Eddie Bauer Holdings, Inc. Convertible Senior Notes due 2014 Placement Agency Agreement
Exhibit 10.4
Xxxxx Xxxxx Holdings, Inc.
Convertible Senior Notes due 2014
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxx Xxxxx Holdings, Inc., a corporation organized under the laws of the State of Delaware
(the “Company”), proposes to issue and sell to certain investors (collectively, the “Investors”) an
aggregate of $75,000,000 of its Convertible Senior Notes due 2014 (the “Securities”) to be issued
pursuant to the provisions of an Indenture to be dated as of the Closing Date (as defined below)
(the “Indenture”) among the Company, the subsidiaries of the Company listed on the signature page
hereto (the “Guarantors”) and The Bank of New York, as Trustee (the “Trustee”). Subject to the
provisions of the Indenture, the Securities will initially be guaranteed (the “Guarantees”) by the
Guarantors on an unsecured senior basis. The Securities will be convertible into shares of the
Company’s common stock, par value $0.01 per share (the “Common Stock”). As used herein,
“Conversion Shares” means the shares of Common Stock issuable upon conversion of the Securities.
The Securities and the Guarantees will be offered and sold to the Investors who are qualified
institutional buyers (“QIBs”) as defined in Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), in compliance with exemptions from registration under the Securities Act.
In connection with the sale of the Securities, the Company has prepared a preliminary private
placement memorandum (the “Preliminary Private Placement Memorandum”) and will prepare a final
private placement memorandum (the “Final Private Placement Memorandum”) including a description of
the terms of the Securities and the terms of the offering of the Securities. References in this
Agreement to the
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Preliminary Private Placement Memorandum and the Final Private Placement Memorandum include
and will include the documents incorporated by reference therein.
The Investors and each of their direct and indirect transferees of the Securities will be
entitled to the benefits of the Registration Rights Agreement (the “Registration Rights
Agreement”), pursuant to which the Company will agree, among other things, to file a registration
statement (the “Registration Statement”) with the Securities and Exchange Commission (“Commission”)
registering the Securities under the Securities Act.
1. Agreement to Act as Placement Agents; Placement of Securities.
(a) Subject to the terms and conditions, and in reliance upon the representations, warranties
and agreements, herein set forth, X.X. Xxxxxx Securities Inc. and Xxxxxxx, Xxxxx & Co. shall be the
Company’s exclusive placement agents (in such capacity, the “Placement Agents”), on a “best
efforts” basis, in connection with the issuance and sale by the Company of the Securities to the
Investors.
(b) This Placement Agency Agreement (this “Agreement”) is not a commitment, express or
implied, on the part of the Placement Agents to commit any capital. Under no circumstances will
either Placement Agent be obligated to purchase any Securities for its own account. In soliciting
purchases of Securities, the Placement Agents shall act solely as the Company’s agents and not as
principal and therefore the Placement Agents shall have no authority to bind the Company.
(c) The purchases of the Securities by the Investors shall be evidenced by the execution of
purchase agreements substantially in the form of Exhibit A (the “Purchase Agreements”).
(d) Concurrently with the execution and delivery of this Agreement, the Company and The Bank
of New York, as escrow agent (“Escrow Agent”), shall enter into an Escrow Agreement (the “Escrow
Agreement”), pursuant to which an escrow account will be established, at the Company’s expense, for
the benefit of the Company and the Investors (the “Escrow Account”). Prior to the Closing Date,
each Investor will deposit in the Escrow Account the full amount of the purchase price for the
Securities being purchased by such Investor (the “Escrow Funds”).
(e) As compensation for services rendered hereunder, the Company shall pay to the Placement
Agents a placement fee (the “Placement Fee”) equal to an amount in cash that is 4% of the aggregate
principal amount of Securities sold by the Company. The Placement Fee shall be payable by Federal
Funds wire transfer to an account or accounts designated by the Placement Agents. X.X. Xxxxxx
Securities Inc. shall be entitled to receive 67% of the Placement Fee and Xxxxxxx, Xxxxx & Co.
shall be entitled to receive 33% of the Placement Fee.
(f) No Securities that the Company has agreed to sell pursuant to this Agreement or the
Purchase Agreements shall be deemed to have been purchased and paid for, or sold by the Company,
until such Securities shall have been delivered to the
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Investor thereof against payment by such Investor. If the Company shall default in its obligations
to deliver Securities to an Investor whose offer it has accepted, and from which it has received
payment for such Securities, the Company agrees to indemnify and hold harmless the Placement Agent
Entities (as defined herein) against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject which arise out of or are based upon such
default of the Company.
2. Representations and Warranties of the Company and the Guarantors. The Company and
each Guarantor jointly and severally represent and warrant to, and agree with, each Placement Agent
that:
(a) The Preliminary Private Placement Memorandum, as of its date, did not, and at the Closing
Date, will not, and the Final Private Placement Memorandum, as of its date and as of the Closing
Date, will not, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Neither the Company nor the Guarantors (including their agents and
representatives, other than the Placement Agents in their capacity as such) has made, used,
prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve
or refer to any written communication that constitutes an offer to sell or solicitation of an offer
to buy the Securities except for the Preliminary Private Placement Memorandum and the Final Private
Placement Memorandum.
(b) The documents incorporated by reference in the Preliminary Private Placement Memorandum
and the Final Private Placement Memorandum, when such documents were filed with the Commission,
conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as
amended and the applicable rules and regulations of the Commission thereunder (the “Exchange Act”),
and none of such documents contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and any further documents so filed and incorporated by
reference in the Preliminary Private Placement Memorandum and the Final Private Placement
Memorandum, when such documents are filed with the Commission, will conform in all material
respects to the requirements of the Exchange Act, and will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) The consolidated financial statements of the Company and its subsidiaries and the related
notes thereto included or incorporated by reference in each of the Preliminary Private Placement
Memorandum and the Final Private Placement Memorandum have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis throughout the
periods covered thereby and present fairly, in all material respects, the consolidated financial
position of the Company and its subsidiaries as of the dates indicated and the consolidated results
of their operations and the consolidated changes in their cash flows for the periods specified.
