Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 7, 2024

 

 

 

LL Flooring Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-33767		27-1310817
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

4901 Bakers Mill Lane, Richmond, Virginia		23230
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: [phone]

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:		Trading Symbol:		Name of exchange on which registered:
Common Stock, par value $0.001 per share		LL		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 1.01

Entry into a Material Definitive Agreement

On August 8, 2024, in connection with certain store closures (as described below), LL Flooring Holdings, Inc. (the “Company”) entered into an agency agreement (the “Agency Agreement”) with Hilco Merchant Resources, LLC (“Hilco”), pursuant to which Hilco agreed to act as the exclusive agent of the Company for a sale of the Company’s inventory at designated stores.

The agency agreement provides that in connection with such sale, the Company shall pay to Hilco (i) a base retail fee of 2% of the gross proceeds of all merchandise sold at the stores which are closing, (ii) a base wholesale fee of 7.5% of the gross proceeds of merchandise sold through Hilco’s wholesale channels, and (iii) additional incentive compensation based on the gross recovery percentages achieved through the sale.

The foregoing description of the Agency Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Agency Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and are incorporated herein by reference

 

Item 1.03

Bankruptcy or Receivership

Chapter 11 Filing

On August 11, 2024, the Company, together with certain of its direct and indirect subsidiaries (the “Debtors”), filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors have filed a motion with the Bankruptcy Court seeking joint administration of their chapter 11 cases (the “Chapter 11 Cases”) pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure under the caption In re LL Flooring Holdings, Inc., et al. The Debtors will continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. To ensure their ability to continue operating in the ordinary course of business, the Debtors have also filed with the Bankruptcy Court a variety of motions seeking “first day” relief, including the authority to continue using their cash management system, pay employee wages and benefits and pay critical vendors in the ordinary course of business. In addition, the Debtors have commenced the Chapter 11 Cases to provide the Debtors with time and resources to allow all parties interested in purchasing the Debtors’ business to continue engaging with the Debtors, with the goal of finding a stalking horse bidder in the first few weeks of the Chapter 11 Cases and ultimately paving a path forward for a sale of the Debtors’ business for the benefit of stakeholders.

Debtor-in-Possession Financing

On the Petition Date and in connection with the Chapter 11 Cases, the Debtors filed a motion seeking Bankruptcy Court approval of a senior secured superpriority revolving credit facility in the aggregate principal amount of up to $130 million (the “DIP ABL Facility” and all amounts extended thereunder, the “DIP Revolving Loans”), subject to compliance with a borrowing base and subject to the other terms and conditions of the Senior Secured Super-Priority Debtor-In-Possession Credit Agreement (the “DIP ABL Agreement”), by and among LL Flooring, Inc., a Delaware corporation (the “Lead Borrower”), LL Flooring Services, LLC, a Delaware limited liability company (together with the Lead Borrower, collectively, the “DIP ABL Borrowers”), the Company and the other Debtors (collectively, the “DIP ABL Guarantors”), the lenders party thereto (the “DIP ABL Lenders”) and Bank of America, N.A. (“BofA”), as administrative agent (in such capacity, the “DIP ABL Agent”).

The DIP ABL Facility contains a “creeping rollup” feature pursuant to which outstanding obligations under that certain Fourth Amended and Restated Credit Agreement, dated as of March 29, 2019 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the Petition Date,

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the “Prepetition ABL Agreement”), by and among the Debtors, the lenders party thereto (the “Prepetition ABL Lenders”), and BofA, as the administrative agent (in such capacity, the “Prepetition ABL Agent”) will be rolled up into obligations under the DIP ABL Facility, first with a roll up on the closing date of issued letters of credit, cash management and bank product obligations, and fees and expenses, and second, a roll up of the principal amount of the prepetition loans on an incremental, “creeping basis” using the proceeds collected from DIP collateral, and finally, a roll up of the remaining obligations under the Prepetition ABL Agreement upon entry of a final order. The principal amount of the prepetition loans counts as usage of the commitments under the DIP ABL Facility, and those amounts will become available to borrow under the DIP ABL Facility as DIP Revolving Loans as such prepetition loans are repaid pursuant to the roll up mechanic. The DIP ABL Facility contains a temporary overadvance feature that expands capacity available to be borrowed during a certain time period during the Chapter 11 Cases subject to certain additional sale milestones. The DIP Revolving Loans will bear interest at a rate per annum equal to a base rate plus 2.25% per annum.

The proceeds of the DIP Revolving Loans will be used in a manner consistent with the orders of the Bankruptcy Court and the Debtor’s operating budget to fund the Chapter 11 Cases in accordance with the orders of the Bankruptcy Court, for the financing of Debtors’ general corporate needs including certain fees and expenses of professionals retained by the Loan Parties, to pay certain other expenses as approved by the Bankruptcy Court and to pay the obligations under the Prepetition ABL Agreement.

The DIP ABL Guarantors will guarantee, on a joint and several basis, all of the obligations under the DIP ABL Facilities. The DIP ABL Facility will be secured by a valid and fully perfected first priority lien and security interest in substantially all property and assets of the Debtors, including the collateral under the Prepetition ABL Agreement and other previously unencumbered assets.

Certain events in the Chapter 11 Cases could trigger an earlier maturity, including the effectiveness of a plan of reorganization, the sale of all or substantially all of the Debtors’ assets, the conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code, and certain other customary triggers.

The DIP ABL Agreement includes certain milestones for the Chapter 11 Cases, representations and warranties, covenants, and events of default. If an event of default under the DIP ABL Agreement occurs, the DIP ABL Agent may, among other things, permanently reduce any remaining commitments and declare the outstanding obligations under the DIP ABL Agreement to be immediately due and payable.

The foregoing description of the DIP ABL Facility is qualified in its entirety by reference to the substantially final form of DIP ABL Agreement filed with the Bankruptcy Court, an executed copy of which the Company expects to file in an amendment to this Form 8-K.

The information set forth under Item 1.01 of this Current Report on Form 8-K regarding the Agency Agreement is incorporated herein by reference.

 

Item 2.04

Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

The commencement of the Chapter 11 Cases constitutes an event of default that accelerated the obligations under the Prepetition Credit Agreement.

The Prepetition Credit Agreement contains a fixed charge coverage ratio covenant that becomes effective only when specified availability falls below the greater of $17.5 million or 10% of the Revolving Loan Cap (as defined in the Prepetition Credit Agreement). On August 8, 2024, the Company provided a certificate of compliance to the Prepetition ABL Agent confirming that the Company’s availability under the Prepetition Credit Agreement had fallen below such level and accordingly was not in compliance with the minimum fixed charge coverage ratio.

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Any efforts to enforce payment obligations under the Prepetition Credit Agreement are automatically stayed as a result of the filing of the Chapter 11 Cases and the holders’ rights of enforcement in respect of the Prepetition Credit Agreement are subject to the applicable provisions of the Bankruptcy Code.

 

Item 2.05

Costs Associated with Exit or Disposal Activities.

On August 7, 2024, the Board of Directors (the “Board”) of the Company determined, after considering all reasonably available options and a thorough and exhaustive review process, that it is in the best interests of its stakeholders to discontinue further financial and operational support for certain of its stores located throughout the United States. The Company has committed to a plan to conduct going-out-of-business sales at and close 94 stores.

The Company intends to amend this Current Report on Form 8-K within 4 business days of when any further applicable information becomes available.

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Board of Directors

On August 8, 2024, each of Thomas Sullivan, Jason Delves and Jill Witter (collectively, the “F9 Directors”) delivered notice of their respective resignation as a member of the Board effective immediately. Such resignations were not a result of a disagreement with the Company or the Board on any matter relating to the Company’s operations, policies or practices or any other matter.

On August 11, 2024, following the resignation of the F9 Directors, the Board reduced the size of the Board from 9 directors to 6 directors.

Resignation of the Company’s Chief Financial Officer

On August 9, 2024, Robert L. Madore Jr., gave notice to the Board that he was resigning for Good Reason (as defined in Mr. Madore’s severance agreement) as the Company’s Chief Financial Officer and Executive Vice President of Finance at LL Flooring, Inc., effective immediately. Mr. Madore’s resignation was not a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Appointment of Interim Chief Financial Officer

On August 9, 2024, the Board appointed Susan Bryan to serve as interim Chief Financial Officer of the Company, replacing Mr. Madore. Prior to her appointment as interim Chief Financial Officer, Ms. Bryan served as the Company’s Vice President of Finance.

In connection with Ms. Bryan’s appointment, the Board increased Ms. Bryan’s annual base salary to $375,000.

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Appointment of Chief Restructuring Officer

On August 7, 2024, the Board appointed Ms. Holly Etlin, Partner and Managing Director of AlixPartners, LLP (“AlixPartners”), as Chief Restructuring Officer of the Company (the “CRO”).

Ms. Etlin has over 30 years of experience in providing turnaround services for companies in the retail, distribution, and consumer products industries, including her service as Chief Restructuring Officer at Bed Bath & Beyond Inc. from April 2023 to September 2023 and as Chief Financial Officer and Chief Restructuring Officer at Tailored Brands, Inc. from July 2020 to January 2021. Ms. Etlin has served as a Partner & Managing Director of AlixPartners since January 2007. AlixPartners provides various consulting services to the Company.

Ms. Etlin’s compensation for the CRO position is included as part of the fees paid by the Company to AlixPartners for overall services AlixPartners provides to the Company. There are no additional, and no anticipated additional, compensatory arrangements between the Company and Ms. Etlin in connection with her performance as the CRO beyond such fees paid by the Company to AlixPartners. Other than as disclosed in this Current Report on Form 8-K, there are no arrangements or understandings between Ms. Etlin and any other person pursuant to which Ms. Etlin was appointed to serve as CRO and there are no family relationships between Ms. Etlin and any director or executive officer of the Company. Other than as disclosed in this Current Report on Form 8-K, since the beginning of the Company’s last fiscal year, the Company has not engaged in any transactions, and there are no proposed transactions, or series of similar transactions, in which the Company was or is to be a participant and in which Ms. Etlin had a direct or indirect material interest in which the amount involved exceeds or exceeded $120,000.

Appointment of Deputy Chief Restructuring Officer

On August 7, 2024, the Board appointed Ms. Deb Rieger-Paganis, Partner and Managing Director of AlixPartners, as Deputy Chief Restructuring Officer of the Company (the “Deputy CRO”).

