing Licensor's share and Licensee's share
thereof, financial statements and any other financial or accounting schedules
deemed necessary by Licensee or Licensor to determine amounts due and owing to
each party shall be calculated monthly based on the normal accounting closing
schedules of Licensee and Licensor.
<PAGE> 193
EXHIBIT F
SETTLEMENT
1. Together with the submission of each month's financial statements (per
the attached closing schedule) contemplated in the "Account Information"
section of Exhibit E, Licensee shall remit to Licensor by wire transfer an
advance of fifty percent (50%) of Licensor's share of profits for such monthly
period against the quarterly reconciliation provided for in paragraph 2 below.
2. At the end of each calendar quarter, the parties shall reconcile the
accounts and accounting information that are to be maintained in accordance
with Exhibit E to the Agreement. Cash distributions, less advances under
paragraph 1 above, resulting from activities producing gross revenues from
shipments will be divided between Licensor and Licensee in accordance with
Exhibit E, provided that Licensor and Licensee have been reimbursed for all
expenses incurred as a result of their investments attributable to activities
producing revenues from shipments.
3. Each business day Licensor shall effect a wire transfer to Licensee
for the previous day's SearsCharge sales.
<PAGE> 194
1994 FISCAL CALENDAR
<TABLE>
<CAPTION>
January July
------- ----
<S> <C> <C> <C>
Fiscal Fiscal
Week S M T W T F S S M T W T F S Week
- ---- ---------------------------- ---------------------------- ----
1 52 2 3 4 5 6 7 8 3 [4] 5 6 7 8 9 27 26
2 51 9 10 11 12 13 14 15 10 11 12 13 14 15 16 28 25
3 50 16 17 18 19 20 21* 22 17 18 19* 20 21 22 23 29 24
4 49 23 24 25 26 27 28 29 24 25 26 27 28 29 30 30 23
February August
-------- ------
S M T W T F S S M T W T F S
---------------------------- ----------------------------
5 48 30 31 1 2 3 4 5 31 1 2 3 4 5 6 31 22
6 47 6 7 8 9 10 11 12 7 8 9 10 11 12 13 32 21
7 46 13 14 15 16 17 18* 19 14 15 16* 17 18 19 20 33 20
8 45 20 [21] 22 23 24 25 26 21 22 23 24 25 26 27 34 19
March September
----- ---------
S M T W T F S S M T W T F S
---------------------------- ----------------------------
9 44 27 28 1 2 3 4 5 28 29 30 31 1 2 3 35 18
10 43 6 7 8 9 10 11 12 4 [5] 6 7 8 9 10 36 17
11 42 13 14 15* 16 17 18 19 11 12 13* 14 15 16 17 37 16
12 41 20 21 22 23 24 25 26 18 19 20 21 22 23 24 38 15
13 40 27 28 29 30 31 1 2 25 26 27 28 29 30 1 39 14
April October
----- -------
S M T W T F S S M T W T F S
---------------------------- ----------------------------
14 39 3 4 5 6 7 8 9 2 3 4 5 6 7 8 40 13
15 38 10 11 12 13 14 15 16 9 10 11 12 13 14 15 41 12
16 37 17 18 19* 20 21 22 23 16 17 18* 19 20 21 22 42 11
17 36 24 25 26 27 28 29 30 23 24 25 26 27 28 29 43 10
May November
--- --------
S M T W T F S S M T W T F S
---------------------------- ----------------------------
18 35 1 2 3 4 5 6 7 30 31 1 2 3 4 5 44 9
19 34 8 9 10 11 12 13 14 6 7 8 9 10 11 12 45 8
20 33 15 16 17* 18 19 20 21 13 14 15* 16 17 18 19 46 7
21 32 22 23 24 25 26 27 28 20 21 22 23 [24] 25 26 47 6
June December
---- --------
S M T W T F S S M T W T F S
---------------------------- ----------------------------
22 31 29 [30] 31 1 2 3 4 27 28 29 30 1 2 3 48 5
23 30 5 6 7 8 9 10 11 4 5 6 7 8 9 10 49 4
24 29 12 13 14* 15 16 17 18 11 12 13* 14 15 16 17 50 3
25 28 19 20 21 22 23 24 25 18 19 20 21 22 23 24 51 2
26 27 26 27 28 29 30 1 2 25 [26] 27 28 29 30 31 52 1
</TABLE>
[ ] Indicates Weehawken holiday
* Accounting Close Date
<PAGE> 195
SHOW PLACE
FEATURING HOME FASHIONS
BY DOMESTICATIONS
SEARS SHOP AT HOME SERVICES, INC.
LICENSE AGREEMENT
EXHIBIT G
USE OF MARKS
TOTAL PAGES 1
DATE: DECEMBER 1993
[PICTURE]
SEARS
SHOP AT HOME SERVICE
<PAGE> 196
Showplace featuring unique designs by Domestications
SEARS SHOP AT HOME SERVICES, INC.
