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Exhibit 10.10
CONSULTING AGREEMENT
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This Consulting Agreement ("Agreement") is entered into as of this 20th day
of June by and between D.I.Y. Home Warehouse, Inc., having a principle place of
business at 0000 Xxxxx Xxxx, Xxxxxx Xxxx, Xxxx 00000 (the "Merchant") and
Xxxxxxxxxxxxx-Xxxxxxxxx Capital Group, LLC., with its principal place of
business at 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxx 00000 ("Consultant").
Consultant shall act as Merchant's sole and exclusive agent to sell all of
the Inventory in all of the stores listed on Exhibit A attached hereto (the
"Stores"), which Merchant has advised Consultant do business under the name of
D.I.Y. Home Warehouse, by means of a store closing sale or similar type sale
(the "Sale"). Consultant and Merchant agree as follows:
1. EXCLUSIVE AGENCY. Consultant shall act as Merchant's exclusive agent for the
purpose of conducting the Sale of all goods located at the Stores (the
"Inventory") at the time of Sale Commencement, as hereinafter defined.
2. DATES. The Sale shall commence on or about June 20, 2001 (the "Sale
Commencement Date") and shall terminate approximately ten (10) weeks thereafter
or such other date as mutually agreed upon by Consultant and Merchant (the
"Conclusion Date").
3. CONSULTANT'S COMPENSATION. Consultant's compensation shall be in accordance
with Exhibit B attached hereto. All compensation shall be payable within thirty
(30) days after the Conclusion Date.
4. SALES. "Sales" shall mean all sales, excluding amounts paid for sales,
excise, and gross receipts taxes, derived from the sale of the Inventory and
shall include any receipts of licensee fees or commissions from licensees
pursuant to written agreements between Merchant and licensee or other third
parties with rights in the Stores during the Sale; provided, however, that it is
expressly understood and agreed, that proceeds from Sale shall not include sales
made prior to the Commencement Date or after the Conclusion Date.
5. RETURNS. Returns of merchandise for items sold prior to the Commencement Date
shall be processed in accordance with Merchant's policies and procedures, and
returns shall not reduce Sales. The item returned shall be added to the Retail
Inventory Value at the Retail Price less the prevailing discount at the time of
the return.
6. SCOPE OF AGENCY. It is understood that Consultant is acting only as
Merchant's agent in the conduct of the Sale, and that all reasonable verifiable
out-of-pocket costs, fees and expenses paid to third parties incurred by
Consultant or Merchant relating to the Sale are the sole responsibility of
Merchant subject to the terms of Section 11 hereof. Consultant shall obtain
Merchant's approval prior to authorizing any third party expense. It is
understood and agreed that in addition to paying for their weekly salary and
bonus, reimbursable expenses attributable to Consultant's liquidation
supervisors shall be limited to the transportation costs (e.g. round trip
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coach airfare, car rental) of traveling to the assigned stores. Notwithstanding
the above, Consultant may not act as an agent of Merchant for any other purpose
other than the purposes specifically provided for herein. The bonus amount paid
to Consultant's supervisors and included as an Expense herein, shall not exceed
30% of supervisor fees.
7. INVENTORY TRANSFERS. Consultant shall have the right to move Inventory
between the Stores, if Consultant deems it necessary in order to maximize the
sale proceeds, after consultation and approval by Merchant which approval shall
not be unreasonably withheld, and if permitted by law with the cost to be an
Expense of Sale (as hereinafter defined). All transfers shall be processed in
accordance with Merchant's historical practices and procedures.
8. STORE OPERATION. Consultant shall conduct the sale in the name of Merchant
and on its behalf and shall have the right to conduct the Sale subject to
Section 17 as a store closing sale or similar type sale (subject to all legal
requirements) in the manner which Consultant in Consultant's discretion
reasonably deems fitting including, but not limited to, advertising, pricing of
Inventory, the right to determine the number, type, selection and schedule of
Merchant Store level personnel to be utilized (subject to Merchant's policies
and procedures and subject to Merchant's restrictions relating to hours and
employment termination provided however no such restriction shall materially
impede the operation of the Sale), Store hours (subject to Merchant's customary
operating hours), Store maintenance (subject to reasonable business practices)
and security provisions (subject to Merchant's policies and procedures).
