Case 20-12816-JTD Doc 87 Filed 11/23/20 Page 1 of 12
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
) In re: ) Chapter 11 ) FURNITURE FACTORY ULTIMATE ) Case No. 20-12816 (JTD) HOLDING, L.P., et al.,1 ) ) (Jointly Administered) Debtors. ) )
APPLICATION OF DEBTORS FOR ENRY OF AN ORDER (I) AUTHORIZING THE EMPLOYMENT AND RETENTION OF B. RILEY REAL ESTATE, LLC AS REAL PROPERTY LEASE CONSULTANT, NUNC PRO TUNC TO THE PETITION DATE AND (II) GRANTING RELATED RELIEF
Furniture Factory Ultimate Holding, L.P. and its debtor affiliates, as debtors and debtors- in-possession in the above-captioned chapter 11 cases (collectively, the “Debtors”) file this application (the “Application”) seeking entry of an order, substantially in the form attached hereto as Exhibit A, pursuant to section 327(a) and 328(a) of title 11 of the United States Code, 11 U.S.C.
§§ 101-1532 (the “Bankruptcy Code”), Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy
Procedure (the “Bankruptcy Rules”), and Rules 2014-1 and 2016 of the Local Rules of Bankruptcy
Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the
“Local Rules”), (i) authorizing the Debtors to employ and retain B. Riley Real Estate, LLC
(“BRRE”) as their real property lease consultant, nunc pro tunc November 5, 2020 (the “Petition
Date”), in accordance with the terms and conditions set forth in a certain letter agreement between
BRRE and the Debtors, dated November 20, 2020 (the “Engagement Agreement”), a copy of
1 The Debtors in these chapter 11 cases, along with the last four digits of each of the Debtors’ respective federal tax identification numbers, are as follows: Furniture Factory Ultimate Holding, LP (4089); Furniture Factory Holding, LLC (5055); Furniture Factory Intermediate Holding, LLC (8060); Furniture Factory Outlet, LLC (3952); Furniture Factory Outlet Transportation, Inc. (7131); Bedding Holding, LLC (7744); Bedding Intermediate Holding, LLC (6384); and Bedding, LLC (4774). The Debtors’ headquarters and mailing address is: 6500 Jenny Lind Road, Space A, Fort Smith, AR 72908.
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which is attached hereto as Exhibit C; and (ii) granting related relief. In support of this
Application, the Debtors likewise submit the Declaration of James Terrell (the “Terrell
Declaration”), attached hereto as Exhibit B. In further support of this Application, the Debtors
respectfully state as follows:
JURISDICTION
1. The United States Bankruptcy Court for the District of Delaware (the “Court”) has
jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing
Order of Reference from the United States District Court for the District of Delaware, dated
February 29, 2012. The Debtors confirm their consent, pursuant to Bankruptcy Rule 7008 and
Local Rule 9013-1(f), to the entry of a final order by the Court in connection with this Application
to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States
Constitution.
2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
3. The statutory predicates for the relief requested herein are sections 327(a) of the
Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016, and Local Rule 2014-1.
BACKGROUND
4. On the Petition Date, each of the Debtors filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”). The Debtors operating their
businesses and managing their properties as debtors-in-possession, pursuant to sections 1107(a)
and 1108 of the Bankruptcy Code.
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5. On November 6, 2020, the Court entered an order [Docket No. 33] authorizing the joint administration and procedural consolidation of the Chapter 11 Cases pursuant to Bankruptcy
Rule 1015(b).
6. On November 18, 2020, the Office of the United States Trustee appointed an
official committee of unsecured creditors in (the “Committee”) in these consolidated Chapter 11
Cases.
7. Additional information regarding the Debtors’ businesses and the facts and
circumstances leading to the commencement of the Chapter 11 Cases is set forth in greater detail
in the Declaration of Donald Roach in Support of Debtors’ First Day Motions and Applications
[Docket No. 13] (the “First Day Declaration”), filed on the Petition Date and incorporated herein
by reference.
RELIEF REQUESTED
8. By this Application, the Debtors seek to employ and retain BRRE as their real
property lease consultant, effective nunc pro tunc to the Petition Date, pursuant to the terms and
conditions of the Engagement Agreement, a copy of which is attached hereto as Exhibit C and is
incorporated by reference herein.
BASIS FOR RELIEF
9. Section 327(a) of the Bankruptcy Code provides that a debtor, subject to Court approval:
[M]ay employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the [debtor] in carrying out the [debtor]’s duties under this title.
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11 U.S.C. § 327(a). Section 1107(b) of the Bankruptcy Code elaborates upon sections 101(14)
and 327(a) of the Bankruptcy Code in cases under chapter 11 of the Bankruptcy Code and provides that “a person is not disqualified for employment under section 327 of [the Bankruptcy Code] by a debtor in possession solely because of such person’s employment by or representation of the debtor before the commencement of the case.” 11 U.S.C. § 1107(b).
10. In addition, the Debtors seek approval of the Engagement Agreement pursuant to section 328(a) of the Bankruptcy Code, which provides, in relevant part, that the Debtors “with the court’s approval, may employ or authorize the employment of a professional person under section 327. . . on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis . . . .” 11 U.S.C. §
328(a). Section 328(a) of the Bankruptcy Code permits the compensation of professionals, including investment bankers, on more flexible terms that reflect the nature of their services and market conditions. Furthermore, Bankruptcy Rule 2014(a) requires that an application for retention include:
[S]pecific facts showing the necessity for the employment, the name of the [firm] to be employed, the reasons for the selection, the professional services to be rendered, and proposed arrangement for compensation, and, to the best of the applicant’s knowledge, all of the [firm’s] connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the U.S. Trustee, or any person employed in the office of the U.S. Trustee.
Fed. R. Bankr. P. 2014.
11. In light of the size and complexity of these consolidated Chapter 11 Cases, the
Debtors respectfully submit that employing and retaining BRRE as their real property lease consultant, effective nunc pro tunc to the Petition Date, pursuant to the fair and reasonable terms
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of the Engagement Agreement, is necessary and in the best interests of the Debtors’ estates and all
parties in interest to these Chapter 11 Cases.
THE LEASE PORTFOLIO
12. The Debtors are party to approximately 31 non-residential real property leases in
five (5) states (collectively, the “Lease Portfolio”). As part of their ongoing restructuring efforts,
the Debtors are engaging in comprehensive review and analysis of its Lease Portfolio. The Debtors
have determined, in consultation with its advisors and in exercise of its sound business judgment,
to retain BRRE to advise and assist the Debtors in connection with a variety of matters relating to
the review, analysis, restructuring, and disposition of the Lease Portfolio. The Debtors believe
that the services provided by BRRE will substantially enhance the Debtors’ efforts to maximize
the value of the Lease Portfolio and is the best interest of the Debtors, the Debtors’ estates, and the
Debtors’ creditors. The Debtors have determined that BRRE is well-qualified to provide these
services in light of BRRE’s extensive experience in the field of real estate and its familiarity with
the needs of distressed companies.
BRRE’S QUALIFICATIONS
13. BRRE is a preeminent real estate consulting and advisory firm with its principal
office located at 875 North Michigan Avenue, Suite 3900, Chicago, Illinois 60611. BRRE advises
clients throughout the United States and Canada. BRRE’s four Principals have over 120 years of
retail real estate expense in and outside of bankruptcy. BRRE has dedicated professionals who
provide real property lease advisory services to its clients and who have extensive experience optimizing retail real estate portfolios, reducing occupancy costs, and assisting in lease
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restructurings, terminations, dispositions, and selection—services that are crucial to the Debtors’
success in these consolidated Chapter 11 Cases.
14. Furthermore, BRRE’s professionals are expert negotiators with close and extensive
relationships with landlords. BRRE Principals have considerable experience providing real
property lease consulting services to financially troubled companies and have been retained in
numerous large and complex chapter 11 cases, including: J.C. Penny, Sears Holdings, Bon-Ton
Department Stores, Aldo, BCBG, Golfsmith, Gordman’s, Sharper Image, Sports Authority, and
WorldCom. Given the qualifications and experience of BRRE as real estate consultant in the
above chapter 11 cases, as well as numerous others, the Debtors respectfully submit that BRRE
will enable the Debtors to maximize value from the Debtors’ real property leases.
SERVICES TO BE PROVIDED
15. Pursuant to the Engagement Agreement, the Debtors seek to retain BRRE to render
certain professional services (collectively, the “Services”), including, without limitation, the
following:2
(a) Consult with the Company to discuss the Company’s goals, objective and
financial parameters in relation to the Leases;
(b) Provide the Company a schedule of work including key activities, time line,
and any required Company support;
2 Capitalized terms used but not otherwise defined in the Engagement Agreement contained herein shall have the meanings ascribed to such terms in the Engagement Agreement. In the event of any inconsistency between this Application and the terms and provisions of the Engagement Agreement, the terms of the Engagement Agreement shall control. 6
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(c) Negotiate with the landlords of the lease Properties and other third parties
on behalf of the Company in order to assist the Company with respect to
Covered Transactions on terms desired by the Company; and
(d) Report periodically, but in any event as often as reasonably requested by the
Company, to the Company regarding the status of the Services and details
related thereto.
16. The Debtors believe that the employment and retention of BRRE as the Debtors’ real property lease consultant will provide the Debtors with experienced professionals and services that are essential to a successful reorganization. The Debtors further believe that BRRE is well- qualified and able to provide the Services to the Debtors. BRRE has indicated a desire, willingness, and ability to act in these Chapter 11 Cases as the Debtors’ real property lease consultant, on the terms described herein and more fully in the Engagement Agreement.
Accordingly, the relief requested in this Application is in the best interests of the Debtors’ estates and all parties in interest.
PROFESSIONAL COMPENSATION
17. In consideration of the services to be provided by BRRE, and as more fully set forth in the Engagement Agreement, subject to Court approval, the Debtors have agreed to compensate
BRRE for the Services in accordance with the following structure:
(a) Early Termination Rights – For each Early Termination Right, BRRE shall
earn and be paid a fee of one half (½) of one (1) month’s Gross Occupancy
Cost per applicable Lease.
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(b) Lease Terminations. For each Lease Termination, BRRE shall earn and be
paid a fee of four percent (4%) of the Occupancy Cost Savings per
applicable Lease.
