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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re:

Chapter 11

John Varvatos Enterprises, Inc., et al., Case No. 20-11043 (MFW)

Debtors.1 Jointly Administered

Hearing Date: June 12, 2020, at 10:30 a.m. (ET) Objection Deadline: June 5, 2020, at 4:00 p.m. (ET)

APPLICATION OF THE DEBTORS FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF

CLEAR THINKING GROUP LLC AS FINANCIAL ADVISOR NUNC PRO TUNC TO THE PETITION DATE

The above-captioned debtors and debtors in possession in the above-captioned Chapter

11 case (the “Debtors”), hereby file this application (the “Application”) for entry of an order, in

substantially the form attached hereto as Exhibit A, authorizing the employment and retention

of Clear Thinking Group LLC (“CTG”), effective as of the Petition Date, as the Debtors’

financial advisor. In support of the Application, the Debtors rely on the Declaration of Lee A.

Diercks in Support of the Application of the Debtors for an Order Authorizing the Retention and

Employment of Clear Thinking Group LLC as Financial Advisor Nunc Pro Tunc to the Petition

Date (the “Diercks Declaration”), attached hereto as Exhibit B. In further support of the

Application, the Debtor respectfully represents as follows:

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number are

as follows: John Varvatos Enterprises, Inc. (3554); Lion/Hendrix Corporation (8784); and John Varvatos Apparel Corp. (3394). The Debtors’ corporate headquarters and mailing address is 26 West 17th Street, 10th Floor, New York, NY 10011.

Case 20-11043-MFW Doc 128 Filed 05/22/20 of 8

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BACKGROUND

1. On May 6, 2020 (the “Petition Date”), each of the Debtors commenced a

bankruptcy case (the “Chapter 11 Case”) by filing a voluntary petition for relief under Chapter

11 of the Bankruptcy Code. The Debtors continue to manage and operate their businesses as

debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. On May 18,

2020, the Office of the United States Trustee appointed an official committee of unsecured

creditors (the “Committee”) [D.I. 94].

2. The factual background regarding the Debtors, including their business

operations, capital and debt structure, and the events leading to the filing of this Chapter 11

Case, is set forth in detail in the Declaration of Joseph Zorda in Support of First Day Relief

[D.I. 4] (the “First Day Declaration”).

RELIEF REQUESTED

3. The Debtors hereby seek authorization to employ and retain CTG, effective as

of the Petition Date, pursuant to CTG’s Engagement Agreement (as defined herein), as the

Debtors’ financial advisor to provide financial advisory services to the Debtor and actively lead

and manage this Chapter 11 case. CTG is a professional person within the meaning of the

Bankruptcy Code and this retention is sought pursuant to 11 U.S.C. §327(a), with the terms of

the proposed engagement and related fee structure made subject to the standards of 11 U.S.C.

§328.

CTG’S PRIOR INVOLVMENT WITH DEBTORS

4. CTG’s involvement with the Debtors began on July 15, 2019 when CTG was

retained to assist the Debtor in connection with a review of its business plan and to assist with

liquidity management. Since that time, CTG has assisted the Debtors with communications with


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its various lenders during its forbearance period, provided business advice on various business

matters, assisted with various cash flow forecasts, and assisting the Debtors in their preparation

for a potential sale and bankruptcy filing. CTG has also assisted the Debtors with procuring DIP

Financing. CTG remained as the Debtors’ financial advisor performing in a variety of

capacities, most recently pursuant to a certain supplemental amendment to its engagement

agreement dated July 15, 2019, and amended on March 9, 2020 (the “Engagement

Agreement”), a copy of which is attached hereto as Exhibit C.

5. Going forward during the Chapter 11 case, the Debtors seek to continue CTG

engagement as its financial advisor because CTG has substantial knowledge of the Debtors’

financial and operational conditions, and vast experience with retail insolvency proceedings.

6. Given this history, the Debtors believe that CTG is well qualified to perform all

financial related services and represent the Debtors’ interests in a cost-effective and efficient

manner.

CTG’S QUALIFICATIONS

7. Established in 2001, CTG has advised companies and creditors in numerous

distressed situations, both in and out of bankruptcy proceedings. CTG’s clients include

companies, creditors, corporate parents, and financial sponsors, as well as acquirers of troubled

assets.

8. CTG has participated in many bankruptcy cases, out of court restructurings, and

asset sales for retail clients, as the Financial Advisor or CRO, including: ASE, Inc., Bacharach,

Inc., Bag’n’Baggage, Inc., Barbecues Galore, Inc., Boot Town Western Warehouse, Inc.,

Charming Charlie, Inc., Copeland Sports, Inc., Crabtree & Evelyn, Inc., Delia’s, Inc.,

Gordmann’s Inc., Hancock Fabrics, Inc., Joyce Leslie, Inc., Lillian Vernon, Inc., Loehmann’s

Holdings, Inc., Market Antiques & Home Furnishing, Inc., Marsh Supermarkets, Inc., Namco,


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LLC, One Price Clothing, Inc., Prints Plus, Inc., Rag Shops, Inc., Sofa Express, Inc., Swoozies,

Inc., The Parent Company, Inc. Total Hockey, Inc., and The Walking Company, Inc. CTG is

currently serving as Debtor’s Financial Advisor, in the chapter 11 cases of Northwest Company,

LLC and its affiliated debtors and debtors in possession, recently filed in the Southern District

of New York. Accordingly, the Debtors view CTG’s wide wealth of experience as an important

resource.

SERVICES TO BE PROVIDED BY CTG

9. Pursuant to the Engagement Agreement, CTG, in this engagement, has provided,

and/or will provide on an ongoing basis upon the Court’s approval of this Application, the

following types of services:2

a. Assisted the Debtors with their chapter 11 bankruptcy filings, including with respect to: 1. the development of a DIP Cash Flow/Budget 2. the development of a liquidation analysis 3. the preparation of the “first day” motions 4. prepetition cash saving / liquidity management activities 5. other necessary preparation activities as needed.

b. Assist the Debtors with communication with their lenders.

c. Assist the Debtors with the communications to their boards of directors and other senior

managers as necessary.

d. Maintain & update the DIP cash flow as needed.

e. Provide necessary DIP cash flow variance reporting as required.

f. Provide project management activities regarding the Company’s sale process, Company’s SOFA preparation, and other similar Bankruptcy related activities.

g. Assist with the communication activities with the various constituencies during the case.

h. Provide court testimony as needed.

2 The summary of the terms of the Engagement Agreement set forth herein is for convenience only. Except as set

forth below, to the extent of any discrepancies between such summary and the terms of the Engagement Agreement, the Engagement Agreement shall govern.


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DISINTERESTEDNESS OF PROFESSIONALS

10. In connection with its proposed retention by the Debtor, CTG has conducted a

“conflict check” in which CTG reviewed the names of the most significant parties in interest in

this Chapter 11 case, a list of which is attached Schedule A to the Diercks Declaration. CTG

focused its conflict check on the Debtors’ vendors, landlords and suppliers. A summary of the

relationships that CTG identified during this process is set forth in the Diercks Declaration.

11. As indicated in the Diercks Declaration: (a) CTG is a “disinterested person”

within the meaning of section 101(14) of the Bankruptcy Code and as required by section 327(a)

of the Bankruptcy Code and referenced by section 328 of the Bankruptcy Code, and holds no

interest materially adverse to the Debtors, their creditors, and shareholders for the matters for

which CTG is to be employed; and (b) CTG has no other connection to the Debtors, their

creditors, equity holders or related parties except as disclosed herein and in the Diercks

Declaration.

12. Also, to the best of the Debtors’ knowledge, none of CTG’s past or current

engagements would or does appear to create an interest materially adverse to the interests of the

Debtors, creditors or stockholders in this Chapter 11 case. For all these reasons, Debtors believe

that CTG is disinterested and holds no materially adverse interest as to the matters upon which

they are to be retained.

PROFESSIONAL COMPENSATION

13. As set forth in the Diercks Declaration, the Debtors and CTG agreed to the

following terms of compensation:

i. Retainer: $281,192.10


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ii. Hourly Fees: Partner $600.00 Managing Director $500.00 Manager $400.00 Consultant $300.00 Analyst $200.00

iii. Cash Expenses: In addition to the fees set forth above, the Debtors

have agreed to pay directly, or reimburse CTG directly, for all reasonable out-of-pocket expenses incurred in connection with CTG’s engagement.