Merchant represents that the Store employees are not subject to any collective
bargaining contracts. In connection therewith, Merchant and Consultant
acknowledge and agree, that (i) nothing herein nor any of Consultant's actions
taken in respect hereto shall be deemed to constitute an assumption by
Consultant of any of Merchant's obligations relating to any of Merchant's
employees including salary, vacation, pension withdrawal, severance, Workers
Adjustment and Retraining Notification Act claims (if any) and other termination
type claims and obligations and (ii) nothing herein nor any of Consultant's
actions taken in respect hereto shall be deemed to constitute an assumption by
Merchant of any of Consultant's obligations relating to any of Consultant's
employees including salary, vacation, pension withdrawal, severance, Worker's
Adjustment and Retraining Notification Act claims (if any) and other termination
type claims and obligations. Consultant shall cooperate and consult with
Merchant's human resources representatives and store management regarding any
personnel issues at the Stores.
9. SALES TAXES. Merchant shall collect all sales, excise and gross receipt taxes
(and not income taxes) payable to any taxing authority having jurisdiction and
such taxes shall be added to the sales price and be paid by the customer at the
time the Inventory is purchased by the customer.
10. CUSTOMER PAYMENT. All sales during the Sale shall be for cash or upon bank
credit cards, AMEX and/or Discover card and all other media normally accepted by
Merchant, including gift certificates and/or merchandise vouchers.
11. SALE EXPENSES. All expenses relating to the Sale shall be defined as the
"Expenses of Sale" and unless otherwise agreed shall be paid directly by
Merchant. On a weekly basis,
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Consultant shall present to Merchant a schedule of all expenses paid by
Consultant on Merchant's behalf, which Merchant shall reimburse to Consultant,
promptly upon submission. The Expenses of Sale shall include all expenses
relating to the Sale, including, but not limited to: (i) advertising; (ii)
signing; (iii) personnel for the Sale; (iv) cost of transporting Inventory
between Stores during the Sale, where permitted by law and in accordance with
Section 8 of this agreement; (v) security; (vi) telephone; and (vii)
Consultant's (6) supervisors at a cost of $2,350 per week for each supervisor,
plus reasonable transportation expenses; (viii) Consultant's senior supervisor
at a cost of $3,250, plus reasonable transportation expenses, (ix) bonus for
store employees and Consultant's supervisors, subject to the limit in Section 6
above and (x) any other expenses directly attributable to the Sale authorized by
Consultant and Merchant. Consultant and Merchant shall agree upon an expense
budget.
12. INSURANCE. Merchant shall continue at its cost and expense until the
Conclusion Date in such amounts as it currently has in effect, all of its
casualty insurance and all of its liability insurance policies, including, but
not limited to, its products liability, comprehensive public liability and auto
liability insurance policies covering injuries to all persons and property in or
in connection with Merchant's operation of the Stores, all or any part of which
Merchant may currently, and may continue to self -insure.
13. CONSULTANT'S INDEMNITY. The Consultant agrees to indemnify and hold harmless
Merchant and it's affiliates against all losses, liabilities, claims, costs,
expenses, including, but not limited to, reasonable attorney's fees,
investigative and discovery costs, settlements or judgments that may arise out
of any bodily injury, including death, or any damage or loss to property as a
result of the performance of this Agreement or Consultant's illegal acts and
wanton misconduct, negligence or intentional acts, including without limitation,
violations of federal, state and local laws pertaining to advertising.
14. MERCHANT'S INDEMNITY. The Merchant agrees to indemnify and hold harmless
Consultant and their affiliates against all losses, liabilities, claims, costs,
expenses, including but not limited to reasonable attorney's fees, investigative
and discovery costs, settlements or judgments that may arise out of any bodily
injury including death, or any damage or loss to property as a result of the
performance of this Agreement or Merchant's illegal acts and wanton misconduct,
negligence or intentional acts, including without limitation, violations of
federal, state and local laws pertaining to Advertising.
15. REPORTS. Merchant shall furnish Consultant with periodic reports, not more
frequently than once every week, on the progress of the Sale which shall specify
the following: Sales, broken down by cash and credit card and Expenses of Sale,
and shall furnish Consultant with such information regarding the Sale as
Consultant shall reasonably request.
16. JURISDICTION. Consultant and Merchant shall submit themselves to the
jurisdiction of Ohio, for all matters between Merchant and Consultant relating
to this Agreement.
17. COMPLIANCE WITH LAWS. Consultant and Merchant shall comply with all federal,
state and municipal laws, laws and regulations ("Laws") that are now or in the
future
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applicable to Consultant and Merchant respectively as such laws pertain to the
Sale contemplated by this Agreement.
