EXHIBIT 10.4

 

November 11, 2016

 

CONFIDENTIAL

 

Lisa Berman, Chief Executive Officer

PEEKAY BOUTIQUES, INC.

901 West Main Street, Suite A

Auburn, WA 98001

 

Dear Ms. Berman:

 

This letter (the “Engagement Agreement”) confirms the engagement of Traverse,
LLC (“Traverse”) by Company and its subsidiaries (the “Company”) to provide
restructuring consulting services. Traverse’s role as restructuring consultant
will include, but not limited, to the matters discussed below.

 

 

1.In connection with this engagement, Traverse shall make available to the
Company:

 

 

a.Albert Altro to serve as Chief Restructuring Officer (the “CRO”); and

 

 

 

 

b.Upon the mutual agreement of Traverse and the Company, Traverse will provide
additional employees of Traverse and/or its affiliates (“Additional Personnel”)
as required (collectively with the CRO, the “Engagement Personnel”), to assist
the CRO in the execution of the duties set forth more fully herein.

 

 

2.The CRO, with the support of the Additional Personnel, shall, reporting to and
taking direction from the Company’s board of directors (the “Board”) support the
Company with respect to restructuring alternatives (the “Restructuring
Alternatives”), including but not limited to the following as reasonably
necessary and/or requested from time to time:

 

 

a.Preparation of procedures and protocols during the forbearance period and
related to the Restructuring Alternatives.

 

 

 

 

b.Supporting the Company with the preparation of various Restructuring
Alternatives, including financial reporting relating thereto.

 

  

 

 

c.Coordinating with the Company’s communication consultants and assisting with
the Company’s communications plan regarding the Restructuring Alternatives.

 

 

 

 

d.Assisting with reporting to and communicating with key constituencies,
including but not limited to the Company’s secured lenders, regarding the
Restructuring Alternatives.

 

 

 

 

e.Assisting with the development of the business plan in connection with the
Restructuring Alternatives.

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f.Assisting with liquidity management and cash flow forecasting.

 

 

 

 

g.Assist with management of the Company’s vendors and suppliers in connection
with the Restructuring Alternatives.

 

 

 

 

h.Coordinate with the Company’s Investment Bankers, and assist in the evaluation
of the Restructuring Alternatives.

 

 

 

 

i.Taking other such actions consistent with the role of a chief restructuring
officer.

 

 

 

 

j.Performing such other services as requested or directed by the Board.

 

In addition to the specific services listed above that we will perform, we
understand that we will participate, at your request and to the extent
appropriate, in meetings and discussions with appropriate parties and their
representative relating to the Company’s restructuring.

 

 

3.Traverse is a firm that provides turnaround, crisis management, and financial
advisory services. In some cases, Traverse provides these services as advisors
to management, in other cases one or more of its staff serve as corporate
officers and other of its staff fill positions as full time or part time
employees. To be clear this engagement letter sets forth Traverse’s engagement
as chief restructuring officer. In the event the Company commences a petition
for relief under Title 11 of the United States Code (the “Bankruptcy Code”), the
Company shall seek approval of this agreement under Bankruptcy Code section 363.

 

The application of Traverse shall disclose the individuals identified for CRO as
well as the names and proposed functions the Additional Personnel.

 

 

4.We understand that our work in providing such assistance will be performed in
accordance with applicable standards of the accounting and restructuring
profession and will include, at your request, reading and analyzing documents,
discussing issues and assumptions with and advising you regarding the factual
issues, concepts and perspectives that appear to us to be the most important
factors bearing on the determinations at issue.

 

 

 

 

5.We understand that we will be performing only those services directed by the
Board. We are to perform such procedures as are necessary and appropriate in the
circumstances as to which we mutually agree.

 

 

 

 

6.It is our intention to work closely with you throughout this engagement.
Regular discussions with you of our engagement should facilitate our progress
and provide you with relevant information and an ongoing opportunity to confirm
or request that we modify the scope of our engagement to best serve your
objectives.

 

 

 

 

7.In order for us to perform our services, it will be necessary for us to have
access to your facilities and to certain books, records and reports of the
Company and affiliated organizations. We will perform our services in a manner
that will permit the business operations of the Company to proceed in an orderly
fashion, subject to the requirements of this engagement. We understand that you
have briefed members of management as to the scope of this engagement and they
have agreed to cooperate with us and our team and to make available to us their
personnel, books, records and other data sources relevant to our needs.