The consolidated financial information included or incorporated by reference in each of the
Preliminary Private Placement Memorandum and the Final Private Placement
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Memorandum has been accurately presented and prepared, in all material respects, on a basis
consistent with the financial statements and the books and records of the Company. The as adjusted
financial information contained in each of the Preliminary Private Placement Memorandum and the
Final Private Placement Memorandum has been prepared on a basis consistent with the historical
consolidated financial statements included in or incorporated by reference in each of the
Preliminary Private Placement Memorandum and the Final Private Placement Memorandum (except for the
adjustments specified therein).
(d) Since the date of the most recent consolidated financial statements of the Company and its
subsidiaries included or incorporated by reference in each of the Preliminary Private Placement
Memorandum and the Final Private Placement Memorandum, except in each case as otherwise disclosed
in the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum (i)
there has been no material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, management, financial position or results
of operations of the Company and its subsidiaries taken as a whole; (ii) neither the Company nor
any of its subsidiaries has incurred any liability or obligation, direct or contingent, that is
material to the Company and its subsidiaries taken as a whole; (iii) neither the Company nor any of
its subsidiaries has entered into any transaction or agreement that is material to the Company and
its subsidiaries taken as a whole; (iv) there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any dividend or distribution of any
kind declared, set aside for payment, paid or made by the Company or any of its subsidiaries on any
class of capital stock, or any redemption in respect thereof; and (v) neither the Company nor any
of its subsidiaries has sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or from any action, order or decree of any court or arbitrator or
governmental or regulatory authority.
(e) The Company and each of its subsidiaries have been duly incorporated or formed, as the
case may be, and are validly existing corporations or limited liability companies, as the case may
be, in good standing under the laws of their respective jurisdictions of incorporation or
formation, as the case may be, are duly qualified to do business and are in good standing as
foreign corporations or foreign limited liability companies, as the case may be, in each
jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified, in good standing or have such power or authority would
not, individually or in the aggregate, have a material adverse effect on the business, properties,
management, financial position or results of operations of the Company and its subsidiaries taken
as a whole or on the performance by the Company and the Guarantors of their obligations under the
Securities, the Guarantees and the Conversion Shares (a “Material Adverse Effect”).
(f) All the outstanding shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; except as
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disclosed in each of the Preliminary Private Placement Memorandum and the Final Private Placement
Memorandum, there are no outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or understandings with respect
to the sale and issuance of, any shares of capital stock or other equity interest in the Company;
the holders of the outstanding shares of capital stock of the Company are not entitled to any
preemptive or other rights to subscribe for the Securities or the Conversion Shares; and the
capital stock of the Company conforms in all material respects to the description thereof contained
in each of the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum.
(g) All the outstanding shares of capital stock or membership interests, as the case may be,
of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and, except as otherwise described in each of the Preliminary Private Placement
Memorandum and the Final Private Placement Memorandum, are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party; and there are no outstanding subscriptions,
rights, warrants, calls or options to acquire, or instruments convertible into or exchangeable for,
or agreements or understandings with respect to the sale and issuance of, any shares of capital
stock or other equity interest in any of the subsidiaries of the Company.
(h) The Company and each of the Guarantors have full right, power and authority to execute and
deliver this Agreement, the Securities (in the case of the Company only), the Purchase Agreements
(in the case of the Company only), the Indenture (including the Guarantees set forth therein) and
the Registration Rights Agreement (collectively, the “Transaction Documents”), and the Company and
each of the Guarantors have full right, power and authority to perform their respective obligations
hereunder and thereunder; and, as of the Closing Date, all corporate or limited liability company
action required to be taken for the due and proper authorization, execution, issuance and delivery
of each of the Transaction Documents and the consummation of the transactions contemplated thereby
has been or will have been duly and validly taken. The Company has the full corporate power and
authority to issue and deliver the Conversion Shares.
(i) The Indenture has been duly authorized by the Company and each of the Guarantors and, when
duly executed and delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
or by equitable principles relating to enforceability (whether considered in a proceeding in equity
or at law) (collectively, the “Enforceability Exceptions”); and on the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the “Trust Indenture Act”), and the rules and regulations of the Commission applicable to
an indenture that is qualified thereunder.
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(j) The Securities have been duly authorized by the Company and, when duly executed,
authenticated, issued and delivered as provided in the Indenture (assuming the Indenture is the
valid and legally binding obligation of the Trustee and assuming due authentication of the
Securities by the Trustee) and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, subject to the Enforceability Exceptions, and
will be entitled to the benefits of the Indenture; and the Guarantees have been duly authorized by
each of the Guarantors and, when the Securities have been duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein, will be valid and legally
binding obligations of each of the Guarantors, enforceable against each of the Guarantors in
accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture. The Securities will be convertible into the Conversion Shares in
accordance with their terms and the terms of the Indenture.
(k) The Conversion Shares issuable upon conversion of the Securities have been duly and
validly authorized and are free of preemptive rights and, when issued and delivered upon such
conversion in accordance with the terms of the Indenture, will be duly and validly authorized and
issued, fully paid and non-assessable and free and clear of all liens, encumbrances, equities or
claims; the Board of Directors of the Company has duly and validly adopted resolutions reserving
such Conversion Shares for issuance upon conversion.
(l) The Purchase Agreements have been duly authorized, executed and delivered by the Company.
This Agreement has been duly authorized, executed and delivered by the Company and each of the
Guarantors.
(m) The Registration Rights Agreement has been duly authorized by the Company and each of the
Guarantors and, when duly executed and delivered on the Closing Date in accordance with its terms
by each of the parties thereto, will constitute a valid and legally binding agreement of the
Company and each of the Guarantors enforceable against the Company and each of the Guarantors in
accordance with its terms, subject to the Enforceability Exceptions, and except that rights to
indemnity and contribution thereunder may be limited by applicable law and public policy
considerations.
(n) Each Transaction Document conforms in all material respects to the description thereof
contained in each of the Preliminary Private Placement Memorandum and the Final Private Placement
Memorandum.