(c) Monetary Lease Modifications. For each Monetary Lease Modification,
BRRE shall earn and be paid a fee of five percent (5%) of the Occupancy
Cost Savings per applicable Lease.
(d) Non-Monetary Lease Modifications. For each Non-Monetary Lease
Modification, BRRE shall earn and be paid a fee of one thousand dollars
($1,000) per applicable Lease.
18. And, as set forth more fully in Schedule B of the Engagement Agreement, compensation is to be paid to BRRE in accordance with the following structure:
(a) BRRE shall provide a deal sheet with the terms of each proposed Covered
Transaction (each, a “Deal Sheet”) to the Company. BRRE shall earn and
be paid Compensation pursuant to this Agreement with respect to each
Covered Transaction upon the closing of a Bankruptcy Court approved
assumption and assignment of the Lease under such Covered Transaction.
(b) Such Compensation, together with all applicable expenses with respect to
such Covered Transaction, shall be due and payable, subject to, and in
accordance with, Schedule B of the Engagement Agreement. In the absence
of the foregoing, BRRE shall not be entitled to any fees or expenses,
notwithstanding the fact that the Company may determine in its sole
discretion not to finalize a transaction that would otherwise give rise to a
fee for BRRE.
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RECORDKEEPING AND APPLICATIONS FOR COMPENSATION
19. Local Rule 2016-2(d) imposes certain information requirements on professionals’
compensation requests, including, among other things, requirements to report billed activities in
tenth-of-an-hour increments, divide activity descriptions into general project categories, include a
time allotment for each activity, and certain other requirements tied to an assumed schedule of
hourly rates. Local Rule 2016-2(h), however, provides that “[a]n employed professional person or
entity within the scope of this Local Rule may request that the Court waive, for cause, one or more
of the information requirements of this Local Rule” in the application seeking court approval for
the retention of such professional entity.
20. Pursuant to Local Rule 2016-2(h), the Debtors and BRRE submit that cause exists
to waive the information and reporting requirements imposed by Local Rule 2016-2(d) with
respect to BRRE. As set forth in the Terrell Declaration, BRRE believes that it would be unduly
burdensome and time-consuming for BRRE to record activities in compliance with the information
requirements set forth in Local Rule 2016-2(d). It is standard in BRRE’s industry for professionals
providing services relating to real property lease consulting to be compensated on a fixed fee basis,
rather than on an incremental hourly basis, for such services. As described above, the Debtors and
BRRE have agreed that, consistent with industry practice, and as more fully described in the
Engagement Agreement, BRRE will be compensated on a fixed fee basis for its Services.
21. In light of the foregoing, requiring BRRE to file periodic fee applications pursuant to sections 330 and 331 of the Bankruptcy Code is unnecessary because the Debtors will not compensate BRRE unless and until the Debtors are in a position to obtain a monetary or non- monetary benefit through a renegotiation, termination, or modification of one or more of the
Debtors’ leases. The Debtors propose that for compensation for all Services rendered, and for all
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expenses incurred in connection with the Services, BRRE be paid one hundred percent (100%) of
the amount due upon submission of an acceptable invoice to the Debtors. Under these
circumstances, it is appropriate and reasonable for BRRE to be compensated pursuant to the terms
of the Engagement Agreement without being required to file interim fee applications as
contemplated by sections 330 and 331 of the Bankruptcy Code and Bankruptcy Rule 2016. BRRE
will file, however, a final fee application for review by the Court and parties in interest pursuant
to section 328(a) of the Bankruptcy Code, consisting of a summary statement of all compensation
and disbursements for which payment or reimbursement is sought or was already paid by the
Debtors.
22. The Debtors submit that applications submitted in the manner set forth above will
provide the Court and other parties in interest with sufficient information to monitor the amount
and types of services rendered to the Debtors by BRRE. See, e.g., In re Forever 21, Inc., Case No.
19-12122 (KG) (Bankr. D. Del. Nov. 4, 2019) [Docket No. 385]; In re Z Gallerie, Inc., Case No.
19-10488 (LSS) (Bankr. D. Del. Apr. 9, 2019) [Docket No. 169]; In re Sports Authority Holdings,
Inc., Case No. 16-10527 (MFW) (Bankr. D. Del. Mar. 31, 2016) [Docket No. 910]; In re Filene’s
Basements, LLC, Case No. 11-13511 (KJC) (Bankr. D. Del. Dec. 28, 2011) [Docket No. 503].
Accordingly, the Debtors requests that the Court modify the requirements set forth in Local Rule
2016-2(d) and permit BRRE to receive compensation and submit fee applications in the manner
set forth herein.
INDEMNIFICATION
23. As part of the overall compensation payable to BRRE under the Engagement
Agreement, the Engagement Agreement provides certain indemnification rights (the
“Indemnification Provisions”) to BRRE and its affiliates, officers, directors, members, managers,
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employees, agents and independent contractors. The Debtors and BRRE believe that, subject to
the modifications set forth in the Proposed Order attached as Exhibit A, the Indemnification
Provisions are customary and reasonable consideration for real property lease consultants, such as
BRRE, for proceedings both out of court and in chapter 11.
24. Moreover, the modifications to the Indemnification Provisions, as set forth in the
Proposed Order, conform to the procedures approved in In re United Artists Theatre Co., 315 F.3d
217 (3d Cir. 2003). Accordingly, the Debtors respectfully submit that the Indemnification
Provisions, as modified in the Proposed Order, are reasonable and in the best interests of the
Debtors, the Debtors’ estates, and the Debtors’ creditors in light of the fact that the Debtors require
BRRE’s Services to maximize the value of the Debtors’ estates.
BRRE’S DISINTERESTEDNESS
25. BRRE has conducted a conflicts analysis to determine whether it has any
relationships with the creditors and parties in interest provided by the Debtors, and, to the best of
the Debtors’ knowledge, information, and belief, and except as disclosed in the Terrell Declaration,
BRRE is a “disinterested person” within the meaning of section 101(14) of the Bankruptcy Code,
as required by section 327(a) of the Bankruptcy Code, and does not hold or represent any interest
materially adverse to the Debtors’ estates in connection with any matter on which it would be
employed.
26. BRRE believes that it does not have any relationships with creditors or parties in
interest that would present a disqualifying conflict of interest. BRRE will supplement its
disclosure to the Bankruptcy Court if any facts or circumstances are discovered that would require
such additional disclosure.
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NOTICE
27. Notice of this Application has been provided to (a) the Office of the U.S. Trustee
for the District of Delaware; (b) counsel to the DIP Lender; (c) the creditors holding the thirty (30) largest unsecured creditors on a consolidated basis or counsel to the Committee, if one has been selected; and (d) any party that request service pursuant to Bankruptcy Rule 2002. The Debtors respectfully submit that, in light of the nature of the relief requested, no other or further notice need be given.
NO PRIOR REQUEST
28. No prior application for the relief requested herein has been made to this or any
other court.
WHEREFORE, the Debtors respectfully request entry of an order, substantially in the
form attached hereto as Exhibit A, (a) authorizing the Debtors to employ and retain BRRE as
their real property lease consultant nunc pro tunc to the Petition Date and (b) granting related
relief.
Dated: November 23, 2020 /s/ Donald Roach Wilmington, Delaware Donald Roach, COO and CFO
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THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
) In re: ) Chapter 11 ) FURNITURE FACTORY ULTIMATE ) Case No. 20-12816 (JTD) HOLDING, L.P., et al.,1 )
) (Jointly Administered) Debtors. ) )
NOTICE OF APPLICATION OF DEBTORS FOR ENRY OF AN ORDER (I) AUTHORIZING THE EMPLOYMENT AND RETENTION OF B. RILEY REAL ESTATE, LLC AS REAL PROPERTY LEASE CONSULTANT, NUNC PRO TUNC TO THE PETITION DATE AND (II) GRANTING RELATED RELIEF
PLEASE TAKE NOTICE that on November 23, 2020, Furniture Factory Ultimate
Holding, L.P. and its debtor affiliates, as debtors and debtors-in-possession in the above-captioned
chapter 11 cases (collectively, the “Debtors”) filed the Application of Debtors for Entry of an
Order (I) Authorizing the Employment and Retention of B. Riley Real Estate, LLC as Real Property
Lease Consultant, Nunc Pro Tunc to the Petition Date and (II) Granting Related Relief (the
“Application”) with the United States Bankruptcy Court for the District of Delaware (the “Court”).
PLEASE TAKE FURTHER NOTICE that any responses to the Application must be in
writing and filed with the Clerk of the Court, 824 North Market Street, Third (3rd) Floor,
Wilmington, Delaware 19801, and served upon the undersigned, so as to be received on or before
4:00 P.M. on December 7, 2020.
1 The Debtors in these chapter 11 cases, along with the last four digits of each of the Debtors’ respective federal tax identification numbers, are as follows: Furniture Factory Ultimate Holding, LP (4089); Furniture Factory Holding, LLC (5055); Furniture Factory Intermediate Holding, LLC (8060); Furniture Factory Outlet, LLC (3952); Furniture Factory Outlet Transportation, Inc. (7131); Bedding Holding, LLC (7744); Bedding Intermediate Holding, LLC (6384); and Bedding, LLC (4774). The Debtors’ headquarters and mailing address is: 6500 Jenny Lind Road, Space A, Fort Smith, AR 72908.
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PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO RESPOND IN
ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF
DEMANDED BY THE APPLICATION WITHOUT FURTHER NOTICE OR HEARING.
PLEASE TAKE FURTHER NOTICE THAT IF AN OBJECTION IS PROPERLY
FILED AND SERVED IN ACCORDANCE WITH THE ABOVE PROCEDURES, A HEARING
WILL BE HELD ON A DATE TO BE DETERMINED BEFORE THE HONORABLE JOHN
T. DORSEY, UNITED STATES BANKRUPTCY JUDGE FOR THE DISTRICT OF
DELAWARE, 824 NORTH MARKET STREET, COURT ROOM #5, FIFTH (5th) FLOOR,
WILMINGTON, DELAWARE 19801. THIS HEARING MAY BE CONDUCTED
TELEPHONICALLY OR VIA VIDEOCONFERENCE AT THE COURT’S DISCRETION.