18. CONSULTANT'S RESPONSIBILITIES. Consultant acknowledges that Merchant's
objective is to maximize the value of the Inventory and minimize Expenses of
Sale while maintaining the historical integrity of Merchant's name and
relationships with its customers, employees and vendors and agrees to operate
the Sale pursuant to that objective. Consultant agrees that it will provide the
following services and support to Merchant, in addition to services and support
provided for elsewhere in this Agreement:
(i) Senior Management personnel to assist in the preparation of
liquidation sale, including transfers of inventory and set up.
(ii) Store level supervisors to assist in execution of sales plan.
(iii) Pricing of merchandise to maximize return.
(iv) Develop and execute, with Merchant an expense budget.
(v) Coordination of display and store setup for the liquidation
sale including creating and obtaining signage.
(vi) Advertising and promotion planning and execution. Consultant
shall deliver to Merchant a proof of the advertisement which
Consultant intends to use. Merchant promptly, within two (2)
business days of receipt by Merchant shall review said
advertisement and then either consent to or disapprove said
advertisement, provided however consent shall not be
unreasonably withheld. Failure to consent or disapprove within
the two business day period shall be deemed to be consent. Any
notices will be sent to Xx. Xxxxxxxx Xxxxxxxx, Xx. Xxxxx Xxxxx
or Xx. Xxxx Xxxxx.
(vii) Consultation as to security and related services to protect the
merchandise, fixtures and other valuables from theft and damage
and safety and reasonable operating procedures to protect
customers and employees.
(viii) Consultation as to obtaining and assistance in completing
applications for the obtaining of GOB licenses.
(ix) Coordination of store maintenance and housekeeping, including
removal of all remaining inventory prior to the closing of the
Stores and leaving the Stores in broom clean condition.
(x) Development of a Store liquidation manual tailored to
Merchant's needs and operations.
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23. REPRESENTATIONS AND WARRANTIES. Consultant represents and warrants the
following: (a) consultant is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the power and
authority to consummate the transactions hereunder, (b) consultant has the
right, power and authority to execute and deliver this Agreement and perform its
obligations hereunder and has taken all necessary action required to authorize
the execution, delivery, and performance of this Agreement and to perform its
obligations hereunder, (c) this Agreement has been duly executed and delivered
by Consultant in accordance with its terms, subject only to any applicable
bankruptcy, insolvency or similar laws affecting the rights of creditors
generally. No court order or decree of any federal, state, or local governmental
authority or regulatory body is in effect that would prevent, impair, or is
required for Consultant's consummation of the transactions contemplated by this
Agreement, and except as provided herein, no consent of any third party is
required therefor. No contract or other agreement to which Consultant is a party
or by which Consultant is otherwise bound will prevent or impair the
consummation of the transactions contemplated by this Agreement.
Merchant represents and warrants the following: (a) Merchant is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has the power and authority to consummate the
transactions hereunder, and (b) Merchant has the right, power and authority to
execute and deliver this agreement and perform its obligations hereunder and has
taken all necessary action required to authorize the execution, delivery, and
performance of this Agreement and to perform its obligations hereunder, No court
order or decree of any federal, state, or local governmental authority or
regulatory body is in effect that would prevent, impair, or is required for
Merchant's consummation of the transactions contemplated by this Agreement, and
except as provided herein, no consent of any third party is required therefor.
No contract or other agreement to which Merchant is a party or by which Merchant
is otherwise bound will prevent or impair the consummation of the transactions
contemplated by this Agreement.
24. COUNTERPARTS; MODIFICATIONS. This Agreement may be executed in counterpart
originals and/or by facsimile transmission and may not be modified except in a
writing executed by each of the parties.
25. NOTICES. All notices or reports to be sent under this Agreement shall be
sent to Merchant at the address listed on the first page hereof, attention Xxxxx
Xxxxxxxxx and to Consultant at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxx,
Xxx Xxxx, 00000, attention Xxxxx Xxxxxxxxx, to be sent via overnight accepted
carrier or certified mail.
26. INDEPENDENT CONTRACTOR. Consultant shall render services hereunder as an
independent contractor and not as employees of the Merchant. Any employees or
agents of Consultant shall not be considered employees of the Merchant. The
Merchant shall have no obligation to withhold any federal or state taxes in
respect to the compensation to be paid Consultant or Consultant's on-site
supervisors pursuant to this Agreement.