(o) Neither the Company nor any of its subsidiaries is (i) in violation of its charter or
by-laws or similar organizational documents; (ii) except as described in each of the Preliminary
Private Placement Memorandum and the Final Private Placement Memorandum, in default, and no event
has occurred that, with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to
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which any of the property or assets of the Company or any of its subsidiaries is subject; or (iii)
in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or assets, except, in the case of clauses
(ii) and (iii) above, for any such defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) The execution, delivery and performance by the Company and each of the Guarantors of each
of the Transaction Documents to which each is a party, the issuance, authentication, sale and
delivery of the Securities and the Guarantees and the Common Stock upon conversion of the
Securities in accordance with the terms and conditions of the Indenture and compliance by the
Company and each of the Guarantors with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, including the use of proceeds therewith as described in
the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum, will not
(i) conflict with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries or (iii) result in the violation
of any law or statute or any judgment, order, decree, rule or regulation of any court or arbitrator
or governmental or regulatory authority or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets, except, in the case of clauses (i)
and (iii) above, for any such conflict, breach, violation or default that would not, individually
or in the aggregate, have a Material Adverse Effect.
(q) No consent, approval, authorization, order, registration or qualification of or with any
court or arbitrator or governmental or regulatory authority is required for the execution, delivery
and performance by the Company and each of the Guarantors of each of the Transaction Documents to
which each is a party, the issuance, authentication, sale and delivery of the Securities and the
Guarantees and the Common Stock issuable upon conversion of the Securities in accordance with the
terms and conditions of the Indenture and compliance by the Company and each of the Guarantors with
the terms thereof and the consummation of the transactions contemplated by the Transaction
Documents, including the use of proceeds therewith as described in the Preliminary Private
Placement Memorandum and the Final Private Placement Memorandum, except for such consents,
approvals, authorizations, orders and registrations or qualifications which shall have been
obtained or made prior to the Closing Date or as may be required to be obtained or made under the
Trust Indenture Act, the Securities Act and applicable state securities laws as contemplated in the
Registration Rights Agreement.
(r) To the knowledge of the Company, no action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency or body which prevents the
issuance of the Securities, the issuance of the
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Guarantees or the issuance of Common Stock issuable upon conversion of the Securities in accordance
with the terms and conditions of the Indenture or suspends the sale of the Securities and
Guarantees in any jurisdiction; no injunction, restraining order or order of any nature by any
federal or state court of competent jurisdiction has been issued with respect to the Company or any
of its subsidiaries which would prevent or suspend the issuance, authentication, sale or delivery
of the Securities and Guarantees or the use of the Preliminary Private Placement Memorandum or the
Final Private Placement Memorandum in any jurisdiction; no action, suit or proceeding is pending
against or, to the best knowledge of the Company, threatened against or affecting the Company or
any of its subsidiaries before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to interfere with or adversely
affect the issuance of the Securities or the issuance of the Guarantees or in any manner reasonably
draws into question the validity or enforceability of any of the Transaction Documents or any
action taken or to be taken pursuant thereto; and the Company has complied with any and all
requests by any securities authority in any jurisdiction for additional information to be included
in the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum.
(s) Except as disclosed in each of the Preliminary Private Placement Memorandum and the Final
Private Placement Memorandum, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be
a party or to which any property or assets of the Company or any of its subsidiaries is or may be
the subject that, individually or in the aggregate, if determined adversely to the Company or any
of its subsidiaries, could reasonably be expected to have a Material Adverse Effect; and to the
best knowledge of the Company and each of the Guarantor, no such investigations, actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory authority or by
others.
(t) BDO Xxxxxxx, LLP, who have audited certain historical consolidated financial statements of
the Company and its subsidiaries, are independent registered public accountants with respect to the
Company and its subsidiaries within the applicable rules and regulations adopted by the Commission
and the Public Accounting Oversight Board (United States) and as required by the Securities Act.
(u) The Company and its subsidiaries have good and marketable title in fee simple to, or have
valid rights to lease or otherwise use, all items of real and personal property that are material
to the respective businesses of the Company and its subsidiaries, in each case, except with respect
to secured debt described in each of the Preliminary Private Placement Memorandum and the Final
Private Placement Memorandum, free and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries or (ii) could not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(v) Except as described in each of the Preliminary Private Placement Memorandum and the Final
Private Placement Memorandum, (i) the Company and its
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subsidiaries own or possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service xxxx registrations,
copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) presently employed by them in
connection with the respective businesses now operated by them, except to the extent that the
failure to own or possess the right to use such intellectual property could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (ii) the use of such rights in
connection with their respective businesses will not conflict in any material respect with any such
rights of others, except for such conflicts as could not, singly or in the aggregate reasonably be
expected to have a Material Adverse Effect; and (iii) the Company and its subsidiaries have not
received any notice of any claim of infringement of or conflict with any such rights of others,
except notices the content of which if accurate, could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(w) No relationship, direct or indirect, exists between or among the Company or any of its
subsidiaries, on the one hand, and the directors, officers, stockholders or other affiliates of the
Company or any of its subsidiaries, on the other, that would be required by the Securities Act to
be described in a registration statement filed with the Commission and that is not so described in
each of the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum.
(x) Neither the Company nor any of its subsidiaries is, and after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof as described in
each of the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum
none of them will be, an “investment company” or an entity “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder (collectively, the “Investment Company Act”).
(y) The Company and its subsidiaries have paid all federal, state, local and foreign taxes and
filed all tax returns required to be paid or filed through the date hereof, in each case other than
those being contested in good faith with adequate reserves provided; and except as otherwise
disclosed in each of the Preliminary Private Placement Memorandum and the Final Private Placement
Memorandum, there is no tax deficiency that has been, or could reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of their respective properties or
assets which has had (nor do the Company or any of the Guarantors have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have) a Material Adverse Effect.
(z) The Company and its subsidiaries possess all licenses, certificates, permits and other
authorizations issued by, and have made all declarations and filings with, the appropriate federal,
state, local or foreign governmental or regulatory authorities that are necessary for the ownership
or lease of their respective properties or the conduct of their respective businesses as described
in each of the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum,
except where the failure to possess or make the same would not, individually or in the aggregate,
have a Material
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Adverse Effect; and except as disclosed in each of the Preliminary Private Placement Memorandum and
the Final Private Placement Memorandum, neither the Company nor any of its subsidiaries has
received notice of any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course.
(aa) No labor disturbance by or dispute with employees of the Company or any of its
subsidiaries exists which is likely to have a Material Adverse Effect or, to the best knowledge of
the Company and each of the Guarantors, is contemplated or threatened, and neither the Company nor
any Guarantor is aware of any existing or imminent labor disturbance by, or dispute with, the
employees of any of the Company’s or any of the Company’s subsidiaries’ principal suppliers or
contractors, except where any such labor disturbance or dispute would not have a Material Adverse
Effect.