ONLY OBJECTIONS MADE IN WRITING AND TIMELY FILED WILL BE CONSIDERED
BY THE BANKRUPTCY COURT AT SUCH HEARING ONLY OBJECTIONS MADE IN
WRITING AND TIMELY FILED WILL BE CONSIDERED BY THE BANKRUPTCY COURT
AT SUCH HEARING.
Dated: November 23, 2020 /s/ Domenic E. Pacitti Wilmington, Delaware Domenic E. Pacitti (DE Bar No. 3989) Michael W. Yurkewicz (DE Bar No. 4165) KLEHR HARRISON HARVEY BRANZBURG LLP 919 North Market Street, Suite 1000 Wilmington, Delaware 19801 Telephone: (302) 426-1189 Facsimile: (302) 426-9193 Email: [email protected] [email protected]
Proposed Counsel to the Debtors
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EXHIBIT A
Proposed Form Order
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
) In re: ) Chapter 11 ) FURNITURE FACTORY ULTIMATE ) Case No. 20-12816 (JTD) HOLDING, L.P., et al.,1 )
) (Jointly Administered) Debtors. ) )
ORDER (I) AUTHORIZING THE EMPLOYMENT AND RETENTION OF B. RILEY REAL ESTATE, LLC AS REAL PROPERTY LEASE CONSULTANT, NUNC PRO TUNC TO THE PETITION DATE AND (II) GRANTING RELATED RELIEF
Upon consideration of the application (the “Application”)2 of the above-captioned chapter
11 cases (the “Debtors”) for entry of an order (this “Order”), pursuant to section 327(a) and 328(a) of the Bankruptcy Code, and Bankruptcy Rules 2014(a) and 2016, and Local Rules 2014-1 and
2016, (i) authorizing the Debtors to employ and retain B. Riley Real Estate, LLC (“BRRE”) as their real property lease consultant, pursuant to the Engagement Agreement, nunc pro tunc to the
Petition Date, as more fully described in the Application; and (ii) granting related relief; and upon consideration of the Fixler Declaration and the First Day Declaration; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and this Court’s Amended
Standing Order of Reference, dated February 29, 2012; and this Court having found that this is a
“core” proceeding pursuant to 28 U.S.C. § 157(b)(2); and that this Court may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue
1 The Debtors in these chapter 11 cases, along with the last four digits of each of the Debtors’ respective federal tax identification numbers, are as follows: Furniture Factory Ultimate Holding, LP (4089); Furniture Factory Holding, LLC (5055); Furniture Factory Intermediate Holding, LLC (8060); Furniture Factory Outlet, LLC (3952); Furniture Factory Outlet Transportation, Inc. (7131); Bedding Holding, LLC (7744); Bedding Intermediate Holding, LLC (6384); and Bedding, LLC (4774). The Debtors’ headquarters and mailing address is: 6500 Jenny Lind Road, Space A, Fort Smith, AR 72908.
2 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Application.
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of this proceeding and the Application in this district is proper pursuant to 28 U.S.C. §§ 1408 and
1409; and this Court having found that the relief requested in the Application is in the best interests of the Debtors’ estates, their creditors, and other parties in interest; and this Court having found that the Debtors’ notice of the Application and opportunity for a hearing on the Application were appropriate and no other notice need be provided; and after due deliberation and sufficient cause appearing therefore; it is hereby ORDERED that:
1. The Application is approved as set forth herein.
2. Pursuant to sections 327(a) and 328(a) of the Bankruptcy Code, the Debtors are authorized and empowered to employ BRRE as their real property lease consultant, nunc pro tunc to November 5, 2020, to perform the services set forth in the Application and the Terrell
Declaration.
3. BRRE is authorized to take such other action as may be reasonable or necessary to comply with all duties set forth in the Application.
4. Notwithstanding anything herein to the contrary, compensation set forth in the
Engagement Agreement is approved, and shall be subject to review only pursuant to the standard of review set forth in section 328(a) of the Bankruptcy Code and shall not be subject to the standard of review set forth in section 330 of the Bankruptcy Code or any other standard of review, except as set forth in paragraph 8 of this Order.
5. Any and all fees and expenses are subject to Court approval. BRRE shall file a final fee application with this Court seeking approval of its fees and expenses. Such application will include a summary statement of all compensation and disbursements for which payment or reimbursement is sought or was already paid by the Debtors. While BRRE shall not be required to file interim fee applications, all payments made to BRRE during these Chapter 11 Cases will be
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included in the final fee application and any interim payments received by BRRE from the Debtors
will be subject to the final fee application. BRRE shall be reimbursed for only its actual and
necessary expenses, and BRRE’s request for reimbursement of the same in the final fee application
shall include the detail required by Local Rule 2016-2(e).
6. The Debtors are authorized to pay BRRE’s fees and to reimburse BRRE for its
actual and necessary costs and expenses in accordance with, and at the times provided by, the
Engagement Agreement, as modified by this Order, and none of the fees payable to BRRE shall constitute a “bonus” or fee enhancement under applicable law.
7. Subject to the requirement in paragraph 5 of this Order, BRRE shall be excused from maintaining and filing time records in accordance with Bankruptcy Rule 2016(a), Local Rule
2016-2(d), the fee guidelines established by the Office of the United States Trustee for the District of Delaware (the “U.S. Trustee”), and any otherwise applicable orders or procedures of the Court
in connection with the services to be rendered pursuant to the Agreement.
8. Notwithstanding the preceding paragraphs, the U.S. Trustee shall retain all rights
to object to the compensation, fees, and expenses to be paid to BRRE pursuant to the Application
and the Engagement Agreement based on the reasonableness standard provided for in section 330
of the Bankruptcy Code, and the Court shall consider any such objection by the U.S. Trustee under
section 330 of the Bankruptcy Code. This Order and the record relating to the Court’s
consideration of the Application shall not prejudice or otherwise affect the rights of the U.S.
Trustee to challenge the reasonableness of BRRE’s compensation, fees, and expenses under the
sections 330 and 331 of the Bankruptcy Code. Accordingly, nothing in this Order or such record
shall constitute a finding of fact or conclusion of law binding the U.S. Trustee, on appeal or
otherwise, with respect to the reasonableness of BRRE’s fees. Further, nothing in the Engagement
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Agreement shall affect or modify the standard of review applicable to an objection by the U.S.
Trustee under this paragraph.
10. The Indemnification Provisions set forth in paragraph 21 of the Engagement
Agreement are approved, subject during the pendency of these Chapter 11 Cases to the following
modifications:
(a) The BRRE Indemnified Parties (as that term is defined in the Agreement, and each singularly, a “BRRE Indemnified Party”) shall not be entitled to indemnification, contribution, or reimbursement pursuant to the Agreement for services, unless such services and the indemnification, contribution, or reimbursement therefor are approved by the Court; (b) notwithstanding any provisions of the Agreement to the contrary, the Debtor shall have no obligation to indemnify any BRRE Indemnified Party or provide contribution or reimbursement to any BRRE Indemnified Party (i) for any claim or expense that is judicially determined (the determination having become final) to have arisen from the BRRE Indemnified Parties’ bad faith, self-dealing, breach of fiduciary duty (if any), willful misconduct or gross negligence, (ii) for a contractual dispute in which the Debtor alleges the breach of any BRRE Indemnified Party’s contractual obligations unless the Court determines that indemnification, contribution, or reimbursement would be permissible pursuant to In re United Artists Theatre Co., 315 F.3d 217 (3d Cir. 2003), or (iii) for any claim or expense that is settled prior to a judicial determination as to the exclusions set forth in clauses (i) and (ii) above, but determined by the Court, after notice and a hearing pursuant to subparagraph (c), infra, to be a claim or expense for which such BRRE Indemnified Party should not receive indemnity, contribution, or reimbursement under the terms of the Agreement, as modified by this Order; and (c) if, before the earlier of (i) the entry of an order confirming a chapter 11 plan in this Chapter 11 Case (that order having become a final order no longer subject to appeal) and (ii) the entry of an order closing this Chapter 11 Case, any BRRE Indemnified Party believes that it is entitled to the payment of any amounts by the Debtor on account of the Debtor’s indemnification, contribution, and/or reimbursement obligations under the Agreement, as modified by this Order, such BRRE Indemnified Party must file an application therefor in this Court, and the Debtor may not pay any such amounts to such BRRE Indemnified Party before the entry of an order by this Court approving the payment. This subparagraph (c) is intended only to specify the period of time under which the Court shall have jurisdiction over any request for fees and expenses by the BRRE Indemnified Parties for indemnification, contribution, and/or reimbursement and not as a provision limiting the duration of the Debtor’s obligation to indemnify, or
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make contributions or reimbursements to, the BRRE Indemnified Parties. All parties in interest shall retain the right to object to any demand by any BRRE Indemnified Party for indemnification, contribution, and/or reimbursement.
11. Any limitation on liability pursuant to the terms of Engagement Agreement or otherwise, including but not limited to paragraph 21 of the Engagement Agreement, are hereby eliminated and of no force or effect.
12. BRRE shall exhaust any retainer it is holding in satisfaction of its fees and expenses before seeking additional payments from the Debtors on account of the same.
13. The Debtors are authorized to take all actions necessary to effectuate the relief granted in this Order in accordance with the Application.
14. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Order are immediately effective and enforceable upon its entry.
15. Notwithstanding anything to the contrary in the Engagement Agreement, this Court retains jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Order and the Debtors’ engagement of BRRE.
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EXHIBIT B
Terrell Declaration
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
) In re: ) Chapter 11 ) FURNITURE FACTORY ULTIMATE ) Case No. 20-12816 (JTD) HOLDING, L.P., et al.,1 )
) (Jointly Administered) Debtors. ) )
DECLARATION OF JAMES TERRELL IN SUPPORT OF APPLICATION OF DEBTORS FOR ENRY OF AN ORDER (I) AUTHORIZING THE EMPLOYMENT AND RETENTION OF B. RILEY REAL ESTATE, LLC AS REAL PROPERTY LEASE CONSULTANT, NUNC PRO TUNC TO THE PETITION DATE AND (II) GRANTING RELATED RELIEF
I, James Terrell, declare, pursuant to Bankruptcy Rule 2014(a), that:
1. I am a Principal of B. Riley Real Estate, LLC (“BRRE”), which has its principal place of business at 875 North Michigan Avenue, Suite 3900, Chicago, Illinois 60611. I am authorized to make and submit this declaration on behalf of BRRE (the “Declaration”) and in support of the Application of the Debtor for Entry of an Order (I) Authorizing the Employment and
Retention of B. Riley Real Estate, LLC as Real Property Lease Consultant, Nunc Pro Tunc to the
Petition Date and (II) Granting Related Relief (the “Application”)2 filed contemporaneously herewith. Except as otherwise noted, I have personal knowledge of the matters set forth herein
1 The Debtors in these chapter 11 cases, along with the last four digits of each of the Debtors’ respective federal tax identification numbers, are as follows: Furniture Factory Ultimate Holding, LP (4089); Furniture Factory Holding, LLC (5055); Furniture Factory Intermediate Holding, LLC (8060); Furniture Factory Outlet, LLC (3952); Furniture Factory Outlet Transportation, Inc. (7131); Bedding Holding, LLC (7744); Bedding Intermediate Holding, LLC (6384); and Bedding, LLC (4774). The Debtors’ headquarters and mailing address is: 6500 Jenny Lind Road, Space A, Fort Smith, AR 72908.