Ms. Rieger-Paganis has over 20 years of experience in providing turnaround services for companies in the retail, consumer products industries and other industries, including her service as Interim Chief Financial Officer at Rodan and Fields, Pier 1 and Toms Shoes. Ms. Rieger-Paganis has served as a Partner & Managing Director of AlixPartners since January 2015. AlixPartners provides various consulting services to the Company.

Ms. Rieger-Paganis’ compensation for the Deputy CRO position is included as part of the fees paid by the Company to AlixPartners for overall services AlixPartners provides to the Company. There are no additional, and no anticipated additional, compensatory arrangements between the Company and Ms. Rieger-Paganis in connection with her performance as the Deputy CRO beyond such fees paid by the Company to AlixPartners. Other than as disclosed in this Current Report on Form 8-K, there are no arrangements or understandings between Ms. Rieger-Paganis and any other person pursuant to which Ms. Rieger-Paganis was appointed to serve as Deputy CRO and there are no family relationships between Ms. Rieger-Paganis and any director or executive officer of the Company. Other than as disclosed in this Current Report on Form 8-K, since the beginning of the Company’s last fiscal year, the Company has not engaged in any transactions, and there are no proposed transactions, or series of similar transactions, in which the Company was or is to be a participant and in which Ms. Rieger-Paganis had a direct or indirect material interest in which the amount involved exceeds or exceeded $120,000.

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Retention Program

On August 7, 2024, the Company authorized entry into a retention agreement (each a “Retention Agreement”) with each of the following executive officers of the Company: (i) Alice G. Givens, Chief Legal, Ethics and Compliance Officer and Corporate Secretary, (ii) Susan Bryan, (iii) Douglas S. Clark, Jr., Senior Vice President, Merchandising and Supply Chain and (iv) Kristian Lesher, Chief Technology Officer (the “Participants”). In exchange for entering into the Retention Agreements, the Company required the Participants to waive their rights to receive any severance payment upon any termination of employment.

Under the Retention Agreements, the Company will have the right to recoup the retention amount (on an after-tax basis) from any Participant who leaves the Company before December 31, 2024, unless (i) such Participant experiences a termination of their employment without “Cause,” due to “Good Reason” or due to their death or “Disability” (as such terms are defined in the Retention Agreement) or (ii) (A) other than in the case of Ms. Givens, a Change in Control (as defined in the Retention Agreement and which includes a wind-down or liquidation of the Company) occurs and the Participant remains available to provide services to the Company for the fifteen (15) day period following the consummation of the Change in Control or (B) in the case of Ms. Givens, if a wind-down or liquidation of the Company occurs, and, in each case, subject to the Participant’s timely execution and nonrevocation of a release of claims in favor of the Company.

The amounts paid pursuant to this program include the following retention amount payments: (i) $337,500 for Alice G. Givens, (ii) $200,000 for Susan Bryan, (iii) $205,000 for Douglas S. Clark, Jr. and (iv) $170,000 for Kristian Lesher.

The foregoing description of the Retention Agreements is only a summary and is qualified in its entirety by reference to the Form of Retention Agreement, a copy of which is attached as Exhibit 10.2 hereto and incorporated by reference into this Item 5.02.

 

Item 7.01

Regulation FD Disclosure

On August 11, 2024, the Company issued a press release announcing, among other things, that the Debtors filed the Chapter 11 Cases in the Bankruptcy Court.

The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 8.01

Other Events

On August 9, 2024, LL Flooring Services, LLC, a wholly-owned subsidiary of the Company, entered into a nonbinding letter of intent with a third party for the sale of the Company’s distribution center located in Sandston, Virginia for approximately $100 million.

Cautionary Information Regarding Trading in the Company’s Securities.

The Company continues to face certain risks and uncertainties that have been affecting its business and operations, and these risks and uncertainties may affect the Company’s ability to enter into a sale transaction and could impact the outcome of the Chapter 11 Cases. Holders of the Company’s equity securities will likely be entitled to little or no recovery on their investment following the Chapter 11 Cases, and recoveries to other stakeholders cannot be determined at this time. The Company cautions that trading in the Company’s securities given the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to

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the actual value realized, if any, by holders of the Company’s securities in the Chapter 11 Cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.

Forward-looking statements

Certain information in this Current Report on Form 8-K may constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, including but not limited to, the asset purchase agreement and the Chapter 11 proceedings and any other statements that refer to our expected, estimated or anticipated future results or that do not relate solely to historical facts. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “assumes,” “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” “targets,” “potential,” “will likely result,” and other similar terms and phrases, are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company’s management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control, including, among other things, the following: the outcome of our contingency planning and restructuring activities; settlement discussions or negotiations; the Company’s liquidity, financial performance, cash position and operations; the Company’s strategy; risks and uncertainties associated with Chapter 11 proceedings; the negative impacts on the Company’s businesses as a result of filing for and operating under Chapter 11 protection; the time, terms and ability to confirm a sale of the Company’s businesses under Section 363 of the U.S. Bankruptcy Code; the adequacy of the capital resources of the Company’s businesses and the difficulty in forecasting the liquidity requirements of the operations of the Company’s businesses; the unpredictability of the Company’s financial results while in Chapter 11 proceedings; the Company’s ability to discharge claims in Chapter 11 proceedings; negotiations with the holders of the Company’s indebtedness and its trade creditors and other significant creditors; risks and uncertainties with performing under the terms of any arrangement with lenders or creditors while in Chapter 11 proceedings; the Company’s ability to conduct business as usual; the Company’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from the Company; the Company’s ability to continue to pay employees, suppliers and vendors; the ability to control costs during Chapter 11 proceedings; adverse litigation; the risk that the Company’s Chapter 11 cases may be converted to cases under Chapter 7 of the Bankruptcy Code; the Company’s ability to secure operating capital; the Company’s ability to take advantage of opportunities to acquire assets with upside potential; the Company’s ability to execute on its strategic plan to pursue, evaluate and close an asset sale of the Company’s businesses pursuant to Section 363 of the U.S. Bankruptcy Code; our inability to maintain compliance with financial covenants and operating obligations which would expose us to potential events of default under our outstanding indebtedness; our ability to incur additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes; a significant reduction in our short-term or long-term revenues which could cause us to be unable to fund our operations and liquidity needs or repay indebtedness; and supply chain interruptions or difficulties. Therefore, the reader is cautioned not to rely on these forward-looking statements.

The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. For a discussion of other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission. Such filings are available on the SEC’s website at www.sec.gov and the Company’s Investor Relations website at https://investors.llflooring.com.

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Item 9.01

Financial Statements and Exhibits

(d) Exhibits

 

Exhibit No.		Description
10.1		Agency Agreement, dated August 8, 2024, between Hilco Merchant Resources, LLC and LL Flooring Holdings, Inc.
10.2		Form of Retention Agreement
99.1		Press Release, dated August 11, 2024
104		Cover Page Interactive Data File (formatted as inline XBRL)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

LL FLOORING HOLDINGS, INC.
By:		/s/ Alice G. Givens
Name:		Alice G. Givens
Title:		Chief Legal, Ethics and Compliance Officer and Corporate Secretary

Date: August 12, 2024

Exhibit 10.1

 

August 8, 2024

VIA EMAIL

LL Flooring Holdings, Inc.

4901 Bakers Mill Lane

Richmond, VA 23230

Attention: Holly Etlin

Chief Restructuring Officer

 

Re:

Letter Agreement Governing Inventory Disposition

Dear Holly:

By executing below, subject to section R hereof, this letter shall serve as an agreement (“Agreement”) between Hilco Merchant Resources, LLC, on the one hand ( “Agent” or a “Party”), and LL Flooring Holdings, Inc., on the other hand (“Merchant” or a “Party” and together with the Agent, the “Parties”), under which Agent shall act as the exclusive agent for the purpose of conducting a sale of certain Merchandise (as defined below) at (i) the Merchant’s stores set forth on Exhibit A and (ii) any other stores as may be designated for disposition by Merchant from the date of this Agreement (each a “Store” and collectively, the “Stores”) and Merchant’s e-commerce platform if designated for disposition by Merchant, subject to the terms and conditions set forth herein, through a “Store Closing”, “Everything Must Go”, “Everything on Sale” or similar themed sale (the “Sale”).

 

A.	Merchandise

For purposes hereof, “Merchandise” shall mean all goods, saleable in the ordinary course, either located in the Stores on the Sale Commencement Date (defined below) or shipped to the Stores from Merchant’s distribution centers during the Sale Term. “Merchandise” does not mean and shall not include: (1) goods that belong to sublessees, licensees or concessionaires of Merchant; (2) owned furnishings, trade fixtures, equipment and improvements to real property that are located in the Stores (collectively, “FF&E”); or (3) damaged or defective merchandise that cannot be sold. For the avoidance of doubt, Merchandise includes goods that are marked damaged, but are nonetheless saleable.

 

B.

Sale Term

For each Store, the Sale shall commence on Friday, August 9, 2024 (the “Sale Commencement Date”) and conclude no later than Sunday, September 29, 2024 (the “Sale Termination Date”); provided, however, that the Parties may mutually agree in writing to extend or terminate the Sale at any Store prior to the Sale Termination Date. The period between the Sale Commencement Date and the Sale Termination Date shall be referred to as the “Sale Term.” At the conclusion of the Sale, Agent shall surrender the premises for each Store to Merchant in broom clean condition and in accordance with the lease requirements for such premises; provided, however, Merchant shall bear all costs and expenses associated with surrendering the premises in accordance with the lease requirements for such premises according to a budget mutually agreed to between the Agent and Merchant. At the conclusion of the Sale at each Store, Agent shall photographically document the condition of each such Store. Photographs shall reference with specificity each Store by number, name, and/or location.

