REAL ESTATE RETENTION AGREEMENT
Between
Edison Brothers Stores, Inc. D.I.P.
and
Keen Realty Consultants Inc.
Dated: November 17, 1995
The purpose of this agreement is to outline the services Keen
Realty Consultants Inc. ("Keen") agrees to perform as Special Real
Estate Consultant to Edison Brothers Stores, Inc., as Debtor in
Possession and its Chapter 11 affiliates (collectively, "Debtor"), with
respect to certain of Debtor's leaseholds (including Debtor's right,
title and interest in the improvements thereat) as more specifically
described in the attached schedules, and/or such other properties as
Debtor may subsequently designate in writing ("Asset(s)") and the
compensation Keen will or may receive. Edison makes no representation
as to the value of said leaseholds or the total compensation which Keen
may expect to receive.
3. TERM
The term of Keen's retention shall be from the date of the entry of
the appropriate Bankruptcy Court Order ("Order") approving the terms
hereof for a period of twelve (12) months or the confirmation of
Debtor's plan of reorganization, whichever occurs first, which term can
be extended pursuant to the same terms and conditions by the mutual
consent of the parties without need for further application to the
Court.
4. SUMMARY OF MARKETING SERVICES AND RELATED FEES
4.1. Exclusive Rights to Sell
X. Xxxx shall have the sole and exclusive authority to
offer the Assets for disposition and, subject to the provisions
hereof, the "exclusive right to sell" an Asset designated for
disposition ("Disposition Asset"). All communications and
inquiries regarding each Disposition Asset, whether directed to
Debtor's real estate, legal or corporate development executives, or
Debtor's bankruptcy counsel, shall be redirected to Keen.
B. Debtor shall retain the complete discretion and
authority to accept or reject any offer and/or to withdraw an Asset
from designation as a Disposition Asset.
4.2. With respect to the Disposition Assets, Keen's services shall
include those generally described below:
A. On request, Keen will review all pertinent documents
and/or consult with Debtor or Debtor's counsel, as Debtor deems
appropriate.
X. Xxxx will create a marketing program which may include
newspaper, magazine or journal advertising, letter and/or flyer
solicitation, placement of signs, direct telemarketing, and such
other marketing methods as may be necessary. Keen acknowledges the
on-going nature of Debtor's nondisposition properties and shall
structure its marketing program so as to indicate that Debtor's
remaining stores are not going out of business. Keen shall not use
Debtor's trademarks, trade names, or logos in any manner not
approved in writing by Debtor prior to such use.
X. Xxxx will prepare and disseminate all such marketing
materials, all of which shall be approved by and shall be at the
sole cost and expense of Debtor, subject to the expense limitations
of Paragraph III.B. below.
X. Xxxx will communicate with parties who have expressed an
interest in the Disposition Assets and will endeavor to locate
additional parties who may have an interest in the purchase of the
Disposition Assets.
X. Xxxx will respond and provide information to, negotiate
with, and solicit offers from prospective purchasers and/or
settlements from landlords and shall make recommendations to Debtor
as to the advisability of accepting particular offers and
settlements.
F. When requested, Keen will meet periodically in St.
Louis, Missouri, Wilmington, Delaware, or New York, New York, with
Debtor, its accountants and attorneys, in connection with the
status of its efforts.
X. Xxxx will recommend to Debtor and its counsel the proper
method of handling the particular problems encountered with respect
to the disposition of the Disposition Assets.
H. Where appropriate, Keen in coordination with Debtor's
bankruptcy counsel will coordinate and organize the public
bankruptcy hearing and/or auction and, where appropriate, will seek
to obtain the attendance of all interested parties through direct
communications, supplementing the required notice process.
X. Xxxx will work with the persons and parties designated
by Debtor responsible for the implementation of the proposed
transaction, reviewing documents, negotiating and assisting in
resolving problems which may arise.
X. Xxxx will, if requested, appear in Court during the term
of this retention, to testify or to consult with Debtor in
connection with the marketing or disposition of the Disposition
Assets.
K. At Debtor's request, Keen will promptly advise Debtor,
in writing, of the name and address of all entities expressing an
indication of interest in any of the Disposition Assets, and of the
substance of Keen's discussions with such entity. Upon the
expiration or termination of this agreement, Keen will, at Debtor's
request and at Debtor's cost, deliver to Debtor a copy of Keen's
files on each Disposition Asset.
