rue21, inc. 155 Thornhill Road Warrendale, PA 15086 May __, 2003
EXHIBIT 10.10
May __, 2003
Xxxxxxxx Xxxx & Xxxxxx, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Ladies and Gentlemen:
This letter agreement confirms our understanding that rue21, inc., a Pennsylvania corporation
(f/k/a Pennsylvania Fashions, Inc.) on behalf of itself and its subsidiaries and affiliates
(collectively, the “Company”) has engaged you (the “Advisor”) to provide financial advisory
services to the Company upon the request of the Company from time to time. These services are to be
provided in connection with ongoing business and financial matters, including operating and cash
flow requirements, corporate liquidity and other ordinary and necessary corporate finance
concerns (including acquisition, advisory and finance matters).
In consideration for the Advisor agreeing to provide such advisory services, the Company agrees to
pay the Advisory an annual fee of $250,000, payable annually in advance, with the first such
payment to be made on the date hereof; provided that if the Company’s secured financing,
agreements do not permit the payment of all or any portion of such annual fee, then such unpaid
fees will accrue and become due and payable by the Company at such time as the Company’s secured
financing agreements do permit such payment.
The annual fee is for financial advisory services to be rendered by the Advisor and its
employees and partners and not for any other services or any such services to be rendered by any
other person. Directors of the Company who are representatives of the Advisor, or any of its
affiliates, will not be entitled to receive compensation for serving as directors of the Company
(it being understood that such directors will be entitled, however, to customary indemnification
agreements with the Company). Any additional services to be provided by or on behalf of the
Advisor, and any additional fee therefor, will be agreed to in writing by the parties.
The Company agrees to reimburse the Advisor on the date hereof for all of the reasonable
out-of-pocket expenses incurred by the Advisor and its affiliates (including without limitation,
the fees and disbursements of counsel and other expenses incurred in
carrying out the Advisor’s
due diligence investigation) in connection with the agreements entered into by the Company. The
Company also agrees to reimburse the Advisor promptly upon request from time to time for all
additional reasonable out-of-pocket expenses incurred by the Advisor in connection with the
services to be rendered by the Advisor pursuant to its engagement hereunder.
Xxxxxxxx Xxxx & Xxxxxx, LLC
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The Company also agrees to indemnify the Advisor and certain other persons and to limit the
Advisor’s liability to the Company as set forth in Schedule I hereto which constitutes an
integral part of this letter. The Company’s agreements contained or referred to in this paragraph
shall survive any termination of this agreement.
This letter agreement shall continue from the date hereof through the date on which the Advisor and
its affiliates beneficially own, collectively, less than 25% of the voting common stock of
Pennsylvania Fashions, Inc. owned beneficially by them, collectively, on the date hereof (as
adjusted for any stock split, stock dividend or reclassification involving the voting common stock
of the Company).
This letter agreement will constitute the entire agreement between the parties hereto and will not
be amended except in writing by the Company and the Advisor. This agreement will be governed by,
and construed in accordance with, the laws of the State of New York without regard to the conflict
of laws rules of such state.
If the foregoing accurately describes our agreement with respect to the foregoing, please so
indicate by signing this letter in the space indicated below.
| Very truly yours, rue21, inc. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | President | |||
ACCEPTED AND AGREED:
XXXXXXXX XXXX & XXXXXX, LLC
By:
|
/s/ Illegible | |||
| Name: | ||||
| Title: |
SCHEDULE I
rue21, inc., a Pennsylvania corporation (f/k/a Pennsylvania Fashions, Inc.) (the “Company”)
will indemnify and hold harmless Xxxxxxxx Xxxx & Xxxxxx, LLC (the “Advisor”), its affiliates and
the respective partners, agents and employees of the Advisor and their respective affiliates
(together with the Advisor, collectively, the “Advisor Group”) from and against any claims,
liabilities, damages, losses and expenses, including reasonable fees and expenses of counsel,
arising out of or in connection with the services rendered by the
Advisor Group under this
agreement, and will reimburse the Advisor Group for all such fees and expenses, including the
reasonable fees and expenses of counsel, as they are incurred by the Advisor Group in connection
with pending or threatened litigation whether or not the Advisor Group is a party thereto. The
Company will not, however, be responsible for any claims, liabilities, damages, losses or expenses
to the extent that such claims, liabilities, damages, losses or expenses are finally determined by
a court of competent jurisdiction to result primarily from the Advisor Group’s gross negligence or
bad faith. The foregoing agreement will be in addition to any rights that the Advisor Group may
have at common law or otherwise, including, but not limited to, any right to contribution.
Notwithstanding anything else contained herein, the Company also agrees that the Advisor Group
will have no liability to the Company in connection with the services rendered hereunder (whether
in tort, contract or otherwise) for claims, liabilities, damages, losses, or expenses, including
reasonable fees and expenses of counsel, incurred by the Company
unless, and to the extent, they
are finally determined by a court of competent jurisdiction to result primarily from the Advisor
Group’s gross negligence or bad faith.
If indemnification is to be sought hereunder by a member of the Advisor Group, then
such member shall notify the Company of the commencement of any action or proceeding in
respect thereof; provided, however, that the failure to so notify the Company shall not
relieve the Company from any liability that it may otherwise have to such indemnified
person, except to the extent the Company shall have been materially prejudiced by such
failure. Following such notification, the Company may elect in writing to assume the
defense of such action or proceeding, and upon such election, it will not be liable for
any legal costs subsequently incurred by such member (other than reasonable costs of
investigation) in connection therewith, unless (i) the Company has failed to provide
counsel reasonably satisfactory to such member in a timely manner or (ii) counsel that has
been provided by the Company reasonably determines that its representation of such member
would present it with a conflict of interest. In any litigation or proceeding, the Company
will not be responsible for the fees and expenses of more than one counsel (together with
local counsel) for all members of the Advisor Group claiming indemnification hereunder in
any one jurisdiction, unless any of such members has a separate and conflicting defense with
regard to such litigation or proceedings, as reasonably determined by the counsel that has
been provided by the Company. The Company will not be liable for any settlement of any
litigation or proceeding effected without its prior written consent, which, consent will
not be unreasonably withheld or delayed. Should the Company assume the defense of any action, the Company will not, without the
Advisor Group’s prior written consent, settle, compromise, consent to the entry of any
judgment in or otherwise seek to terminate such action if such settlement, compromise,
consent or termination imposes obligations on any member of the Advisor Group (through
injunctive relief or otherwise) other than the payment of money or does not unconditionally
release the Advisor Group from liability.