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C.	Project Management

 

(i)

Agent’s Undertakings

During the Sale Term, Agent shall, in collaboration with Merchant, (a) provide qualified supervisors (the “Supervisors”) engaged by Agent to oversee the management of the Stores; (b) determine appropriate point-of-sale and external advertising for the Stores, approved in advance by Merchant; (c) determine appropriate discounts of Merchandise, staffing levels for the Stores, approved in advance by Merchant, and appropriate bonus and incentive programs, if any, for the Stores’ employees, approved in advance by Merchant; (d) oversee display of Merchandise for the Stores; (e) to the extent that information is available, evaluate sales of Merchandise by category and sales reporting and monitor expenses; (f) maintain the confidentiality of all proprietary or non-public information regarding Merchant in accordance with the provisions of the confidentiality agreement signed by the Parties; (g) assist Merchant in connection with managing loss prevention and employee relations matters; (h) determine the necessity for obtaining any applicable permits and governmental approvals to conduct the Sale, including working with Merchant to obtain each in a timely and orderly fashion and preparing or causing to be prepared all forms necessary to assist in Merchant’s securing any applicable permits and governmental approvals necessary to conduct the Sale, the costs and expenses of which shall be paid by Merchant and shall be in addition to the costs and expenses set forth on the Expense Budget; (i) include Additional Agent Goods in the Sale in its discretion under the terms set forth in this Agreement; and (k) provide such other related services deemed necessary or appropriate by Merchant and Agent.

The Parties expressly acknowledge and agree that Merchant shall have no liability to the Supervisors for wages, benefits, severance pay, termination pay, vacation pay, pay in lieu of notice of termination or any other liability arising from Agent’s hiring or engagement of the Supervisors, and the Supervisors shall not be considered employees of Merchant.

 

(ii)

Merchant’s Undertakings

During the Sale Term, Merchant shall (a) be the employer of the Stores’ employees, other than the Supervisors; (b) pay all taxes, costs, expenses, accounts payable, and other liabilities relating to the Stores, the Stores’ employees and other representatives of Merchant; (c) prepare and process all tax forms and other documentation; (d) collect all sales taxes and pay them to the appropriate taxing authorities for the Stores; (e) use reasonable efforts to cause Merchant’s employees to cooperate with Agent and the Supervisors; (f) execute all agreements mutually determined by the Merchant and Agent to be necessary or desirable for the operation of the Stores during the Sale; (g) arrange for the ordinary maintenance of all point-of-sale equipment required for the Stores and any computer servers necessary to operate the Sale; (h) apply for and obtain, with Agent’s assistance and support, all applicable permits and authorizations (including landlord approvals and consents) for the Sale; (i) ensure that Agent has quiet use and enjoyment of the Stores for the Sale Term in order to perform its obligations under this Agreement.

 

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Merchant shall provide throughout the Sale Term central administrative services necessary for the Sale, including (without limitation) customary POS administration, sales audit, cash reconciliation, accounting, and payroll processing, all at no cost to Agent.

The Parties expressly acknowledge and agree that Agent shall have no liability to Merchant’s employees for wages, benefits, severance pay, termination pay, vacation pay, pay in lieu of notice of termination or any other liability arising from Merchant’s employment, hiring or retention of its employees, and such employees shall not be considered employees of Agent.

 

D.

The Sale

All sales of Merchandise shall be made on behalf of Merchant. In conducting the Sale, Agent shall have the right to use the LL Flooring and Lumber Liquidators names to market the Merchandise. Agent does not have, nor shall it have, any right, title or interest in the Merchandise. All sales of Merchandise shall be by cash, gift card, gift certificate, merchandise credit, debit card, voucher, or credit card and, at Merchant’s discretion, by check or otherwise in accordance with Merchant’s policies, and shall be “final” with no returns accepted or allowed, unless otherwise directed by Merchant, provided, however, that purchases via voucher, gift card, or gift certificate shall only be accepted for the time period and pursuant to the terms set forth in the Approval Order (as defined below). For the avoidance of doubt, Merchant’s pre-Sale return policy will be honored to allow returns of items sold pre-Sale in accordance with Merchant’s pre-Sale return policy applicable to the product(s) sought to be returned.

 

E.	Agent Fee and Expenses in Connection with the Sale

In consideration of its services hereunder, Agent shall earn a base retail fee equal to two percent (2.0%) of the Gross Proceeds of Merchandise sold at the Stores (the “Base Retail Fee”). Agent shall earn a base wholesale fee of seven and one half percent (7.5%) of the Gross Proceeds of Merchandise sold through Agent’s wholesale channels (the “Wholesale Fee”). For purposes of this Agreement, “Gross Proceeds” means gross receipts calculated using the “gross rings” method, net of applicable sales taxes.

 

 

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In addition to the Base Retail Fee and the Wholesale Fee, and not in lieu thereof, the Merchant shall pay to Agent from Gross Proceeds an additional fee based upon the Gross Recovery Percentages achieved as set forth in the following table (the “Additional Incentive Compensation”). The Additional Incentive Compensation shall be equal to the aggregate sum of the percentages set forth in the “Additional Incentive Compensation” column of the table (e.g., calculated back to first dollar) for the corresponding Gross Recovery Percentage achieved; provided, however, no Additional Incentive Compensation shall be earned or payable where the Gross Recovery Percentage is less than 94.74%:

 

Gross Cost Recovery Percentage		Additional Incentive Compensation
Between 94.75% and 95.5%		An additional 0.25% of Gross Proceeds (total fee equal to 2.25% of Gross Proceeds)
Above 95.5%		An additional 0.25% of Gross Proceeds (total fee equal to 2.50% of Gross Proceeds)

For purposes of the Additional Incentive Compensation:

“Cost Value” with respect to each item of Merchandise sold shall mean the lower of (i) the lowest per unit vendor cost in the File or in the Merchant’s books and records, maintained in the ordinary course consistent with historic practices; or (ii) the Retail Price.

“File” shall mean the following files provided to Agent: “Total Inventory by Site and Article as of 07.31.24.xlsx” and “June EOM Inventory by Site with Price.xlsx,” and all subsequent merchandise files created or updated through the Sale Commencement Date.

“Gross Recovery Percentage” shall mean the Gross Proceeds divided by the sum of the aggregate Cost Value of all of the Merchandise.

“Retail Price” shall mean with respect to each item of Merchandise sold, the retail price reflected at the register for such item, excluding the discount granted in connection with such sale.

Merchant shall be responsible for all expenses of the Sale, including (without limitation) all Store-level operating expenses, all costs and expenses related to Merchant’s other retail store operations, Merchant’s costs for operating the Distribution Centers (as defined below), and Agent’s other reasonable, documented out of pocket expenses. To control expenses of the Sale, Merchant and Agent have established an aggregate budget (the “Expense Budget”) of certain delineated expenses, including (without limitation) payment of the costs of supervision (including (without limitation) Supervisors’ wages, fees, travel, and deferred compensation) and advertising costs. The Expense Budget for the Sale is attached hereto as Exhibit B. The Expense Budget may only be modified by mutual written (including email) agreement of Agent and Merchant, provided that appropriate modifications to the Expense Budget, if any, will be mutually agreed prior to Merchant’s addition of any stores for disposition under this Agreement. The costs of supervision set forth on Exhibit B include, among other things, industry standard deferred compensation. Notwithstanding anything herein to the contrary, unless otherwise agreed to by Merchant, Merchant shall not be obligated to pay costs that have not been included, or provided for, in the Expense Budget, as may be amended in accordance with this Agreement.

All accounting matters (including, without limitation, all fees, expenses, or other amounts reimbursable or payable to Agent) shall be reconciled on every Wednesday for the prior week and shall be paid within seven (7) days after each such weekly reconciliation. The Parties shall complete a final reconciliation and settlement of all amounts payable to Agent and contemplated by this Agreement (including, without limitation, Expense Budget items, and fees earned hereunder) no later than forty five (45) days following the Sale Termination Date for the last Store.

 

4

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Upon execution of this Agreement, the Merchant shall pay by wire transfer to the Agent an advance payment of costs and expenses delineated in the Expense Budget of $708,360 (the “Sale Expense Advance”) which shall be held by Agent and applied towards Expense Budget items as incurred. Any portion of the Sale Expense Advance not so used shall be returned to Merchant within three days following the final reconciliation.

 

F.	Indemnification

 

(i)

Merchant’s Indemnification

Merchant shall indemnify, defend, and hold Agent and its consultants, members, managers, partners, officers, directors, employees, attorneys, advisors, representatives, lenders, potential co-investors, principals, affiliates, and Supervisors (collectively, “Agent Indemnified Parties”) harmless from and against all liabilities, claims, demands, damages, costs and expenses (including reasonable attorneys’ fees) arising from or related to: (a) the willful or negligent acts or omissions of Merchant or the Merchant Indemnified Parties (as defined below); (b) the material breach of any provision of this Agreement by Merchant; (c) any liability or other claims, including, without limitation, product liability claims, asserted by customers, any Store employees (under a collective bargaining agreement or otherwise), or any other person (excluding Agent Indemnified Parties) against Agent or an Agent Indemnified Party, except claims arising from Agent’s negligence, willful misconduct, actual fraud, or unlawful behavior; (d) any harassment, discrimination or violation of any laws or regulations or any other unlawful, tortious or otherwise actionable treatment of Agent’s Indemnified Parties or Merchant’s customers by Merchant or Merchant’s Indemnified Parties; and (e) Merchant’s failure to pay over to the appropriate taxing authority any taxes required to be paid by Merchant during the Sale Term in accordance with applicable law.

 

(ii)

Agent’s Indemnification

Agent shall indemnify, defend and hold Merchant and its consultants, members, managers, partners, officers, directors, employees, attorneys, advisors, representatives, lenders, potential co-investors, principals, and affiliates (other than the Agent or the Agent Indemnified Parties) (collectively, “Merchant Indemnified Parties”) harmless from and against all liabilities, claims, demands, damages, costs and expenses (including reasonable attorneys’ fees) arising from or related to (a) the willful or negligent acts or omissions of Agent or the Agent Indemnified Parties; (b) the breach of any provision of, or the failure to perform any obligation under, this Agreement by Agent; (c) any liability or other claims made by Agent’s Indemnified Parties or any other person (excluding Merchant Indemnified Parties) against a Merchant Indemnified Party arising out of or related to Agent’s conduct of the Sale, except claims arising from Merchant’s negligence, willful misconduct, actual fraud, or unlawful behavior; (d) any harassment, discrimination or violation of any laws or regulations or any other unlawful, tortious or otherwise actionable treatment of Merchant Indemnified Parties, or Merchant’s customers by Agent or any of the Agent Indemnified Parties and (e) any claims made by any party engaged by Agent as an employee, agent, representative or independent contractor arising out of such engagement.