2 Capitalized terms used but not otherwise defined herein shall have the same meanings ascribed to them as in the Application.
PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 3 of 20
and, if called and sworn as a witness, I could and would testify competently thereto.3 BRRE was
retained pursuant to that certain Real Estate Services Agreement, dated November 9, 2020, by and
between BRRE and the Debtors (the “Engagement Agreement”), a copy of which is attached as
Exhibit C to the Application.
2. I have held a variety of real estate and real estate related positions throughout my
over forty year career. I assisted in the development and operations of shipping centers for Homart
Development Company. I served as Sears, Roebuck and Co.’s liaison for Coldwell Banker Real
Estate. I served on the team that lead the development of their corporate headquarters and business
park. I served as the Real Estate Chief Operating Officer when the Sears portfolio included over
4,500 locations and 450 millions square feet. My responsibilities included new stores, lease
negotiations, divestitures, redevelopment, joint ventures and asset management. After my
retirement from Sears, I was Senior Vice President of Ashley Furniture responsible for their
portfolio and redevelopment opportunities. I has since worked in the real estate restructuring arena
independently, with A & G Realty Partners and currently with BRRE.
A. BRRE’s QUALIFICATIONS
3. BRRE is a preeminent real estate consulting and advisory firm with its principal
office located at 875 North Michigan Avenue, Suite 3900, Chicago, Illinois 60611. BRRE advises
clients throughout the United States and Canada. BRRE’s four Principals have over 120 years of
retail real estate expense in and outside of bankruptcy. BRRE has dedicated professionals who
provide real property lease advisory services to its clients and who have extensive experience optimizing retail real estate portfolios, reducing occupancy costs, and assisting in lease
3 Certain disclosures herein relate to matters within the personal knowledge of other professionals at BRRE and are based on information provided by them. 2
PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 4 of 20
restructurings, terminations, dispositions, and selection—services that are crucial to the Debtors’
success in these consolidated Chapter 11 Cases.
4. Furthermore, BRRE’s professionals are expert negotiators with close and extensive
relationships with landlords. BRRE Principals have considerable experience providing real
property lease consulting services to financially troubled companies and have been retained in
numerous large and complex chapter 11 cases, including: J.C. Penny, Sears Holdings, Bon-Ton
Department Stores, Aldo, BCBG, Golfsmith, Gordman’s, Sharper Image, Sports Authority, and
WorldCom.
B. Efforts to Avoid Duplication of Services
5. BRRE believes that its services will be complementary, rather than duplicative, of
the services to be performed by the Debtors’ other professionals retained in this Chapter 11 Case.
BRRE will carry out unique functions and will use reasonable efforts to coordinate with the
Debtors and its professionals retained in these Chapter 11 Case to avoid the unnecessary
duplication of services.
C. Services to be Provided and Professional Compensation
6. The scope of services to be performed by BRRE is accurately set forth in the
application and in the Engagement Agreement.
7. Subject to the Court’s approval, the Debtor will compensate BRRE pursuant to the
terms of the Engagement Application, which provide the following structure for payment of those
services laid out in full in the Engagement Agreement:
(a) Early Termination Rights – For each Early Termination Right, BRRE shall
earn and be paid a fee of one half (½) of one (1) month’s Gross Occupancy
Cost per applicable Lease.
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(b) Lease Terminations. For each Lease Termination, BRRE shall earn and be
paid a fee of four percent (4%) of the Occupancy Cost Savings per
applicable Lease.
(c) Monetary Lease Modifications. For each Monetary Lease Modification,
BRRE shall earn and be paid a fee of five percent (5%) of the Occupancy
Cost Savings per applicable Lease.
(d) Non-Monetary Lease Modifications. For each Non-Monetary Lease
Modification, BRRE shall earn and be paid a fee of one thousand dollars
($1,000) per applicable Lease.
8. And, as set forth more fully in Schedule B of the Engagement Agreement, compensation is to be paid to BRRE in accordance with the following structure:
(a) BRRE shall provide a deal sheet with the terms of each proposed Covered
Transaction (each, a “Deal Sheet”) to the Company. BRRE shall earn and
be paid Compensation pursuant to this Agreement with respect to each
Covered Transaction upon the closing of a Bankruptcy Court approved
assumption and assignment of the Lease under such Covered Transaction.
(b) Such Compensation, together with all applicable expenses with respect to
such Covered Transaction, shall be due and payable, subject to, and in
accordance with, Schedule B of the Engagement Agreement. In the absence
of the foregoing, BRRE shall not be entitled to any fees or expenses,
notwithstanding the fact that the Company may determine in its sole
discretion not to finalize a transaction that would otherwise give rise to a
fee for BRRE.
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9. I believe that the compensation structure described above and set forth in the
Engagement Agreement is comparable to compensation generally charged by real property lease advisors of similar stature to BRRE for comparable engagements, both in and out of bankruptcy.
Furthermore, the proposed compensation structure is also consistent with BRRE’s normal and customary billing practices for cases of comparable size and complexity that require the level and scope of services to be provided in these Chapter 11 Cases.
10. BRRE has not shared or agreed to share any of its compensation from the Debtors with any other person, other than members and consultants of BRRE, as permitted by section 504 of the Bankruptcy Code.
11. Except as described herein, no commitments have been made or received by BRRE, nor any member thereof, as to compensation or payment in connection with these Chapter 11
Cases.
D. Recordkeeping and Applications for Compensation
12. I believe that there exists cause to waive the information and reporting requirements imposed by Local rule 2016-2(d) with respect to the BRRE. It is standard in BRRE’s industry for professionals providing services relating to real property lease consulting to be compensated on a fixed fee basis, rather than on an incremental hourly basis. Requiring BRRE to file periodic fee applications pursuant to sections 330 and 331 of the Bankruptcy Code is unduly burdensome and time-consuming because the Debtors will not compensate BRRE unless and until the Debtors are in a position to obtain a monetary or non-monetary benefit through a renegotiation, termination, or modification of one or more of the Debtors’ leases. The Debtors and BRRE propose that BRRE be paid one hundred percent (100%) of the amount due upon submission of an acceptable invoice to the Debtors. Under these circumstances, it is appropriate and reasonable for BRRE to be
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compensated pursuant to the terms of the Engagement Agreement without being required to file interim fee applications as contemplated by sections 330 and 331 of the Bankruptcy Code and
Bankruptcy Rule 2016.
13. BRRE will file, however, a final fee application for review by the Court and parties in interest pursuant to section 328(a) of the Bankruptcy Code, consisting of a summary statement of all compensation and disbursements for which payment or reimbursement is sought or was already paid by the Debtors.
E. Indemnification
14. The Indemnification Provisions were fully negotiated by and between the Debtors
and BRRE at arm’s length and in good faith as part of the overall compensation payable to BRRE
under the Engagement Agreement, and is subject, in its entirety, to the terms of the Proposed
Order. I believe that, subject to the modifications set forth in the Proposed Order, the
Indemnification Provisions are customary and reasonable for similar real property lease consultant
engagements in chapter 11 cases and reflects the qualifications and limitations on indemnification
provisions that are customary in this district and other jurisdictions.
F. BRRE’s Disinterestedness
15. In connection with the Debtors’ proposed retention of BRRE, BRRE obtained from
the Debtors’ counsel the names of individuals and entities that may be parties in interest in these
Chapter 11 Cases (collectively, the “Potential Parties in Interest”), which Potential Parties in
Interest are listed on Schedule 1 annexed hereto. BRRE then compared the names of the Potential
Parties in Interest with the names of entities that have entered into engagement agreements with
BRRE in the last three years.
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16. I am unaware of any real property lease consultant or other real estate advisor
engagements of BRRE by the Potential Parties in Interest within the last three years or any other material connections between BRRE and the Potential Parties in Interest other than BRRE’s present engagement with American Freight, LLC (an affiliate of American Freight FFO, LLC) and its affiliates. It is possible that BRRE may now or in the future be retained by one or more additional Potential Parties in Interest in unrelated matters without my knowledge. To the extent that BRRE discovers or enters into any new material relationship with Potential Parties in Interest, this Declaration will be supplemented.
17. Although BRRE has researched the Potential Parties in Interest list, the Debtor may also have numerous customers, creditors, competitors, and other parties with whom they maintain business relationships that are not included as Potential Parties in Interest and with whom BRRE may maintain business relationships.
18. In addition, it is possible that certain of BRRE’s or its affiliates and its and theirs respective directors, officers, members, managers, or employees may have had in the past, may currently have, or may in the future have connections to (i) the Debtors or (ii) the Potential Parties in Interest in these Chapter 11 Cases. To the extent that BRRE discovers that any of its directors, officers, or employees have a material relationship with the Debtors or any Potential Party in
Interest, this Declaration will be supplemented.
19. BRRE is a direct, wholly owned subsidiary of B. Riley Financial, Inc. (NASDAQ:
RILY), a publicly traded, diversified financial services firm. B. Riley Financial, Inc. and its
subsidiaries provide collaborative financial services and solutions through:
(a) B. Riley Securities, Inc. (“B. Riley Securities”) is a leading, full service
investment bank providing financial advisory, corporate finance, research, securities
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lending and sales and trading services to corporate, institutional and high net worth
individual clients. B. Riley Securities, (fka B. Riley FBR) was formed in November 2017
through the merger of B. Riley & Co, LLC and FBR Capital Markets & Co., which the
Company acquired in June 2017.