14. The fees described above are consistent with CTG’s normal and customary billing

practices for cases of this size and complexity, which requires the level and scope of services

outlined in the Engagement Agreement.

15. The $281,192.10 retainer paid to CTG (the “Retainer”), is available for

postpetition services. The Debtors do not owe CTG any amount for services performed or

expenses incurred prior to the Petition Date. Accordingly, CTG is not a prepetition creditor of

the Debtors.

16. CTG will apply to the Court for the interim and final allowance and compensation

and reimbursement of expenses as a professional person pursuant to, and subject to the standard

of review of, Section 328(a) of the Bankruptcy Code, the Bankruptcy Rules and applicable Local

Rules and orders, and not subject to any other standard of review under section 330 of the

Bankruptcy Code.

17. The Debtors have also agreed to provide CTG with certain indemnification

provisions. Specifically,

Client agrees to indemnify, hold harmless and defend CTG (including its principals, employees and agents) against all claims, liabilities, losses, damages and reasonable and documented expenses as they are incurred, including reasonable and documented legal fees and disbursements of its counsel and the costs of its professional time (at rates in effect when such future time is required) relating to or arising out of the engagement, including any legal proceeding in which CTG may be required or agree to participate but


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in which it is not a party. CTG, its principals, employees and agents, may, but are not required to, engage, at Client’s expense, a single firm of separate counsel of its choice in connection with any of the matters to which this indemnification agreement relates. This indemnification agreement does not apply to claims, liabilities, losses, damages and expenses that are adjudicated in a court of competent jurisdiction (after the exhaustion of any appeals) to be solely the result of gross negligence on the part of CTG.

18. The Debtors believe that the fee arrangement and other terms and conditions of

the Engagement Letter, including the indemnification provisions, are reasonable terms and

conditions of employment in light of (i) industry practice; (ii) market rates charged for

comparable services in and out of the Chapter 11 context; (iii) CTG’s substantial financial

advisory experience; and (iv) nature and scope of the work performed by CTG prior to the

Petition Date and to be performed by CTG in this Chapter 11 case.

19. As set forth in the Diercks Declaration, no promises have been received by CTG

or by any member or associate thereof as to compensation in connection with this case.

Furthermore, CTG has not shared or agreed to share any of its compensation from the Debtors

with any other persons, other than employees of CTG.

20. The Debtors believe that CTG is qualified to act as financial advisor to the

Debtors, that the terms and conditions of the Engagement Letter are reasonable and, therefore

should be authorized and approved by this Court.

NOTICE

21. Notice of this Motion shall be given to (i) the Office of the United States Trustee;

(ii) counsel to the Committee; (iii) counsel to Wells Fargo Bank, N.A.; (iv) counsel to

Lion/Hendrix Cayman Limited; and (v) all parties requesting notice pursuant to Bankruptcy Rule

2002. Due to the nature of the relief requested herein, the Debtors submit that no other or further

notice need be provided.


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NO PRIOR REQUEST

22. No previous request for the relief sought in this Application has been made to this

court.

CONCLUSION

WHEREFORE, the Debtors respectfully request that the Court enter an order,

substantially in the form annexed hereto as Exhibit A, (a) authorizing the Debtors to employ and

retain CTG, effective as of the Petition Date, as the Debtors’ financial advisor, and (b) granting

such further relief as may be just and proper.

Dated: May 22, 2020 Wilmington, Delaware

MORRIS, NICHOLS, ARSHT & TUNNELL LLP /s/ Derek C. Abbott Derek C. Abbott (No. 3376) Matthew O. Talmo (No. 6333) Andrew R. Workman (No. 6710) 1201 N. Market Street, 16th Floor P.O. Box 1347 Wilmington, Delaware 19899-1347 Telephone: (302) 658-9200 Facsimile: (302) 658-3989 [email protected] [email protected] [email protected] Proposed Counsel to the Debtors and Debtors in Possession



In re:

Chapter 11



Hearing Date: June 12, 2020, at 10:30 a.m. (ET) Objection Deadline: June 5, 2020, at 4:00 p.m. (ET)

NOTICE OF THE APPLICATION OF THE DEBTORS FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT

OF CLEAR THINKING GROUP LLC AS FINANCIAL ADVISOR NUNC PRO TUNC TO THE PETITION DATE

PLEASE TAKE NOTICE that today, the above-captioned debtors and debtors in

possession (the “Debtors”) filed the Application of the Debtors for Entry of an Order Authorizing the Retention and Employment of Clear Thinking Group LLC as Financial Advisor Nunc Pro Tunc to the Petition Date (the “Application”).

PLEASE TAKE FURTHER NOTICE that objections, if any, to the Application must be (a) in writing and served on or before June 5, 2020, at 4:00 p.m. (ET) (the “Objection Deadline”); (b) filed with the Clerk of the Bankruptcy Court, 824 N. Market Street, 3rd Floor, Wilmington, Delaware 19801; and (c) served so as to be received on or before the Objection Deadline by the undersigned counsel.

PLEASE TAKE FURTHER NOTICE THAT only objections made in writing and timely filed and received, in accordance with the procedures above, will be considered by the Bankruptcy Court at such hearing.

PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE

APPLICATION WILL BE HELD ON JUNE 12, 2020, AT 10:30 A.M. (ET) BEFORE THE HONORABLE MARY F. WALRATH, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 MARKET STREET, 5TH FLOOR, COURTROOM #4, WILMINGTON, DELAWARE 19801.

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED IN THE APPLICATION WITHOUT FURTHER NOTICE OR HEARING.



Case 20-11043-MFW Doc 128-1 Filed 05/22/20 Page 1 of 2

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Dated: May 22, 2020 Wilmington, Delaware

MORRIS, NICHOLS, ARSHT & TUNNELL LLP /s/ Derek C. Abbott Derek C. Abbott (No. 3376) Matthew O. Talmo (No. 6333) Andrew R. Workman (No. 6710) 1201 N. Market Street, 16th Floor P.O. Box 1347 Wilmington, Delaware 19899-1347 Telephone: (302) 658-9200 Facsimile: (302) 658-3989 [email protected] [email protected] [email protected] Proposed Counsel to the Debtors and Debtors in Possession


EXHIBIT A

Proposed Order



In re:

Chapter 11



ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF CLEAR THINKING GROUP LLC AS FINANCIAL ADVISOR

NUNC PRO TUNC TO THE PETITION DATE

Upon the application (the “Application”) of the above-captioned debtors and debtors in

possession (the “Debtors”), for entry of an order, pursuant to Bankruptcy Code sections 327(a),

and 328(a), Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, authorizing

the employment and retention of CTG, effective as of the Petition Date, as the Debtors’ financial

advisor; and the Court having reviewed the Application and the Diercks Declaration; and the

Court being satisfied with the representations made in the Application and the Diercks

Declaration that CTG does not hold or represent any interest adverse to the Debtors or their

estates, that it is a “disinterested person” as that term is defined in Bankruptcy Code section

101(14); and that its employment is necessary and in the best interests of the Debtors’ estates,

creditors, and other parties in interest; and due and sufficient notice of the Application having

been given under the particular circumstances; and it appearing that no other or further notice

need be provided; and upon the record herein; and after due deliberation thereon; and good and

sufficient cause appearing therefor, it is hereby




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ORDERED, ADJUDGED, AND DECREED THAT:

1. The Application is GRANTED to the extent set forth herein.

2. Pursuant to sections 327(a) and 328(a) of the Bankruptcy Code, the Debtors are

authorized to employ and retain CTG as their financial advisor, effective as of the Petition Date,

upon the terms and for the purposes set forth in the Application and the Engagement Agreement

and to perform the professional services set forth in the Application and the Engagement

Agreement.

3. The Debtors are hereby authorized to compensate CTG in accordance with the

terms of the Engagement Letter.

4. CTG will apply to the Court for interim and final allowance and compensation and

reimbursement of expenses as a professional pursuant to, and subject to the standard of review of,

Section 328(a) of the Bankruptcy Code, the Bankruptcy Rules and applicable Local Rules and

orders, and subject to any other standard of review under section 330 of the Bankruptcy Code.