 

5

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G.

Insurance

 

(i)

Merchant’s Insurance Obligations

Merchant shall maintain throughout the Sale Term, liability insurance policies (including, without limitation, products liability (to the extent currently provided), commercial general liability insurance and auto liability insurance) covering injuries to persons and property in or in connection with the Stores, and shall use commercially reasonable efforts to cause Agent to be named as an additional insured with respect to all such policies. At Agent’s request, Merchant shall provide Agent with a certificate or certificates evidencing the insurance coverage required hereunder and that Agent is an additional insured thereunder. In addition, Merchant shall maintain throughout the Sale Term, in such amounts as it currently has in effect, workers compensation insurance in compliance with all statutory requirements.

 

(ii)

Agent’s Insurance Obligations

As an expense of the Sale and as included in the Expense Budget, Agent shall maintain (at Agent’s expense) throughout the Sale Term, liability insurance policies (including, without limitation, products liability/completed operations, contractual liability, comprehensive public liability and auto liability insurance) on an occurrence basis in an amount of at least Two Million dollars ($2,000,000) and an aggregate basis of at least five million dollars ($5,000,000) covering injuries to persons and property in or in connection with Agent’s provision of services at the Stores. Agent shall name Merchant as an additional insured and loss payee under such policy, and upon execution of this Agreement provide Merchant with a certificate or certificates evidencing the insurance coverage required hereunder. In addition, Agent shall maintain throughout the Sale Term, workers compensation insurance compliance with all statutory requirements. Further, should Agent employ or engage third parties to perform any of Agent’s undertakings with regard to this Agreement, Agent will ensure that such third parties are covered by Agent’s insurance or maintain all of the same insurance as Agent is required to maintain pursuant to this paragraph and name Merchant as an additional insured and loss payee under the policy for each such insurance.

 

H.	Representations, Warranties, Covenants and Agreements

(i) Merchant warrants, represents, covenants and agrees that (a) Merchant is a company duly organized, validly existing and in good standing under the laws of its state of organization, with full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and maintains its principal executive office at the address set forth herein, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary actions of Merchant and this Agreement constitutes a valid and binding obligation of Merchant enforceable against Merchant in accordance with its terms and conditions, and the consent of no other entity or person is required for Merchant to fully perform all of its obligations herein, (c) all ticketing of Merchandise at the Stores has been and will be done in accordance with Merchant’s customary ticketing practices; (d) all normal course hard markdowns on the Merchandise have been, and will be, taken consistent with customary Merchant’s practices, and (e) the Stores will be operated in the ordinary course of business in all respects, other than those expressly agreed to by Merchant and Agent.

 

6

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(ii) Agent warrants, represents, covenants and agrees that (a) Agent is a company duly organized, validly existing and in good standing under the laws of its state of organization, with full power and authority to execute and deliver this Agreement and to perform the Agent’s obligations hereunder, and maintains its principal executive office at the addresses set forth herein, (b) the execution, delivery and performance of this Agreement has been duly authorized by all necessary actions of Agent and this Agreement constitutes a valid and binding obligation of Agent enforceable against Agent in accordance with its terms and conditions, and the consent of no other entity or person is required for Agent to fully perform all of its obligations herein, (c) Agent shall comply with and act in accordance with any and all applicable state and local laws, rules, and regulations, and other legal obligations of all governmental authorities, (d) no non-emergency repairs or maintenance in the Stores will be conducted without Merchant’s prior written consent, and (e) Agent will not take any disciplinary action against any employee of Merchant.

 

I.	Furniture, Fixtures and Equipment

Agent shall sell the FF&E in the Stores from the Stores themselves and from Merchant’s distribution centers (the “Distribution Centers”) from the Distribution Centers themselves. Merchant shall be responsible for all reasonable and documented costs and expenses incurred by Agent in connection with the sale of FF&E, which costs and expenses shall be incurred pursuant to a budget or budgets to be established from time to time by mutual agreement of the Parties. Agent shall have the right to abandon at the Stores any unsold FF&E.

In consideration for providing the services set forth in this section I, Agent shall be entitled to a commission from the sale of the FF&E equal to 15.0% of the Gross Proceeds of the sale of the FF&E.

Agent shall remit to Merchant all Gross Proceeds from the sale of FF&E. During each weekly reconciliation described in section E above, Agent’s FF&E fee shall be calculated, and Agent’s calculated FF&E fee and all FF&E costs and expenses then incurred shall paid within seven (7) days after each such weekly reconciliation.

 

II.	Termination

The following shall constitute “Termination Events” hereunder:

 

(a)

Merchant’s or Agent’s failure to perform any of their respective material obligations hereunder, which failure shall continue uncured seven (7) days after receipt of written notice thereof to the defaulting Party;

 

(b)

Any representation or warranty made by Merchant or Agent is untrue in any material respect as of the date made or at any time and throughout the Sale Term; or

 

(c)

the Sale is terminated or materially interrupted or impaired for any reason other than an event of default by Agent or Merchant.

 

7

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If a Termination Event occurs, the non-defaulting Party (in the case of an event of default) or either Party (if the Sale is otherwise terminated or materially interrupted or impaired) may, in its 7 discretion, elect to terminate this Agreement by providing seven (7) business days’ written notice thereof to the other Party and, in the case of an event of default, in addition to terminating this Agreement, pursue any and all rights and remedies and damages resulting from such default. If this Agreement is terminated, Merchant shall be obligated to pay Agent all amounts due under this Agreement through and including the termination date.

 

K.

Notices

All notices, certificates, approvals, and payments provided for herein shall be sent by fax or by recognized overnight delivery service as follows: (a) To Merchant: at the address listed above; (b) To Agent: c/o Hilco Merchant Resources, LLC, One Northbrook Place, 5 Revere Drive, Suite 206, Northbrook, IL 60062, Fax: [phone], Attn: T. Kellan Grant; or (c) such other address as may be designated in writing by Merchant or Agent. To the extent that a writing or written agreement is required by this Agreement, such writing or written agreement may be memorialized in and transmitted by electronic mail.

 

L.	Independent Consultant

Agent’s relationship to Merchant is that of an independent contractor without the capacity to bind Merchant in any respect. No employer/employee, principal/agent, joint venture or other such relationship is created by this Agreement. Merchant shall have no control over the hours that Agent or its employees or assistants or the Supervisors work or the means or manner in which the services that will be provided are performed and Agent is not authorized to enter into any contracts or agreements on behalf of Merchant or to otherwise create any obligations of Merchant to third parties, unless authorized in writing to do so by Merchant.

 

M.	Non-Assignment

Neither this Agreement nor any of the rights hereunder may be transferred or assigned by either Party without the prior written consent of the other Party; provided, however, that Agent may syndicate this transaction with one or more third parties upon notice to, but not the consent of Merchant. No modification, amendment or waiver of any of the provisions contained in this Agreement, or any future representation, promise or condition in connection with the subject matter of this Agreement, shall be binding upon any Party to this Agreement unless made in writing and signed by a duly authorized representative or agent of such Party. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, legal representatives, successors and permitted assigns.

 

N.	Severability

If any term or provision of this Agreement, as applied to either Party or any circumstance, for any reason shall be declared by a court of competent jurisdiction to be invalid, illegal, unenforceable, inoperative or otherwise ineffective, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. If the surviving portions of the Agreement fail to retain the essential understanding of the Parties, the Agreement may be terminated by mutual consent of the Parties.

 

8

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O.	Governing Law, Venue, Jurisdiction and Jury Waiver

This Agreement, and its validity, construction and effect, shall be governed by and enforced in accordance with the internal laws of the State of Illinois (without reference to the conflicts of laws provisions therein). Merchant and Agent waive their respective rights to trial by jury of any cause of action, claim, counterclaim or cross-complaint in any action, proceeding and/or hearing brought by either Agent against Merchant or Merchant against Agent on any matter whatsoever arising out of, or in any way connected with, this Agreement, the relationship between Merchant and Agent, any claim of injury or damage or the enforcement of any remedy under any law, statute or regulation, emergency or otherwise, now or hereafter in effect.

 

P.	Entire Agreement

This Agreement, together with all additional schedules and exhibits attached hereto, constitutes a single, integrated written contract expressing the entire agreement of the Parties concerning the subject matter hereof. No covenants, agreements, representations or warranties of any kind whatsoever have been made by any Party except as specifically set forth in this Agreement. All prior agreements, discussions and negotiations are entirely superseded by this Agreement.

 

Q.

Execution

This Agreement may be executed simultaneously in counterparts (including by means of electronic mail, facsimile or portable document format (pdf) signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same instrument. This Agreement, and any amendments hereto, to the extent signed and delivered by means of electronic mail, a facsimile machine or electronic transmission in portable document format (pdf), shall be treated in all manner and respects as an original thereof and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.

 

R.	Bankruptcy

If the Merchant commences a case under Chapter 11 of title 11, United States Code (the “Bankruptcy Code”), with a bankruptcy court (the “Bankruptcy Court”), the Merchant shall promptly file a motion to assume sections of this Agreement under section 365 and/or 363 of the Bankruptcy Code, and utilize its reasonable best efforts to ensure that such motion is approved by an order that provides, among other things, as follows (the “Approval Order”): (i) the payment of all fees and reimbursement of expenses under this Agreement is approved without further order of the court; (ii) all such payments of fees and reimbursement of expenses related to such Approval Order shall be made on a weekly basis without further order of the Bankruptcy Court and otherwise in accordance with this Agreement; (iii) the payment of all fees and reimbursement of expenses to Agent related to such Approval Orders shall be included in any approved debtor in possession, cash collateral, or other post-petition financing budget as a condition to the Assumption of the Agreement; (iv) authorizing the Sale without the necessity of complying with state and local rules, laws, ordinances and regulations, including, without limitation, permitting and licensing requirements, that could otherwise govern the Sale; (v) authorizing the Sale notwithstanding restrictions in leases, reciprocal easement agreements or other contracts that purport to restrict the Sale or the necessity of obtaining any third party consents; (vi) approving the sale of Additional Agent Goods in accordance with the terms and

 

9

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conditions hereof; and (vii) take all further actions as are necessary or appropriate to carry out the terms and conditions of this Agreement. In such event, any legal action, suit or proceeding arising in connection with this Agreement shall be submitted to the exclusive jurisdiction of the Bankruptcy Court having jurisdiction over the Merchant, and each Party waives any defenses or objections based on lack of jurisdiction, improper venue, and/or forum non conveniens. From and after entry of the Approval Order, Agent shall conduct the Sale in accordance with the terms of the Approval Order in all material respects.