(bb) (i) The Company and its subsidiaries (x) are, and at all prior times were, in compliance
with any and all applicable federal, state, local and foreign laws, rules, regulations,
requirements, decisions and orders relating to the protection of human health or safety, the
environment, natural resources, hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, “Environmental Laws”), (y) have received and are in compliance with all permits,
licenses, certificates or other authorizations or approvals required of them under applicable
Environmental Laws to conduct their respective businesses, and (z) have not received notice of any
actual or potential liability under or relating to any Environmental Laws, including for the
investigation or remediation of any disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, and have no knowledge of any event or condition that would reasonably
be expected to result in any such notice, except in the case of each of (x) and (y) above, for any
such failure to comply, or failure to receive required permits, licenses or approvals, or cost or
liability, as would not, individually or in the aggregate, have a Material Adverse Effect; and (ii)
except as disclosed in each of the Preliminary Private Placement Memorandum and the Final Private
Placement Memorandum, (x) there are no proceedings that are pending, or that are known by the
Company to be contemplated, against the Company or any of its subsidiaries under any Environmental
Laws in which a governmental entity is also a party, other than such proceedings regarding which it
is reasonably believed no monetary sanctions of $100,000 or more will be imposed, (y) the Company
and its subsidiaries are not aware of any material issues regarding compliance with Environmental
Laws, or material liabilities or other material obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that could reasonably be
expected to have a Material Adverse Effect.
(cc) (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), for which the Company or any member
of its “Controlled Group” (defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended
(the “Code”)) would have any liability (each, a “Plan”) has been maintained, in all material
respects, in compliance with its terms and the requirements of any applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the Code; (ii) no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred
with
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respect to any Plan excluding transactions effected pursuant to a statutory or administrative
exemption; (iii) except as disclosed in each of the Preliminary Private Placement Memorandum and
the Final Private Placement Memorandum, for each Plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined in
Section 412 of the Code, whether or not waived, has occurred or is reasonably expected to occur;
(iv) except as disclosed in each of the Preliminary Private Placement Memorandum and the Final
Private Placement Memorandum, the fair market value of the assets of each Plan exceeds the present
value of all benefits accrued under such Plan (determined based on those assumptions used to fund
such Plan); (v) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred
or is reasonably expected to occur which could be reasonably expected to have a Material Adverse
Effect; (vi) neither the Company nor any member of the Controlled Group has incurred, nor
reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the
Plan or premiums to the Pension Benefit Guaranty Corporation in the ordinary course and without
default) with respect to the termination of, or withdrawal from, any pension plan for which the
Company or any member of the Controlled Group would have any liability in respect of a Plan
(including a “multiemployer plan,” within the meaning of Section 4001(a)(3) of ERISA); and (vii)
and each such pension plan that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or by failure to act, which could cause the
loss of such qualification.
(dd) The Company and its subsidiaries have insurance covering their respective properties,
operations, personnel and businesses, including business interruption insurance, which insurance is
in amounts and insures against such losses and risks as the Company reasonably believes is
adequate, and consistent with industry practice, to protect the Company and its subsidiaries and
their respective businesses; and neither the Company nor any of its subsidiaries has (i) received
notice from any insurer or agent of such insurer that capital improvements or other expenditures
are required or necessary to be made in order to continue such insurance or (ii) any reason to
believe that it will not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary
to continue its business.
(ee) On the Closing Date and immediately after giving effect to the issuance of the Securities
and the consummation of the other transactions related thereto as described in each of the
Preliminary Private Placement Memorandum and the Final Private Placement Memorandum, including the
amendment and restatement of the Credit Agreement, the Company and each of the Guarantors will be
Solvent. As used in this paragraph, the term “Solvent” means, with respect to a particular date,
that on such date (i) the present fair market value (or present fair saleable value) of the assets
of the Company or such Guarantor, as the case may be, is not less than the total amount required to
pay the probable liabilities of the Company or such Guarantor, as the case may be, on its total
existing debts and other liabilities (including contingent liabilities, computed at the amount
that, in light of all of the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability) as they become absolute
and matured; (ii) the Company or such
12
Guarantor, as the case may be, is able to realize upon its assets and pay its debts and other
liabilities (including such contingent liabilities) as they mature and become due in the normal
course of business; (iii) assuming consummation of the issuance of the Securities as contemplated
by this Agreement, the Preliminary Private Placement Memorandum and the Final Private Placement
Memorandum and the amendment and restatement of the Credit Agreement, the Company has not incurred,
and does not propose to incur, debts that would be beyond its ability to pay as such debts and
other liabilities mature; (iv) the Company or such Guarantor, as the case may be, is not engaged in
any business or transaction, and does not propose to engage in any business or transaction, for
which its property would constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which the Company or such Guarantor, as the case may be,
is engaged; and (v) the Company or such Guarantor, as the case may be, is not a defendant in any
civil action that would result in a judgment that the Company or such Guarantor, as the case may
be, is or would become unable to satisfy.
(ff) Except as described in the Preliminary Private Placement Memorandum or the Final Private
Placement Memorandum, no subsidiary of the Company is currently prohibited, directly or indirectly,
under any agreement or other instrument to which it is a party or is subject, from paying any
dividends to the Company, from making any other distribution on such subsidiary’s capital stock,
from repaying to the Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary
of the Company.
(gg) On the Closing Date, the Securities will not be of the same class as securities listed on
a national securities exchange registered under Section 6 of the Exchange Act or quoted in an
automated inter-dealer quotation system; and each of the Preliminary Offering Memorandum and the
Final Private Placement Memorandum, as of its respective date, contains all the information that,
if requested by a prospective purchaser of the Securities, would be required to be provided to such
prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(hh) Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D)
has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require registration of the
Securities under the Securities Act. None of the Company or any of its affiliates or any other
person acting on its or their behalf (other than the Placement Agents, as to which no
representation is made) has solicited offers for, or offered or sold, the Securities and the
Guarantees by means of any form of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D.