LICENSE AGREEMENT
EXHIBIT H
USE OF MARKS
TOTAL PAGES 1
DATE: DECEMBER 1993
[PICTURE]
<PAGE> 1
Exhibit 2.2
FORM OF WARRANT AGREEMENT
<PAGE> 2
WARRANT AGREEMENT
BETWEEN
HANOVER DIRECT, INC.
AND
SEARS SHOP AT HOME SERVICES, INC.
Dated as of January 1, 1994
For Up To 7,000,000 Shares
of Common Stock
<PAGE> 3
WARRANT AGREEMENT, dated as of January 1, 1994 (this "Agreement"),
between HANOVER DIRECT, INC., a Delaware corporation (the "Company"), and SEARS
SHOP AT HOME SERVICES, INC., a Delaware corporation ("Sears").
WHEREAS, the Company is desirous of obtaining certain rights to
marketing lists owned by Sears in order to sell various products to certain
customers identified thereon, which rights, and the terms and conditions of the
exercise thereof, are set forth in a certain License Agreement, dated as of the
date hereof, (the "License Agreement"), between the Company, as licensee, and
Sears, as licensor;
WHEREAS, as an inducement to Sears to enter into the License Agreement
and grant the rights thereunder, the Company proposes to issue to Sears a
warrant (the "Warrant") to purchase up to an aggregate of 7,000,000 shares (the
"Warrant Shares") of the Company's Common Stock, par value $0.66 2/3 per share
(the "Common Stock"), for an exercise price as set forth herein, all upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Issuance of Warrants; Form of Warrant Certificate.
Concurrently with the execution of this Agreement, the Company will issue and
deliver the Warrant to Sears. The text of the Warrant Certificate (the
"Warrant Certificate") and the form of election to purchase Warrant Shares to
be printed on the reverse thereof shall be as set forth in Annex A attached
hereto. The Warrant Certificate shall be dated the date hereof and shall be
executed on behalf of the Company by the manual or facsimile signature of the
Chairman of the Board, President or Vice President of the Company, under its
corporate seal, affixed or in facsimile, attested to by the manual or facsimile
signature of the Secretary or an Assistant Secretary of the Company and shall
bind the Company notwithstanding that such individuals or any one of them shall
have ceased to hold such offices prior to the delivery of the Warrant Shares.
2. Issuance. The Warrant Certificate shall be issued in the name
of "Sears Shop At Home Services, Inc." and the Company shall be entitled to
treat Sears as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Warrant
Certificate on the part of any other person, and shall not be liable for any
transfer of the
<PAGE> 4
Warrant Certificate or the Warrant, in whole or in part, except as provided in
Section 3(a) hereof.
3. Transfer of Warrants and Warrant Shares.
(a) The Warrant is not and shall not be transferable except to an
"affiliate" (as such term is defined for purposes of Rule 144 promulgated under
the Securities Act of 1933, as amended) of Sears, which is a corporation
engaged solely in the business of acquiring, holding, owning, managing and
disposing of securities. The Warrant shall be transferable only upon the
surrender thereof, duly endorsed by the holder thereof or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer, in each case accompanied by
any necessary transfer tax or other governmental charge imposed upon transfer,
or evidence of the payment thereof. In all cases of transfer by an attorney,
the original power of attorney, duly approved, or an official copy thereof,
duly certified, shall be deposited with the Company. Upon any transfer, the
Company shall promptly deliver a new Warrant Certificate to the person entitled
thereto, which Warrant Certificate shall be identical in all respects to the
Warrant Certificate surrendered except for the name of the holder thereof.
Notwithstanding the foregoing, the Company shall have no obligation to cause
the Warrant to be transferred to any person, unless the holder of the Warrant
shall furnish to the Company evidence of compliance with the Securities Act of
1933, as amended (the "Securities Act"), in accordance with the provisions of
this Section 3.
(b) Sears covenants to the Company that Sears will not dispose of
the Warrant or any Warrant Shares except pursuant to (i) an effective
Registration Statement or (ii) an opinion of counsel, reasonably satisfactory
to counsel for the Company, that an exemption from such registration is
available.
(c) The Warrant shall be subject to a stop-transfer order and the
Warrant Certificate shall bear the following legend by which each holder of the
Warrant shall be bound:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN OPINION OF COUNSEL, WHICH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION,
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."
-2-
<PAGE> 5
(d) The Warrant Shares shall be subject to a stop-transfer order
and any certificates evidencing any such shares ("Share Certificates") shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT
TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE."