 

S.	Additional Agent Goods

 

(1)

Exercisable in its reasonable discretion, Agent shall have the right to supplement the Merchandise in the Sale with additional goods procured by Agent which are of like kind, and no lesser quality to the Merchandise in the Sale (“Additional Agent Goods”), provided that Merchant may reasonably object to the inclusion of Additional Agent Goods that are not of like kind and are of lesser quality to the Merchandise in the Sale at the Closing Stores or through the e-commerce platform. Any Additional Agent Goods shall be purchased by Agent as part the Sale at Agent’s sole expense, with the total cost of any such Additional Agent Goods not to exceed fifteen percent (15%) of the aggregate Cost Value in any particular Store. Sales of Additional Agent Goods shall be run through Merchant’s cash register systems, so long as Agent has marked the Additional Agent Goods using either a “dummy” SKU or department number, or in such other manner so as to distinguish the sale of Additional Agent Goods from the sale of Merchandise. Agent and Merchant shall also cooperate to ensure that the Additional Agent Goods are marked in such a way that a reasonable consumer could identify the Additional Agent Goods as non-Merchandise. Additionally, Agent shall provide signage in the Stores notifying customers that the Additional Agent Goods have been included in the Sale.

 

(2)

Agent shall pay to Merchant an amount equal to five percent (5%) of the gross proceeds (excluding sales taxes) from the sale of Additional Agent Goods (the “Additional Agent Goods Fee”) completed during the Sale Term and Agent shall retain all remaining amounts from the sale of the Additional Agent Goods. Agent shall pay to Merchant the then-reconciled Additional Agent Goods Fee in connection with the weekly reconciliation with respect to the sales of Additional Agent Goods sold by the Agent during each then prior week (or at such other mutually agreed upon time). Agent and the Merchant intend that the transactions relating to the Additional Agent Goods are, and shall be construed as, a true consignment from Agent to the Merchant in all respects and not a consignment for security purposes. Subject solely to Agent’s obligations to pay to the Merchant the Additional Agent Goods fee described in this Agreement, at all times and for all purposes the Additional Agent Goods and their proceeds shall be the exclusive property of Agent, and no other person or entity shall have any claim against any of the Additional Agent Goods or their proceeds. At Agent’s sole cost and expense, the Merchant shall insure the Additional Agent Goods and, if required, promptly file any proofs of loss with regard to same with the Merchant’s insurers. Agent shall be responsible for payment of any deductible under any such insurance in the event of any casualty affecting the Additional Agent Goods.

 

10

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(3)

The Merchant acknowledges that the Additional Agent Goods shall be consigned to the Merchant as a true consignment under Article 9 of the Code. Any Approval Order shall contain provisions reasonable acceptable to Agent governing the treatment and sale of Additional Agent Goods.

*   *   *

 

11

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If this Agreement is acceptable to you, kindly execute a copy in the space provided, and return a countersigned version to the undersigned. Thank you again for this opportunity — we look forward to working with you.

 

Very truly yours,
HILCO MERCHANT RESOURCES, LLC
/s/ T. Kellan Grant
By:		T. Kellan Grant
Its:		EVP Commercial Counsel

 

AGREED AND ACCEPTED as of the 8th day
of August, 2024
LL FLOORING HOLDINGS, INC.
/s/ Charles Tyson
By:		Charles Tyson
Its:		Chief Executive Officer

 

12

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EXHIBIT A

Stores

 

13

---

LL Flooring, LLC

Exhibit A

 

Store List

 

Count

Loc #

Name

Address

City

State

Zip

Country

Phone

District

Region

Open Date

Lease End Date

Gross Sq. Ft.

WH Sq Ft

Selling Sq. Ft.

1

1019

1019 PHOENIX, AZ

2120 S. 7th Street

Phoenix

AZ

85034

USA

[phone]

WESTUS

REGION 27

09/01/01

06/30/25

8,400

6,902

1,498

2

1059

1059 RANCHO CUCAMONGA, CA

10920 Foothill Blvd. (Foothill Crossing)

Rancho Cucamonga

CA

91730

USA

[phone]

WESTUS

REGION 14

12/14/04

05/31/25

7,039

5,430

1,609

3

1076

1076 COLUMBUS, OH

4242 West Broad Street

Columbus

OH

43228

USA

[phone]

EASTUS

REGION 28

12/19/05

04/30/28

6,900

5,399

1,501

4

1089

1089 CHANHASSEN, MN

2973 Water Tower Place

Chanhassen

MN

55317

USA

[phone]

SOUTHUS

REGION 17

11/07/06

09/30/26

6,356

5,553

803

5

1094

1094 NORWALK, CT

651 Connecticut Ave

Norwalk

CT

06854

USA

[phone]

EASTUS

REGION 5

03/08/07

03/31/27

5,740

4,760

999

6

1125

1125 MCALLEN, TX

3300 West Frontage Rd (Palms Crossing)

McAllen

TX

78503

USA

[phone]

WESTUS

REGION 24

01/02/08

01/31/30

15,000

12,558

2,442

7

1126

1126 EAST PEORIA, IL

1467 N. Main Street

East Peoria

IL

61611

USA

[phone]

EASTUS

REGION 8

02/02/08

01/31/28

9,450

8,305

1,145

8

1127

1127 LONGMONT, CO

633 Frontage Road

Longmont

CO

80501

USA

[phone]

WESTUS

REGION 27

02/29/08

12/31/24

6,000

5,170

830

9

1131

1131 BURLINGAME, CA

1501 Adrian Road

Burlingame

CA

94010

USA

[phone]

WESTUS

REGION 19

10/11/08

02/28/25

7,200

6,192

1,008

10

1145

1145 DAVENPORT, IA

321 West Kimberly Road

Davenport

IA

52806

USA

[phone]

SOUTHUS

REGION 9

10/17/08

12/31/24

5,500

4,595

905

11

1170

1170 FRESNO, CA

5091 N. Fresno Street, Suite 140 (Gallery Plaza)

Fresno

CA

93710

USA

[phone]

WESTUS

REGION 25

08/15/09

09/30/26

8,144

6,957

1,187

12

1177

1177 WESTBURY, NY

24 Kinkel St

Westbury

NY

11590

USA

[phone]

EASTUS

REGION 5

11/16/09

08/31/28

9,900

8,434

1,466

13

1179

1179 ROCHESTER, MN

5139 Highway 52N

Rochester

MN

55901

USA

[phone]

SOUTHUS

REGION 17

10/02/09

03/31/25

5,388

4,474

914

14

1187

1187 BROUSSARD, LA

3401 Hwy 90

East Broussard

LA

70518

USA

[phone]

SOUTHUS

REGION 16

10/17/09

09/30/26

7,100

6,200

900

15

1189

1189 BAKERSFIELD, CA

3601 Ming Avenue

Bakersfield

CA

93309

USA

[phone]

WESTUS

REGION 25

11/27/09

05/31/28

8,500

6,970

1,530

16

1208

1208 EDGEWOOD, MD

2710 Pulaski Highway

Edgewood

MD

21040

USA

[phone]

EASTUS

REGION 3

06/14/10

10/31/24

5,000

4,076

924

17

1213

1213 SAN DIEGO, CA

2222 Verus Street Suite A & B

San Diego

CA

92154

USA

[phone]

WESTUS

REGION 14

08/13/10

09/30/25

7,339

6,139

1,200

18

1223

1223 SHERMAN, TX

1215 S Sam Rayburn Freeway

Sherman

TX

75090

USA

[phone]

WESTUS

REGION 11

12/10/10

02/28/25

4,317

3,409

908

19

1227

1227 GENEVA, IL

1530 South Randall Road Road

Geneva

IL

60185

USA

[phone]

EASTUS

REGION 8

12/04/10

01/31/30

6,000

4,542

1,458

20

1232

1232 NORTH HAVEN, CT

410 Universal Drive N

North Haven

CT

06473

USA

[phone]

EASTUS

REGION 5

02/25/11

12/31/24

6,397

4,893

1,504

21

1244

1244 GREENWOOD, IN

2117 Independence Drive (Summerfield Commons)

Greenwood

IN

46143

USA

[phone]

EASTUS

REGION 28

05/26/11

08/31/26

5,800

4,650

1,150

22

1254

1254 CHAMPAIGN, IL

301 W. Marketview Drive

Champaign

IL

61822

USA

[phone]

EASTUS

REGION 8

09/19/11

08/31/26

7,091

5,861

1,230

23

1285

1285 ARLINGTON, TX

808 Interstate 20 Frontage Road

Arlington

TX

76017

USA

[phone]

WESTUS

REGION 11

04/17/13

08/31/28

7,841

6,240

1,601

24

1290

1290 LAS VEGAS, NV

4588 North Rancho Drive, Suites 1-6 (Rancho Pines Shopping Center)

Las Vegas

NV

89130

USA

[phone]

WESTUS

REGION 14

06/26/13

08/31/27

6,000

4,511

1,489

25

1293

1293 STATEN ISLAND, NY

2040 Forest Ave (Forest Plaza)

Staten Island

NY

10303

USA

[phone]

EASTUS

REGION 26

02/14/13

06/30/29

7,070

5,569

1,501

26

1295

1295 CRYSTAL LAKE, IL

4500 US Highway 14

Crystal Lake

IL

60014

USA

[phone]

EASTUS

REGION 8

07/27/13

09/30/25

6,347

4,826

1,521

27

1310

1310 WOODBRIDGE, NJ

503-507 King Georges Road

Woodbridge

NJ

07095

USA

[phone]

EASTUS

REGION 26

10/28/13

01/31/29

6,450

4,949

1,501

28

1311

1311 WOODBURY, NJ

1450 Clemments Bride Road, Suite 16 & 17 (The Plaza at Deptford)

Woodbury

NJ

08096

USA

[phone]