(ii) Assuming the accuracy of the representations and warranties of the Placement Agents
contained herein, it is not necessary, in connection with the issuance and sale of the Securities
and Guarantees to the Investors and the offer, resale and delivery of the Securities and Guarantees
by the Investors in the manner contemplated by this Agreement, the Preliminary Private Placement
Memorandum and the Final Private Placement Memorandum, to register the Securities and Guarantees
under the Securities Act or to qualify the Indenture under the Trust Indenture Act.
13
(jj) Neither the Company nor any of the Guarantors has taken, directly or indirectly, any
action designed to or that could reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities.
Any certificate signed by any officer of the Company or any of its subsidiaries and delivered
to the Placement Agents shall be deemed a joint and several representation and warranty by the
Company and each of its subsidiaries to the Placement Agents as to the matters covered thereby.
3. Representations and Warranties of the Placement Agents. Each Placement Agent,
severally and not jointly, represents and warrants to, and agrees with, the Company that it has not
and will not solicit offers for the Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities Act; and (ii) it
has and will solicit offers for the Securities only from persons whom it reasonably believes to be
QIBs or, if any such person is buying for one or more institutional accounts for which such person
is acting as fiduciary or agent, only when such person has represented to them that each such
account is a QIB, to whom notice has been given that such sale or delivery is being made in
reliance on Section 4(2) of the Securities Act, and, in each case, in transactions pursuant to
Section 4(2) of the Securities Act.
4. The Closing. The time and date of closing and delivery of the documents required
to be delivered to the Placement Agents pursuant to Section 6 hereof shall be at 10:00 a.m, New
York City time on April 3, 2007 (the “Closing Date”) at the offices of Akin Gump Xxxxxxx Xxxxx &
Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000. At the closing, the Escrow Agent will (i)
disburse the Escrow Funds from the Escrow Account to the Company as provided in the Escrow
Agreement and (ii) deliver the Securities to the Investors, which delivery may be made through the
facilities of The Depository Trust Company.
5. Agreements. The Company agrees with each Placement Agent that:
(a) Prior to the completion of the sale of the Securities by the Company, before making or
distributing any amendment or supplement to either the Preliminary Private Placement Memorandum or
the Final Private Placement Memorandum, the Company will furnish to each Placement Agent a copy of
any proposed amendment or supplement to such Memorandum for review and will not distribute any such
proposed amendment or supplement to which either Placement Agent reasonably objects within a
reasonable period of time after having been furnished such proposed amendment or supplement.
(b) The Company will cooperate with the Placement Agents in arranging for the qualification of
the Securities for offering and sale under the securities or “Blue Sky” laws of such jurisdictions
as the Placement Agents may reasonably have designated in writing and will continue such
qualifications in effect for as long as may be necessary to complete the sale of the Securities;
provided, however, that in connection therewith, the Company shall not be required to qualify as a
foreign corporation or to execute a general
14
consent to service of process in any jurisdiction or subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction where it is not then so subject.
(c) Without the prior written consent of the Placement Agents, for a period of 90 days from
the date of the Final Private Placement Memorandum, the Company agrees not to (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any of its equity securities or any securities convertible into or
exercisable or exchangeable for its equity securities, (ii) enter into any swap or other agreement
that transfers to another, in whole or in part, any of the economic consequences of ownership of
notes, Common Stock or any similar securities or any security convertible or exercisable or
exchangeable for common stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of its equity securities or such other securities, in cash or
otherwise, (iii) file with the Commission a registration statement under the Securities Act
relating to any additional Common Stock or securities convertible into, or exchangeable for, any
Common Stock or (iv) publicly disclose the intention to effect any transaction described in clauses
(i) through (iii), without the prior written consent of the Placement Agents other than (a) the
Securities offered hereby, (b) the shares of Common Stock issuable upon conversion of the
Securities, (c) the grant to any employee or director stock options or restricted stock units to
purchase Common Stock (including the issuance of Common Stock upon the exercise of options or
settlement of restricted stock units currently outstanding or granted after the date hereof)
pursuant to any of the Company’s employee or director stock option or similar plans as in effect on
the date of the Final Private Placement Memorandum or such similar plans as are subsequently
approved by the Company’s stockholders, and (d) the filing of any registration statement in respect
of the Securities offered hereby and the Common Stock issuable upon conversion of the Securities,
pursuant to the Registration Rights Agreement, or any registration statement with respect to Common
Stock or other securities pursuant to the Company’s employee or director stock option or similar
plans as in effect on the date of the Final Private Placement Memorandum or such similar plans as
are subsequently approved by the Company’s stockholders.
(d) The Company will provide to each Placement Agent and to counsel for each Placement Agent,
without charge, prior to the date on which the Securities shall have been sold by the Company, as
many copies of the Preliminary Private Placement Memorandum and the Final Private Placement
Memorandum or any amendment or supplement thereto as each Placement Agent may reasonably request.
(e) The Company will apply the net proceeds from the sale of the Securities as set forth under
“Use of proceeds” in the Final Private Placement Memorandum.
(f) If not otherwise available on the Commission’s Electronic Data Gathering, Analysis and
Retrieval system (“XXXXX”), prior to the date that the Securities are no longer outstanding, the
Company will furnish to the holders of the Securities as soon as practicable, but in no case sooner
than as required to file with the Commission pursuant to the Exchange Act, after the end of each
fiscal year an annual report (including a
15
balance sheet and statements of income, stockholders’ equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as soon as practicable,
but in no case sooner than as required to file with the Commission pursuant to the Exchange Act,
after the end of each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the date of the Final Private Placement Memorandum), will make available to
its securityholders consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail.
(g) None of the Company or any of its “affiliates” (as defined in Rule 144 under the
Securities Act) will sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any “security” (as defined in the Securities Act) that could be integrated with the sale
of the Securities in a manner that would require the registration under the Securities Act of the
Securities.
(h) The Company will not, and will not permit any of its affiliates to, engage in any form of
general solicitation or general advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Securities or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(i) For so long as any of the Securities remain outstanding and are “restricted securities”
within the meaning of Rule 144(a)(3) under the Securities Act, the Company will make available at
its expense, upon request, to any holder of such Securities and any prospective purchasers thereof
the information specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(j) Prior to any registration of the Securities pursuant to the Registration Rights Agreement,
or at such earlier time as may be so required, to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the “TIA”), and to enter into any necessary supplemental indentures in
connection therewith.