4. Term of Warrant; Number of Warrant Shares; Exercise of Warrant.
(a) The Warrant entitles the holder thereof to purchase, at any
time during the period commencing on the date that is the fifth (5th)
anniversary of the date hereof and ending at or before 5:00 p.m., New York
time, on the date that is ninety (90) days thereafter (the "Expiration Date"),
up to that certain number of whole shares of Common stock as is specified in
subparagraph (b) or subparagraph (c) of this Section 5, as the case may be,
subject to the fulfillment of the respective conditions specified therein, in
each case, at an exercise price per share equal to 175% of the average Closing
Price (as hereinafter defined) of the Common Stock for the ten (10) trading
days immediately preceding the date upon which Sears shall execute and deliver
the License Agreement (the "Exercise Price"). For purposes of this Agreement,
the term "Closing Price" shall mean, for any day, the last reported sale price
regular way on such day or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
either case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if not listed or admitted to trading
on any national securities exchange, the average of the highest reported bid
and lowest reported asked quotations for the Common Stock on NASDAQ or any
comparable system.
(b) Subject to the provisions of this Agreement, and provided that
(i) the Company shall have achieved both (A) at least Two Hundred Fifty Million
Dollars ($250,000,000) in Licensed Sales Revenues (as hereinafter defined) and
(B) at least Thirty Million Dollars ($30,000,000) of Licensed EBIT (as
hereinafter defined), in each case, during the one (1) year period commencing
on the fourth anniversary of the date hereof and ending on the day preceding
the fifth anniversary of the date hereof, and (ii) Sears shall not at the time
be in default in its obligations under the License Agreement, the holder of the
Warrant shall
-3-
<PAGE> 6
have the right, which may be exercised, in whole or in part, to purchase from
the Company (and the Company shall issue and sell to such holder) up to Three
Million Five Hundred Thousand (3,500,000) fully paid and nonassessable whole
shares of Common Stock upon surrender to the Company, or its duly authorized
agent, of the Warrant Certificate, with the form of election to purchase on the
reverse thereof duly filled in to indicate the number of Warrant Shares to be
purchased and otherwise duly completed and signed, and upon payment to the
Company of an amount equal to the product of the Exercise Price multiplied by
the number of shares being purchased as indicated in the election form on the
reverse of the Warrant Certificate so surrendered (the "Warrant Price").
Payment of the applicable Warrant Price shall be made in cash or by certified
or official bank check or wire transfer payable to the order of the Company.
(c) Subject to the provisions of this Agreement, and provided that
(i) the Company shall have achieved both (A) Five Hundred Million
Dollars-($500,000,000) in Licensed Sales Revenues and (B) at least Sixty
Million Dollars ($60,000,000) of Licensed EBIT, in each case, during the one
(1) year period commencing on the fourth anniversary of the date hereof and
ending on the day preceding the fifth anniversary of the date hereof, and (ii)
Sears shall not at the time be in default in its obligations under the License
Agreement, the holder of the Warrant shall have the right, which may be
exercised in whole or in part, to purchase from the Company (and the Company
shall issue and sell to such holder) up to Seven Million (7,000,000) fully paid
and nonassessable whole shares of Common Stock upon surrender to the Company,
or its duly authorized agent, of the Warrant Certificate, with the form of
election to purchase on the reverse thereof duly filled in to indicate the
number of Warrant Shares to be purchased and otherwise duly completed and
signed, and upon payment to the Company of the applicable Warrant Price.
Payment of the applicable Warrant Price shall be made in cash or by certified
or official bank check or wire transfer payable to the order of the Company.
(d) For purposes of this Section 4, the following terms shall have
the meanings set forth below:
(i) "Licensed EBIT" shall mean earnings (as computed in accordance
with generally accepted accounting principles), before deduction for
interest expense and taxes (as computed in accordance with generally
accepted accounting principles), of the Company that were generated under
any Program (as defined in the License Agreement); and
(ii) "Licensed Sales Revenues" shall mean gross revenues (as
computed in accordance with generally
-4-
<PAGE> 7
accepted accounting principles) of the Company generated by sales of
Products (as defined in the License Agreement) pursuant to any Program (as
defined in the License Agreement) reduced by the aggregate amount of such
revenues attributable to Products returned to the Company following the
sale thereof.
(e) Subject to Section 5 hereof, upon such surrender of the
Warrant Certificate, and payment of the applicable Warrant Price as aforesaid,
the Company shall issue and cause to be delivered to the holder of the Warrant
or upon the written order of such holder and (subject to receipt of evidence of
compliance with the Securities Act in accordance with the provisions of Section
3 of this Agreement) in such name or names as the holder of the Warrant may
designate, one or more Share Certificates for the number of whole Warrant
Shares so purchased.