(b) B. Riley Wealth Management, Inc. (“B. Riley Wealth Management”)
provides comprehensive wealth management and brokerage services to individuals and
families, corporations and non-profit organizations, including qualified retirement plans,
trusts, foundations and endowments. B. Riley Wealth Management was formerly
Wunderlich Securities, Inc., which the Company acquired on July 3, 2017 and changed the
name in June 2018.
(c) B. Riley Capital Management, LLC, a Securities and Exchange
Commission-registered investment advisor, which includes:
(i) B. Riley Asset Management, an advisor to certain private funds
and to institutional and high net worth investors.
(ii) Great American Capital Partners, LLC (“GACP”), the general
partner of two private funds, GACP I, L.P. and GACP II, L.P., both direct lending
funds that provide senior secured loans and second lien secured loan facilities to
middle market public and private U.S. companies.
(d) Our subsidiaries doing business as B. Riley Advisory Services:
(i) GlassRatner Advisory & Capital Group LLC (“GlassRatner”), a
specialty financial advisory services firm that provides consulting services to
shareholders, creditors and companies, including due diligence, fraud
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PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 10 of 20
investigations, corporate litigation support, crisis management and bankruptcy
services.
(ii) Great American Group Advisory and Valuation Services, LLC, a
leading provider of appraisal and valuation services for asset based lenders,
private equity firms and corporate clients.
(e) B. Riley Retail Solutions, LLC (fka Great American Group, LLC), a
leading provider of asset disposition and auction solutions to a wide range of retail and
industrial clients.
(f) We also pursue a strategy of investing in or acquiring companies which
we believe have attractive investment return characteristics. We acquired United Online,
Inc. (“UOL” or “United Online”) on July 1, 2016 and magicJack VocalTec Ltd.
(“magicJack”) on November 14, 2018 as part of our principal investment strategy.
(i) UOL is a communications company that offers consumer
subscription services and products, consisting of Internet access services and
devices under the NetZero and Juno brands primarily sold in the United States.
(ii) magicJack is a Voice over IP (“VoIP”) cloud-based technology
and services communications provider.
(g) BR Brand, in which the Company owns a majority interest, provides
licensing of a brand investment portfolio. BR Brand owns the assets and intellectual
property related to licenses of six brands: Catherine Malandrino, English Laundry, Joan
Vass, Kensie Girl, Limited Too and Nanette Lepore.
20. The review of the Potential Parties in Interest was conducted by B. Riley Financial,
Inc. pursuant the following procedures: We check the internal databases of B. Riley Financial, Inc.
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PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 11 of 20
and its subsidiaries, and, additionally, we ask our corporate senior management, finance,
accounting, compliance and legal departments, as well as managers at our above-described
investment banking, retail, real estate, appraisal, advisory, liquidation and wealth and capital
management affiliates to review the list of interested parties and to identify and describe any
relationships. Based on the process set forth herein, it is my understanding that the overall design
and implementation of BRRE’s current procedures provide a reasonable level of comfort that
relationships and potential conflicts will be identified. Continued inquiry will be made following
the filing this Declaration by undertaking the same procedures described herein on a periodic basis,
with additional disclosures to be filed in this Court if necessary or otherwise appropriate.
21. BRRE is a separate legal entity and obverses all legal formalities between entities.
BRRE adheres to all confidentially obligations across entities with respect to client information.
BRRE personnel do not have access to the files of other business lines nor do other business lines
have access to BRRE files.
22. BRRE and its affiliates have certain connections with creditors, equity security
holders, and other parties in interest in these Chapter 11 Cases. All of these matters, however, are
unrelated to these Chapter 11 Cases. BRRE and its affiliates serve clients across a broad range of
industries, functions, and geographies, and, within industries, serve competitors and do so in a
manner that protects the confidentiality of each client’s information (including the confidentiality
of the engagement itself). Thus, BRRE and its affiliates may have in the past provided services for, may presently be providing services for, and may in the future provide services for entities
that are determined to be creditors, equity security holders, and other parties in interest in these
Chapter 11 Cases; however, to the best of my current knowledge, subject to the disclosures set forth herein, such services do not focus on direct commercial relationships or transactions between
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such companies and the Debtors. From time to time, BRRE or its affiliates, may engage the
professional services of, or be engaged in proceedings in which firms listed on the Interested
Parties List may appear. Affiliates of BRRE regularly provide asset appraisal, consultation,
enterprise valuation, and/or field exam services in the ordinary course of business to many lenders,
investors, and other market participants, some of whom may be parties in interest in this case.
Without limiting the foregoing, BRRE and its affiliates report the following connections to the
Potential Parties in Interest:
Great American Group Advisory and Valuation Services, LLC has provided and
may continue to provide appraisal and valuation services to: Fifth Third Bank, Regions
Bank, BancFirst, Community First National Bank, First Commercial Bank PNC Bank, Sun
Capital Partners and their affiliates, Stellus Capital Investment Corporation, United
Furniture Industries, Serta Mattress Company, Elements International Group, Albany
Industries, Steve Silver Co., Standard Furniture Mfg. Co. Inc., Staples Advantage, in each
case on matters wholly unrelated to these Chapter 11 Cases. Great American additionally
works with, and appears in cases in which, Hilco Real Estate, LLC has also appeared.
GlassRatner Advisory & Capital Group, LLC has provided and may continue to
provide consulting and advisory services to: Stretto, Troutman Pepper Hamilton Sanders
LLP, Sun Capital Partners, Regions Bank, Fifth Third Bank, Klehr Harrison Harvey
Branzburg LLP, in each case on matters wholly unrelated to these Chapter 11 Cases.
Additionally, GlassRatner served as chief restructuring officer for Apex Linen, filed in
Delaware and before Judge Silverstein, where FocalPoint Securities was originally retained
as the Debtor’s investment banker but subsequently replaced. In the same mater Stretto
was (and still is) retained.
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BRRE and its affiliates are involved in other proceedings in the United States
District Court in the District of Delaware on unrelated matters, and on such proceedings
have worked with J. Timothy Fox, Jr. and Linda Richenderfer and have appeared before,
and may in the future appear before, judges listed as Potential Parties in Interest. Principals
of BRRE may have previously negotiated on behalf of other clients with landlords who are
parties in interest in these Chapter 11 Cases.
Affiliates of BRRE provide financial services to Franchise Group, Inc. (“FRG”),
the parent company of American Freight, and its affiliates, including investment banking,
financial advisory services and the provision of financing. From August 9, 2018 to March
31, 2020, members of B. Riley Financial, Inc.’s senior management, Kenneth Young and
Bryant Riley, served on the board of directors of FRG. As of June 26 2020, the date of B.
Riley’s most recent Schedule 13D filing with the Securities and Exchange Commission,
affiliates of BRRE collectively owned 11.6% of FRG’s common stock.
23. Neither I nor any other professional of BRRE who will work on this engagement, to the best of my knowledge after reasonable inquiry, is related or connected to the United States
Bankruptcy Judge assigned to these Chapter 11 Cases, the U.S. Trustee, or any persons employed by the U.S. Trustee.
24. Based upon the foregoing, except as otherwise set forth herein, to the best of my knowledge, information, and belief, BRRE is a “disinterested person” within the meaning of section 101(14) of the Bankruptcy Code (as modified by section 1107(b) of the Bankruptcy Code), in that, to the best of my knowledge, BRRE, its members, and employees: (a) are not a creditors, an equity security holders, or an insiders of the Debtors; (b) are not and were not, within two years before the Petition Date, a director, officer, or employee of the Debtors; and (c) do not have an
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interest materially adverse to the Debtors, their estates, or of any class of creditors or equity
security holders, by reason of any direct or indirect relationship to, connection with, or interest
in, the Debtors, or for any other reason.
[Signature page follows]
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PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 15 of 20
Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true
andcorrect to the best of my knowledge, information, and belief.
Dated: November 23, 2020
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Schedule 1
Potential Parties in Interest
Debtors Furniture Factory Ultimate Holding, LP Furniture Factory Holding, LLC Furniture Factory Intermediate Holding, LLC Furniture Factory Outlet, LLC Furniture Factory Outlet Transportation, Inc. Bedding Holding, LLC Bedding Intermediate Holding, LLC Bedding, LLC
Lenders Stellus Capital Investment Corporation Stellus Capital Management LLC Stellus Credit Master Fund I, LLC Stellus Credit VCOC Fund I, LLC Stellus Credit Master Fund I SPV, LLC Stellus Credit VCOC SPV, LLC Furniture Factory Note Holding, LLC American Freight FFO, LLC
Banks Fifth Third Bank Arvest Bank Regions Bank Centennial Bank Equity Bank BancFirst Central Bank of Boone County Community First National Bank Republic Bank Oklahoma Heritage Bank First Financial Bank PNC Bank Synchrony Bank
Interest Holders Sun Capital Partners VI, L.P. Sun Capital Partners VI Employee Co-Invest Vehicle, L.P. Stellus Credit Master Fund I, LLC Stellus Credit VCOC Fund I, LLC Stellus Capital Investment Corporation
Officers & Directors Hank Mullany Donald Roach Bobby Rutherford
PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 17 of 20
Beth Neumann Matthew Garff
Top 30 Unsecured Creditors Homestretch The Springfield News Leader United Furniture Industries Malouf Serta Mattress Company American Furniture/Peak Living Carpenter Co GBS Enterprises, LLC Washington Furniture Sales Elements International Group Albany Industries Steve Silver Co. Austin Group Furniture LLC Standard Furniture Mfg. Co Inc Crestview Kith Furniture Crowe Chizek LLP Hilco Real Estate, LLC Holland House Precision Textiles Stag & Hare Inn, LLC Pillar Logistics Spencer Stuart Chateau On The Lake LP Wood Manufacturing Staples Advantage Culp, Inc. L&P Inc. Integrity Express Logistics, LP Broadview Networks DMM Forest Products Inc. Storis, Inc.