(k) The Company will use all commercially reasonable efforts to (i) permit the Securities to
be designated as PORTAL-eligible securities in accordance with the rules and regulations adopted by
the NASD relating to trading in the NASD’s PORTAL Market (the “PORTAL Market”) and (ii) permit the
Securities to be eligible for clearance and settlement through The Depository Trust Company.
(l) The Company shall reserve and keep available at all times, free of preemptive rights,
shares of Common Stock for the purpose of enabling the Company to satisfy any obligations to issue
shares of its Common Stock upon conversion of the Securities.
(m) The Company will take such steps as shall be necessary to ensure that neither the Company
nor any of the its subsidiaries become an “investment company”
16
within the meaning of such term under the Investment Company Act of 1940, as amended.
(n) The Company will not take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(o) For a period of two years (calculated in accordance with paragraph (d) of Rule 144 under
the Securities Act) following the date any Securities are acquired from the Company or any of its
“affiliates” (as defined in Rule 144A under the Securities Act), none of the Company or any of its
“affiliates” will sell any such Securities.
6. Conditions to the Obligations of the Placement Agents. The several obligations of
the Placement Agents hereunder and the closing of the sale of the Securities pursuant to the
Purchase Agreements shall be subject to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) The Placement Agents shall have received the opinion, dated the Closing Date and addressed
to the Placement Agents, of Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, counsel for the Company, covering
the matters set forth in Exhibit B-1 to this Agreement. The Placement Agents shall have
received the opinion, dated the Closing Date and addressed to the Placement Agents, of Ohio counsel
for the Company, covering the matters set forth in Exhibit B-2 to this Agreement.
(b) The “lockup” agreements, each substantially in the form of Exhibit C hereto,
between the Placement Agents and certain officers and directors of the Company as listed in
Schedule I hereto relating to sales and certain other dispositions of shares of the equity
securities or certain other securities, delivered to the Placement Agents on or before the date
hereof, shall be in full force and effect on the Closing Date.
(c) The Placement Agents shall have received from each Investor an executed investor letter
each substantially in the form set forth in Exhibit D to this Agreement.
(d) Representations and warranties of the Company contained in this Agreement shall be true
and correct on and as of the date hereof, on and as of the Closing Date as if made on and as of the
Closing Date; the statements of the Company’s officers made pursuant to any certificate delivered
in accordance with the provisions hereof shall be true and correct on and as of the date made and
on and as of the Closing Date; the Company shall have performed all covenants and agreements and
satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the
Closing Date; and, except as described in the Company’s filings pursuant to the requirements the
Exchange Act (the “Exchange Act Filings”) (exclusive of any such filings after the date hereof),
subsequent to the date of the most recent financial statements in such Exchange Act Filings of the
Company, there shall have been no event or development, and no information shall have become known,
that, individually or in the aggregate, has or would be reasonably likely to have a Material
Adverse Effect.
17
(e) The Placement Agents shall have received a certificate of the Company, dated the Closing
Date, signed on behalf of the Company by either its interim chief executive officer or its interim
chief financial officer or both to the effect that
(1) the representations and warranties of the Company contained in this Agreement are true and
correct on and as of the date hereof and on and as of the Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(2) at the Closing Date, since the date hereof or since the date of the most recent financial
statements in the Company’s Exchange Act Filings (exclusive of any such filings after the date
hereof), no event or development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to have a Material Adverse
Effect; and
(3) the sale of the Securities hereunder has not been enjoined (temporarily or permanently).
(f) On the Closing Date, the Placement Agents and the Investors shall have received the
Registration Rights Agreement executed by the Company and such agreement shall be in full force and
effect at all times from and after the Closing Date.
(g) The Conversion Shares shall have been duly listed, subject to notice of issuance, on the
NASDAQ Global Market and satisfactory evidence of such actions shall have been provided to the
Placement Agents, and the Company has taken no action designed to, or likely to have the effect of
delisting the Securities from the NASDAQ Global Market, nor has the Company received any
information that the NASDAQ Global Market is contemplating the termination of such listing.
On or before the Closing Date, the Placement Agents and counsel for the Placement Agents shall
have received such further documents, opinions, certificates, letters and schedules or instruments
relating to the business, corporate, legal and financial affairs of the Company and its
subsidiaries as they shall have heretofore reasonably requested from the Company.
All such documents, opinions, certificates, letters, schedules or instruments delivered
pursuant to this Agreement will comply with the provisions hereof only if they are reasonably
satisfactory in all material respects to the Placement Agents and counsel for the Placement Agents.
The Company shall furnish to the Placement Agents such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as the Placement
Agents shall reasonably request.
7. Payment of Company’s Expenses and Reimbursement of Placement Agents’ Expenses. The
Company agrees to pay all costs and expenses incident to the performance of its obligations under
this Agreement, whether or not the transactions
18
contemplated herein are consummated or this Agreement is terminated pursuant to Section 9
hereof, including all costs and expenses incident to (i) the printing, word processing or other
production of documents with respect to the transactions contemplated hereby, including any costs
of printing the Preliminary Private Placement Memorandum and the Final Private Placement Memorandum
and any amendment or supplement thereto, and any “Blue Sky” memoranda, (ii) all arrangements
relating to the delivery to the Placement Agents and the Investors of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants and any other experts
or advisors retained by the Company, (iv) preparation (including printing), issuance and delivery
to the Investors of the Securities, (v) the qualification of the Securities under state securities
and “Blue Sky” laws, including documented filing fees and $5,100 in respect of the fees and
disbursements of counsel for the Placement Agents relating thereto, (vi) the fees and expenses
(including, without limitation, fees and disbursements of legal counsel, provided that the
Placement Agents shall notify the Company and obtain its prior consent, such consent not to be
unreasonably withheld, if the documented fees and disbursements of legal counsel to be reimbursed
pursuant to this Section exceed $400,000) incurred by the Placement Agents in connection with this
Agreement or any of the transactions contemplated hereby, (vii) expenses in connection with the
“roadshow” and any due diligence meetings with prospective investors in the Securities, (viii) fees
and expenses of any Trustee, registrar or depositary, including the documented fees and expenses of
counsel, and (ix) all expenses and listing fees incurred in connection with the application for
quotation of the Securities on the PORTAL Market. If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the Placement Agents set
forth in Section 6 hereof is not satisfied, because this Agreement is terminated or because of any
failure, refusal or inability on the part of the Company to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder (other than solely by reason of a
default by the Placement Agents of their obligations hereunder after all other conditions hereunder
have been satisfied in accordance herewith), the Company agrees to promptly reimburse the Placement
Agents, severally, upon demand for all out-of-pocket expenses (including fees, disbursements and
charges of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Placement Agents, subject to requirement
that the Placement Agents obtain the Company’s prior consent, such consent not to be unreasonably
withheld, if the fees and disbursements of such legal counsel exceed $400,000) that shall have been
incurred by the Placement Agents in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Placement Agent, its
affiliates and their respective officers, directors, employees, agents and controlling
persons (each a “Placement Agent Entity”) from and against any and all losses, claims,
damages, liabilities and expenses, joint or several, to which any such Placement Agent
Entity may become subject arising out of or in connection with the transactions
contemplated by this Agreement, or any claim, litigation, investigation or proceedings
relating to the foregoing (“Proceedings”) regardless of whether any of such Placement Agent
Entities is a
19
party thereto, and to reimburse such Placement Agent Entities for any legal or other
expenses as they are incurred in connection with investigating, responding to or defending
any of the foregoing; provided that the foregoing indemnification will not, as to any
Placement Agent Entity, apply to losses, claims, damages, liabilities or expenses to the
extent that they are finally judicially determined to have resulted from the gross
negligence or willful misconduct of such Placement Agent Entity. The Company also agrees
that no Placement Agent Entity shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company for or in connection with this Agreement, any
transactions contemplated thereby or the Placement Agents’ role or services in connection
therewith, except to the extent that any liability for losses, claims, demands, damages,
liabilities or expenses incurred by the Company are finally judicially determined to have
resulted from the gross negligence or willful misconduct of such Placement Agent Entity.