(f) If permitted by applicable law, such Share Certificate or
Share Certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder of
record of the Warrant Shares evidenced thereby as of the date of the surrender
of the Warrant Certificate and payment of the applicable Warrant Price. The
Warrant shall be exercisable on or before the Expiration Date during the period
specified in Section 4(a), at the election of the holder thereof, either as an
entirety or for part of the Warrant Shares specified therein. If the total
number of Warrant Shares represented by the Warrant Certificate shall not be
purchased in full upon the exercise of the Warrant, the holder of the Warrant
shall be deemed to have relinquished any and all rights to purchase the balance
of the Warrant Shares previously represented by the Warrant Certificate and the
Warrant Certificate shall be deemed to be canceled.
5. Payment of Taxes. The Company will pay all documentary
stamp taxes, if any, attributable to the initial issuance of Warrant Shares
upon the exercise of the Warrant; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of the Warrant or the Warrant
Certificate (either upon the initial delivery of the Warrant pursuant to this
Agreement or in connection with any permitted transfer of the Warrant
Certificate) or of any Share Certificate for Warrant Shares in a name other
than that of the holder of the Warrant.
6. Mutilated or Missing Certificate. In case the Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company shall
issue and deliver in exchange and in substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and in substitution
-5-
<PAGE> 8
for the Warrant Certificate lost, stolen or destroyed, a new Warrant
Certificate identical in all respects to the Warrant Certificate so mutilated,
lost, stolen or destroyed; but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant Certificate and
of indemnity or bond, if requested, also satisfactory to the Company. An
applicant for such substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
company may prescribe.
7. Reservation of Warrant Shares; Authorization.
(a) Reservation of Warrant Shares. The Company hereby covenants
and agrees for the benefit of Sears and any permitted transferee of the Warrant
Certificate, that the Company will, at or before the time when the Warrant
becomes exercisable in accordance with Section 4 hereof, make available, out of
the authorized and unissued shares of Common Stock or the authorized and issued
shares of Common Stock held in the Company's treasury, the full number of
shares of Common Stock as may be sufficient, at such time, to provide for the
exercise of the rights of purchase represented by the Warrant. The Company
will keep a copy of this Agreement on file with the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent Transfer Agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase represented by the Warrant. Furthermore, the Company agrees
timely to supply such Transfer Agent with duly executed Share Certificates for
the Warrant Shares.
(b) Authorization. This Agreement has been duly and validly
executed and delivered by the Company and this Agreement constitutes a valid
and binding agreement of the Company enforceable in accordance with its terms
(except in each such case as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
except that the remedy of specific performance and injunctive and other forms
of equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought and
except as rights to indemnity and contribution hereunder and thereunder may be
limited by federal or state securities laws). The execution, delivery and
performance of this Agreement by the Company and compliance by the Company with
the terms and provisions hereof do not and will not violate any provision of
any law, rule or regulation, order, writ, judgment, injunction, statute,
decree, determination or award having applicability to the Company, or any of
its properties or assets. The execution, delivery and performance of this
-6-
<PAGE> 9
Agreement by the Company and compliance by the Company with the terms and
provisions hereof do not and will not (i) conflict with or result in a breach
of or constitute a default under any provision of the charter or by-laws of the
Company; or (ii) give rise to an event of default which may result in the
acceleration of any material amount of indebtedness for borrowed money of the
Company or an event of default under any other material contractual obligation
of the Company. The Company covenants that upon issuance and delivery against
payment of the applicable Warrant Price pursuant to the terms of this
Agreement, all Warrant Shares will be validly issued, fully paid and
nonassessable outstanding shares of Common Stock of the Company. The Company
represents and warrants that the number of outstanding shares of Common Stock
of the Company, as of [November 8, 1993], is [61,726,218]. Except as set forth
on Schedule I attached hereto, there are no outstanding subscriptions,
convertible securities, warrants or other rights, agreements or commitments to
subscribe for or purchase or acquire from the Company, or any contracts
providing for the issuance of, or the granting of rights to acquire any capital
stock of the Company or any securities convertible or exchangeable for any such
capital stock. There are no preemptive rights with respect to and there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of the Company.
8. Registration Rights.
(a) Right to Request Registration. From and after the date upon
which the Warrant shall become exercisable in accordance with Section 4 of this
Agreement (but not before), the holder of the Warrant Certificate or the holder
or holders of the Warrant Shares shall have the right to request, from time to
time, that the Company register the Warrant Shares as provided in this Section
8.