EASTUS

REGION 22

10/02/13

01/31/26

7,000

5,499

1,501

29

1314

1314 FAIRFIELD, CA

1595 Holiday Lane, Suite B-4 (Holiday Galleria)

Fairfield

CA

94534

USA

[phone]

WESTUS

REGION 19

05/19/14

11/30/24

6,430

4,938

1,492

30

1316

1316 LAFAYETTE, IN

4315 Commerce Drive

Lafayette

IN

47905

USA

[phone]

EASTUS

REGION 28

12/24/13

03/31/25

8,000

6,499

1,501

31

1317

1317 REYNOLDSBURG, OH

2736 Brice Road (Brice Park Shopping Center)

Reynoldsburg

OH

43068

USA

[phone]

EASTUS

REGION 28

07/13/14

07/31/29

7,200

5,705

1,495

32

1318

1318 ROSWELL, GA

593 Holcomb Bridge Road, Suite 593

Roswell

GA

30009

USA

[phone]

SOUTHUS

REGION 6

12/21/13

01/31/33

5,466

4,070

1,396

33

1319

1319 CINCINNATI, OH

454 Ohio Pike, Unit No. 58 (Cherry Grove Plaza)

Cincinnati

OH

45255

USA

[phone]

EASTUS

REGION 28

04/14/14

01/31/25

6,035

4,565

1,470

34

1324

1324 SANTEE, CA

240-102 Town Center Parkway (Santee Town Center)

Santee

CA

92071

USA

[phone]

WESTUS

REGION 14

10/10/15

12/31/25

6,081

4,576

1,505

35

1325

1325 WATERBURY, CT

1012 Wolcott Street

Waterbury

CT

06705

USA

[phone]

EASTUS

REGION 26

07/12/14

09/30/26

6,500

5,015

1,485

36

1335

1335 FLORIDA CITY, FL

33550 S. Dixie Hwy (Florida City Centre

Florida City

FL

33034

USA

[phone]

SOUTHUS

REGION 10

04/18/14

08/31/26

7,034

5,464

1,570

37

1341

1341 LEOMINSTER, MA

489-493 North Main Street (WaterTower Plaza)

Leominster

MA

01453

USA

[phone]

EASTUS

REGION 1

06/16/14

08/31/29

7,967

6,186

1,781

38

1344

1344 PHILADELPHIA, PA

1530 South Columbus Blvd.

S. Philadelphia

PA

19147

USA

[phone]

EASTUS

REGION 22

11/14/14

12/31/24

6,235

4,743

1,492

39

1345

1345 LUTHERVILLE TIMONIUM, M2D153

2153 York Road (Timonium Sq.)

Timonium

MD

21093

USA

[phone]

EASTUS

REGION 3

07/25/14

12/31/27

7,500

5,986

1,514

40

1350

1350 MILFORD, CT

1389 Boston Post Road (Milford Crossing)

Milford

CT

06460

USA

[phone]

EASTUS

REGION 5

04/24/15

05/31/25

5,587

3,999

1,588

41

1352

1352 TORRANCE, CA

1431 W. Knox Street, Suite 200 (The Shops at South Bay)

Torrance

CA

90501

USA

[phone]

WESTUS

REGION 14

10/14/14

02/28/25

5,175

3,488

1,687

42

1355

1355 SOUTH ELGIN, IL

356 Randall Road (Shops at South Elgin/Shops at Randall Road)

South Elgin

IL

60177

USA

[phone]

EASTUS

REGION 8

06/10/15

08/31/27

8,400

6,928

1,472

43

1359

1359 FORT WORTH, TX

425 Sherry Lane (Westover Village Shopping Center)

Ft. Worth

TX

76114

USA

[phone]

WESTUS

REGION 11

06/11/15

09/30/27

7,500

5,980

1,520

44

1363

1363 DENTON, TX

2311 Colorado Blvd. (Colorado Square)

Denton

TX

76205

USA

[phone]

WESTUS

REGION 11

08/28/15

10/31/25

7,168

5,625

1,543

45

1366

1366 KATY, TX

455 Katy Fort Bend Road (Mission at Katy Mills Center)

Katy

TX

77494

USA

[phone]

WESTUS

REGION 24

11/21/15

02/28/26

7,500

5,917

1,583

46

1372

1372 FAIRLESS HILLS, PA

146 Lincoln Hwy.

Fairless Hills

PA

19030

USA

[phone]

EASTUS

REGION 22

11/04/15

06/30/26

8,045

6,550

1,495

47

1376

1376 TAMPA, FL

8444 West Hillsborough Avenue (Ross Plaza)

Tampa

FL

33615

USA

[phone]

SOUTHUS

REGION 12

08/27/16

11/30/25

7,000

5,816

1,184

48

1379

1379 OLYMPIA, WA

1520 Cooper Point Road SW, Suite 250 (Cooper Point Pavilion)

Olympia

WA

98502

USA

[phone]

WESTUS

REGION 30

11/17/16

11/30/28

7,181

5,980

1,201

49

1385

1385 GAINESVILLE, FL

2607 NW 13th Street (Gainesville Plaza)

Gainesville

FL

32601

USA

[phone]

SOUTHUS

REGION 12

12/01/17

03/31/27

9,677

8,345

1,332

50

1386

1386 RIVERDALE, UT

4040 Riverdale Road, Suite A-1

Riverdale

UT

84405

USA

[phone]

WESTUS

REGION 15

12/01/17

01/31/28

8,000

6,598

1,402

51

1388

1388 MESA, AZ

1845 S. Power Road

Mesa

AZ

85206

USA

[phone]

WESTUS

REGION 27

09/01/17

06/30/29

7,988

6,656

1,332

52

1389

1389 SALINAS, CA

1043 N. Main Street

Salinas

CA

93906

USA

[phone]

WESTUS

REGION 19

01/26/18

04/30/28

7,038

5,711

1,327

53

1393

1393 Loveland, CO

2985 North Garfield Avenue

Loveland

CO

80538

USA

[phone]

WESTUS

REGION 27

02/23/18

04/30/28

8,034

6,678

1,356

54

1394

1394 LAKE CHARLES, LA

3415 Derek Drive (Lake Charles Power Center)

Lake Charles

LA

70607

USA

[phone]

SOUTHUS

REGION 16

04/27/18

07/31/28

9,930

8,358

1,572

55

1396

1396 KILLEEN, TX

1101 South Fort Hood Street, Suite 300 (Wendland Plaza)

Killeen

TX

76541

USA

[phone]

WESTUS

REGION 24

03/16/18

05/31/25

5,884

4,400

1,484

56

1398

1398 SAINT CLOUD, MN

3320 Division Street West (Division Street Plaza)

St. Cloud

MN

56301

USA

[phone]

SOUTHUS

REGION 17

05/18/18

06/30/25

8,004

6,452

1,552

57

1401

1401 ELK GROVE, CA

8777 Elk Grove Boulevard (Elk Grove Shopping Center)

Elk Grove

CA

95624

USA

[phone]

WESTUS

REGION 19

05/25/18

09/30/26

8,927

7,595

1,332

58

1405

1405 New Hartford, NY

8619 Clinton Street (The Orchard Shopping Center)

New Hartford

NY

13413

USA

[phone]

EASTUS

REGION 4

06/29/18

11/30/25

6,000

4,616

1,384

59

1408

1408 THORNTON, CO

930 East 104th Avenue

Thornton

CO

80233

USA

[phone]

WESTUS

REGION 27

08/28/19

07/31/29

10,855

5,078

5,777

60

1410

1410 Woodbridge, VA

14516 Potomac Mills Road (Festival at Manassas Center)

Woodbridge

VA

22192

USA

[phone]

EASTUS

REGION 20

10/12/18

10/31/28

7,160

5,814

1,346

61

1412

1412 S SAN ANTONIO, TX

3142 SE Military Drive, Ste 116 (City Base Landing)

San Antonio #2

TX

78223

USA

[phone]

WESTUS

REGION 24

11/09/18

10/31/25

8,100

6,732

1,368

62

1413

1413 KANSAS CITY, MO

2618 NE Vivion Road

Kansas Ciity (North)

MO

64119

USA

[phone]

SOUTHUS

REGION 9

05/03/19

03/31/29

6,500

5,086

1,414

63

1417

1417 CHESTERFIELD, MO

17724-17726 Chesterfield Airport Road

Chesterfield

MO

63005

USA

[phone]

SOUTHUS

REGION 9

03/22/19

06/30/26

4,520

2,807

1,713

64

1419

1419 PARKERSBURG, WV

2838 Pike Street, Suite 1A and 2

Parkersburg

WV

26101

USA

[phone]

EASTUS

REGION 23

05/17/19

06/30/29

6,430

5,014

1,416

65

1423

1423 KENTWOOD, MI

4260 28th Street SE Kentwood (Kentwood Towne Center)

Kentwood

Mi

49512

USA

[phone]

EASTUS

REGION 7

12/06/19

01/31/29

8,400

5,691

2,709

66

1424

1424 SOLON, OH

6025 Kruse Drive, Suite 141 (Uptown Solon Center)

Solon

OH

44139

USA

[phone]

EASTUS

REGION 4

05/29/20

07/31/25

8,000

5,325

2,675

67

1426

1426 BLOOMINGTON, IL

1701 N Empire Street, Suite 305-310

Bloomington

IL

61704

USA

[phone]

EASTUS

REGION 8

08/14/20

10/31/27

6,651

5,440

1,211

68

1427

1427 College Station, TX

1128 Harvey Road

College Station

TX

77840

USA

[phone]

WESTUS

REGION 24

05/29/20

07/31/27

6,435

5,022

1,413

69

1428

1428 Albany, OR

1241 Clay Street SE

Albany

OR

97322

USA

[phone]

WESTUS

REGION 15

06/26/20

07/31/27

7,219

5,678

1,541

70

1430

1430 Clarksville, TN

115 Terminal Road

Clarksville

TN

37040

USA

[phone]

SOUTHUS

REGION 10

11/20/20

10/31/25

12,272

10,854

1,418

71

1431

1431 MEDFORD, NY

700-47 E Patchogue Yaphank Road

Medford

NY

11763

USA

[phone]

EASTUS

REGION 5

05/03/21

01/31/28

10,121

8,472

1,649

 

Hilco Merchant Resources, LLC		Page 1		8/5/2024

---

LL Flooring, LLC

Exhibit A

 

Store List

 

Count

Loc #

Name

Address

City

State

Zip

Country

Phone

District

Region

Open Date

Lease End Date

Gross Sq. Ft.