Landlords Westphal Leasing, LLC Sunflower Supply Co., Inc. Missouri Blvd Invest Co. E.W. Thompson, Inc. Southern Hills Center, LTD Jackson Street Group LLC M3 Ventures, LLC Old Guys Rule, LLC McRae Mortgage Invest. LDC Silvertree LLC Gamble Brothers, LLC TB Garrett Creek LLC Douglas C Foyt 2
PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 18 of 20
WilMark Ventures, LLC P&H Investments, LLC Halltown Farms, LLC J&L Development Company, LLC Ponca Shopping Center, LLC Eagle-North Hills Shopping Centre One Land Company, LLC Rock N Roll Development, LLC South Tulsa Storage, LLC One Home Realty, Inc. Kelly Commercial Realty, LLC Gateway Retail Partners I, LLC D3 New Albany, LLC William Shane Courtney c/o 7D Commercial Real Estate Hogan Holdings 56, LLC Dixie, LLC Indian Trail Square, LLC Bardstown S.C., LLC Powderhorn Properties LLC Roberts and Sneed Inc. Fields Investment Co. Crain Investments, LP OP 1, LLC CV Owasso, LLC Gopher Orthopedics, LLC Gregory Realty Marathon Management, LLC Columns Development Partners Centennial Place Co. 5524 Bosque Valley Mills Commercial, LLC Bosque River Center Realty, LLC J.L.O Enterprises, Inc. Brighton Landmark, LLC Pearson Equity Jeffersonville I, LLC J DEE O Enterprises LLC
Insurers Hartford Underwriters Insurance Company Trumbull Insurance Company Hartford Casualty Insurance Company The Continental Insurance Company National Turnpike Selective Ins. Co of the Southeast Philadelphia Indemnity Insurance Company Hartford Fire Insurance Company Syndicate 2623/623 at Lloyd’s Chubb Federal Ins.
Utilities Oklahoma Gas SPIRE Energy Ameren Missouri Liberty Utilities 3
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Summit Natural Gas of Missouri Centerpoint Energy Oklahoma Natural Gas Black Hills Atmos Energy Vectren Energy City of Elizabethtown LG&E Duke Power Evergy City Utilities West Plains North Little Rock Electric Entergy City Water and Conway Corporation City of Siloam Springs Canadian Valley Electric Coop Paragould Light Water and Cable Ponca City Utility Authority OG&E Evergy Public Service Co. of Oklahoma Paducah Power and Water Kentucky Utilities Company City of Bardstown
Professionals FocalPoint Securities, LLC RAS Management Stretto Troutman Pepper Hamilton Sanders LLP Klehr Harrison Harvey Branzburg LLP
US Trustee, Judges, and court contacts for the District of Delaware (and key staff members)
Attrix, Lauren Buchbinder, David Carey, Kevin J. Casey, Linda Dice, Holly Dorsey, John T. Dortch, Shakima L. Fox, Timothy J., Jr. Giordano, Diane Green, Christine Gross, Kevin Hackman, Benjamin Heck, Jeffrey Leamy, Jane McCollum, Hannah M. 4
PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-3 Filed 11/23/20 Page 20 of 20
O’Malley, James R. Owens, Karen B. Panacio, Michael Richenderfer, Linda Sarkessian, Juliet Schepacarter, Richard Selber Silverstein, Laurie Serrano, Edith A. Shannon, Brendan L. Silverstein, Laurie Selber Sontchi, Christopher S. Starr, Karen Tinker, T. Patrick Vinson, Ramona Walrath, Mary F. West, Michael Wynn, Dion
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EXHIBIT C
Engagement Agreement
PHIL1 9219613v.4 Case 20-12816-JTD Doc 87-4 Filed 11/23/20 Page 2 of 18
EXECUTION VERSION
REAL ESTATE SERVICES AGREEMENT
This Real Estate Services Agreement including the Schedules attached hereto (collectively the “Agreement”) is made as of November 20th, 2020 (the “Agreement Date”), by and between B. Riley Real Estate, LLC (“BRRE”), a Delaware limited liability company, with its principal place of business at 875 N. Michigan Avenue, Suite 3900, Chicago, IL 60611 and Furniture Factory Outlet, LLC (the “Company”), on behalf of itself and its debtor affiliates and subsidiaries that are Debtors (defined below) in the Bankruptcy Case (defined below), with a principal place of business located at 6500 Jenny Lind Road, Fort Smith, AR 72908 (each a “Party” and collectively the “Parties”).
WITNESSETH:
WHEREAS, Company and its affiliated debtors and debtors-in-possession (collectively, the “Debtors”), are debtors and debtors-in-possession in chapter 11 cases pending in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), jointly administered under Case No. 20-12816 (collectively, the “Bankruptcy Case”);
WHEREAS, the Debtors have sought Bankruptcy Court approval to sell substantially all of their assets, including some or all of the Leases (as defined below), in connection with the Bankruptcy Case (the “Sale Process”),
WHEREAS, Company is the owner of the leasehold interests as set forth in Schedule A attached hereto with respect to premises set forth on such Schedule (each a “Lease” and collectively the “Leases”) or as set forth on such schedule (the underlying properties, each a “Property” and collectively the “Properties”);
WHEREAS, Company seeks to engage BRRE to provide certain consulting and advisory services in connection with the Leases and Properties as provided herein, subject to the Bankruptcy Court Approval in the Bankruptcy Case; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings set forth on Schedule B hereto.
NOW THEREFORE, in consideration of the mutual covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Scope. In accordance with the terms and conditions of this Agreement, BRRE will provide the following services (the “Services”) with respect to the Covered Transactions, to the extent requested by the Company and appropriate:
a) consult with the Company to discuss the Company’s goals, objectives and financial parameters in relation to the Leases;
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b) provide the Company a schedule of work including key activities, time line, and any required Company support;
c) negotiate with the landlords of the leased Properties and other third parties on behalf of the Company in order to assist the Company with respect to Covered Transactions on terms desired by the Company; and
d) report periodically, but in any event as often as reasonably requested by the Company, to the Company regarding the status of the Services and details related thereto.
2. Term of Agreement; Termination; Survival. This Agreement shall be for a term of three (3) months beginning on the Agreement Date (the “Term”), provided that the Term shall be extended until the Services are completed or by written agreement of the Parties. Notwithstanding the foregoing, either Party may cancel this Agreement upon ten (10) days’ prior written notice to the other Party in accordance with the notice provision below, provided that the Company shall not terminate this Agreement during the first thirty (30) days hereof. If BRRE becomes unable to perform its duties as a result of a legal, contractual or regulatory restriction, BRRE shall have the right to terminate this Agreement with immediate effect. Any rights or obligations incurred or accrued by either Party prior to termination shall survive termination of this Agreement. The parties’ rights and obligations pursuant to this Section 2 , Section 3 and Sections 16 – 33 shall survive the termination or expiration of this Agreement.
3. Compensation. The compensation for the Services is set forth on Schedule B, which is attached hereto and incorporated herein (the “Compensation”).
4. Bankruptcy.
a. The Company will file an application with the Bankruptcy Court to employ BRRE, on the terms set forth in this Agreement, and utilize its reasonable best efforts to ensure that such application is considered by the Bankruptcy Court that provides, among other things, as follows: (i) entry of an order (the “Approval Order”) approving BRRE’s retention pursuant to, and/or assumption, of this Agreement; (ii) the payment of all fees and reimbursement of expenses hereunder to BRRE in accordance with this Agreement; and (iii) authorizing the Company to take such further actions as are necessary or appropriate to carry out the terms and conditions of this Agreement.
b. The Company will provide BRRE with a copy of the pleadings in connection with requesting any Approval Order prior to submission to the Bankruptcy Court for BRRE’s review and comment (without limiting the foregoing, the Company shall use reasonable efforts to give BRRE at least 2 days’ prior notice of such filing) and advise BRRE of any objection or
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hearings pertaining to BRRE’s retention. Any Approval Order must be acceptable to BRRE and the continuation of BRRE’s obligations hereunder will be conditioned upon the entry of such Approval Order. If an acceptable Approval Order is not obtained within 45 days from the date that it is filed, BRRE shall have the right to terminate this Agreement at any time thereafter. Further, if an Approval Order is not obtained authorizing BRRE’s services and fees as set forth herein, the Company agrees to amend the application in conjunction with, and with approval from, BRRE and request a hearing to review the application.
c. Further, all work product generated by BRRE shall be made available to all prospective purchasers participating in the Debtors’ Sale Process.
5. Additional Services. BRRE may provide additional services requested by the Company that are not otherwise specifically provided for in this Agreement. Any additional services will be mutually agreed upon in writing in advance by the Parties.
6. Recordkeeping. The Services to be provided by BRRE pursuant to this Agreement are, in general, transactional in nature. Accordingly, BRRE will not bill the Company by the hour or maintain time records.
7. Expenses and Disbursements. BRRE shall not be responsible for any transactional costs incurred by the Company in connection with its retention and Services. The Company shall reimburse BRRE for BRRE’s reasonable out-of-pocket expenses consistent with the Company’s travel and expense policy, upon prior written approval by Company (including, but not limited to, legal, mailing, marketing and travel expenses) incurred in connection with its retention and Services, including, but not limited to, responding to any litigation or other type of inquiry, deposition or otherwise relating to the Services or this Agreement. Any reimbursable expenses shall be paid to BRRE within thirty (30) days of the Company’s receipt of invoice. The provisions of this Section shall not in any way limit the Company’s obligations pursuant to Section 22.
8. Exclusive. During the duration of this Agreement, BRRE shall have the sole and exclusive authority to perform the Services for the Leases/Properties set forth on Schedule A. The Company agrees to forward all relevant inquiries regarding the Leases/Properties listed on Schedule A made to the Company, its representatives or related parties to BRRE. In the event that during the Term of this Agreement the Company hires a third party for or the Company itself consummates a transaction for one of the Services set forth herein for a Lease/Property listed on Schedule A, BRRE shall still be compensated in accordance with Schedule B of this Agreement.
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9. Company’s Representative. The Company will appoint a person as its representative (“Company’s Representative”) in dealing with BRRE. The Company reserves the right, at any time and from time-to-time, upon notice to BRRE in accordance with the notice provisions below, to designate a successor representative or an additional representative and to limit the authority of the representative in any respect. BRRE will report regularly to the Company’s Representative in order to keep him/her fully apprised of BRRE’s performance. The designated principal representative for BRRE will be JIM TERRELL. If BRRE seeks to change its principal representative, the Company agrees not to unreasonably withhold its consent to any proposed replacement.