(b) Incidental Registration. If the Company at any time proposes
to file on its behalf a Registration Statement under the Securities Act on any
form (other than a Registration Statement on Form S-4 or S-8 or any successor
form for securities to be offered in a transaction of the type referred to in
Rule 145 under the Securities Act or to employees of the Company pursuant to
any employee benefit plan, respectively) for the general registration of
securities to be sold for cash with respect to its Common Stock or any other
class of equity security (as defined in Section 3(a)(11) of the Securities
Exchange Act of 1934, as amended) of the Company, it will give written notice
to the holder of the Warrant Certificate or the holder or holders of the
Warrant Shares at least forty-five (45) days before the initial filing with the
Commission of such Registration Statement, which notice shall set forth the
intended method
-7-
<PAGE> 10
of disposition of the securities proposed to be registered by the Company. The
notice shall offer to include in such filing the aggregate number of Warrant
Shares as such holder or holders may request; provided, however, that the
Company shall not be required to effect more than two such registrations
pursuant to this Section 8(b) in which Warrant Shares are registered (subject
to the proviso of the penultimate sentence of this Section 8(b)). Nothing in
this Section 8 shall preclude the Company from discontinuing the registration
of its securities being effected on its behalf under this Section 8 at any time
prior to the effective date of the registration relating thereto for any
reason.
The holder of the Warrant Certificate or any holder of Warrant Shares
desiring to have Warrant Shares registered under this Section B(b) shall advise
the Company in writing within thirty (30) days after the date of receipt of
such offer from the Company, setting forth the amount of such Warrant Shares
for which registration is requested. The Company shall thereupon include in
such filing the number of Warrant Shares for which registration is so
requested, subject to the next sentence, and shall use its best efforts to
effect registration under the Securities Act of such Warrant Shares. If the
managing underwriter of a proposed public offering shall advise the Company
that, in its opinion, the distribution of the Warrant Shares requested to be
included in the registration concurrently with the securities being registered
by the Company would adversely affect the distribution of such securities by
the Company, at the price and upon the terms approved by the Company, then the
number of shares of Common Stock which such underwriters believes, in its sole
discretion, may be sold at such price and upon such terms shall be allocated
first to the Company, then to any selling security holder exercising a
contractual demand registration right and finally, on a pro rata basis, among
all other selling securitis holders of shares then being registered (including,
without limitation, the holder of the Warrant or the holder or holders of any
Warrant Shares); provided that, in such case, such registration shall not be
deemed to be one of the two incidental registrations available to holders of
Warrant Shares pursuant to this Section 8(b). Except as otherwise provided in
section 8(d), all expenses of such registration shall be borne by the Company.
(c) Registration Procedures. If the Company is registering any of
its securities under the Securities Act pursuant to the provisions of this
Section 8, the Company will, as expeditiously as possible:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a Registration Statement with respect to such securities
and use its
-8-
<PAGE> 11
best efforts to cause such Registration Statement to become and remain
effective for a period of time required for the disposition of such
securities by the holders thereof, which period shall not exceed nine (9)
months;
(ii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all securities covered by
such Registration Statement until the earlier of such time as all of such
securities have been disposed of in a public offering or the expiration of
nine (9) months;
(iii) furnish to such selling security holders such number of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents, as such selling security holders may reasonably
request;
(iv) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue
sky laws of such jurisdictions within the United States and Puerto Rico as
each holder of such securities shall reasonably request (provided, however,
that (A) if such registration and qualification is in a jurisdiction at the
request of any holder of the Warrant Certificate or Warrant Shares and the
Company would not have otherwise registered or qualified in such
jurisdiction, the expenses for such registration and qualification shall be
borne by such requesting holder, and (B) the Company shall not be obligated
to qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it is not then qualified or to file any general
consent to service of process as a result of such registration and
qualification in such jurisdiction), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such
Registration Statement; and
(v) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, but not later than 18 months
after the effective date of the Registration Statement, an earnings
statement covering the period of at least
-9-
<PAGE> 12
12 months beginning with the first full month after the effective date of
such Registration Statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Section 8 in respect of the securities which
are to be registered at the request of any holder of the Warrant Certificate or
Warrant Shares that such holder shall furnish to the Company such information
regarding such holder and the securities held by such holder and the intended
method of disposition thereof as the Company shall reasonably request and as
shall be required in connection with the action taken by the Company.
(d) Expenses. All expenses incurred in complying with this
Section 8, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), printing expenses,
fees and disbursements of counsel for the Company, shall be paid fifty percent
(50%) by the Company and fifty percent (50%) by the holders requesting
registration pursuant hereto, except that such holders shall pay one-hundred
percent (100%) of all fees, discounts and commissions to any underwriter, all
fees and disbursements of counsel for any underwriter or any such holder and
all transfer taxes in respect of the securities sold by any such holder and the
Company shall have no liability for any such underwriter's fees, discounts and
commissions, any such counsel fees and disbursements or any such transfer
taxes.
(e) Indemnification and Contribution.