4.3. Fee: Keen's fee for handling the disposition of each
Disposition Asset, as provided herein, shall be computed and
paid as follows:
A. For the review of documents, analysis of the leases, and
development and implementation of a marketing strategy, Debtor
shall pay Keen an advisory and consulting fee of $500 per
Disposition Asset, payable in full upon the later to occur of
Bankruptcy Court approval of Keen's retention or Debtor's
subsequent designation of a leasehold as an additional Disposition
Asset.
B. If the assignment by the Debtor of a Disposition Asset
to either a third party or the landlord or the termination of a
leasehold prior to or simultaneous with the rejection of a
leasehold which is a Disposition Asset results in the receipt of
Gross Proceeds (as defined below) by Debtor, then Keen shall
receive in respect of each such occurrence an amount equal to eight
percent (8%) of the Gross Proceeds from the assignment or
termination of the Disposition Asset involved, or the sum of two
thousand dollars ($2,000), whichever is greater, and in either
event such fee to be reduced by the $500 paid pursuant to Paragraph
II.C.1. above, with the balance of such fee to be paid in full
simultaneously with the closing, sale, assignment, or other
consummation of the transaction and Debtor's receipt of such Gross
Proceeds. "Gross Proceeds" as used herein shall mean the sum of
all cash consideration transferred to or for the benefit of Debtor,
plus any forgiveness by a landlord of any claim for rent or other
charges under a lease relating to the period ending on the date of
assignment, rejection, or termination of such lease, but excluding
any claim under section 502(b)(6)(A) of the Bankruptcy Code.
Except as otherwise provided herein, the computation of Gross
Proceeds for a particular transaction involving a Disposition Asset
shall not be reduced by expenses incurred by Keen or Debtor in
connection with the transaction, including the costs of
advertising, Debtor's legal fees, break-up fees, or closing costs
or adjustments of any kind.
C. If the assignment by the Debtor of a Disposition Asset
to either a third party or to the landlord or if the termination of
a leasehold prior to or simultaneously with the rejection of a
leasehold which is a Disposition Asset does not result in the
receipt of Gross Proceeds by the Debtor but results in the waiver
of all claims which would otherwise arise upon the rejection of a
leasehold and which would be allowable under section 502(b)(6) of
the Bankruptcy Code, or if after the rejection of a leasehold which
is a Disposition Asset Keen obtains from the landlord a waiver of
all claims which would otherwise arise upon the rejection of a
leasehold and which would be allowable under section 502(b)(6) of
the Bankruptcy Code, then Keen shall receive an amount equal to two
thousand dollars ($2,000) in respect of each such occurrence, such
fee to be reduced by the $500 paid pursuant to Paragraph II.C.1.
above, with the balance of such fee to be paid in full
simultaneously with the closing, sale, assignment or other
consummation effecting the waiver of such claims.
D. Performance Fee: In addition, if the fees earned by Keen
pursuant to Paragraph "II.C.3." above (before giving credit for the
fees earned by Keen pursuant to Paragraph "II.C.1." above) are less
than six percent (6%) of the "Actual Savings Achieved" (as defined
below), then upon the confirmation of Debtor's plan of
reorganization, or in the event of the conversion of the cases to
cases under chapter 7, upon any interim or final distribution to
creditors by the trustee, Debtor or the trustee, as appropriate,
will pay to Keen the difference between the fees received by Keen
pursuant to Paragraphs "II.C.3." above and six percent (6%) of the
"Actual Savings Achieved".
E. Definitions:
(i) "Actual Savings Achieved" equals Net Rejection
Claim Avoided minus Settlement Costs.
(ii) "Net Rejection Claim Avoided" equals Rejection
Claim Avoided multiplied by Payout to Creditors.
(iii) "Rejection Claim Avoided" means the aggregate of
the landlords' claims for rejection damages in
respect of the Disposition Assets, otherwise
allowable under section 502(b)(6) of the
Bankruptcy Code, which were waived, released, or
reduced as a result of all transactions
contemplated by Paragraphs II.C.2 and 3 above,
whether or not Keen is entitled to receive fees
under Paragraph II.C.3. above for such waiver,
release or reduction. "Rejection Claim Avoided"
shall in no event include consequential damages or
other claims not involving rent or other charges
directly incurred under the terms of particular
lease.
