INDEPENDENT
INVENTORY TAKING SERVICE (THE "INVENTORY TAKING SERVICE") TO CONDUCT THE
INVENTORY TAKING.
THE INVENTORY TAKING SHALL BE CONDUCTED IN ACCORDANCE WITH
THE PROCEDURES AND INSTRUCTIONS ATTACHED HERETO AS EXHIBIT 5.1(A)(I) (THE
"INVENTORY TAKING INSTRUCTIONS").
AGENT SHALL BE RESPONSIBLE FOR FIFTY PERCENT
(50%) OF THE FEES AND EXPENSES OF THE INVENTORY TAKING SERVICE AS AN EXPENSE
HEREUNDER AND MERCHANT SHALL PAY THE REMAINING FIFTY PERCENT (50%).
EXCEPT FOR
THE INVENTORY TAKING COSTS PAYABLE TO THE INVENTORY TAKING SERVICE, MERCHANT AND
AGENT SHALL EACH BEAR ITS RESPECTIVE COSTS AND EXPENSES RELATIVE TO THE
INVENTORY TAKING.
MERCHANT, AGENT AND THE LENDER MAY EACH HAVE REPRESENTATIVES
PRESENT DURING THE INVENTORY TAKING AND EACH SHALL HAVE THE RIGHT TO REVIEW AND
VERIFY THE LISTING AND TABULATION OF THE INVENTORY TAKING SERVICE.
MERCHANT
AGREES THAT, DURING THE CONDUCT OF THE INVENTORY TAKING IN EACH OF THE INVENTORY
LOCATIONS, THE APPLICABLE INVENTORY LOCATION SHALL BE CLOSED TO THE PUBLIC, AND
NO SALES OR OTHER TRANSACTIONS SHALL BE CONDUCTED.
MERCHANT AND THE AGENT
FURTHER AGREE THAT UNTIL THE INVENTORY TAKING IN EACH PARTICULAR INVENTORY
LOCATION IS COMPLETED, NEITHER MERCHANT NOR THE AGENT SHALL: (I) TRANSFER ANY
MERCHANDISE TO OR FROM THAT INVENTORY LOCATION, (II) MOVE MERCHANDISE WITHIN OR
ABOUT THE INVENTORY LOCATIONS, AND/OR (III) REMOVE ANY HANG TAGS, PRICE TICKETS,
OR INVENTORY CONTROL TAGS AFFIXED TO ANY MERCHANDISE. MERCHANT AND AGENT AGREE
TO COOPERATE WITH EACH OTHER TO CONDUCT THE INVENTORY TAKING COMMENCING AT A
TIME THAT WOULD
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MINIMIZE THE NUMBER OF HOURS THAT SUCH LOCATIONS WOULD BE CLOSED FOR BUSINESS.
ON A WEEKLY BASIS, AS PART OF THE WEEKLY SALE RECONCILIATIONS, MERCHANT AND
AGENT SHALL COUNT AND RECONCILE ALL SHIPMENTS AND RECEIPTS OF DISTRIBUTION
CENTER MERCHANDISE AND ON-ORDER MERCHANDISE IN THE STORES IN ACCORDANCE WITH THE
PROCEDURES SET FORTH ON EXHIBIT 5.1(A)(II) (TO BE REASONABLY AGREED UPON BY
MERCHANT AND AGENT); PROVIDED, HOWEVER, THAT THE AGGREGATE COST VALUE OF SUCH
MERCHANDISE SHALL BE INCLUDED FOR PURPOSES OF CALCULATING THE GUARANTEED AMOUNT.
(b)
The Agent and Merchant agree that they will, and agree to cause
their respective representatives to, cooperate and assist in the preparation and
the calculation of the Aggregate Cost Value of the Merchandise included in the
Sale, including, without limitation, the making available to the extent
necessary of books, records, work papers and personnel.
(c)
Distribution Center Merchandise and On-Order Merchandise,
if any delivered to the Stores after the Sale Commencement Date, shall be
counted and reconciled within five Store business days after receipt of such
goods in the Stores, in accordance with the procedures set forth herein; failure
to report any variance between the received shipment and the applicable shipping
documents (each a "Shipping Variance") within such five Store business day
period shall, absent manifest error, result in such receipts being automatically
confirmed as received, consistent with the applicable shipping documents.
Merchant shall have two Distribution Center business days to verify a timely
reported Shipping Variance (each a "Shipping Variance Response");
failure to
respond to an asserted Shipping Variance