5. CTG shall be required to maintain time records with a description of the services

provided on behalf of the Debtors, the approximate time expended in providing those services and

the individuals who provided professional services on behalf of the Debtors.

6. The Debtors are authorized to indemnify CTG in accordance with the terms of the

Engagement Letter, except as set forth below:

a. CTG shall not be entitled to indemnification, contribution or reimbursement pursuant to the Engagement Agreement for services provided under the Engagement Agreement, unless such services and the indemnification, contribution, or reimbursement therefor are approved by the Court;

b. Notwithstanding anything to the contrary in the Engagement Agreement, the Debtors shall have no obligation to indemnify CTG, or provide contribution or reimbursement to CTG, for any claim or expense that is either: (i) judicially determined (the determination having become final) to have arisen from CTG’s gross negligence, willful misconduct, or fraud; (ii) for a contractual dispute in which the Debtors allege the breach of CTG’s contractual obligations if the Court


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determines that indemnification, contribution, or reimbursement would not be permissible pursuant to In re United Artists Theatre Co., 315 F.3d 217 (3d Cir. 2003), or (iii) settled prior to a judicial determination under (i) or (ii), but determined by this Court, after notice and a hearing, to be a claim or expense for which CTG should not receive indemnity, contribution, or reimbursement under the terms of the Engagement Agreement as modified; and

c. If, before the earlier of (i) the entry of an order confirming a chapter 11 plan in these chapter 11 cases (that order having become a final order no longer subject to appeal), or (ii) the entry of an order closing these chapter 11 cases, CTG believes that it is entitled to the payment of any amounts by the Debtors on account of the Debtors’ indemnification, contribution and/or reimbursement obligations under the Engagement Agreement (as modified by this Order), including without limitation the advancement of defense costs, CTG must file an application therefor in this Court, and the Debtors may not pay any such amounts to CTG before the entry of an order by this Court approving the payment. This paragraph is intended only to specify the period of time under which the Court shall have jurisdiction over any request for fees and expenses by CTG for indemnification, contribution, or reimbursement, and not a provision limiting the duration of the Debtors’ obligation to indemnify CTG. All parties in interest shall retain the right to object to any demand by CTG for indemnification, contribution, or reimbursement.

7. Notwithstanding any Bankruptcy Rule to the contrary, this Order shall be

immediately effective and enforceable upon its entry.

8. The Court shall retain jurisdiction to hear and determine all matters arising from or

related to the implementation or interpretation of this Order.

Dated: ____________, 2020 Wilmington, Delaware

________________________________________ THE HONORABLE MARY F. WALRATH UNITED STATES BANKRUPTCY JUDGE


EXHIBIT B

Diercks Declaration



In re:

Chapter 11



DECLARATION OF LEE A. DIERCKS IN SUPPORT OF THE APPLICATION OF DEBTORS FOR AN ORDER AUTHORIZING THE

RETENTION AND EMPLOYMENT OF CLEAR THINKING GROUP LLC AS FINANCIAL ADVISOR, NUNC PRO TUNC TO THE PETITION DATE

I, Lee A. Diercks, hereby declare under penalty of perjury as follows: 1. I am a Partner of Clear Thinking Group LLC (“CTG”), a consulting firm that

specializes in corporate restructuring, operations and business improvements, litigation analytics,

liquidation and asset sales, and case management services, and maintains offices at 401 Towne

Centre Drive, Hillsborough, New Jersey 08844. I have read the application for entry of an order

pursuant to sections 105(a) and 363(b) of title 11 of the United States Code (the “Bankruptcy

Code”) authorizing the Debtors, pursuant to the terms and conditions of that certain engagement

agreement between John Varvatos Enterprises, Inc. and CTG, dated July 15, 2019 and amended

on March 9, 2020 (the “Engagement Agreement”),2 to retain CTG to provide the Debtors with

financial advisory services nunc pro tunc to May 6, 2020 (the “Petition Date”); and submit this

declaration in support thereof.



2 All capitalized terms not otherwise defined herein shall have the meanings given to them in the Engagement

Agreement.


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CTG’s Qualifications

2. CTG is recognized for its expertise in providing financial advisory services in

financially distressed situations, including advising debtors, creditors, and other constituents in

chapter 11 proceedings in numerous cases.

3. CTG has considerable expertise with chapter 11 restructuring, asset liquidation,

sale of distressed assets, and other distressed company circumstances, advising both debtors and

creditors. Examples of debtor retail advisory assignments in which CTG and I have been actively

involved include, among others: ASE, Inc., Bacharach, Inc., Bag’n’Baggage, Inc., Barbecues

Galore, Inc., Boot Town Western Warehouse, Inc., Charming Charlie, Inc., Copeland Sports,

Inc., Crabtree & Evelyn, Inc., Delia’s, Inc., Gordmann’s Inc., Hancock Fabrics, Inc., Joyce

Leslie, Inc., Lillian Vernon, Inc., Loehmann’s Holdings, Inc., Market Antiques & Home

Furnishing, Inc., Marsh Supermarkets, Inc., Namco, LLC, One Price Clothing, Inc., Prints Plus,

Inc., Rag Shops, Inc., Sofa Express, Inc., Swoozies, Inc., The Parent Company, Inc. Total

Hockey, Inc., and The Walking Company, Inc..

4. CTG has provided financial advisory services to the Debtors since July 15, 2019.

CTG has assisted the Debtors with strategic advice, financial forecasting, financial modeling,

general business advisory, and pre-bankruptcy services. CTG has become familiar with the

Debtors’ operations and is well qualified to advise the Debtors in connection with such financial

matters in a cost-effective and efficient manner.

5. As more further set forth in the Engagement Agreement, CTG’s engagement to

represent the Debtors includes, among other things, strategic advice, assistance with the

development of a bankruptcy case cash flow, participation in negotiations among the Debtors

and their creditors, suppliers, and other parties in interest, assistance to the Debtors in reviewing


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the terms, conditions and impact of any proposed full or partial sale of the Debtors’ assets,

advice and assistance to the Debtors’ retail operations and participation in presentations to the

Debtors’ boards of directors (collectively, the “Board”), negotiations with the Debtors’ pre-

petition and post-petition creditors.

Disinterestedness of Professionals

6. Based on the results of the conflict search conducted to date by CTG’s

compliance department, as described more fully below, and based on my understanding of the

Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and

the practice being followed in other chapter 11 cases, to the best of my knowledge, neither I,

CTG, nor any member or employee thereof, insofar as I have been able to ascertain, has any

connection with the Debtors, their creditors, or other parties in interest (as reasonably known to

us), their attorneys, the United States Trustee for the District of Delaware (the “U.S. Trustee”), or

any person employed in the Office of the U.S. Trustee, except as disclosed or otherwise

described herein.

7. To the best of my knowledge, CTG is a “disinterested person” as that term is

defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the

Bankruptcy Code.

8. As part of its diverse practice, CTG appears in numerous cases, proceedings, and

transactions involving many different attorneys, accountants, investment bankers, and financial

consultants, some of which may represent claimants and parties-in-interest in these chapter 11

cases. Further, CTG or companies in which it has investments has in the past, and may in the

future, be represented by several attorneys and law firms in the legal community, some of whom

may be involved in these proceedings. In addition, CTG has in the past and will likely in the


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future be working with or against other professionals involved in these cases in matters unrelated

to the Debtors or these chapter 11 cases. Based on our current knowledge of the professionals

involved, and to the best of my knowledge, none of these business relations constitute interests

materially adverse to the Debtors in matters upon which CTG is to be employed.

9. CTG has represented, and will in the future represent, many different clients with

various business interests in numerous industries. These clients are often referred to CTG by

intermediaries such as lawyers, investment bankers, lenders, and accountants.