10. Company Cooperation. The Company shall make available to BRRE all information concerning the Leases/Properties necessary for the performance of its obligations hereunder, including, but not limited to, copies of the Leases, the current rents, taxes and other charges relating to the Leases, the premise sizes of the Leases, the commencement and expiration dates of the Leases, any Lease options, up to date landlord contact information and such other information as BRRE reasonably requests for the performance of its Services.
The Company shall insert the Leased properties, into Schedule A attached hereto.
All information provided by the Company to BRRE, including but not limited to the information referenced above, shall collectively be referred to as “Company Information”. It is understood and agreed by the Parties that BRRE shall have no obligation to verify the accuracy of such information, that the incompleteness or inaccuracy of the Company Information may affect BRRE’s Services and that BRRE shall have no liability whatsoever resulting from, whether directly or indirectly, the inaccuracy or incompleteness of the Company Information. Both Parties understand and agree that BRRE shall base its Services on the Company Information and any material inaccuracies, discrepancies or omissions in the Company Information may affect the Services provided, including but not limited to, a delay in the provision of the Services. Furthermore, both Parties understand and agree that the commencement of this Agreement as well as BRREs performance of its Services is contingent upon BRRE’s receipt of the requested Company Information.
11. Use of Company Name. BRRE may use the Company’s name and logo to identify the Company as one of BRRE’s clients with Company’s consent, which shall not be unreasonably withheld, delayed or denied. BRRE further agrees to obtain Company’s approval as to the substance of any publication of Company’s name and logo prior to publishing such information in any advertising, marketing or other BRRE materials to be disclosed to third parties.
12. No Authority to Execute Agreements. BRRE shall have no right or power to enter into any agreement in the name of or on behalf of the Company or to otherwise
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obligate the Company in any manner unless authorized in a writing (that has not been revoked) signed by the Company.
13. Approval of Contracts. All of the terms and conditions of each Covered Transaction or any other agreement involving a Lease shall be subject to approval by the Company, which approval may be withheld in the Company’s sole and absolute discretion.
14. Meetings and Written Reports. After the commencement of the Agreement, BRRE shall meet with, in a manner agreed to by the Parties, the Company’s Representative to review the Company’s goals, objectives and financial parameters. Thereafter, BRRE will meet with or participate in telephone conferences with the Company’s Representative regarding the status of the Services as mutually agreed to by the Parties.
15. Disclosures/Reports. All information, advice, recommendations or other content of any reports, presentations or other communications that BRRE provides under the terms of this Agreement are solely for the benefit of the Company. All opinions and advice (written or oral) given by BRRE to the Company in connection with this Agreement are intended solely for the benefit and use of the Company and no such opinion or advice shall be used for any other purpose, or reproduced, disseminated, quoted or referred to at any time, in any manner, or for any purpose, other than as provided herein, without the prior written consent of BRRE, which shall not be unreasonably withheld, delayed or denied.
If the Company receives a subpoena, summons or court order by any federal, state or other regulatory agency having jurisdiction over the Company relating in any respect to BRRE or its Services, the Company shall promptly notify BRRE, if legally permissible, so that BRRE may obtain, at its sole cost, a protective order for such information. If BRRE is unable to obtain a protective order and the Company is required to provide information regarding BRRE and/or the Services, the Company agrees to provide only that information which is legally required and to use reasonable efforts to obtain confidential treatment of such information/documentation.
16. Independent Contractor; No Fiduciary Duty. Each Party acknowledges and agrees that the arrangements contemplated herein are and will be for the provision of the Services and that nothing contained herein shall create or be construed as creating a contract or other arrangement of employment between the Company and BRRE. BRRE shall provide the Services as an independent contractor and not as an employee, agent, partner or joint venture of the Company. Each Party disclaims any intention to impose any fiduciary duty on the other Party.
17. Non-Circumvention. The Company hereby covenants and agrees that it shall not, by amendment of its charter documents or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
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securities, or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, and will at all times in good faith carry out all of the provisions of this Agreement and take all action as may be reasonably required to protect the rights of BRRE herein.
18. Assignment. Neither Party may delegate or assign its rights and obligations under this Agreement in whole or in part to an unaffiliated third party without the prior written consent of the other Party, which consent may not be unreasonably withheld, delayed or denied.
19. Representations, Warranties and Covenants. Each Party has all requisite power and authority to enter into this Agreement. This Agreement has been validly authorized by all necessary corporate action and constitutes a legal, valid and binding agreement of the Company and BRRE. Each Party represents that this Agreement does not and will not violate any applicable law or conflict with any agreement, instrument, judgment, order or decree to which it is a party or by which it is bound. Furthermore, each Party represents and agrees that it will comply with all applicable laws, rules, regulations, orders or decrees during the term of this Agreement in performing its obligations hereunder. Each Party represents that the person signing this Agreement on its behalf has the requisite authority to enter into this Agreement and can bind the respective Party.
20. Intellectual Property. BRRE may use data, software, designs, utilities, tools, models, systems and other methodologies that it owns or licenses in performing the Services hereunder. Notwithstanding the delivery of any reports by BRRE to the Company, BRRE shall retain all intellectual property rights in such materials (including any improvements or knowledge developed while performing the Services) and in any working papers compiled in connection with the Services.
21. Indemnification.
a. To the fullest extent permitted by law and subject to Bankruptcy Court approval, the Company hereby agrees to indemnify BRRE and its affiliates, officers, directors, members, managers, employees, agents and independent contractors (collectively, “BRRE Indemnified Parties”), and hold each of them harmless from and against all claims, demands, penalties, losses, liabilities or damages, including, without limitation, reasonable attorneys’ fees and expenses (collectively “Losses”), asserted against any BRRE Indemnified Party, resulting from (directly or indirectly), or related to the Services or this Agreement (including, but not limited to, any covenants, representations or warranties contained herein) or in any written agreement entered into in connection herewith, except to the extent that such Losses are to have resulted primarily from the BRRE’s fraud, bad faith, gross negligence or willful misconduct.
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b. BRRE hereby agrees to indemnify the Company its affiliates, officers, directors, members, managers, employees, agents and independent contractors (collectively, the “Company Indemnified Parties”) and hold each of them harmless from and against all Losses asserted against a Company Indemnified Parties, resulting from (directly or indirectly), or related to the Services or this Agreement (including, but not limited to, any covenants, representations or warranties contained herein) or in any written agreement entered into in connection herewith due to BRRE’s fraud, bad faith, gross negligence or willful misconduct. Such indemnification shall survive the completion of the engagement and/or the expiration or termination of this engagement or this Agreement.
22. Limitation on Liability. Except for the Parties’ indemnification obligations contained in Section 22 of this Agreement, neither party shall be responsible for any indirect, incidental, consequential, exemplary, punitive or other special damages (including, but not limited to, loss of profits and damage to reputation or business) arising under or by reason of this Agreement, the Services or any act or omission hereunder. Neither party shall be liable if it is unable to perform its responsibilities hereunder as a result of events beyond its control. Furthermore, in no event shall BRRE’s liability for a default or breach of this Agreement exceed the amount of fees paid to BRRE hereunder.
23. Prevailing Party. To the fullest extent permitted by law and subject to Bankruptcy Court approval, the prevailing party in any dispute relating to or arising from this Agreement shall have the right to collect from the other party, other than the Debtors, its reasonable costs and attorneys’ fees.
24. Beneficiaries. This Agreement shall inure to the sole and exclusive benefit of BRRE and the Company and the Indemnified Parties and their respective successors and representatives. The obligations and liabilities under this Agreement shall be binding upon BRRE and the Company.
25. Amendments; Modifications. This Agreement may be modified or amended, or its provisions waived, only in a writing signed by each of the parties hereto.
26. Severability. If any portion of this Agreement shall be held or made unenforceable or invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the remainder of this Agreement shall not be affected thereby and shall remain in full force and effect, and, to the fullest extent, the provisions of the Agreement shall be severable.
27. Entire Agreement. This Agreement constitutes the entire Agreement between the parties and supersedes and cancels any and all prior or contemporaneous arrangements, understandings and agreements, written or oral, between them relating to the subject matter hereof.
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28. Counterpart Execution/Facsimile and Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original, but which together shall be considered a single instrument. Facsimile and .pdf signatures to this Agreement shall be acceptable and binding.
29. Notices. Unless otherwise expressly provided herein or waived in writing by the Party to whom notice is given, any notice or other communication required or permitted hereunder will be effective if given in writing (i) when delivered by hand; (ii) three days after sent by certified mail, return receipt requested; (iii) when delivered by electronic email communication to the email address set forth below and verified by confirmed receipt; or (iv) one day after delivery to a commercial overnight courier, and addressed to the Parties as follows:
To the Company: Furniture Factory Outlet, LLC 6500 Jenny Lind Road, Fort Smith, AR 72908 Attention: Don Roach, CFO&COO Tel: (479) 431-5590 Email: [email protected] Email: [email protected]
To BRRE: B. Riley Real Estate, LLC 875 N. Michigan Avenue Suite 3900 Chicago, IL 60611 Attn: Michael Jerbich Tel: (312) 894-7621 Email: [email protected]
30. Governing Law, Waiver of Trial by Jury. This Agreement and all aspects of the relationship created hereby and any other agreements relating hereto shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed therein and, in connection therewith, the parties hereto consent to the exclusive jurisdiction and venue of the Bankruptcy Court for disputes arising hereunder. Notwithstanding the foregoing, solely for purposes of enforcing the Company’s obligations under Section 22, the Company consents to personal jurisdiction, service and venue in any court proceeding in which any claim relating to or arising out of this engagement is brought by or against any Indemnified Party. BRRE AND THE COMPANY EACH HEREBY AGREES TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTERCLAIM OR ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT.
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31. Headings. The descriptive headings of the paragraphs, subparagraphs and Appendixes of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretations of this Agreement.
32. Interpretation. No provision of this Agreement will be interpreted in favor of, or against, any of the parties hereto by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof.