WH Sq Ft

Selling Sq. Ft.

72

1433

1433 FRANKLIN, TN

209 S. Royal Oaks Blvd. (Watson Glen Shoping Center)

Franklin

TN

37064

USA

[phone]

SOUTHUS

REGION 10

03/26/21

04/30/26

6,467

5,102

1,365

73

1434

1434 Exton, PA

213 W. Lincoln Highway (Whiteland Town Center)

Exton

PA

19341

USA

[phone]

EASTUS

REGION 22

04/21/21

06/30/26

5,845

4,346

1,499

74

1435

1435 HOUSTON Galleria, TX

8366 Westheimer Road

Houston

TX

77063

USA

[phone]

WESTUS

REGION 24

09/03/21

05/31/26

2,013

474

1,539

75

1436

1436 CLEARWATER, FL

2613 Gulf to Bay Blvd

Clearwater

FL

33759

USA

[phone]

SOUTHUS

REGION 12

07/16/21

10/31/26

2,000

611

1,389

76

1437

1437 VISALIA, CA

3725 S. Mooney Boulevard (Gateway Plaza)

Visalia

CA

93277

USA

[phone]

WESTUS

REGION 25

11/29/21

11/30/28

10,300

8,891

1,409

77

1440

1440 Hattiesburg, MS

4700 Hardy Street

Hattiesburg

MS

39402

USA

[phone]

SOUTHUS

REGION 16

06/28/21

08/31/26

7,574

6,170

1,404

78

1441

1441 BECKLEY, WV

1020 N. Eisenhower Drive (Cranberry Creek Shopping Center)

Beckley

WV

25801

USA

[phone]

EASTUS

REGION 20

06/28/21

08/31/26

8,450

7,046

1,404

79

1442

1442 Jackson, TN

1241 Vann Drive

Jackson

TN

38305

USA

[phone]

SOUTHUS

REGION 16

09/15/21

10/31/26

5,500

4,062

1,438

80

1444

1444 Muncie, IN

1515 W McGalliard Road (Northwest Plaza)

Muncie

IN

47304

USA

[phone]

EASTUS

REGION 28

01/10/22

03/31/27

8,275

6,860

1,415

81

1445

1445 Framingham, MA

235 Old Connecticut Path

Framingham

MA

01701

USA

[phone]

EASTUS

REGION 1

02/14/22

02/28/29

6,560

5,001

1,559

82

1446

1446 Mount Holly, NJ

531 High Street

Mt. Holly

NJ

08060

USA

[phone]

EASTUS

REGION 22

04/25/22

03/31/27

9,602

8,182

1,420

83

1447

1447 Yakima, WA

2319 S. First Street, Suite 101

Yakima

WA

98903

USA

[phone]

WESTUS

REGION 30

12/06/21

01/31/32

11,015

9,533

1,482

84

1449

1449 Burlington, NC

1807-1809 S. Church Street (Grove Park Plaza)

Burlington

NC

27215

USA

[phone]

SOUTHUS

REGION 2

03/28/22

06/30/32

7,915

6,220

1,695

85

1450

1450 SAINT AUGUSTINE, FL

330 CBL Dr.

St. Augustine

FL

32086

USA

[phone]

SOUTHUS

REGION 12

03/21/22

04/30/27

9,000

7,596

1,404

86

1451

1451 MENOMONEE FALLS, WI

N81W15086 Appleton Ave

Menomonee Falls

WI

53051

USA

[phone]

SOUTHUS

REGION 17

01/31/22

06/30/33

8,569

7,181

1,388

87

1453

1453 Bellingham, WA

145 E Stuart Rd.

Bellingham

WA

28226

USA

[phone]

WESTUS

REGION 30

11/07/22

12/31/27

7,522

6,118

1,404

88

1454

1454 Cumming, GA

580 Atlanta Road, Suite 203B

Cumming

GA

30040

USA

[phone]

SOUTHUS

REGION 6

06/13/22

07/31/27

5,980

4,576

1,404

89

1455

1455 Tuscaloosa, AL

3305 Mcfarland Blvd

Tuscaloosa

AL

35405

USA

[phone]

SOUTHUS

REGION 6

03/28/22

05/31/27

6,200

4,796

1,404

90

1458

1458 Battle Creek, MI

5700 Beckley Rd. Suite 14

Battle Creek

Mi

49015

USA

[phone]

EASTUS

REGION 7

06/13/22

07/31/27

8,036

6,552

1,484

91

1459

1459 Joplin, MO

732 Rangeline, Northtown Center

Joplin

MO

64801

USA

[phone]

SOUTHUS

REGION 9

12/05/22

12/31/27

7,004

5,639

1,365

92

1460

1460 Prescott Valley, AZ

6689 E 1st Street

Prescott Valley

AZ

86314

USA

[phone]

WESTUS

REGION 27

09/19/22

12/31/32

11,560

10,156

1,404

93

1462

1462 MUNDELEIN, IL

3080 W. Route 60

Mundelein

IL

60060

USA

[phone]

EASTUS

REGION 8

10/27/22

11/30/32

6,789

5,385

1,404

94

1463

1463 Abilene, TX

4127 S. Danville Drive

Abilene

TX

79605

USA

[phone]

WESTUS

REGION 11

09/22/22

10/31/27

6,027

4,630

1,397

94

Average Sq. Ft.

7,315

5,837

1,479

 

Hilco Merchant Resources, LLC		Page 2		8/5/2024

---

EXHIBIT B

Expense Budget

 

16

---

LL Flooring, LLC

Exhibit B

 

Expense Budget

 

		1st Week				Each Subsequent Week
Advertising
Digital & Media			22,400				22,400
Signs (1)			76,637				—
Sign Walkers			67,561				67,561
Subtotal Advertising			166,598				89,961
Supervision
Fees / Wages / Expenses (2)			232,100				169,700
Subtotal Supervision			232,100				169,700
Miscellaneous
Miscellaneous /Legal (3)			50,000				—
Subtotal Miscellaneous			50,000				—
Total Expenses			448,699				259,661

Notes:

 

1. Includes Sales Tax.

2. Includes Deferred Compensation and Insurance.

3. Any legal expenses associated with issues raised by or disputes with landlords, including (without limitation) negotiations in respect of landlord side letters, shall be in addition to and not part of the budgeted legal expenses.

 

Hilco Merchant Resources, LLC				8/2/2024

Exhibit 10.2

 

August 6, 2024

Re: Employee Retention Plan

Dear [Name]:

In recognition of your continuing key role at and services on behalf of LL Flooring Holdings, Inc. (the “Company”), you will be eligible to earn a retention payment of $[•] (the “Retention Amount”), less any required tax withholding, subject to your compliance with the terms and conditions set forth in this letter (this “Agreement”). You agree that your eligibility to receive the Retention Amount (whether or not earned or recovered) replaces your right to receive any severance payment upon termination of employment.

Provided that you execute and deliver this Agreement to the Company by August 8, 2024, your Retention Amount will be paid to you on August 9, 2024. You agree that if you resign your employment, or if your employment is terminated with Cause (as defined in Appendix A hereto) prior to the Retention Date, then you will repay to the Company, within ten (10) calendar days of your employment termination date, the entire Retention Amount (less applicable tax and other deductions withheld by the Company). If you fail to repay the Retention Amount, the Company may recover the Retention Amount by offsetting any other compensation or benefits due to you, subject to applicable law, and that you will be obligated to pay the Company for legal expenses or other costs incurred by the Company in their attempts to recover the Retention Amount.

If, prior to the Retention Date, [(i)] you experience a Qualifying Termination of Employment (as defined in Appendix A hereto) [or (ii) a Change in Control (as defined in Appendix A hereto) occurs and you remain available to provide services to the Company for the fifteen (15) day period following the consummation of the Change in Control] and[, in each case,] you timely execute (and refrain from revoking) a release of claims against the Company in a form provided by the Company, then you will not be obligated to repay the Retention Amount.¹ Your failure to accept an offer of employment from a buyer in connection with a Change in Control will not impact your right to retain the Retention Amount.

This Agreement is not assignable except to your estate upon death, or by the Company to any successor of the Company (including an acquiror of substantially all of its assets). This Agreement is governed by the laws of the Commonwealth of Virginia, without regard to principles of conflicts of laws, and sets forth the entire understanding between the Company and you regarding the contents hereof. This Agreement may be executed in counterparts (including electronic), each of which shall be deemed an original and all together the same Agreement. This Agreement may only be amended by written agreement between you and the Company.

[Remainder of Page Intentionally Left Blank]

 

1	Bracketed items in this paragraph and related definitions thereto are removed in Ms. Givens’ retention agreement.

---

To accept this Agreement, please sign where indicated below, and return on or before August 8, 2024 in a confidential envelope to LL Flooring Holdings, Inc., 4901 Bakers Mill Lane, Richmond, VA 23230, Attn: Human Resources, or to [e-mail].

 

Sincerely,
LL FLOORING HOLDINGS, INC.
By:
Title:

 

ACCEPTED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE:
By:

 

2

---

APPENDIX A

“Cause” means (i) the definition provided in your employment agreement, offer letter, or severance agreement; (ii) in the absence of any such agreement (or the absence of any definition of “Cause” contained therein), any one of the following: (A) your gross neglect of duty to the Company or any of its subsidiaries or gross negligence or intentional misconduct in the course of your employment; (B) you having been indicted for, or entered a plea of guilty or nolo contendere to, a crime that constitutes a felony or your commission of any other act or omission involving fraud with respect to the Company or any of its subsidiaries or any of their customers or suppliers; (C) your breach of any fiduciary duty owed to the Company or any of its subsidiaries; (D) you being prohibited from serving as an officer of a reporting company subject to Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Securities Exchange Act”), by applicable law, as the result of any order of a court or governmental agency or other judicial or administrative proceeding or as the result of any contractual arrangements to which you are bound; (E) your willful and intentional non-performance of your duties and responsibilities with the Company or any subsidiary or willful disregard of any legal directives of the Company’s Board of Directors (the “Board”) or your direct report and failure, in either case, to cure such breach, if capable of being cured, within ten (10) days of receipt of written notice from the Company; (F) you breach any confidentiality, non-competition, non-solicitation or other restrictive covenants to which you are bound as related to the Company or any of its subsidiaries and the failure to cure such breach, if capable of being cured, within ten (10) days of receipt of written notice from the Company; and/or (G) the material breach by you of the Company’s code of conduct and the failure to cure such material breach, if capable of being cured, within ten (10) days of receipt of written notice from the Company.