(iv) "Payout To Creditors" means the percentage
recovery that unsecured creditors receive on the
Effective Date of a confirmed plan of
reorganization or at the time of an interim or
final distribution by a trustee, per dollar of
allowed unsecured claim.
(v) "Settlement Costs" means any cash consideration
paid by Debtor in connection with the transactions
which result in Rejection Claims Avoided above,
including payments to landlord, assignee or
subtenant, but excluding any payments necessary to
"cure" defaults in accordance with section
365(b)(1)(A) of the Bankruptcy Code.
F. Example:
As an illustration only, if we assume that Debtor has
paid Settlement Costs of $3,500,000; the Rejection Claim
Avoided equals $10,000,000; and the Payout to Creditors
equals 70 cents on the dollar, then if Keen's
Performance Fee is 6% of the Actual Savings Achieved,
and Keen has previously received fees under Paragraph
II.C.3. equal to $200,000, then the Performance Fee
payable to Keen would equal $X.
Maximum Rejection Claim avoided, $10,000,000
Multiplied by the Payout to Creditors of 0.70
Equals Net Rejection Claim Avoided of $7,000,000
Less Settlement costs of $3,500,000
Results in Actual Savings Achieved of $3,500,000
Commission rate = 6%
Performance fee (before deduction of fees
previously paid) = $210,000
Less previously paid fees of $200,000
Yields performance fee payable of $10,000
5. EXPENSES AND DISBURSEMENTS
5.1. Neither Keen nor Debtor shall be responsible for any legal
expenses incurred by the other in connection with this agreement or the
obligations of either party hereunder.
5.2. All advertising, marketing, traveling, lodging, express mail,
postage, telephone charges, photocopying charges and other expenses
involved in the analysis, marketing and disposition of the Assets shall
be borne by Debtor, provided, however, that the total amount of such
expenses other than travel and lodging incurred by Keen pursuant hereto
shall not exceed twenty-five thousand dollars ($25,000) without Debtor's
prior written consent. Each expense item in excess of $2,500 must be
approved by Debtor prior to the expenditure, which consent shall not be
unreasonably withheld. Keen will prepare and present to Debtor a
marketing plan and budget subject to the foregoing limitations, and,
upon Debtor's approval of the budget, Debtor will advance the budgeted
amount to Keen. On a monthly basis, Keen shall provide Debtor with
copies of invoices and related substantiating information regarding such
expenses. Keen shall refund any excess expense advancements to Debtor
on a timely basis.
5.3. Keen shall be under no obligation to incur marketing expenses
until such time as Keen receives funds from Debtor.
5.4. In the event Debtor fails or is unable to pay the expenses as
above described or such additional expenses as Debtor may approve, Keen
shall have the right to terminate this agreement and pursue any claims
that it might have.
6. SURVIVAL
6.1. In the event Debtor and any third party should enter into an
agreement providing for the sale, assignment, lease or other disposition
of a then designated Disposition Asset before the expiration of this
agreement, and the closing thereof does not occur until after said
expiration, then, provided such closing occurs within 12 months after
the expiration, Keen shall be entitled to a fee in accordance with the
terms of this agreement and such right shall survive the expiration
hereof.
6.2. If Debtor, after the expiration of this agreement, arranges
for the sale of a Disposition Asset to a third party whom Keen
introduced to such Disposition Asset or with whom Keen dealt in
connection with a Disposition Asset prior to said expiration (other than
third parties with whom Keen's only contact was a response to an
advertisement which response did not result in an indication of interest
in such Disposition Asset by such third party), and a contract signing
takes place within six (6) months after said expiration and a closing
thereon occurs within 12 months after such expiration, then Keen shall
be entitled to a fee in accordance with the terms of this agreement, and
such right shall survive the expiration hereof.