(i) In the event of any registration of any of the Warrant Shares
under the Securities Act pursuant to this Section 8, the Company shall
indemnify and hold harmless each holder of the Warrant Shares, such
holder's directors and officers and each other person (including each
underwriter) who participated in the offering of the Warrant Shares and
each other person, if any, who controls such holder or such participating
person within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or
any such director or officer of any participating person or controlling
person may become subject under the Securities Act or any other statute or
at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement of any material fact contained, on the effective date thereof, in
any Registration Statement under which such securities were
-10-
<PAGE> 13
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
(ii) any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse such holder or such director, officer or participating
person or controlling person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating person
or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder
specifically for use therein. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
holder or such director, officer or participating person or controlling
person, and shall survive the transfer of such securities by such holder.
The indemnification of each holder of the Warrant Shares with respect to a
preliminary prospectus shall only apply where the Company shall be
indemnified with respect thereto by an underwriter, which indemnification
the Company agrees to use its best efforts to obtain, and shall not apply
where the holder claiming indemnification has sold the securities directly
to a purchaser.
(ii) Each holder of any Warrant Shares, by acceptance thereof,
agrees to indemnify and hold harmless the Company, its directors and
officers and each other person, if any, who controls the Company within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director or
officer or controlling person may become subject under the Securities Act
or any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based solely upon information in writing provided to the Company by such
holder contained, on the effective date thereof, in any Registration
Statement under which securities were registered under the Securities Act
at the request of such holder, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto. The
indemnification of the Company with respect to a
-11-
<PAGE> 14
preliminary prospectus shall only apply where a holder has sold such
securities directly to a purchaser.
(iii) If the indemnification provided for in this Section 8 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party under this Section 8 as a result of the losses,
claims, damages, liabilities and expense referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this subparagraph (iii) of this Section 8(e) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Termination of Restrictions. Notwithstanding the foregoing
provisions of this Section 8, the restrictions imposed by Section 3 of this
Agreement upon the transferability of the Warrant, the Warrant Certificate and
the Warrant Shares and the legend requirements of Section 3(c) and (d) shall
terminate as to the Warrant or any particular Warrant Share (i) when and so
long as such security shall have been effectively registered under the
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<PAGE> 15
Securities Act and disposed of pursuant thereto, or (ii) when the Company shall
have delivered to the holder or holders thereof the written opinion of counsel
to the Company, which opinion and counsel shall each be reasonably satisfactory
to such holder or holders, stating that the transferability portion of such
legend is not required in order to ensure compliance with the Securities Act.
Whenever the restrictions imposed by Section 3 of this Agreement shall
terminate as to the Warrant, as hereinabove provided, the holder thereof shall
be entitled to receive from the Company, at the expense of the Company, upon
the surrender of the Warrant Certificate, a new Warrant Certificate not bearing
the restrictive legend required by Section 3(c) but otherwise identical in all
respects to the Warrant Certificate surrendered. Wherever the restrictions
imposed by such Section 3 shall terminate as to any Warrant Share, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, upon the surrender of the Share Certificate
representing such Warrant Share, a new Share Certificate representing such
Warrant Share not bearing the restrictive legend set forth in Section 3(d) but
otherwise identical in all respects to the Share Certificate surrendered.
(g) Listing on Securities Exchange. From and after the date upon
which the Warrant shall become exercisable in accordance with Section 4 of this
Agreement (but not before), if the Company shall list any shares of Common
Stock on any securities exchange, it will, at is expense, list thereon,
maintain and, when necessary, increase such listing of, all shares of Common
Stock issued or, to the extent permissible under the applicable securities
exchange rules, issuable upon the exercise of the Warrant so long as any shares
of Common Stock shall be so listed.
(h) Certain Limitations on Registration Rights. Notwithstanding
the other provisions of this Section 8, the Company shall not be obligated to
register any Warrant Shares if (x) the Company delivers to the holder thereof
the written opinion of counsel to the Company, which opinion and counsel shall
each be reasonably satisfactory to such holder, stating that the sale or other
disposition of such holder's Warrant Shares, in the manner proposed by such
holder (or, if such holder has engaged an investment banking firm at its
expense, in the manner proposed by such investment banking firm), may be
effected without registering such Warrant Shares under the Securities Act, and
(y) the failure of the Company to register such Warrant Shares will not result
in a five percent (5%) reduction in the net proceeds to be received by such
holder in connection with such sale or other disposition.
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<PAGE> 16
9. Rights as Stockholders; Notices to Holders. Nothing contained
in this Agreement or in the Warrant shall be construed as conferring upon the
holder of the Warrant or its permitted transferees the right to vote or to
receive dividends or to consent to or receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, or any rights whatsoever as stockholders of the Company.
10. Miscellaneous.
(a) Notices. Any notice, demand or other communication authorized
or required pursuant to this Agreement to be given or made shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed as follows:
(i) if to the Company, to:
Hanover Direct, Inc.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
Attention: Michael P. Sherman
Executive Vice President
and General Counsel
and (ii) if to the holder of the Warrant
Certificate, to:
Sears Shop At Home Services, Inc.