“Change in Control” means the occurrence of any of the following:

 

i.

any person, including a “group” (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act), is or becomes the beneficial owner, directly or indirectly, of 50% or more of either: (A) the then outstanding shares of common stock, par value $0.001 per share (“Common Stock”), of the Company (the “Outstanding Common Shares”); or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”), excluding any person who becomes such a beneficial owner in connection with a transaction that complies with clauses (A), (B), and (C) of paragraph (iii) below;

 

ii.

individuals, who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that, any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board;

 

iii.

the consummation of an acquisition, reorganization, reincorporation, redomestication, merger, amalgamation, consolidation, plan or scheme of arrangement, exchange offer, business combination, or similar transaction of the Company or any of its subsidiaries or the sale, transfer, or other disposition of all or substantially all of the Company’s assets (any of which, a “Corporate Transaction”), unless, immediately following such Corporate Transaction or series of related Corporate Transactions, as the case may be, (A) all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Shares and Outstanding Voting Securities immediately prior to such Corporate Transaction own or beneficially own, directly or indirectly, more than 50% of, respectively, the Outstanding Common Shares and the combined voting power of the Outstanding Voting Securities entitled to vote generally in the election of directors (or other governing body), as the case may be, of the entity resulting from such Corporate Transaction (including, without limitation, an entity (including any new parent entity) which as a result

 

3

---

of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one (1) or more subsidiaries or entities) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Shares and the Outstanding Voting Securities, as the case may be; (B) no person (excluding any entity resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such entity resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 50% or more of, respectively, the then outstanding shares of Common Stock of the entity resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Corporate Transaction; and (C) at least a majority of the members of the board of directors (or other governing body) of the entity resulting from such Corporate Transaction were members of the Incumbent Board at the time of the approval of such Corporate Transaction; or

 

iv.

prior to December 31, 2024, the liquidation or wind-down of the Company.

“Disability” means a physical or mental infirmity that prevents the performance on a full-time basis of all or substantially all of your employment-related duties, with or without accommodation, lasting either for a period of ninety (90) consecutive days or for a period of more than ninety (90) days in any rolling one hundred and eighty (180) day period.

“Good Reason” means the definition set forth in your employment agreement, offer letter, or severance agreement, if applicable.

“Qualifying Termination of Employment” means a termination of your employment (i) without Cause; (ii) due to Good Reason; or (iii) due to your death or Disability.

“Retention Date” means the earliest to occur of (i) December 31, 2024; or (ii) the date a Change in Control occurs.²

 

 

2	For Ms. Givens’ retention agreement, clause (ii) is replaced with “the date a liquidation or wind-down of the Company occurs.”

 

4

Exhibit 99.1

LL Flooring Initiates Voluntary Chapter 11 Process

Pursuing Going-Concern Sale of Business

Secures Commitment for Debtor-in-Possession Financing to Support Operations

Continues To Serve Customers and Provide a Broad Range of Hard and Soft Surface Flooring

Both Online and in Stores

RICHMOND, Va. – August 11, 2024 – LL Flooring Holdings, Inc. (“LL Flooring” or the “Company”) (NYSE: LL), today announced that the Company and certain of its subsidiaries have commenced voluntary Chapter 11 reorganization proceedings in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). LL Flooring intends to use these proceedings to pursue a going-concern sale of its business.

LL Flooring is generally operating in the normal course through this process and remains focused on providing customers with a broad range of hard and soft surface flooring and an exceptional shopping experience. The Company has more than 300 continuing stores across the U.S. that, along with its online platform, are open and continuing to serve customers with few changes to store operations and policies. In addition, LL Flooring entered into an agreement with Hilco Merchant Resources, LLC, to assist the Company in its recently initiated store closing sales at 94 of its locations. Those 94 stores will remain open and serving customers through this closing process.

Prior to filing for Chapter 11, the Company conducted extensive marketing processes with respect to its business and certain of its assets, including its distribution center in Sandston, Virginia. The marketing process garnered significant interest, and the Company intends to use these Chapter 11 proceedings to continue pursuing a going-concern sale of its business under the Bankruptcy Code. The Company remains in active negotiations with multiple bidders and hopes to seek Bankruptcy Court approval of a sale of its business in the first few weeks of the Chapter 11 proceedings.

LL Flooring has received a commitment for debtor-in-possession (“DIP”) financing of up to $130 million from its existing bank group led by Bank of America. Following Court approval, the incremental liquidity provided by the DIP financing, combined with cash generated from the Company’s ongoing operations is expected to support the business during these proceedings.

Charles Tyson, President and Chief Executive Officer of LL Flooring, said, “After comprehensive efforts to enhance our liquidity position in a challenging macro environment, a determination was made that initiating this Chapter 11 process is the best path forward for the Company. Today’s step is intended to provide LL Flooring with additional time and financial flexibility as we reduce our physical footprint and close certain stores while pursuing a going-concern sale of the rest of our business. As we move through this process, we are committed to continuing to serve our valued customers, and to working seamlessly with our vendors and partners. I am appreciative of our associates for their ongoing hard work in providing the best experience for our customers.”

LL Flooring has filed a number of customary motions in connection with the Chapter 11 proceedings. Once approved by the Court, those motions will allow the Company to smoothly transition its business into Chapter 11, including by, among other things, granting authority to continue payment of wages and maintain healthcare and other benefits as well as certain other relief customary in these circumstances. The Company has sought authorization to continue honoring customer commitments subject to certain modifications of store operations or policies relating to its acceptance of customer deposits and gift cards. Any updates to store operations or policies will be posted on the Company’s website, where customers can also find a list of locations conducting store closing sales. The Company intends to pay vendors and suppliers in full under normal terms for goods and services provided on or after the Chapter 11 filing date and has requested Court approval to do so.

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Additional information about the Company’s Chapter 11 process is available at www.LLFlooringRestructuring.com.

Court filings and other information related to the proceedings are available on a separate website administrated by the company’s claims agent, Stretto, at https://cases.stretto.com/LLFlooring; by calling Stretto representatives toll-free at 855-314-5841, or 714-716-1925 for calls originating outside of the U.S. or Canada; or by emailing Stretto at [e-mail].

Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel, Houlihan Lokey is serving as financial adviser, and AlixPartners LLP is serving as restructuring advisor to the Company.

About LL Flooring

LL Flooring is one of the country’s leading specialty retailers of hard-surface flooring with more than 300 stores nationwide. The Company seeks to offer the best customer experience online and in stores, with more than 500 varieties of hard-surface floors featuring a range of quality styles and on-trend designs. LL Flooring’s online tools also help empower customers to find the right solution for the space they’ve envisioned. LL Flooring’s extensive selection includes waterproof hybrid resilient, waterproof vinyl plank, solid and engineered hardwood, laminate, bamboo, porcelain tile, and cork, with a wide range of flooring enhancements and accessories to complement, as well as carpet in select stores. LL Flooring stores are staffed with flooring experts who provide advice, Pro partnership services and installation options for all of LL Flooring’s products, the majority of which is in stock and ready for delivery.

Forward Looking Statements

Certain information in this press release may constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, including but not limited to, the asset purchase agreement and the Chapter 11 proceedings and any other statements that refer to our expected, estimated or anticipated future results or that do not relate solely to historical facts. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “assumes,” “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” “targets,” “potential,” “will likely result,” and other similar terms and phrases, are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company’s management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control, including, among other things, the following: the outcome of our contingency planning and restructuring activities; settlement discussions or negotiations; the Company’s liquidity, financial performance, cash position and operations; the Company’s strategy; risks and uncertainties associated with Chapter 11 proceedings; the negative impacts on the Company’s businesses as a result of filing for and operating under Chapter 11 protection; the time, terms and ability to confirm a sale of the Company’s businesses under Section 363 of the U.S. Bankruptcy Code; the adequacy of the capital resources of the Company’s businesses and the difficulty in forecasting the liquidity requirements of the operations of the Company’s businesses; the unpredictability of the Company’s financial results while in Chapter 11 proceedings; the Company’s ability to discharge claims in Chapter 11 proceedings; negotiations with the holders of the Company’s indebtedness and its trade creditors and other significant creditors; risks and uncertainties with performing under the terms of any arrangement with lenders or creditors while in Chapter 11 proceedings; the Company’s ability to conduct business as usual; the Company’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from the Company; the Company’s ability to continue to pay employees, suppliers and vendors; the ability to control costs during Chapter 11 proceedings; adverse litigation; the risk that the Company’s Chapter 11 cases may be converted to cases under Chapter 7 of the Bankruptcy Code; the Company’s ability to secure operating capital; the Company’s ability to take advantage of opportunities to acquire assets with upside potential; the Company’s ability to execute on its strategic plan to pursue, evaluate and close an asset sale of the Company’s businesses pursuant to Section 363 of the U.S. Bankruptcy Code; our inability to maintain compliance with financial covenants and operating obligations which would expose us to potential events of default under our outstanding indebtedness; our ability to

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incur additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes; a significant reduction in our short-term or long-term revenues which could cause us to be unable to fund our operations and liquidity needs or repay indebtedness; and supply chain interruptions or difficulties. Therefore, the reader is cautioned not to rely on these forward-looking statements.

The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. For a discussion of other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission. Such filings are available on the SEC’s website at www.sec.gov and the Company’s Investor Relations website at https://investors.llflooring.com.

For media inquiries:

Leigh Parrish / Ed Trissel / Spencer Hoffman

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

Document and Entity Information	Aug. 07, 2024
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001396033
Document Type	8-K
Document Period End Date	Aug. 07, 2024
Entity Registrant Name	LL Flooring Holdings, Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-33767
Entity Tax Identification Number	27-1310817
Entity Address, Address Line One	4901 Bakers Mill Lane
Entity Address, City or Town	Richmond
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	23230
City Area Code	(804)
Local Phone Number	463-2000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $0.001 per share
Trading Symbol	LL
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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