10. CTG has undertaken a thorough review of its computerized database that contains

the names of the clients and other parties of interest with respect to certain matters. The identities

of the potential parties in interest, attached hereto as Schedule A, were provided to CTG by the

Debtors and include the following entities: (i) the Debtors and their affiliates; (ii) the Debtors’

directors, officers, and majority shareholders; (iii) the Debtors’ secured creditors; (iv) the

Debtors’ 30 largest unsecured creditors on a consolidated basis; (v) the Debtors’ prepetition

lenders; (vi) any professionals to be retained by the Debtors in these chapter 11 cases; (vii) other

significant parties in interest; and (viii) the U.S. Trustee. CTG’s investigation has not revealed

any actual or potential conflict of interest with respect to CTG’s proposed representation of the

Debtors. However, out of an abundance of caution, CTG makes the following disclosures:

a) CTG has been retained in the past & presently, by Riemer & Braunstein, the law firm representing one of the secured creditors, Wells Fargo Bank, in this case. None of the past or current matters are related to this case.

b) CTG, has worked directly for Wells Fargo Commercial Finance, on past matters,

unrelated to this case. c) CTG has worked with, MMG Advisors, the proposed Investment Banker in this

case, on other past engagements, of which are unrelated to this case.


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d) CTG has worked with Omni Agent Solutions, the proposed noticing, and claims agent in this case, on other cases currently or in the past, that are unrelated to these chapter 11 cases.

e) CTG has worked with Young Conaway Stargatt & Taylor, LLP, the local counsel for Lion

Capital, on other cases in the past, that are unrelated to these Chapter 11 cases.

f) CTG has worked with CAC Specialty, the Debtor’s Director and Officer insurance broker, on past cases that are unrelated to these Chapter 11 cases.

g) CTG has worked with Marsh, the Debtor’s Business insurance broker, on past cases that are

unrelated to these Chapter 11 cases.

11. CTG agrees to update the disclosure information from time to time, if and

when additional parties with an interest in or a relationship with the Debtors are identified by

the Debtors, in writing, to CTG.

12. CTG is confident that: (a) it does not represent, and will not represent any parties-

in-interest in connection with the Debtors’ chapter 11 cases; and (b) any relationship it may have

with any party-in-interest will not interfere with or impair CTG’s representation of the Debtors in

these chapter 11 cases. If this Court approves the proposed employment of CTG by the Debtors,

CTG will not accept any engagement or perform any services for any entity or person other than

the Debtors in connection with these chapter 11 cases. Moreover, as set forth in the Application

and the Engagement Agreement, I and CTG serve subject to the oversight, guidance, control, and

direction of the Board and at the Board’s pleasure.

Professional Services to be Rendered and Compensation.

13. The relationship between the Debtors and CTG is governed by the Engagement

Agreement. Pursuant to the terms of the Engagement Agreement, CTG’s activities include, but


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are not limited to, reviewing, analyzing, and making recommendations to the Debtors in the

following areas:3

a. Assisted the Debtors with their chapter 11 bankruptcy filings, including with respect to: 1. the development of a DIP Cash Flow/Budget; 2. the development of a liquidation analysis; 3. the preparation of the “first day” motions; 4. prepetition cash saving / liquidity management activities; and 5. other necessary preparation activities as needed.

b. Assist the Debtors with communication with their lenders.

c. Assist the Debtors with the communications to their boards of directors and other senior

managers as necessary.

d. Maintain & update the DIP cash flow as needed.

e. Provide necessary DIP cash flow variance reporting as required.

f. Provide project management activities regarding the Company’s sale process, Company’s SOFA preparation, and other similar Bankruptcy related activities.

g. Assist with the communication activities with the various constituencies during the case.

h. Provide court testimony as needed.

14. The financial advisory services that CTG will provide to the Debtors are

necessary to enable the Debtors to maximize the value of their estates in connection with their

financial restructuring and/or partial or full liquidation and sale of assets.

15. Per the Engagement Agreement, compensation for the services will be based upon

the time devoted on the Debtors’ behalf and the experience of those providing the services. CTG

will bill hourly rates as follows:

3 The summary of the terms of the Engagement Agreement set forth herein is for convenience only. Except as set

forth below, to the extent of any discrepancies between such summary and the terms of the Engagement Agreement, the Engagement Agreement shall govern.


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Partner - $600.00 Managing Director - $500.00 Manager - $400.00 Consultant - $300.00 Analyst - $200.00

16. In addition to the above fees, the Debtors shall reimburse CTG, pursuant to the

Engagement Agreement, for all of its reasonable out of pocket expenses incurred in connection

with this engagement, such as travel, lodging, postage, telephone courier services, copying,

conference calls and facsimile charges, all legal expenses associated with CTG’s retention and

approval by the Court, and all other legal requirements and actions regarding the Debtors’

chapter 11 cases in accordance with the indemnification provision set forth in the Engagement

Agreement. All such billings will be in accordance with standard Bankruptcy Court practices

and local rules.

17. The fees described above are consistent with CTG’s normal and customary billing

practices for cases of this size and complexity, which require the level and scope of services

outlined in the Engagement Agreement.

18. When CTG was retained on July 15, 2019, the Debtors provided a retainer of

$25,000.00. Prior to the Petition Date, the Debtors provided CTG with an additional retainer of

$320,000.00. CTG drew down on its retainer in the total amount of $63,807.90, and now holds

approximately $281,192.10 as a retainer for postpetition services (the “Retainer”). The Retainer

will be held by CTG and will be applied to fees and expenses authorized pursuant to CTG’s fee

applications.


8

19. I am generally familiar with the Bankruptcy Code and the Bankruptcy Rules, and

CTG will comply with them, subject to orders of this Court.

I hereby declare under penalty of perjury that the foregoing is true and correct.

Executed on May 22, 2020. By: /s/ Lee Diercks

Lee Diercks Partner Clear Thinking Group LLC


SCHEDULE A

Potential Parties in Interest

Debtors John Varvatos Enterprises, Inc. Lion/Hendrix Corporation John Varvatos Apparel Corp. Lenders Wells Fargo Bank, N.A. Lion/Hendrix Cayman Limited Debtors’ Counsel Morris, Nichols, Arsht & Tunnell LLP Debtors’ Professionals Clear Thinking Group LLC MMG Advisors, Inc. Lender’s Counsel Burr & Forman LLP Reimer & Braunstein LLP Sullivan & Cromwell LLP Young Conaway Stargatt & Taylor, LLP Insurance Companies, Brokers, Financers AXIS Insurance Company Beazley Insurance Company, Inc. CAC Specialty Chubb Insurance Company of Canada Continental Insurance Company Federal Insurance Company Federal Insurance Company Great Midwest Insurance Company Great Northern Insurance Company Great Northern Insurance Company Marsh USA Inc. Pacific Indemnity Insurance Company RSUI Indemnity Company

RSUI Indemnity Company Zurich American Insurance Company Litigation Parties Acacia Feldman Alicia Frazier Allexis La Porte Alyssa Hickey Andrea Palacios Angel Lane Angela Shin Angela Townsend Arissia Tossetti Ashleylynn Clare Carly Call Carolina De Castro Rocha Cheryl Somekh-Crouchen Chloe Lahey Christina Torres Claire Anderson Crystal Guinto Diana Guzman Ekaterina Voloschenko Fanta Souare Francesca Schelfhout Genevieve Dubuque Giselle Bellomo Golaleh Hassanzadeh Gozde Susel Hillary Crandle Ingrid Lazo Jamie Rudnick Janna Doyle Jazlyn Ramos-Garcia Jena Tobak Jessica Afonso Jessica Sgandurra Jin Hur Jordan VanWinkle Joy Fusaro Julia Mastroeni


2

Kaitlin Brinkman Karen Hor Kariann Spielberg Karla Gomez Kayleigh Landi Kelsey McCarthy Kristy Ann Velez Larisa Soto-Briones Laura Bethencourt Laurentina Chaparro Leticia Kentish Malena Machado Margaret Holcomb Marianna Ranz Mariecris Arcaparlas Mayra Lavallee Michelle Lancina Michelle Marks Michelle Ortiz Mimoza Previzi-Omar Morgan Flynn Nicole Purdy Pamela Kassen Pamela Zuniga Paulyna Garcia Ruby Romero Tessa Knox Tripti Pandey Veronica Porter Victoria Albanese Viviane Arjona Wijdan Shoubaki Yasmin Yacoub Yiwa Wang Zayana Dakinova Regulatory Agencies Securities and Exchange Commission Internal Revenue Service United States Department of Justice Delaware Secretary of State Delaware Secretary of the Treasury Taxing and Licensing Authorities Bal Harbour Village