Attention:
or, in either case, to such other address as may be designated by notice as
provided in this Section 10(a).
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflict of laws.
(c) Amendments and Waivers. This Agreement may be amended,
modified or superseded only by written instrument signed by all of the parties
hereto, and any of the terms, provisions and conditions hereof may be waived,
only by a written instrument signed by the party waiving such term, provision
or condition.
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<PAGE> 17
(d) Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or Sears, as the case may be,
shall bind and inure to the benefit of their respective successors, assigns and
permitted transferees hereunder.
(e) Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and
Sears, and their permitted successors, assigns and transferees, any legal or
equitable right, remedy or claim under this Agreement, but this Agreement shall
be for the sole and exclusive benefit of the Company and Sears and their
permitted successors, assigns and transferees.
(f) Captions, Etc. The captions of the sections and subsections
of this Agreement have been inserted for convenience only and shall have no
substantive effect. Unless the context otherwise requires, terms used herein
shall be equally applicable to the singular and plural forms thereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
(h) Termination. This Agreement shall terminate at the close of
business on the Expiration Date or any earlier date when the Warrant shall have
been exercised, whether in full or in part, provided that the registration
rights provided for in Section 8 of this Agreement shall remain in full force
and effect to the extent provided for therein.
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day, month and year first above written.
HANOVER DIRECT, INC.
By:
------------------------------
Name:
Title:
SEARS SHOP AT HOME SERVICES, INC.
By:
-------------------------------
Name:
Title:
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<PAGE> 19
SCHEDULE 1
HANOVER DIRECT, INC.
SCHEDULE OF OUTSTANDING
OPTIONS, SUBSCRIPTIONS, CONVERTIBLE SECURITIES,
WARRANTS AND OTHER SIMILAR RIGHTS
RELATING TO THE COMPANY'S SECURITIES
<PAGE> 20
Annex A
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
No. 1 Up To 7,000,000 Warrant Shares
Dated: January 1, 1994
VOID AFTER 5:00 P.M. NEW YORK CITY
TIME ON
HANOVER DIRECT, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received Sears Shop At Home Services,
Inc., a Delaware corporation ("Sears"), or its successor, assign or permitted
transferee (the "Holder"), is the owner of this Warrant and entitled to
purchase, at any time during the period commencing on the fifth anniversary of
the date hereof and ending at or before 5:00 p.m., New York time, on the date
that is ninety (90) days thereafter (the "Expiration Date"), up to that number
of fully paid and nonassessable shares of Common Stock, $0.66 2/3% par value
(the "Common Stock"), of Hanover Direct, Inc., a Delaware corporation (the
"Company"), as is set forth below, subject to the fulfillment of the
conditions specified hereinbelow, at an exercise price per share (the "Exercise
Price") equal to 175% of the average Closing Price (as hereinafter defined) of
the Common Stock for the ten (10) trading days immediately preceding the date
upon which Sears shall execute and deliver that certain License Agreement,
dated as of January 1, 1994 (the "License Agreement"), between the Company, as
licensee, and Sears, as licensor. For purposes hereof, the term "Closing
Price" shall mean, for any day, the last reported sale price regular way on
such day or, in case no such reported sale takes place on such day, the average
of the reported closing
<PAGE> 21
bid and asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or if not listed or admitted to trading on any national securities exchange,
the average of the highest reported bid and lowest reported asked quotations
for the Common Stock on NASDAQ or any comparable system. Payment of the
Exercise Price may be made in cash or by certified or official bank check to
the order of the Company.
Subject to the provisions of the Warrant Agreement, and provided that
(i) the Company shall have achieved both (A) at least Two Hundred Fifty Million
Dollars ($250,000,000) in Licensed Sales Revenues (as hereinafter defined) and
(B) at least Thirty Million Dollars ($30,000,000) of Licensed EBIT (as
hereinafter defined), in each case, during the one (1) year period commencing
on the fourth anniversary of the date hereof and ending on the day preceding
the fifth anniversary of the date hereof, and (ii) Sears shall not at the time
be in default in its obligations under the License Agreement, the Holder hereof
shall have the right, which may be exercised in whole or in part, to purchase
from the Company (and the Company shall issue and sell to such Holder) up to
Three Million Five Hundred Thousand (3,500,000) fully paid and nonassessable
whole shares of Common Stock upon surrender to the Company, or its duly
authorized agent, of this Warrant Certificate, with the form of election to
purchase on the reverse hereof duly filled in to indicate the number of Warrant
Shares to be purchased and otherwise duly completed and signed, and upon
payment to the Company of an amount equal to the product of the Exercise Price
multiplied by the number of shares being purchased as indicated in such form of
election (the "Warrant Price"). Payment of the applicable Warrant Price shall
be made in cash or by certified or official bank check or wire transfer payable
to the order of the Company.