[The Remainder of this Page is Intentionally Left Blank]
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Schedules
Schedule A Leases/Properties
Schedule B Covered Transactions/Compensation
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SCHEDULE A
LEASES/PROPERTIES
Store Square Building # Store Name Address City State Footage Type
6 JOPLIN 1400 E. 32nd Street Joplin MO 34,000 Free Standing
20 WEST PLAINS 1364 Southern Hills CTR West Plains MO 15,450 Inline
10 JEFF CITY 2010 Missouri Blvd. Jefferson City MO 22,129 Free Standing
41 CONWAY 580 Amity Rd Conway AR 30,300 Free Standing
58 PADUCAH 3521 James Sanders Blvd Paducah KY 23,505 Free Standing
34 LITTLE ROCK 280 S Shackleford Rd Little Rock AR 30,000 Free Standing
37 COLUMBIA 1450 Cinnamon Hill Lane Columbia MO 30,000 Free Standing
39 JONESBORO 2839 Race Street Jonesboro AR 26,750 Free Standing
59 ST. JOSEPH 3715 N Belt Highway St. Joseph MO 35,000 Free Standing
54 WARRENSBURG 133 Parsons Avenue Warrensburg MO 20,560 Free Standing
13 SEDALIA 3200 West Broadway Sedalia MO 25,435 Free Standing
42 BATESVILLE 1 Furniture Lane Batesville AR 31,320 Free Standing
23 SHERWOOD 6527 Warden Road Sherwood AR 31,050 Free Standing
32 MUSKOGEE 1551 W. Shawnee Muskogee OK 26,600 Free Standing
302 New Albany 2300 State Street New Albany IN 23,634 Inline
2 ROGERS AVE 8819 Rogers Avenue S-A Fort Smith AR 26,620 Free Standing
313 BARDSTOWN 223 KY Home Square Shopping Ct Bardstown KY 22,972 Inline
25 BRYANT 22401 HWY I-30 Bryant AR 25,000 Free Standing
44 SILOAM SPRINGS 3758 Hwy 412 E Siloam Springs AR 23,500 Free Standing
48 NEW HWY 71 S 8300 Hwy 71 South Fort Smith AR 23,500 Free Standing
53 ADA 1140 North Hills Center Ada OK 21,000 Inline
306 MADISON 440 E. Clifty Drive Madison IN 24,920 Inline
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Store Square Building # Store Name Address City State Footage Type
47 SHAWNEE 4939 N. Union Ave. Shawnee OK 23,500 Free Standing
49 PARAGOULD 1210 Linwood Dr. Paragould AR 20,050 Free Standing
60 NORMAN 831 Sonoma Park Drive Norman OK 23,700 Free Standing
55 LAWTON 7420 NW Sun Blvd. Lawton OK 23,555 Free Standing
50 PONCA CITY 2900 N 14th St Ponca City OK 22,853 Inline
63 OWENSBORO 2512 Calumet Trace Owensboro KY 23,500
312 Louisville (Preston Hwy) 5749 Preston Highway Louisville KY 25,000 Inline
308 ELIZABETHTOWN 1705 N. Dixie Highway Elizabethtown KY 26,097 Inline
310 DIXIE 6801 Dixie Highway Louisville (Dixie Hwy) KY 25,047 Inline
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SCHEDULE B
Covered Transactions/Compensation
A. Compensation
BRRE shall be compensated for the Services as follows:
1. Early Termination Rights – For each Early Termination Right, BRRE shall earn and be paid a fee of one half (½) of one (1) month’s Gross Occupancy Cost per applicable Lease.
2. Lease Terminations. For each Lease Termination, BRRE shall earn and be paid a fee of four percent (4%) of the Occupancy Cost Savings per applicable Lease.
3. Monetary Lease Modifications. For each Monetary Lease Modification, BRRE shall earn and be paid a fee of five percent (5%) of the Occupancy Cost Savings per applicable Lease.
4. Non-Monetary Lease Modifications. For each Non-Monetary Lease Modification, BRRE shall earn and be paid a fee of one thousand dollars ($1,000) per applicable Lease. B. Payment of Compensation.
BRRE shall provide a deal sheet with the terms of each proposed Covered Transaction (each, a “Deal Sheet”) to the Company. Subject to Section 20 of this Agreement, and except as otherwise provided in this Schedule B, BRRE shall earn and be paid Compensation pursuant to this Agreement with respect to each Covered Transaction upon the latest to occur of: (1) the Company’s entry into a written, binding Document with respect to such Covered Transaction, (2) the consummation of such Covered Transaction, (3) the Company receiving the benefit of such Covered Transaction; or (4) closing of a Bankruptcy Court approved assumption and assignment of the Lease under such Covered Transaction.
Such Compensation, together with all applicable expenses with respect to such Covered Transaction, shall be due and payable , subject to, and in accordance with, this Schedule B In the absence of the foregoing, BRRE shall not be entitled to any fees or expenses, notwithstanding the fact that the Company may determine in its sole discretion not to finalize a transaction that would otherwise give rise to a fee for BRRE.
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C. Definitions
“Covered Transaction” shall be defined as a Lease Termination, an Early Termination Right, a Monetary Lease Modification or a Non-Monetary Lease Modification.
“Document” shall be defined as any amendment or agreement that modifies a Lease or any rights or obligations relating to a Lease or Property, in any manner, including, but not limited to, a Covered Transaction. A Document shall also include any other agreement relating to a Lease or Property. For the avoidance of doubt, the landlord, a third party or the Company, can generate a Document.
“Early Termination Right” shall be defined as the Company’s exclusive right to terminate a Lease prior to its expiration date.
“Gross Occupancy Cost” shall be defined as the sum of the remaining occupancy costs of a Lease including, but not limited to, the base rent, any annual increases, percentage rent, CAM, taxes, insurance, rental tax, marketing and merchants association charges, utility charges, HVAC usage charges, trash removal charges, sprinkler usage charges, unpaid rents, tenant improvement dollars due to the landlord and any other charges payable by the Company to the landlord under a particular Lease as of the Agreement Date. In the case of percentage rent, such rent will be calculated using sales figures for the twelve (12) months ended at the end of the month prior to the calculation (equitably adjusted if less than twelve (12) months of sales figures are available). CAM, taxes, insurance, marketing and merchants association charges and all other applicable charges will be calculated using the last available full year charge for each item (which may be a calendar year or a lease year, depending upon which is the most recent full year charge available). In the event that rent increases periodically based upon the change in the Consumer Price Index (CPI), the assumed annual CPI increase shall be two and one-half percent (2.5%).
“Lease Termination” shall be defined as the disposition, whether all or part, of a Lease through assignment termination or otherwise.
“Lease Termination Cost” shall be defined as the total cost to effect a Lease Termination transaction. It includes any fees paid to a landlord or other third party to effect a Lease Termination, outside broker’s fees, downtime (any occupancy costs paid to the landlord after a store’s vacancy) and tenant improvement dollars. The Lease Termination Cost shall not include the payment of any past due amounts and the reimbursement for any unamortized leasehold improvements due to the landlord. Any consideration paid by an assignee, tenant, subtenant or other party to the Company to effect a Lease Termination transaction shall reduce the Lease Termination Cost.
“Monetary Lease Modification” shall be defined as any modification to or inclusion of additional provisions relating to the monetary terms of a Lease agreement, including, but not limited to, reduction in rent, reduction in Lease term, termination of rent, reduction of
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unamortized tenant allowance, reduction or elimination of the obligation to pay tenant allowance to the landlord, reduction or elimination of the requirement to improve the Lease space, the granting of tenant allowance or capital improvement dollars or landlord improvements to the Property, extensions of existing rent reductions past their original end date, any lease extension that results in rent less than the option period rent (or if no option period, the existing rent after giving effect to the applicable annual percentage increases), reduction in CAM charges, taxes, elimination of percentage rent, conversion to percentage rent, reductions in or returns of security deposits and FF&E if otherwise non-refundable (either pursuant to the terms of the Lease or as determined by the landlord) or any or any other amendment to a Lease that results in Occupancy Cost Savings to the Company.
“New Gross Occupancy Cost” shall be defined as the reduced Gross Occupancy Cost that results or would result from a Covered Transaction.
“Non-Monetary Lease Modification” shall be defined as any modification to the non- monetary terms of a Lease agreement, including, but not limited to, change of use, co- tenancy clause, sublease rights, the negotiation of a lease extension, the granting of an option (where there were no options), the granting of additional options, an amendment to the current option term or terms and relocation or reduction of Lease spaces that do not result in a reduction in Gross Occupancy Cost. For the avoidance of doubt, any lease extension that results in rent less than the option period rent (or if no option period, the existing rent after giving effect to the applicable annual percentage increases) shall not be deemed a Non-Monetary Lease Modification and BRRE’s Compensation shall be calculated solely on the basis of such extension being a Monetary Lease Modification.
“Occupancy Cost Savings” shall be defined as the difference between the original Gross Occupancy Cost and the New Gross Occupancy Cost for the period from the earlier of the effective date of a Document, the date in which the Covered Transaction becomes effective or the date in which BRRE becomes entitled to its Compensation under the end of the original or new Lease term as applicable pursuant to the terms of the Covered Transaction.
Occupancy Cost Savings include, but are not limited to, reduction in rent, reduction in Lease term, reduction in Lease space, termination of rent, delay or deferral of rent, reduction of unamortized tenant allowance, reduction or elimination of the obligation to pay tenant allowance to the landlord, reduction or elimination of the requirement to improve the Lease space, the granting of tenant allowance or capital improvement dollars or landlord improvements to the Property, extensions of existing rent reductions past their original end date, any lease extension that results in rent less than the option period rent, reduction in CAM charges, taxes, elimination of percentage rent, conversion to percentage rent, reductions in or returns of security deposits and FF&E if otherwise non-refundable (either pursuant to the terms of the Lease or as determined by the landlord) or any or any other amendment to a Lease that results in savings to the Company. For clarification purposes, Occupancy Cost Savings are not reduced by any lost security deposits or FF&E or any loss or fees not specifically authorized herein to be deducted from the calculation of
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Occupancy Cost Savings.
For Occupancy Cost Savings resulting from the extension of a rent reduction past the rent reduction in effect as of the Agreement Date, the savings shall be based upon the original rent set forth in the Lease. For Occupancy Cost Savings resulting from lease extensions that result in rent less than the option period rent (or if no option period, the existing rent after giving effect to the applicable annual percentage increases), the savings shall be based upon the option price for the period of the duration of the extension or if there is no option price then it shall be based upon the annual percentage increases for the duration of the extension. For Occupancy Cost Savings resulting from a Lease Termination, the savings shall be based upon the original Lease date – commencing on the date of the Lease Termination through the end date of the original Lease.
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