Bayside City Marshal Boston Office of the City Clerk Broward County Tax Collector California Department of Tax and Fee Administration California State Board of Equalization California Travel and Tourism Commission California Workers’ Compensation Institute Canada Border Service Agency Canada Revenue Agency City & County of San Francisco Tax Collector City of Beverly Hills Finance Administration/Utility Billing City of Boston City of Costa Mesa City of Detroit Treasurer City of Las Vegas Department of Planning, Business License Division City of Livermore City of Malibu City of San Diego Development Services City of San Diego Office of the City Treasurer City of Sunrise Business Tax Office City of West Hollywood Clark County Assessor Clark County Business License Comptroller of Maryland County of Orange Treasurer-Tax Collector Dallas County Tax Office East Hampton Tax Receiver Fairfax County Department of Tax Administration Florida Department of Revenue Georgia Department of Revenue Government of Ontario, Ministry of Finance Harris County Tax Office Internal Revenue Service Los Angeles County Fire Department Los Angeles County Sheriff’s Department Los Angeles County Treasurer Los Angeles County Treasurer and Tax Collector Los Angeles Treasurer-Tax Collector Maryland State Department of Assessments & Taxation Massachusetts Department of Revenue Miami-Dade County Tax Collector


3

Michigan Department of Treasury Nevada Department of Taxation Nevada Secretary of State New Jersey Division of Revenue New Jersey Division of Taxation New York City Department of Consumer Affairs New York City Department of Finance New York City Fire Department New York Commissioner of Taxation and Finance New York State Department of Labor Ohio Department of Taxation Ontario Workplace Safety & Insurance Board Riverside County Treasurer Sacramento Franchise Tax Board San Diego County Treasurer Tax Collector State of Delaware Division of Corporations Texas Comptroller of Public Accounts The Receiver General for Canada Town of Woodbury, Town Clerk’s Office U.S. Customs and Border Patrol U.S. Fish & Wildlife Services Village of East Hampton Village of Woodbury Virginia Department of Taxation Woburn Receivable Management Corporation Utilities APX Net, Inc. AT&T Bell Canada Beverly Hills Water Department Central Hudson Gas & Electric Corporation Centurylink Comcast Con Edison Duke Energy Corp. Enbridge Gas Distribution Eversource Florida Power & Light Frontier Communications Corporation Granite Telecommunications Megapath Cloud Company LLC Mesa Water District Mettel

Miami Dade County Water and Sewer Dept. Nevada Energy Orange & Rockland PG&E PSEG Long Island Ring Central, Inc. Rocket Fiber LLC SDG&E dba San Diego Gas & Electric Southern California Edison Southwest Gas Corporation Spectrum Business Startex Power Toronto Hydro-Electric Systems Ltd. Verizon, Inc. Bankruptcy Judges Hon. Brendan L. Shannon Hon. Christopher S. Sontchi Hon. Kevin Gross Hon. Kevin J. Carey Hon. Laurie Selber Silverstein Hon. Mary F. Walrath Hon. John T. Dorsey Hon. Karen B. Owens Bankruptcy Court Staff Laura Haney Sherry Scaruzzí Donna Grottini Nancy Hunt Jill Walker Rachel Bello Cheryl Szymanski Danielle Gadson Catherine Farrell Laurie Capp Lora Johnson Cacia Batts Janet Moore Rachel Werkheiser Una O’Boyle U.S. Trustee & Staff


4

T. Patrick Tinker David Buchbinder Linda Casey Timothy J. Fox, Jr. Benjamin Hackman Brya Keilson Mark Kenney Jane Leamy Hannah M. McCollum Linda Richenderfer Juliet Sarkessian Richard Schepacarter Rose Sierra Jaclyn Weissgerber Other Interested Parties 1020 Lincoln Road, LLC 1145 Forum Shops, LLC 1500 Webward Avenue, LLC 54 Newton Lane, LLC AB Industries Abel A. Aguilera Able Billion Sourcing And Design Limited Acorn Conceptual Textiles Acronis Inc. Activaire LLC ADA Inspection Services ADP LLC Adtheorent Inc. Aetna Aetna Behavioral Health, LLC A-Girls Co. Ltd. Air Park International Aireactor Systems & Service Inc. dba Airite Airstream Air Conditioning Corp. AJ Squared Security Ala Campolmi Alliance Glass, Inc. Allstar Security & Consulting Inc. American Apparel & Footwear Association American Express American Red Cross Amfar Andre 1 Custom Shoes Inc. Andres Sette Arruza

Angela De Bona Agency Annas Alterations LLC Ansarada Pty Limited Any Perk, Inc. Ao Sgs Vostok Limited Arpel Deri Artsy Flora Inc. Artwell Holdings Limited Athens Services Atlantic Constructors Inc. Atlantic Mills (Thailand) Aurus AXA Equitable Life Insurance Company Axper Azienda Foderami Dragoni Spa B Live, LLC BBC Jacquard Srl Benchmarque Etude Syliste Benefit Resource, Inc. Beppetex Srl Berto E.G. Industria Tessile Beth Pakradooni Studio, Inc. Bhartiya International Ltd. Bleckmann Belgie NV BMS Neon Sign Bonotto Spa Borderfree Inc. Borgodue Srl Botto Giuseppe & Figli Spa Botto Giuseppe & Figli Spa (USD) Bottonificio Seltecolli Bravery for All, LLC Break Mgmt. Brenton Diallo Brian Evans Bright Generation Ent. Ltd. Brinks Canada Ltd. BSK Associates BT Bunny Shoes Di Fabio E Riccardo Bargi S.A.S. Burns Factory Cablevision Systems Corporation Calzaturificio Victor Srl Canepa S.P.A. (Euro) Canepa Spa (USD) Capitol Light


5

Carlis C. Conner Jr. Carlo D'Angelo Srl Cattle Baron's Ball CC Productions LLC Century City Mall, LLC Ceridian - Canada Ceridian Client Funds Ceridian Small Business Cervotessile S.P.A. Cervotessile Textile (Suzhou) Co Ltd. Champion Couriers Inc. Charge and Ride Chelsea Music Hall CHH America, Inc. Ching Fung Apparel Access City of Beverly Hills City of Las Vegas Cityside Archives Ltd. Clear Law Institute Closing Time Cocktail, LLC Clutch Holdings LLC Code Consultants, Inc. Codice - Infinity Srl Cofil S.R.L. Color X Inc. Columbia Omnicorp Comero S.P.A. Comero Spa Conceria Eugenia Srl Conceria Masini Spa Concur T&E Co 10 Only Concur Technologies Inc. Conde Nast NY Conde Nast Publications Contract Datascan, LP Copious Management Inc. Copley Place Associates LLC Cotonificio Albini S P A Cottex LLP Cox Communications, Inc. Crialme crowdMGMT, LLC Cuatrecasas Cybersource Corporation Da Lian Tai Yang Ying Garments Co., Ltd. Dalian Dongda Garment Co., Ltd.

D'Angelico Guitars of America LLC Dash Hudson David Siegel Dayang Alliance LLC De Rigo Rem Dean Billings dba Pest Elimination Sys Tech Inc. Deloitte Denim Kumascilik Tic Ve San Ltd. Sti Desert Hills Premium Outlet Partners, L.P Design Packaging Design Partners LLC DGA Security Systems DHL Express USA Di & Son Service Ltd. Di. Ve S.P.A. Dial-A-Bug Pest Control Diana Wilburn Digital Evolution Group LLC Dinamo Contemporary Fabrics Directed Online Discovery Benefits Inc. Distinctive Display Inc. Dixon Wilson DL Leather Documentary Designs Inc. Dominant Garments Fty. Ltd. Draper Co., Ltd. Dress Italy S.R.L. Drive In 24 LLC dba Root NYC Duksung Inco Co., Ltd. Edicate Button & Garment Accessories Mfy Ltd. EFM Mgmt Inc. Elizabeth Arden (Canada) Ltd. Elizabeth Arden UK Elizabeth Arden, Inc. Emmetex Emporium Mall LLC Epstein Becker & Green, P.C. Erdos Group HK Ernest A. Liberati Erre Emme Soule Silga Gomma Errepi Essential Publications U.S. LLC Euler Hermes Services North America LLC Euro Tessile S.P.A European Tailoring


