EXHIBIT 10(g)
REAL ESTATE CONSULTING AND ADVISORY SERVICES AGREEMENT
This Agreement is entered into as of February 18, 2002, by and between
Hilco Real Estate, LLC, a Delaware limited liability company ("Hilco"), and
Xxxxxxxx Stores, Inc. (the "Company" or "Debtor"), which has filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code, in
the United States Bankruptcy Court for the District of _______ (the "Bankruptcy
Court") subject to notice and Bankruptcy Court approval, and Debtor hereby
agrees to retain Hilco with respect to the analysis and sale of Debtor's right,
title and interest in the Company's owned properties, (the "Owned Properties")
and in leased properties (each a "Lease," and collectively, the "Leases") set
forth on Schedule A hereto and any additional properties added pursuant to the
terms hereof.
Recitals:
A. Company operates a retail department store chain.
B. Company desires to sell and assign certain of the Owned Properties and
certain of the Leases and/or to renegotiate the terms of certain other leases
designated by the Company, and seeks to engage Hilco to provide certain
consulting services in connection therewith.
Agreement:
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Company and Hilco agree as follows:
1. Consulting and Advisory Services. At Company's request, Hilco
shall provide the consulting and advisory services of the principals of Hilco,
with a view towards successfully negotiating the assumption and assignment of
the Leases and sale of the Owned Properties and/or renegotiating the terms and
conditions of certain other leases, as designated by the Company in writing.
Such services shall include:
(a) Meeting with Company to ascertain the Company's
goals, objectives and financial parameters.
(b) Developing and designing a marketing program
consistent with the terms of the proposal dated
February 7, 2002, (the "Proposal") for the sale
and/or assignment of the Leases and the Owned
Properties.
(c) Where appropriate and in conjunction with the
Company, Hilco will coordinate and organize the
bidding procedures and sale process, as outlined in
the Proposal, in order to maximize the attendance of
all interested bidders for the sale and assignment of
the Leases and the Owned Properties.
(d) At Company's direction and on Company's behalf,
negotiate the terms of the purchase agreements for
the sale and assignment of the Owned Stores and
Leases.
(e) At Company's direction and on Company's behalf,
renegotiate the terms and conditions of termination
agreements with the landlords under the Leases.
(f) At Company's direction and on Company's behalf,
Hilco will negotiate for the benefit of the Debtor's
estate claim reductions and modifications with
respect to the Leases.
(g) Reporting periodically (not less frequently than
weekly) to Company regarding the status of
negotiations.
2. Term. Subject to the entry of an Order of the Bankruptcy
Court, the term of this Agreement shall commence upon the execution hereof and
shall expire on March 1, 2003 provided, however, that Hilco or the Debtor may
terminate this Agreement for "cause" upon three (3) days prior written notice to
the other, without prejudice to Hilco's rights pursuant to Section 6 below and
subject to payment of all fees and expenses then due and owing. For purposes of
this Agreement, "cause" shall mean failure of either party to perform any of its
material obligations hereunder.
3. Authority. Hilco is authorized only to negotiate the terms of
the sale of the Owned Properties or sale or assignment of the Leases or
renegotiate the terms and conditions of certain leases as directed by the
Company at the direction and on the behalf of Company, but not to commit the
Company to any agreement or arrangement or to sign any instrument on behalf of
the Company without the Company's express consent.
4. Compensation. As compensation for Hilco's services, the
Company will pay to Hilco:
(a) Subject to Section 10(q) hereof with respect to the
Toledo Store, upon closing the disposition, by
assignment, sale or otherwise of the Owned Properties
and the Leases, a fee equal to two percent (2.0%) of
the Gross Proceeds (as defined below);
(b) A fee of three and one-half percent (3.5%) for each
Claim Reduction (as defined below) (a "Claim
Reduction Payment") with a minimum of $5,000 per
store. A "Claim Reduction" shall mean the entry into
an agreement by the Debtor with a landlord negotiated
by Hilco for the reduction or waiver of claims under
11 U.S.C. Section 502(b)(6) ("Claim Reduction
Agreement") with respect to a Lease, calculated based
on the net cash savings to the estate as a result of
such Claim Reduction Agreement (a "Claim Reduction");
provided, however, that Hilco shall
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seek Claim Reductions only for Leases for that the
Company has requested that Hilco obtain Claim
Reductions;
(c) A fee of four percent (4%) of the Rent Reduction (as
defined below) achieved for any Renegotiated Lease
(as defined below) (a "Rent Reduction Payment").
"Gross Proceeds" shall mean the total amount of cash paid by
the buyer(s) of the Owned Properties or lease assignee or
landlord for any Lease.