6.3. Within fifteen (15) days from the expiration or termination of
this agreement, Keen shall furnish Debtor with a list of all such third
parties with respect to which Keen's introduction to each listed
Disposition Asset would entitle Keen to a fee in the event of a sale of
such Disposition Asset during the six (6) month survival period. The
failure of Keen to furnish Debtor with such a list shall not be
prejudicial to Keen's rights nor a default by Keen, unless Debtor gives
Keen written notice of Keen's failure to provide such a list and Keen
thereafter fails to furnish such a list to Debtor within ten (10)
business days of Keen's actual receipt of Debtor's notice. Keen shall
be entitled to fees pursuant to Paragraph IV.B. above only in respect of
transactions with third parties whose identities were timely furnished
to Debtor pursuant to this Paragraph IV.C.
6.4. In addition, in the event that Debtor enters into a contract
to dispose of a Disposition Asset which would result in Keen being
entitled to a fee pursuant to this agreement, and a bankruptcy hearing
or auction is conducted to solicit higher and better offers, and if a
closing on the original contract or such higher and better contract
occurs within the time limitations set forth above, then regardless of
who may be the successful bidder, Keen is entitled to a fee pursuant to
the terms of this agreement and such right shall survive the expiration
hereof.
7. CARVE-OUT
By obtaining a Bankruptcy Court Order approving this agreement,
Debtor and the Bankruptcy Court authorize and xxxxx Xxxx, without need
for further application to the court, the recovery pursuant to section
506(c) of the Bankruptcy Code, of its fees and permitted expenses at the
time of the closing of any real estate transaction covered by this
agreement, notwithstanding the liens, if any, of any secured creditors.
In the event such Order shall not be granted, then Keen shall have the
right, at Keen's discretion, at any time to terminate this Agreement
upon written notice to Debtor or its counsel. The rights provided by
this paragraph and the Order approving same shall be deemed to
supplement and not supersede other rights provided to Keen.
8. DEBTOR'S RESPONSIBILITIES
8.1. Upon retention, Debtor will deliver to Keen a list of all
brokers, principals or other prospects who in the prior 30 days have
contacted Debtor's Legal, Real Estate, or Corporate Development
departments expressing an interest in using or acquiring a Disposition
Asset along with all correspondence and other records that relate to any
such interest.
8.2. With respect to each Disposition Asset for which a Phase 1
environmental report has been commissioned at Debtor's request, Debtor
will immediately provide a true and complete copy of such Phase 1
environmental report to Keen and will authorize Keen to disseminate such
report to prospects.
8.3. For so long as Debtor is the tenant for a particular
Disposition Asset, Debtor shall use its good faith efforts to maintain
the Disposition Assets in accordance with its lease obligations and
shall furnish power and water (pursuant to its lease obligations, if
any) and shall carry personal and public liability insurance covering
such premises.
9. GENERAL PROVISIONS
9.1. The services to be provided by Keen pursuant to this agreement
are, in general, transactional in nature, and Keen will not be billing
Debtor by the hour nor keeping a record of its time spent on behalf of
Debtor.
9.2. Debtor shall make available to Keen all information and data
requested in "Rider 1" attached as well as such additional information
concerning the Assets as Keen reasonably requests in connection with the
performance of Keen's obligations hereunder. To Debtor's knowledge, all
information provided by Debtor shall be in all material respects
accurate and complete (except to the extent indicated) at the time it is
furnished and Debtor shall, as soon as it becomes aware of a material
inaccuracy or incompleteness in any information then or later provided
to Keen, promptly advise Keen in writing of such inaccuracy or
incompleteness and correct the same. Keen shall under all circumstances
have the right to rely, without independent verification, on the
material accuracy and completeness of all such information supplied to
Keen in connection with Keen's engagement hereunder and shall not be
responsible for the inaccuracy or incompleteness of any information
provided to it. Prospective purchasers shall, however, be cautioned to
carefully review all lease documents to satisfy themselves as to the
accuracy of any transmitted information or representation.
9.3. This agreement is subject to and contingent upon the entry of
the appropriate Bankruptcy Court Order approving the terms hereof, which
Debtor agrees to use reasonable and good faith efforts to obtain; and
shall thereafter be binding upon, and shall insure to the benefit of the
parties hereto. Keen shall not assign its rights or obligations under
this Agreement to any third party.
9.4. Debtor acknowledges that this letter agreement in its entirety
will be attached to and made a part of Debtor's application to the
Court, and will be referenced to in the Court Order authorizing Keen's
retention.
9.5. This agreement shall be construed fairly as to all parties,
and there shall be no presumption against the party upon whose
letterhead this agreement is drafted in the interpretation of this
agreement.