6

Evolv Clothing Company Ltd. Fabrica Tessuti Facebook, Inc. Factotum Shoes & Leather Fair Factories Clearinghouse, Inc. Faliero Sarti L'Accessori Fashion GPS, Inc. Fashion Valley Mall, LLC Fashioners NY Inc. Federal Express Europe Inc. Fedex Fibel Fidelity Investments Findmine Inc. Fit Models LLC Fiveol Textil Spa Fluid, Inc. FMP Payroll Services Ford Models Inc. Forrest Solutions Fortex Fortiustex, Comercio De Texteis S.A. FPL - Acct No 28512-77190 Frameless Asia Pacific Limited Franco Vago (UK) Ltd. Franco Vago Air & Sea Ser - HK (USD) Franco Vago Inc. - NY (USD) Franco Vago International Logistics (Shanghai) Ltd. Franco Vago Spa Franco Vago, LDA Fratelli Guarino Di Donato SNC Free Style S.R.L Friends of the Bass Museum Inc. Funkshion LLC Gabriel Byer Garda Cl East-Lockbox #233209 Gary Petersen Photography Inc. General Information Services, Inc. Genesis Publications Ltd. Gilbert Displays Inc. Gilwood China Co., Ltd. Gilwood International Co., Ltd. Gleiss Lutz Global Design ID Inc. Google Inc. Great West Life

Greentree Landscaping, Inc. Group Nine Media Inc. Groupby USA Inc. GS1 US Inc. Guabello Guard Services USA Inc. Gunduz Kurk-US Gurhan New York, Inc. GXS Hama UK Ltd. Hatteras Hebei Hongye Cashmere Co., Ltd. Hedleys Humpers Ltd. Her Min Textile Co, Ltd. Hero Tower Lim Hewlett-Packard Financial Services Company HG Galleria I, II, III, LP Hieu Truang High Country Millwork, Inc. HLC Linen Group USA, Inc. Hong Kong Mandarin (Jimay) International Ltd. Hope Star Overseas Limited Hotwire Unlimited LLC Hughes Hubbard & Reed LLP Hypebeast Hong Kong Limited Ideal Fastener Asia Ltd. Ideal Fastener Europe SAGL Ideal Fasteners India Ltd. IMG Models LLC Imperial Commercial Cleaning, Inc. Infinity Global Inc. Ingram Book Co. Inpelsa Inseta Srl Intelli-Tec Interdoma S.L. Interim Management Answers Intertek Italia S.P.A (Euro) Intertek Test Hizmetleri A.S. Intertek Testing Services Peru SA Intertek Testing Services Shenzhen Ltd. Intertrade Systems Inc. Italtessil SRL ITS Worldwide, LLC J W A Shopfitting Solution Ltd. Jack Studios, Inc.


7

Jagged Peak Inc. Jasper Peto France Sarl (USD) JBCStyle NY LLS Jessica Cecere Jodan Corporation Jolene Paolozzi Jones Mgmt Jowoo Limited JV Italian Services Srl Kailas Photography Katten Keter Environmental Services Inc. Kirstin Gellatly Klein Moynihan Turco LLP Kleinschmidt Inc. Kliger-Weiss Infosystems, Inc. KM Associates of NY, Inc. Knight Bilham Photography Knopf Und Knopf International Konica Minolta Konica Minolta Business Solutions USA Inc. Konica Minolta Premier Koojoo Textile Co Ltd. L Industries Ltd. La Doma Lab Srl Lanificio Caverni Srl Lanificio Del Casentino S Lanificio F.lli Bacci Lanificio F.lli Cerruti spa Lanificio Luigi Ricceri spa Lanificio Tg Di Fabio (USD) Lanificio Tg Di Fabio spa (Euro) Lanificio Zignone Lanny K W Inc. Lardini Srl Lars Nord Studio Inc. Lawrence H Meyer Leggiuno Spa Leslie Perkins Lever Apparel Ltd. Lever Shirt Limited Lexer Pty Ltd. LF Centennial PTE Ltd. Lion Capital Listrak Inc.

Littler Mendelson, PC Livermore Premium Outlets LLC Luxos Italia Sri Lyria Srl M & M Sanitation Corp Mabo International S R L Mabo International Srl (US) Mackenzie Taylor Benefits Consultants Ltd. Major Model Management, Inc. Malibu Cross Creek, Ltd. Malibu Foundation Manhattan Mechanical Contractors, Inc. Mantero Seta Spa Manulife Financial Marcello's dba Garzon Investment Partnership Marco Pastorelli Spa Mariano's Tailor Marini & Cecconi Marini Industrie Spa Marmara Deri San. Ve Tic Ltd. Sti Maroon Mountain Inc. Martiape Massive Music Group Mattec Srl Matthew Sabato Max Leather Soc. Coop Arl Maxim Service Group Inc. MBH Architects, Inc. Meba Tekstil San Ve Turizm Yatirimlari A.S. Meenakshi (India) Ltd. Mel & Rose Wine & Spirits Melrose High Street Holdings LLC Melrose Robertson Holdings LLC Mesura Tekstil San Ve Tic Ltd. Sti Metalbottoni Metalux Imaging Microsoft Corporation Milk Studios, LLC. Millennium Steel & Rack Rentals, Inc. Modas Eva USA Inc. Modelleria Cenzi Di Lapponi Moreno Modern Testing Services LLC Morrison Cohen LLP Movember Foundation MTC Casting Inc. Munro Tailoring


8

Nahanco Nalya S.P.A Nalya Spa National Book Network National Waste Services LLC New WTC Retail, LLC Nexgen Packaging Ltd. Nexgen Packaging, LLC Nice Tones Ltd. Niceriver Development Limited Northpark Partners, LP Nova Accessories Ltd. Novexco Inc. NST Apparel (Europe) Lda. NYC Department of Finance NYC Fire Department Oakhurst Partners LLC Omnitrans Inc. Orient Forest Ltd. Orlando Vineland Po LP Paul Fazio Pepperjam LLC Permit Place Inc. Picasso Pellami S.R.L. Pinori Filati Spa Pipp Mobile Storage Systems Inc. Pitney Bowes Global Financial Services LLC Pivotal Integrated HR Solutions Pontoglio S.P.A. Pool Trend Srl Pooltrend Post LLC Premier Supplies USA Inc. PricewaterhouseCoopers LLP Pride Media Profits Fund Fashion Manufacturing Ltd. Proforma Management Systems Purple USA Inc. Quadbridge Inc. Quench USA, Inc. R. K. Industries IV Radius8, Inc. Rakuten Card Linked Offer Network Randa Accessories Leather Goods LLC Raymond UCO Denim Private Limited Rebel Rebel Realty, Inc.

Recology Golden Gate Red Eye Productions, Inc. Redaelli Niedieck Girmes Reltex Sas Rene Fragoso Representation Services NV/Sa Retail Solutions Rhino Entertainment Company Richa Global Exports Pvt Ltd. Riopele Texteis (US) Riskified Inc. RLM Apparel Software Robert Burns Wines Rock Paper Photo, LLC Rocky Trucking Corp. Ryan Scherb Sacchettificio Toscano Salesforce.Com, Inc. Salt Studios LLC Sandy Dias dba SJD USA Inc. Sanko Tekstil Sarl Vp Victor Perez Savino Del Bene - FDS Inc. Savino Del Bene USA Inc. Savino Del Bene USA Inc. Sawgrass Mills Phase IV, LLC Scarsdale Security Inc. Secom Plc Seliger Studio Inc. Sen Deri Ve Servizi E Seta Srl SF-Water SGS Hong Kong Ltd. SGS Korea SGS North America Inc. Shabby Castle Shearling Service Srl Shellac NYC LLC Sher Packaging Limited Hong Kong Sher Plastics, LLC Shideh Kafei Shiraz NYC Inc. Dba Shiraz Events Shoe Lab Shred-It USA Inc. Shree Bharat International Pvt. Ltd. Silhouette Studio Digital LLC


9

Simon/Chelsea Las Vegas Development, LLC Sistema Tessile Srl - Euro Sky I T Group SMI Tessuti Spa Solomon Page Group LLC SoundStage Direct South Coast Plaza South Ocean Knitters Limited Southern California Mess. Southwest Sign Co. Stephen Gutierrez Storage Deluxe Management Company LLC Studio Massimo Natali Srl Uninominale Swalec Takihyo Co Ltd. Talior It! Telecheck Services, Inc. Terminix Processing Center The Agency Arizona The Blue Factory Limited The Business of Fashion Inc. The Design Library The Developers S.A. The Empowerment Plan The Music Bed LLC The Ritz Carlton Hotel Company LLC The Society Model Management Inc. Throat Threads Apparel Inc. Tiger Button Co Inc. Time Payment Corp dba Alpine Water Sys Time Warner Cable (Melrose) Time Warner Cable Business Class Tom Cody Design Inc. Towncross Ltd. Transperfect Translations International, Inc. Tuv Rheinland of North America, Inc. Tyson Galleria LLC Uline Uline Canada Corp Unicorn Trimmings Limited Uniform Apparel Limited United Parcel Service Italia S.R.L Unitika Tsusho Ltd. Unot Constructora Sa De Cv UPS US Coffee Inc.