"Rent Reduction" shall mean as to any Renegotiated Lease, the
present value of rent reductions provided in such Renegotiated
Lease determined as of the closing date of such Renegotiated
Lease using a discount rate of eight percent (8%).
"Renegotiated Lease" shall mean any lease that the Debtor has
requested Hilco to achieve a rent reduction and for which the
Debtor has entered into an amended lease or lease amendment
consummating such rent reduction.
The Debtor shall have the sole right to accept or reject the
proposed disposition of the Owned Properties or the assumption
or rejection of a Lease or other transaction involving the
same. The Debtor shall have the sole right to accept or reject
any proposed Claim Reduction Agreement or Renegotiated Lease.
The amounts owing to Hilco hereunder shall be paid (i) at the
time of closing for an Owned Property or Lease disposition
transaction directly out of Gross Proceeds; (ii) upon
execution of a Claim Reduction Agreement, for Claim Reduction
Payments as to the minimum payment, and at the time of the
effective date of a plan or reorganization or conversion of
the case to a chapter 7 case, any additional amounts on
account of Claim Reductions and (iii) upon execution of a
Renegotiated Lease, for any Rent Reduction Payments.
The order of the Bankruptcy Court approving this Agreement
shall provide that Hilco shall be paid the disposition fees
directly out of Gross Proceeds. All payments to Hilco shall be
free and clear of any liens, claims and encumbrances.
5. Costs. Hilco shall be entitled to reimbursement from Company
for all Reimbursable Expenses (defined below). Billing shall be monthly and
payment shall be due not later than thirty (30) days after the date of invoice.
"Reimbursable Expenses" means all out-of-pocket expenses incurred by Hilco in
connection with its performance of its services hereunder, in an amount not to
exceed an agreed upon amount with the Company (in accordance with a budget to be
submitted by Hilco and agreed upon by Company prior to execution of this
Agreement) including, without limitation: reasonable expenses of coach travel
and transportation, including, the cost of out-of-town travel, court attendance
and expert witness testimony (which shall be paid at Hilco's standard hourly
rate for such services as specified in the agreed upon budget), including
economy transportation expenses, room and board; long distance telephone
charges; postage and courier/overnight express fees. Hilco shall not be
responsible for any transactional costs and/or legal expenses incurred by the
Debtor in
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connection with its retention of Hilco and its involvement with the subject
matter of this Agreement. In the event any marketing expenses are required to be
pre-paid, the Debtor will be presented with those requests and be responsible
for those payments to the extent contemplated by the budget.
6. Survival. If within ninety (90) days after the expiration of
the term of this Agreement or any extension thereof, Company shall enter into an
assignment of any Owned Property or Lease (as to which disposition agreement was
not entered into during the term hereof), with an entity Hilco contacted and
showed the related property during the term of this Agreement (a "Contacted
Party") Hilco shall be entitled to a fee in accordance with Paragraph 4 as if
such assignment had been entered into during the term of this Agreement unless
the termination of Hilco has been for "cause." Hilco shall provide the Company
with a list of the Contacted Parties within ten (10) days of the termination of
this Agreement.
7. Hilco and Company Covenants. In consideration of this
Agreement, Hilco agrees to utilize reasonable efforts and diligence to achieve
the purpose of this Agreement. Company agrees to cooperate reasonably with Hilco
and to make available to Hilco such information as Hilco requests, including
true and correct copies of the Leases and related correspondence.
8. Successors and Assigns. Hilco shall be entitled to
compensation for services rendered in accordance herewith and this Agreement
shall be binding upon the Debtor or any successor or assignee.
9. Exclusive. Hilco shall have the sole and exclusive authority
to perform all services outlined herein on an "exclusive right to sell" basis,
and all inquiries regarding the Owned Properties and Leases made to the Debtor,
its representatives, counsel or related parties to the Debtor, shall be
redirected to Hilco.
10. General Provisions.
(a) Debtor and Hilco shall deal with each other fairly and in good
faith so as to allow both parties to perform their duties and
earn the benefits of this Agreement.
(b) The Debtor recognizes and acknowledges that the services to be
provided by Hilco pursuant to this Agreement are, in general,
transactional in nature, and Hilco will not be billing the
Debtor by the hour nor maintaining time records, with the
exception of Hilco's hourly rate for court appearances. It is
agreed that Hilco is not requested or required to maintain
such time records, with the exception of Hilco's hourly rate
for court appearances, and that its compensation will be fixed
on the percentages set forth herein.