(b) If for any reason the foregoing indemnification is unavailable to any Placement
Agent Entity or insufficient to hold it harmless, then the Company shall contribute to the
amount paid or payable by such Placement Agent Entity as a result of such loss, claim,
damage, liability or expense in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand and such Placement Agent Entity
on the other hand but also the relative fault of the Company and such Placement Agent
Entity, as well as any relevant equitable considerations. It is hereby agreed that the
relative benefits to the Company on the one hand and all Placement Agent Entities on the
other hand shall be deemed to be in the same proportion as (i) the total value received or
proposed to be received by the Company pursuant to any sale of the Securities (whether or
not consummated) bears to (ii) the fee paid or proposed to be paid to each Placement Agent
in connection with such sale. The indemnity, reimbursement and contribution obligations of
the Company under this Section 8 shall be in addition to any liability which the Company
may otherwise have to a Placement Agent Entity and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the Company and
any Placement Agent Entity.
(c) Promptly after receipt by a Placement Agent Entity of notice of the commencement
of any Proceedings, such Placement Agent Entity will, if a claim is to be made hereunder
against the Company in respect thereof, notify the Company in writing of the commencement
thereof; provided that (i) the omission so to notify the Company will not relieve it from
any liability which it may have hereunder except to the extent it has been materially
prejudiced by such failure and (ii) the omission so to notify the Company will not relieve
it from any liability which it may have to a Placement Agent Entity otherwise than on
account of this Section 8. In case any such Proceedings are brought against any Placement
Agent Entity and it notifies the Company of the commencement thereof, the Company will be
entitled to participate therein and, to the extent that it may elect by written notice
delivered to the Placement Agent Entity, to assume the defense thereof with counsel
reasonably satisfactory to such Placement Agent
20
Entity; provided that if the defendants in any such Proceedings include both the
Placement Agent Entity and the Company and the Placement Agent Entity shall have concluded
that there may be legal defenses available to it which are different from or additional to
those available to the Company, the Placement Agent Entity shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate in the defense
of such Proceedings on behalf of such Placement Agent Entity. Upon receipt of notice from
the Company to such Placement Agent Entity of its election so to assume the defense of such
Proceedings and approval by the Placement Agent Entity of counsel, the Company will not be
liable to such Placement Agent Entity for expenses incurred by the Placement Agent Entity
in connection with the defense thereof (other than reasonable costs of investigation)
unless (i) the Placement Agent Entity shall have employed separate counsel in connection
with the assertion of legal defenses in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that the Company shall not be liable for
the expenses of more than one separate counsel (in addition to any local counsel), approved
by the Placement Agents, representing the Placement Agent Entities who are parties to such
Proceedings), (ii) the Company shall not have employed counsel reasonably satisfactory to
the Placement Agent Entity to represent the Placement Agent Entity within a reasonable time
after notice of commencement of the Proceedings or (iii) the Company has authorized in
writing the employment of counsel for the Placement Agent Entity.
(d) The Company shall not be liable for any settlement of any Proceedings effected
without its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the plaintiff in any
such Proceedings, the Company agrees to indemnify and hold harmless each Placement Agent
Entity from and against any and all losses, claims, damages, liabilities and expenses by
reason of such settlement or judgment to the extent provided herein. Notwithstanding the
immediately preceding sentence, if at any time a Placement Agent Entity shall have
requested the Company to reimburse such Placement Agent Entity for legal or other expenses
in connection with investigating, responding to or defending any Proceedings as
contemplated by this Section 8, the Company shall be liable for any settlement of any
Proceedings effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by the Company of such request for reimbursement and (ii)
the Company shall not have reimbursed such Placement Agent Entity in accordance with this
Agreement and with such request prior to the date of such settlement. The Company shall
not, without the prior written consent of a Placement Agent Entity, effect any settlement
of any pending or threatened Proceedings in respect of which indemnity could have been
sought hereunder by such Placement Agent Entity unless such settlement includes an
unconditional release of such Placement Agent Entity in form and substance satisfactory to
such Placement Agent Entity from all liability on claims that are the subject matter of
such Proceedings and does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any Placement Agent Entity.
21
9. Termination. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Placement Agents, by notice given to the Company, if
after the execution and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (ii) trading of any securities of or guaranteed by the Company shall have been
suspended on any exchange or in any over the counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either Federal or New York
State authorities, or (iv) there shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis that, in the judgment of the Placement
Agents, is material and adverse and which, in the judgment of the Placement Agents, makes it
impracticable to offer, sell or deliver the Securities on the terms and in the manner contemplated
in the Final Private Placement Memorandum or to enforce contracts for the sale of the Securities.