Usak Cevahir Deri Valerie Wilson Travel, Inc. Vanzetta E Associati Verde Garment Manufacturing Limited Veriship VF Mall, LLC Village Party Store Vinyl Baby LLC VIP Connection Inc. Vision Service Plan Vivolo Srl Vizyon Deri San.Ve Tic. A.S W.B. Mason Co Inc. Walter Schupfer Management Waste Connections Wellen Int'l Textile Ltd. Wen-Parker Logistics, Inc. Western Studio Service Inc. Whitehaus Media Group LLC Wilhelmina International Ltd. William Henry Knives Inc. Winget Cyc Industrial Ltd. Winner Step Corporation Limited Winter Management Corp. WIS Corporation Woodbury Common Premium Outlets Worksmith Inc. World Textile Sourcing Worldnet International Wpromote LLC Xacus S.R.L (Euros) Xacus S.R.L. XO Communications LLC Xpo Last Mile Inc. dba Xpo Logistics Yagi Tsusho (America), Inc. Yale Breslin Yorkdale Shopping Centre RE Holdings Inc. Youngbo Worldwide Co. Ltd. Yunah Apparel Co., Ltd. Zhuo Diao


EXHIBIT C

Engagement Agreement


I CLEARTHINKING

GROUp@

4U1 I owne cernre unveHillsborough, NJ 08844

908.431.2121

www.clearthinkinggroup.com

July 15,2019

Mr. Guy SommerholderChh~fFinafi~hll om~~fJohn VllfVAto§ Bnt~fpri§@§; tne.~6 W. 17th Strtl,tl,tNew York; NY lOOllRe: Consulting Services Agreement

Dear Guy:

This letter outlines the understanding between Clear Thinking Group LLC ("CTG"), a Delaware limitedliability company, and John Varvatos Enterprises, Inc. ("Client") of the objective, tasks, work product andfees for the engagement of CTG to perform the services outlined in the attached Statement of Work(Appendix A). This is an engagement for services only and (without limiting Client's rights with respect toany deficiency in provision of such services) decisions relating to the implementation of the advice andrecommendations of CTG during the course of its engagement shall be made by and are the soleresponsibility of the Client.

1. STAFFING. Stu Kessler, Partner and or, Lee Diercks, Partner, will be responsible for theoverall engagement management. They may be assisted by a staff of consultants at variouslevels, all of whom have a wide range of skills and abilities related to this type of assignment.In addition, CTG has relationships with and periodically retains independent contractors withspecialized skills and abilities to assist us.

2. STATEMENT OF WORK. CTG will provide consulting services to Client as described inAppendix A, which is incorporated herein.

3. TIMING, FEES AND EXPENSES. CTG will commence this engagement on July 16,2019,following the receipt of a signed engagement letter and payment of the retainer.

Hourly Fees. This engagement will be staffed with professionals at various levels,as the tasks require.

Hourly fees charged for the purposes of billings will be:*

PresidentIPartnerManaging DirectorManagerConsultantAnalyst

$600.00$500.00$400.00$300.00$200.00

CTG will cap its fees at $25,000 per week thru August 31, 2019 (the "Cap"). CTG also agreesto defer 50% of each week's fees payment for 45 days ("Deferral").


*If CTG is engaged for Phase II, CTG agrees to consider other possible fee arrangements.

Cash Expenses. In addition to the fees set forth above, Client shall pay directly, or reimburseCTG directly, for all reasonable and documented out-of-pocket expenses incurred inconnection with this assignment such as travel, lodging, postage, telephone and facsimilecharges, etc. All such billings will be in accordance with CTG's customary practices and inany event be subject to prior written consent (email to suffice) of Client with respect to anyexpenses in excess of $2,500.

Payment. CTG will invoice Client for all fees and expenses on a weekly basis. Each invoice isdue and payable within two (2) business days following receipt, subject to the Cap and Deferralprovisions above, in each case to be paid via wire transfer in accordance with wire instructionsprovided by CTG to Client in such invoice. Invoices that are unpaid ten (10) business days pastthe applicable due date are deemed delinquent and we reserve the right to charge interest on thepast due amount at the lesser of (i) 1.0% per month and (ii) the maximum amount permitted bylaw. If fees are not paid in a timely manner, then we reserve the right to suspend our services,withhold delivery of any deliverables, or withdraw from this engagement entirely. If anycollection action is required, Client agrees to reimburse us for our costs of collection, includingreasonable and documented attorneys' fees.

Retainer. CTG will require a retainer of $25,000.00 payable via wire transfer in accordancewith wire instructions provided by CTG to Client. At the conclusion of the engagement, CTGwill submit a [mal invoice for services rendered and expenses incurred (excluding previousinvoices paid) and offset the [mal invoice against the retainer, and any remaining amount (ifany), will be returned to Client within ten (10) business days of the final reconciliation.

4. RELATIONSHIP OF THE PARTIES. The parties intend that an independent contractorrelationship will be created by this agreement and neither party shall be considered an employee,agent or representative of the other. Employees or advisors ofCTG are not entitled to any of thebenefits that Client provides for the Client's employees. Client also agrees not to solicit or hireany employees of CTG that Client came in contact with in connection with CTG's engagementhereunder for a period of one year subsequent to the earlier of the completion and/or terminationof this agreement; provided, however, that this provision shall not restrict Client from makinggeneral solicitations and/or using employee search firms or recruiters so long as they do not targetsuch employees (and Client may hire employees through such non-targeted searches), and Clientmay hire any employee that independently contacts Client with respect to an employmentrelationship prior to Client soliciting such employee.

5. CONFIDENTIALITY. CTG agrees to keep confidential all information obtained from the Clientor its representatives. Except as required by law, CTG agrees that neither it nor its directors,officers, principals, employees, service providers or advisors (including attorneys) will discloseto any other person or entity, or use for any purpose other than specified herein, any informationpertaining to Client or any affiliate thereof which is either non-public, confidential or proprietaryin nature ("Information") which it obtains or is given access to during the performance of theservices provided hereunder. CTG may make reasonable disclosure of information to itsemployees, advisors and third party service providers in connection with their performance oftheir obligations and assignments hereunder, provided that prior to receiving any Informationsuch third party shall agree to abide by the confidentiality provisions of this agreement, and inany event, CTG shall be responsible for any breach of confidentiality by such third parties as ifCTG breached this agreement. Subject to prior Client approval, CTG may also use Client's trade

Clear Thinking Group LLC Page 2


name and logo in its marketing and promotional materials, including but not limited to CTG'swebsite and printed materials to identify the Client in connection with services provided by CTGto the Client.

Information includes (without limitation) data, plans, reports, schedules, drawings, accounts,records, calculations, specifications, flow sheets, computer programs, source or object codes,results, models, or any work product relating to the business of the Client, its subsidiaries,distributors affiliates, vendors, customers, employees, contractors and consultants.

The Client acknowledges that all advice (written or oral) given by CTG to the Client inconnection with CTG's engagement is intended solely for the benefit and use of the Client(limited to its board of directors management) in its evaluation of its business operations. Clientagrees that no such advice shall be used for any other purpose or reproduced, disseminated,quoted or referred to at any time in any manner or for any purpose other than accomplishing thetasks and programs referred to herein without CTG's prior approval (which shall not beunreasonably withheld) except as required by law. Notwithstanding the two immediatelypreceding sentences, the Client may furnish the advice described in the two immediatelypreceding sentences (i) on a need-to-know basis to its legal counsel and other professionaladvisors that are advising the Client (provided that such advisors are informed of the restrictionswith respect to such advice set forth herein, and that CTG shall not have any duty to such advisorsin connection therewith, and the Client shall be responsible for any breach by such advisors ofsuch restrictions) and (ii) in response to any subpoena, court order, or similar legal demand orany written request by a governmental agency.