(c) Any correspondence or required notice shall be addressed as
follows:
If to Hilco: Hilco Real Estate, LLC
0 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
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Tel. (000) 000-0000
Fax (000) 000-0000
Attn: Xxxxxxxx X. Xxxx
If to the Debtor: Xxxxxxxx Stores Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
With a copy to:
Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP
00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(d) The effectiveness of this Agreement is subject to and
contingent upon the entry of a Bankruptcy Court order, in form
and substance acceptable to Hilco, authorizing the Debtor's
entry into this Agreement, which Debtor agrees to use its best
efforts to obtain. The Debtor will provide Hilco with a copy
of the pleadings requesting retention of Hilco prior to
submission to the Bankruptcy Court and advise Hilco of any
objection or hearings pertaining to Hilco's retention. Hilco
shall provide the Debtor with any and all information and
documentation necessary for its retention by the Debtor.
(e) Debtor acknowledges that this Agreement in its entirety will
be attached to, and made a part of, Debtor's application to
the Bankruptcy Court and will be incorporated by reference in
the Bankruptcy Court Order authorizing Hilco's retention.
(f) This Agreement shall be deemed drafted by both parties hereto,
and there shall be no presumption against either party in the
interpretation of this Agreement.
(g) By executing or otherwise accepting this Agreement, Debtor and
Hilco acknowledge and represent that they are represented by
and have consulted with independent legal counsel with respect
to the terms and conditions contained herein.
(h) Hilco agrees to keep all non-public information confidential
from dissemination to Third Parties (defined below) and will
put in place appropriate procedures to ensure that Third
Parties do not receive non-public information other than
marketing materials approved by the Debtor relating to the
Owned Properties and Leases, unless otherwise instructed in
writing by the Debtor or the Bankruptcy Court. "Third Parties"
shall mean any entity other than Hilco or its subsidiaries,
parents or affiliates, including their officers,
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employees, agents and representatives. Debtor shall clearly
label any such confidential information that is in written
form as "Confidential."
(i) The Debtor shall provide Hilco with:
- all reasonably requested real estate information to
the extent in the Debtor's possession;
- information on prospect interest and evidence of all
real estate inquiries, to the extent that the Debtor
has such information and evidence; and
- all environmental reports and notices, if any, of
violations of environmental laws/regulations, to the
extent in the Debtor's possession.
(j) Any and all issues, disputes, claims or causes of action which
relate or pertain to, or result or arise from this Agreement
or Hilo's services hereunder, shall be subject to the
exclusive jurisdiction of the Bankruptcy Court presiding over
the Debtor's case.
(k) This Agreement may be executed in original counterparts, and
if executed and delivered via facsimile shall be deemed the
equivalent of an original.
(l) Debtor shall promptly apply to the Bankruptcy Court for
authority to retain Hilco in accordance with this Agreement.
In connection with such application, the Debtor will request
authority to pay Hilco the commissions set forth in this
Agreement and the expenses set forth herein as they come due
without the necessity of Hilco's filing interim or final fee
applications with the Bankruptcy Court.
(m) This Agreement creates no third-party beneficiaries.
(n) The Company and Hilco shall have the right to add additional
Owned Properties or Leases to this Agreement for which Hilco
will perform the services set forth herein on the terms of
this Agreement.
(o) Hilco shall and hereby agrees to defend, indemnify and hold
the Company and its principals, members, officers, directors,
agents, and employees (each a "Company Indemnified Party")
harmless from and against any claim, damage, loss, expense
(including reasonable attorneys' fees), penalty or liability
of any kind whatsoever, or any action therefore, by or on
behalf of any person which arise from or are in connection
with a breach by Hilco of this Agreement and Hilco's gross
negligence or willful misconduct in performing its services
hereunder.
(p) In the event that the Company consummates a disposition with
the potential purchaser identified to Hilco as to the Owned
Property located at in Toledo, Ohio (the "Toledo Store"). for
not greater than the consideration that the Company has
negotiated with such potential purchaser as of the date hereof
(the "Proposed Price"), Hilco shall not receive a
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fee for the sale of the Toledo Store; provided, however, that in the
event that a sale of the Toledo Store is consummated with the potential
purchaser or any other purchaser for consideration in excess of the
Proposed Price, then, Hilco shall be entitled to a fee of two percent
(2.0%) of the consideration in excess of the Proposed Price to be paid
as set forth in Section 4(a).
IN WITNESS WHEREOF, Company and Hilco have executed and delivered this
Agreement as of the date first above written.
XXXXXXXX STORES, INC., HILCO REAL ESTATE,LLC., a
a Michigan Corporation Delaware limited liability company,
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxx
---------------------------- --------------------------
Xxxx X. Xxxxxxx Xxxxxxxx X. Xxxx
Title: Vice Chairman Title: President
Date: Date:
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SCHEDULE A
OWNED PROPERTIES AND LEASES
Saginaw, Michigan-Owned
Toledo, Ohio-Owned
Columbus, Ohio-Owned
Clearwater, Florida-Leased
Tampa, Florida-Leased
Osprey, Florida-Leased
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