26. CONFIDENTIALITY. Any and all information, written or unwritten, and of any
kind or nature, made available or provided to, or obtained by Consultant or
Merchant in connection
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with this Agreement or the request for proposal process and the negotiations
leading to this Agreement and the terms of this Agreement shall be maintained in
the strictest confidence by Consultant and Merchant, their employees and agents,
and shall not be divulged by Consultant or Merchant or their employees or agents
without the other's prior express written consent. This confidentiality
provision shall survive the termination of this Agreement. Provided however,
Merchant may respond to reference inquiries regarding Consultant's services.
27. NON-ASSIGNMENT; SUCCESSORS. Except as specifically provided in this
paragraph, or upon written consent by the parties hereto, this Agreement shall
not be assignable to the benefit of any person or entity other than the Merchant
or Consultant. All of the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the successors in
interest of the respective parties hereto.
27. NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties hereto, any rights or remedies under or by reason of this
Agreement.
28. SEVERABILITY. In case any provision in or obligations under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality or enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby unless such invalidity, illegality or
non-enforcement would be contrary to the manifest intention of the parties as
contained herein.
29. TIME. Time is of the essence hereunder.
30. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the
parties with respect to this transaction and supersedes and cancels all prior
agreements or representations, written or oral, with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and date first set forth above.
XXXXXXXXXXXXX-XXXXXXXXX CAPITAL GROUP, LLC
By:
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D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Xxxxxxxx Xxxxxxxx, President
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EXHIBIT A - LIST OF CLOSING STORES
Exhibit A
Store List
Street Address City Zip
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00000 Xxxxxxxxx Xx. Xxxxxxxxx 00000
000 Xxxxx Xxxx Xx Xxxxxx 00000
00000 Xxxx Xx Xxxxxxxx 00000
0000 X Xxxxxxxxx Xxxxx 00000
0000 X Xxxxx Xx Xxxx Xxxxxxxxx 00000
0000 Xxx Xx. Xxxxxx 00000
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EXHIBIT B - SCHEDULE OF BONUS COMPENSATION
DIY Final 6 Stores Exhibit B
Suggested Fee Schedule
Estimated Inventory 19,351,006
Estimated expenses 2,633,627
13.61%
SBCG Net return Net return $ to
Return % Return $ Fee % SBCG Fee $ % to DIY DIY
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56.50% 10,933,318 0.00% - 42.89% 8,299,691
57.00% 11,030,073 0.00% - 43.39% 8,396,446
57.50% 11,126,828 0.00% - 43.89% 8,493,201
58.00% 11,223,583 0.00% - 44.39% 8,589,956
58.50% 11,320,338 0.00% - 44.89% 8,686,712
59.00% 11,417,093 0.00% - 45.39% 8,783,467
59.50% 11,513,848 0.00% - 45.89% 8,880,222
60.00% 11,610,603 0.00% - 46.39% 8,976,977
60.50% 11,707,359 0.25% 29,268 46.74% 9,044,463
61.00% 11,804,114 0.25% 29,510 47.24% 9,140,976
61.50% 11,900,869 0.50% 59,504 47.58% 9,207,737
62.00% 11,997,624 0.50% 59,988 48.08% 9,304,009
62.50% 12,094,379 0.75% 90,708 48.42% 9,370,044
63.00% 12,191,134 0.75% 91,434 48.92% 9,466,073
63.50% 12,287,889 1.00% 122,879 49.26% 9,531,383
64.00% 12,384,644 1.00% 123,846 49.75% 9,627,170
64.50% 12,481,399 1.25% 156,017 50.08% 9,691,754
65.00% 12,578,154 1.25% 157,227 50.58% 9,787,300
65.50% 12,674,909 1.50% 190,124 50.91% 9,851,158
66.00% 12,771,664 1.50% 191,575 51.40% 9,946,462
66.50% 12,868,419 1.75% 225,197 51.73% 10,009,595
67.00% 12,965,174 1.75% 226,891 52.22% 10,104,656
67.50% 13,061,929 2.00% 261,239 52.54% 10,167,063
68.00% 13,158,684 2.00% 263,174 53.03% 10,261,883
68.50% 13,255,439 2.25% 298,247 53.35% 10,323,565
69.00% 13,352,194 2.25% 300,424 53.84% 10,418,143
69.50% 13,448,949 2.50% 336,224 54.15% 10,479,098
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