This agreement shall survive the termination of the engagement provided however thatinformation of the Client shall no longer be deemed confidential on the lOthannual anniversaryof CTG's completion of the engagement, and CTG's advice shall no longer be subject to therestrictions above on the 2nd annual anniversary ofCTG's completion of the engagement.

Notwithstanding anything to the contrary herein, it is expressly agreed and understood that CTGshall be entitled to disclose and/or produce Information if it is requested or becomes legallycompelled (by oral questions, interrogatories, request for information or documents, subpoena,criminal or civil investigative demand, or similar process) to disclose any of the Information.CTG agrees to provide Client with prompt written notice prior to such disclosure (to the extentpermitted by law) and in any event as soon as practicable so Client may seek a protective orderor other appropriate remedy and/or waive compliance with the provisions of this agreement.

6. INDEMNIFICATION. Client agrees to indemnify, hold harmless and defend CTG (includingits principals, employees and agents) against all claims, liabilities, losses, damages andreasonable and documented expenses as they are incurred, including reasonable and documentedlegal fees and disbursements of its counsel and the costs of its professional time (at rates in effectwhen such future time is required) relating to or arising out of the engagement, including anylegal proceeding in which CTG may be required or agree to participate but in which it is not aparty. CTG, its principals, employees and agents, may, but are not required to, engage, at Client'sexpense, a single firm of separate counsel of its choice in connection with any of the matters towhich this indemnification agreement relates. This indemnification agreement does not apply toclaims, liabilities, losses, damages and expenses that are adjudicated in a court of competentjurisdiction (after the exhaustion of any appeals) to be solely the result of gross negligence on thepart ofCTG.

7. TERMINATION AND SURVIVAL. This agreement may be terminated (a) at any time bywritten notice to CTG Client or (b) upon seven (7) days prior written notice to Client by CTG,provided, however, that notwithstanding such termination (x) CTG will be entitled to any feesand expenses due under the provisions of the agreement up to the date of such notice of



termination and (y) CTG shall deliver to Client any work in progress or completed work. Therespective rights and obligations hereunder shall inure to the benefit of any successor of theparties. The obligations of the parties under the Indemnification and Confidentiality sections ofthis agreement shall survive the termination of the agreement as well as the other sections of thisagreement, which expressly provide that they shall survive termination of this agreement.

8. GOVERNING LAW. This agreement is governed by and construed in accordance with the lawsof the State of New York with respect to contracts made and to be performed entirely therein andwithout regard to choice of law or principles thereof. If the parties have any dispute arisingbetween them, including any dispute with respect to this agreement, its interpretation,performance or breach, and are unable to agree on a mutually satisfactory resolution with thirty(30) days, either party may require the matter to be settled by a single arbitrator selected by theAmerican Arbitration Association in accordance with its Commercial Arbitration Rules. Thearbitration shall take place in the State of New York. The decisions of the arbitrator shall be finaland binding on the parties hereto and judgment upon the award rendered by the arbitrator maybe entered in any court having jurisdiction thereof. The costs assessed by the AAA for arbitrationshall be borne equally by both parties.

9. LIMITATIONS. This is a services engagement. CTG warrants that it will perform serviceshereunder in good faith and disclaims all other warranties. Notwithstanding any other provisionof this agreement, except in the case ofwi11ful misconduct or gross negligence, CTG will not beliable for any actions, damages, claims, liabilities, costs, expenses or losses arising out of orrelating to the services performed hereunder for an aggregate amount in excess of the fees paidby the Client to CTG in performing the services that form the basis for the action or claim. Inaddition, CTG will not be liable for any delays resulting from circumstances or causes beyondits reasonable control, including without limitation, fire or other casualty, acts of God, strikes orlabor disputes, war, other violence, or any law, order or required of any governmental agency orauthority.

10. SEVERABILITY. If any portion of this agreement shall be determined to be invalid orunenforceable, CTG and Client agree that the remainder shall be valid and enforceable to themaximum extent possible.

11. NOTICES. All notices required or permitted to be delivered under this agreement shall be inwriting and sent, if to CTG, to the address set forth at the head of this letter and, if to Client, tothe address set forth above, to the attention of Guy Sommerholder or such other name or addressas may be given in writing to the other party. All notices under this agreement shall be sufficientif delivered by email, facsimile or overnight mail. Any notice shall be deemed to be given uponactual receipt.

12. ENTIRE AGREEMENT. Client agrees that this agreement represents its entire understanding ofthe terms of CTG's engagement and that it supersedes any prior understandings or agreementsthat the parties may have had or discussed. The terms and provisions of this agreement may notbe modified or amended except in a writing signed by an authorized representative of the ClientandCTG.



If the terms set forth above and within the attached Statement of Work (Appendix A) meet with yourapproval, please sign and return this proposal to my attention.

~OJLee DiercksPartner

Accepted and Acknowledged:

Signed: _Name:Title:Date:



Appendix A - Statement of WorkCTG will provide the following services to Client:

Phase I:

1.) Review the FYE 2017,2018 and 2019 YTD fmancial performance of the Client compared to yearover year performance and compared to the Client's fmancial plan or projections.

2.) Review of the Client's overall business plan and general assumptions to determinereasonableness.

3.) Review of Client's 13-week cash flow projections, borrowing base information, etc. andassumptions to determine reasonableness.

4.) Review of each of the Client's various business unit's expenses for possible cost productivitysavmgs.

5.) Review of the Client's Corporate overhead for possible cost savings.

6.) Develop possible liquidity improvement plans and actions.

7.) Provide a written summary of our findings and detailed recommendations.

8.) Ifrequested by Client, CTG will participate in a conference call(s) with their lender(s) to reviewour fmdings.

9.) Any other items requested by Client and mutually agreed upon by CTG (such agreement not to beunreasonably withheld) and Client.

Phase II: Of agreed upou in a supplementary engagement agreement and scope of work)

1.) Assist Management Team with the execution of actions to improve liquidity.

2.) Assist Client with communication to their Lenders, Vendors, and Landlords.

3.) Assist Client with actions necessary to facilitate a sale or liquidity event.

4.) Any other items requested by Client and mutually agreed upon by CTG (such agreement not tobe unreasonably withheld) and Client.



CTG Supplemental Engagement Scope for JVE:

Effective 3/9/2020, the Scope of Work for JVE will be modified to:

1.) Assist Client with its potential Ch. 11 Bankruptcy Filing including the following tasks: a. Assist Client with the development of a DIP Cash Flow/Budget b. Assist Client with the development of a liquidation analysis c. Assist Client with the preparation of the “first day” motions d. Assist Client with prepetition cash saving / liquidity management activities e. Assist Client with other necessary preparation activities as needed.

2.) Assist Client with the communication to its Lenders.

3.) Assist Client with the communications to the Board of Directors, or other Senior Managers as

necessary.

4.) If the Client files its Bankruptcy petition, CTG will provide the following services: a. Maintain & update the DIP cash flow as needed. b. Provide necessary DIP cash flow variance reporting as required. c. Provide project management activities in regard to the Company’s sale process,

Company’s SOFA preparation, and other similar Bankruptcy related activities. d. Assist the Client with the communication activities with the various constituencies

during the case. e. Provide court testimony as needed.

Also, the engagement is modified in the following regard:

• If the Client is to file for bankruptcy protection, a new retainer of $75,000.00 is required for post-petition activities and will be held until the end of the case or such time that CTG is now longer needed in the case, and will be applied to outstanding amounts or final invoice owed at that time.

• Per the current agreement, all prepetition invoices must be paid each week when the invoice is presented to the Client and all prepetition amounts will need be funded prior to the petition being filed.

Lee Diercks, Partner Clear Thinking Group LLC

________________________

Joseph Zorda, CFO JVE 3/9/2020


NUNC PRO TUNC - Omni Agent Solutions · 2020. 5. 22. · Holdings, Inc., Market Antiques & Home...

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