Subject to the provisions of the Warrant Agreement, and provided that
(i) the Company shall have achieved both (A) Five Hundred Million Dollars
($500,000,000) in Licensed Sales Revenues and (B) at least Sixty Million
Dollars ($60,000,000) of Licensed EBIT, in each case, during the one (1) year
period commencing on the fourth anniversary of the date hereof and ending on
the day preceding the fifth anniversary of the date hereof, and (ii) Sears
shall not at the time be in default in its obligations under the License
Agreement, the Holder hereof shall have the right, which may be exercised in
whole or in part, to purchase from the Company (and the Company shall issue and
sell to such Holder) up to Seven Million (7,000,000) fully paid and
nonassessable whole shares of Common Stock upon surrender to the Company, or
its duly authorized agent, of this Warrant Certificate, with the form of
election to
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<PAGE> 22
purchase on the reverse hereof duly filled in to indicate the number of Warrant
Shares to be purchased and otherwise duly completed and signed, and upon
payment to the Company of the applicable Warrant Price. Payment of the
applicable Warrant Price shall be made in cash or by certified or official bank
check or wire transfer payable to the order of the Company.
For purposes of the Warrant, the following terms shall have the
meanings set forth below:
(i) "Licensed EBIT" shall mean earnings (as computed in accordance
with generally accepted accounting principles), before deduction for
interest expense and taxes (as computed in accordance with generally
accepted accounting principles), of the Company that were generated under
any Program (as defined in the License Agreement); and
(ii) "Licensed Sales Revenues" shall mean gross revenues (as
computed in accordance with generally accepted accounting principles) of
the Company generated by sales of Products (as defined in the License
Agreement) pursuant to any Program (as defined in the License Agreement)
reduced by the aggregate amount of such revenues attributable to Products
returned to the Company following the sale thereof.
If the total number of Warrant Shares represented by this Warrant
Certificate shall not be purchased in full upon the exercise of the Warrant,
the Holder hereof (for itself and any prior Holder hereof, including, without
limitation, Sears) shall be deemed to have relinquished any and all rights to
purchase the balance of the Warrant Shares previously represented by this
Warrant Certificate and this Warrant Certificate shall be deemed to be
canceled.
This Warrant Certificate is subject to and entitled to the benefits of
all of the terms, provisions and conditions of that certain Warrant Agreement,
dated as of January 1, 1994 (the "Warrant Agreement"), by and between the
Company and Sears Shop At Home Services, Inc., which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof and to which
Warrant Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Company and the Holder of this Warrant Certificate. Copies of the Warrant
Agreement are on file at the principal office of the Company.
Sears may be treated by the Company and all other persons dealing with
this Warrant Certificate as the absolute owner hereof for any purpose and as
the person
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<PAGE> 23
entitled to exercise the rights represented hereby, any notice to the contrary
notwithstanding, and until transfer hereof in accordance with the terms of the
Warrant Agreement, the Company may treat Sears as the owner for all purposes.
The Holder hereof shall not be entitled to vote or to receive
dividends or be deemed the holder of Common Stock or any other securities of
the Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon such Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance, or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until the Warrant evidenced by this Warrant Certificate shall have
been exercised and the Common Stock purchasable upon the exercise thereof shall
have become deliverable as provided in the Warrant Agreement.
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<PAGE> 24
IN WITNESS WHEREOF, Hanover Direct, Inc. has caused the signature (or
facsimile signature) of its President to be printed hereon and its corporate
seal (or facsimile) to be printed hereon, attested by the signature (or
facsimile signature) of its Secretary.
HANOVER DIRECT, INC.
By:
------------------------------------
Name
President
Attest:
- ----------------------------------------
Name
Secretary
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<PAGE> 25
(Form of Reverse Side
of Warrant Certificate)
PURCHASE FORM
(To be executed upon exercise of warrant)
To Hanover Direct, Inc.:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the Warrant Certificate attached hereto for, and to
purchase thereunder,_______________ shares of Common Stock, as provided for
therein, and tenders herewith payment of the applicable Warrant Price in full
in the form of cash or a certified or official bank check in the amount of
$__________________.
Please issue a certificate or certificates for such shares of Common
Stock in the name of1:
Name
PLEASE INSERT SOCIAL ------------------------------
SECURITY OR OTHER (Please Print Name and Address)
IDENTIFYING NUMBER
Address
---------------------------
- --------------------------------
Signature:
By
---------------------------
Name:
Title:
NOTE: Please provide proof of
authority to sign in the form
of an incumbency certificate
or other evidence
satisfactory to the Company.
The above signature, name and
title should correspond
exactly with such proof of
authority.
Dated: ___________________________, 19__
- ----------------------------------
1 If more than one entity is to receive shares, please indicate the required
information for, and the desired number of shares to be held by, each such
entity.
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