Termination of this Agreement pursuant to this Section 9 shall be without liability of any
party to any other party except as provided in Section 8 hereof.
10. Survival of Agreements, Representations, Warranties and Indemnities. The
respective agreements, representations, warranties, indemnities and other statements of the Company
or its officers and of the Placement Agents set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on behalf of the
Placement Agents or the Company or any of the officers, directors, employees, agents or controlling
persons referred to in Section 8 hereof, and will survive delivery of and payment for the
Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
11. Notices. Notices in relation to this letter agreement may be sent to the Company
at 00000 X.X. 00xx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 or by facsimile sent to the
attention of Xxxxxxx Xxxxxx at 000-000-0000, confirmed by calling 000-000-0000 and to JPMorgan at
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx Xxxxxxxxxxx, or by facsimile sent to
000-000-0000, confirmed by calling 000-000-0000, and to Xxxxxxx Xxxxx at 00 Xxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Attention: Xxxx Xxxx, or by facsimile sent to 000-000-0000, confirmed by calling
000-000-0000.
12. No Fiduciary Relationships. The Company acknowledges that the Placement Agents
have been retained solely to provide the services set forth herein. In rendering such services,
each of the Placement Agents shall act as an independent contractor and not as a financial advisor
or a fiduciary to, or an agent of, the Company or any other person. Additionally, the Placement
Agents are not advising the Company or any other person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own independent
investigation and appraisal of the transactions contemplated hereby, and the Placement Agents shall
have no responsibility or liability to the Company with respect thereto. Any review by the
Placement Agents of the Company, the transactions contemplated hereby or other matters
22
relating to such transactions will be performed solely for the benefit of the Placement Agents
and shall not be on behalf of the Company. Any duties of Placement Agents arising out of this
Agreement shall be owed solely to the Company and nothing in this Agreement or the nature of the
services of the Placement Agents in connection with this Agreement shall be deemed to create a
fiduciary duty or fiduciary or agency relationship between the Placement Agents and the Company and
its stockholders, employees or creditors, and the Company agrees that it shall not make, and hereby
waives, any claim based on an assertion of such a fiduciary duty or relationship in connection with
the transactions contemplated by this Agreement. In addition, the Company agrees that each of the
Placement Agents may perform the services contemplated hereby in conjunction with its affiliates,
and that any affiliates of the Placement Agents performing services hereunder shall be entitled to
the benefits and be subject to the terms of this Agreement.
The Company acknowledges that each of the Placement Agents is a securities firm engaged in
securities trading and brokerage activities and providing investment banking and financial advisory
services. In the ordinary course of business, each of the Placement Agents and its affiliates may
at any time hold long or short positions, and may trade or otherwise effect transactions, for their
own account or the accounts of customers, in debt or equity securities of the Company, its
affiliates or other entities that may be involved in the transactions contemplated hereby. In
addition, each of the Placement Agents and its affiliates may from time to time perform various
investment banking, commercial banking and financial advisory services for other clients and
customers who may have conflicting interests with respect to the Company or the offering and sale
of the Securities.
Furthermore, the Company acknowledges that each of the Placement Agents and its affiliates may
have fiduciary or other relationships whereby such Placement Agent and its affiliates may exercise
voting power over securities of various persons, which securities may from time to time include
securities of the Company or of potential purchasers of the Securities or others with interests in
respect of the offering and sale of the Securities. The Company acknowledges that each Placement
Agent and its affiliates may exercise such powers and otherwise perform its functions in connection
with such fiduciary or other relationships without regard to the relationship of the Placement
Agents to the Company hereunder.
13. APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND THE PLACEMENT
AGENTS IRREVOCABLY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY OR ON BEHALF OF EITHER PARTY RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE
PERFORMANCE OF SERVICES HEREUNDER.
14. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.
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15. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
16. Miscellaneous. This Agreement and the engagement letter dated March 6, 2007 among
the Company and the Placement Agents contain the entire agreement between the parties relating to
the subject matter hereof and supersedes all oral statements and prior writings with respect
thereto. This Agreement may not be amended or modified except by a writing executed by each of the
parties hereto. Section headings herein are for convenience only and are not a part of this
Agreement. This Agreement is solely for the benefit of the Company and the Placement Agents, and
no other person (except for indemnified persons to the extent set forth in Section 8) shall acquire
or have any rights under or by virtue of this letter agreement. This Agreement may not be assigned
by any party hereto without the prior written consent of each other party hereto. No party hereto
shall be responsible or have any liability to any other party for any indirect, special or
consequential damages arising out of or in connection with this Agreement or the transactions
contemplated hereby, even if advised of the possibility thereof.
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If the foregoing is in accordance with your understanding of our agreement, please sign
and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company and the Placement Agents.
| Very truly yours, | ||||||
| XXXXX XXXXX HOLDINGS, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxx | |||||
| Title: Interim Chief Financial Officer | ||||||
| XXXXX XXXXX, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxx | |||||
| Title: Interim Chief Financial Officer | ||||||
| XXXXX XXXXX FULFILLMENT SERVICES, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxx | |||||
| Title: Interim Chief Financial Officer | ||||||
| XXXXX XXXXX DIVERSIFIED SALES, LLC | ||||||
| By: | /s/ Xxxxx Xxxxxx | |||||
| Title: Interim Chief Financial Officer | ||||||
| XXXXX XXXXX SERVICES, LLC | ||||||
| By: | /s/ Xxxxx Xxxxxx | |||||
| Title: Interim Chief Financial Officer | ||||||
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| XXXXX XXXXX INTERNATIONAL DEVELOPMENT, LLC |
|||||||
| By: | /s/ Xxxxx Xxxxxx | ||||||
| Title: Interim Chief Financial Officer | |||||||
| XXXXX XXXXX INFORMATION TECHNOLOGY, LLC |
|||||||
| By: | /s/ Xxxxx Xxxxxx | ||||||
| Title: Interim Chief Financial Officer | |||||||
The foregoing Placement Agency Agreement is
hereby confirmed and accepted
as of the date first above written.
hereby confirmed and accepted
as of the date first above written.
X.X. XXXXXX SECURITIES INC.
By: |
||||
| Title: | ||||
| XXXXXXX, XXXXX & CO. | ||||
By: |
||||