9.6. By executing or otherwise accepting this agreement, Debtor and
Keen each acknowledge and represent that it is represented by and has
consulted with legal counsel with respect to the terms and conditions
contained herein.
9.7. In the event that Debtor fails to sign this agreement but
proceeds to submit an application to the Bankruptcy Court to approve
Keen's retention pursuant to this agreement, that action alone shall be
deemed a manifestation of Debtor's intent to be bound by this agreement
as if this agreement were actually signed by Debtor, subject to the
Bankruptcy Court's approval.
9.8. If Keen shall materially breach its obligations under this
Agreement, Debtor shall have the right to terminate this agreement, upon
three (3) business days from Keen's actual receipt of written notice of
such breach and provided Keen shall not have cured such breach within
such three business days. Upon termination pursuant to this paragraph,
Keen shall forfeit its right to any Performance Fee not previously paid
and shall refund to Debtor any fees paid to Keen pursuant to Paragraph
II.C.1. above in respect of any Disposition Property not yet disposed.
Any disputes under this paragraph shall be submitted to the Bankruptcy
Court for determination.
9.9. Any and all issues, disputes, claims or causes of action which
relate or pertain to, or result or arise from this agreement or Keen's
services hereunder, shall be subject to the exclusive jurisdiction of
the Bankruptcy Court, with venue vesting in that district before which
Debtor's proceeding is being heard. The prevailing party in any such
dispute shall be entitled to reimbursement of its reasonable attorneys'
fees and other expenses from the losing party.
9.10. In the event Debtor's chapter 11 case is converted to
one under chapter 7 of the Bankruptcy Code, this Retention Agreement
shall remain in full force and effect.
9.11. Keen covenants and represents that during the term of
this agreement it shall use its good faith efforts to fulfil its
obligations hereunder utilizing proper staffing and giving this project
its highest priority, Keen's Xxxxxx Xxxxxxx and its other senior
officers shall supervise and directly administer Keen's efforts.
9.12. At the time of submission of the appropriate application
to the Bankruptcy Court for approval of this retention, Debtor shall
simultaneously submit an application to the Court for an order approving
the auctioning of the Disposition Assets, reserving a courtroom for the
auction and approving the terms and conditions of auction.
9.13. This agreement may be executed in original counterparts.
9.14. Each party represents that it is duly authorized to
enter into this agreement and that the officer signing on behalf of it
is also duly authorized.
9.15. Any correspondence or required notice pursuant to this
agreement shall be addressed as follows:
If to Keen: Keen Realty Consultants Inc.
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000/Facsimile: (000) 000-0000
ATTN: Xxxxxx X. Xxxxxxx, Vice President
If to Debtor: Edison Brothers Stores, Inc. D.I.P.
000 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000/Facsimile: (000) 000-0000
ATTN: Xxxxx X. Xxxxxx, Senior E.V.P.
With a copy to: Weil, Gotshal & Xxxxxx
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000/Facsimile: (000) 000-0000
ATTN: Xxxxxx X. Xxxxxxx, Esq.
If the foregoing correctly sets forth our understanding, kindly
sign where indicated below, and return the original copy of this letter
enclosed herewith.
Very truly yours,
KEEN REALTY CONSULTANTS INC.
By:/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Vice President
AGREED AND ACCEPTED THIS
17th day of November, 1995
EDISON BROTHERS STORES, INC.
By:/s/Xxxxx X. Xxxxxx
Name:Xxxxx X. Xxxxxx
Title:Senior Executive Vice President
RIDER
Please provide Keen with the following information with respect to each
Property:
With respect to each leasehold Disposition Property:
a) The following:
- store number,
- store name,
- store street address or shopping center name,
- city,
- state,
- tenant name,
- landlord name, contact person, address, telephone and
facsimile numbers,
- lease commencement date,
- lease termination date,
- lease renewal options,
- square footage of premises,
- base rent per square foot,
- current total annual base rent,
- current total annual additional charges (may be
estimated and may not include year end adjustments),
- itemization of additional charges (upon request),
- rent escalations,
- option rent,
- use clause,
- percent rent, rate and breakpoint,
b) As and when needed, complete and accurate copy of each lease;
and
c) Lease Abstracts or summaries for each lease.