 

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8.Traverse acknowledges that, in connection with the services to be provided
pursuant to this Engagement Agreement, certain confidential, non-public and
proprietary information concerning the Company (“Confidential Information”) has
been or may be disclosed by the Company to Traverse or its employees,
affiliates, attorneys, subcontractors and advisors (collectively,
“Representatives”). Traverse agrees that, without the Company’s prior consent,
no Confidential Information will be disclosed, in whole or in part, to (i) those
Representatives who need access to any Confidential Information for purposes of
performing the services to be provided hereunder, or (ii) as may be required by
law or regulatory authority, provided that, in the case of clause (ii), to the
extent legally permissible, Traverse shall cooperate with the Company in
seeking, in order to prevent or limit disclosure of Confidential Information, a
protective order or other appropriate remedy pursuant to the relevant procedures
under any applicable laws and regulations; if, failing the entry of a protective
order or other appropriate remedy, disclosure of any Confidential Information is
required, Traverse may only disclose that portion of Confidential Information
that its counsel advises it is compelled to disclose; and Traverse shall
provide, prior to making such disclosure, prompt notice to the Company that such
disclosure is required upon becoming aware of such requirement. The term
“Confidential Information” does not include any information: (a) that was
already in the possession of Traverse or any of its Representatives, or that was
available to Traverse or any of its Representatives on a non-confidential basis,
prior to the time of disclosure to Traverse or such Representatives; (b)
obtained by Traverse or any of its Representatives from a third person which,
insofar as is known to Traverse or such Representatives, is not subject to any
prohibition against disclosure; (c) which was or is independently developed by
Traverse or any of its Representatives without violating any confidentiality
obligations under this paragraph; or (d) which was or becomes generally
available to the public through no fault of Traverse. The obligations set forth
in this paragraph shall remain in effect for a period of twelve months after the
expiration or termination of this Engagement Agreement.

 

 

 

 

9.Our work will be performed on a "level-of-effort" basis; that is, the depth of
our analyses and extent of our authentication of the information on which our
advice to you will be predicated may be limited in some respects due to the
extent and sufficiency of available information, time constraints dictated by
the circumstances of our engagement, and other factors. Moreover, we do not
contemplate examining any such information in accordance with generally accepted
auditing or attestation standards. Rather, it is understood that, in general, we
rely on information disclosed or supplied to us by you or by employees and
representatives of the Company without audit or other detailed verification of
their accuracy and validity.

 

 

 

 

 

Traverse will bill, and the Company agrees to pay, a fixed monthly fee of
$50,000 for work performed by the Engagement Personnel.

 

We will also be reimbursed for our reasonable out-of-pocket expenses including,
but not limited to, travel, meals and lodging, delivery services, costs of
reproduction, and other related expenses. We will submit monthly invoices for
services rendered and expenses incurred. Our invoices are payable upon receipt.

 

It is our policy in these cases to receive a security retainer prior to the
commencement of our activities to be held by us throughout this engagement. The
retainer secures final payment of our invoices for services rendered. Given the
magnitude and scope of the services you have requested, we require an advance of
$25,000. This advance will be returned to the Company upon payment in full of
our outstanding invoices or applied to any outstanding invoices at the
conclusion of this engagement. 

 

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10.The Company agrees to indemnify and hold harmless Traverse LLC and the
Engagement Personnel (the “Indemnified Parties”) to the fullest extent lawful
from any and all losses, claims, damages, liabilities, penalties, judgments,
awards, costs, fees, expenses and disbursements including, without limitation,
the costs, fees, expenses and disbursements, as and when incurred, of
investigating, preparing or defending any action, suit, proceeding or
investigation (whether or not in connection with proceedings or litigation in
which Engagement Personnel are a party), directly or indirectly, caused by,
relating to, based upon, arising out of or in connection with the engagement of
Traverse or the Engagement Personnel by the Company or any services rendered
pursuant to such engagement, provided, however, that the Company shall not be
responsible for any losses, claims, damages, liabilities or expenses of any
Indemnified Party to the extent they are caused by the Indemnified Parties’ bad
faith, willful misconduct or gross negligence.

 

 

 

 

 

The Company agrees that Traverse and the Engagement Personnel engaged in this
matter will not be liable to the Company for any claims, liabilities, or
expenses relating to this engagement in excess of the fees paid by them to the
Engagement Personnel pursuant to this engagement, unless there is a final
non-appealable order of a Court of competent jurisdiction, at the trial level,
finding Traverse or the Engagement Personnel directly liable for gross
negligence or willful misconduct.

 

The limitation on liability and indemnification contained in this engagement
letter shall survive the completion or termination of this engagement.

 

 

11.The Company, Traverse and the Engagement Personnel hereby irrevocably and
unconditionally (a) submits for themselves and their property in any legal
action or proceeding relating to this Engagement Agreement, to the non-exclusive
general jurisdiction of the Courts of the State of Delaware.

 

 

 

 

12.Notwithstanding anything to the contrary contained herein, Traverse LLC and
the Engagement Personnel shall have the right to disclose its retention by the
Company or the successful completion of its services hereunder in internal
marketing materials only.

 

 

 

 

13.This Engagement Agreement shall remain in force (the “Engagement Term”) for a
period of six (6) months from the date of signing this Engagement Agreement,
unless otherwise extended by agreement of the Company and Traverse. During the
Engagement Term, the Engagement Agreement may be terminated by either party upon
thirty (30) days prior written notice to the other.

 

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I look forward to working with you on this important matter. Please return a
copy of this engagement letter, signed in the space provided to signify your
agreement with the terms and provisions herein. If you have any questions,
please call Albert Altro at (310) 809-5064.

 

 

 Very truly yours,    By:/s/ Albert Altro

 

 

Albert Altro   Traverse LLC 

 

Agreed by:

 

 

Company

 

   By:/s/ Lisa Berman

 

Lisa Berman  Chief Executive Officer 

 

 

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