Document:

exv10w4

 

Exhibit 10.4

Eddie Bauer Holdings, Inc.

Convertible Senior Notes due 2014

Placement Agency Agreement

New York, New York

March 28, 2007

J.P. Morgan Securities Inc.

277 Park Avenue

New York, New York 10172

Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004

Ladies and Gentlemen:

     Eddie Bauer 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, J.P. Morgan Securities Inc. and Goldman, Sachs & 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. J.P. Morgan
Securities Inc. shall be entitled to receive 67% of the Placement Fee and Goldman, Sachs & 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 Seidman, 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 mark 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 Strauss Hauer &
Feld LLP, 590 Madison Avenue, New York, NY 10022-2524. 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 (“EDGAR”), 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 Strauss Hauer & Feld 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 Simpson Thacher & Bartlett 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 15010 N.E. 36th Street, Redmond, Washington 98052 or by facsimile sent to the
attention of Shelley Milano at 425-755-7671, confirmed by calling 425-755-6179 and to JPMorgan at
277 Park Avenue, New York, NY 10172, Attention: Santosh Sreenivasan, or by facsimile sent to
212-622-6037, confirmed by calling 212-622-5604, and to Goldman Sachs at 85 Broad Street, New York,
NY 10004, Attention: John Kolz, or by facsimile sent to 212-346-3885, confirmed by calling
212-902-1735.

     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.

 

 

 23

     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.

 

 

 24

     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,	 	 
	 
	 	 	 	 	 	 
	 	 	EDDIE BAUER HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EDDIE BAUER, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EDDIE BAUER FULFILLMENT SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EDDIE BAUER DIVERSIFIED SALES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EDDIE BAUER SERVICES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 

 

 

25

	 	 	 	 	 	 	 
	 	 	EDDIE BAUER INTERNATIONAL
      DEVELOPMENT, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EDDIE BAUER INFORMATION
      TECHNOLOGY, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Taylor	 	 
	 

	 	 	 	 

Name: David Taylor
	 	 
	 

	 	 	 	Title: Interim Chief Financial Officer	 	 

The foregoing Placement Agency Agreement is

hereby confirmed and accepted

as of the date first above written.

J.P. MORGAN SECURITIES INC.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name: 
	 	 
	 

	 	Title: 	 	 
	 
	 	 	 	 
	GOLDMAN, SACHS & CO.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

(Goldman, Sachs & Co.)exv10w5

 

Exhibit 10.5

Eddie Bauer Holdings, Inc.

5.25% Convertible Senior Notes due 2014

Registration Rights Agreement

April 4, 2007

J.P. Morgan Securities Inc.

277 Park Avenue

New York, New York 10172

Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004

Ladies and Gentlemen:

     This Registration Rights Agreement is made and entered into on the date indicated above by and
among Eddie Bauer Holdings, Inc., a Delaware corporation (the “Company”), the subsidiaries
of the Company listed on the signature page hereto (collectively, the “Guarantors”) and
J.P. Morgan Securities Inc. and Goldman, Sachs & Co. (the “Placement Agents”) pursuant to
the Placement Agency Agreement, dated March 28, 2007, among the Company and the Placement Agents
(the “Placement Agency Agreement”).

     In order to induce the investors (the “Purchasers”) to enter into the securities
purchase agreements, dated March 29, 2007 (each, a “Purchase Agreement” and collectively,
the “Purchase Agreements”), the Company has agreed to provide the registration rights set
forth in this Agreement. The execution of this Agreement is a condition to the closing under the
Purchase Agreements.

     The Company agrees with the Placement Agents for the benefit of the Holders (as defined
herein) of the 5.25% Convertible Senior Notes due 2014 (the “Notes”) and the beneficial
owners from time to time of the Shares (as defined herein) issued upon conversion of the Notes, as
follows:

     1. Certain Definitions.

     For purposes of this Agreement the following terms shall have the following meanings:

     (a) “Additional Guarantor” means any subsidiary of the Company that executes a
Guarantee under the Indenture after the date of this Agreement.

     (b) “Additional Interest” has the meaning assigned thereto in Section 2(d).

 

 2 

     (c) “Additional Interest Payment Date” has the meaning assigned thereto in
Section 2(d).

     (d) “Agreement” means this Registration Rights Agreement, as the same may be
amended from time to time pursuant to the terms hereof.

     (e) “Closing Date” means the date on which any Notes are initially issued.

     (f) “Commission” means the Securities and Exchange Commission, or any other
federal agency at the time administering the Exchange Act or the Securities Act, whichever
is the relevant statute for the particular purpose.

     (g) “Company” has the meaning specified in the first paragraph of this
Agreement.

     (h) “Deferral Notice” has the meaning assigned thereto in Section 3(b).

     (i) “Deferral Period” has the meaning assigned thereto in Section 3(b).

     (j) “Effective Period” has the meaning assigned thereto in Section 2(a).

     (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     (l) “Free Writing Prospectus” means each free writing prospectus (as defined in
Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the sale of the Securities.

     (m) “Guarantee” means, individually, any guarantee of the Notes by a Guarantor
pursuant to the terms of the Indenture and any supplemental indenture thereto.

     (n) “Guarantors” means the entities guaranteeing the Notes pursuant to the
terms of the Indenture, including any Guarantor’s successors and any Additional Guarantors.

     (o) “Holder” means each holder, from time to time, of Registrable Securities
(including the Purchasers).

     (p) “Indenture” means the Indenture dated as of the date hereof among the
Company, the Guarantors and The Bank of New York, as Trustee, pursuant to which the Notes
and the Guarantees are being issued.

     (q) “Issuer Information” has the meaning set forth in Section 6(a) hereof.

     (r) “Material Event” has the meaning assigned thereto in Section 3(a)(iv).

     (s) “Majority Holders” shall mean, on any date, holders of the majority of the
Shares constituting Registrable Securities; for the purposes of this definition, Holders

 

3

of
Notes constituting Registrable Securities shall be deemed to be the Holders of the number of
Shares into which such Notes are or would be convertible as of such date.

     (t) “NASD” shall mean the National Association of Securities Dealers, Inc.

     (u) “NASD Rules” shall mean the Conduct Rules and the By-Laws of the NASD.

     (v) “Notes” has the meaning specified in the first paragraph of this Agreement.

     (w) “Notice and Questionnaire” means a written notice delivered to the Company
containing substantially the information called for by the Form of Selling Securityholder
Notice and Questionnaire attached as Annex A to the Private Placement Memorandum.

     (x) “Notice Holder” means, on any date, any Holder that has delivered a Notice
and Questionnaire to the Company prior to such date.

     (y) “Person” means a corporation, association, partnership, organization,
business, individual, government or political subdivision thereof or governmental agency.

     (z) “Placement Agents” has the meaning specified in the first paragraph of this
Agreement.

     (aa) “Private Placement Memorandum” means the Private Placement Memorandum
dated March 29, 2007 relating to the offer and sale of the Securities.

     (bb) “Prospectus” means the prospectus included in any Shelf Registration
Statement, including any preliminary prospectus, and any such prospectus as amended or
supplemented by any amendment or prospectus supplement, including post-effective amendments,
and all materials incorporated by reference or explicitly deemed to be incorporated by
reference in such Prospectus.

     (cc) “Purchase Agreements” has the meaning specified in the second paragraph of
this Agreement.

     (dd) “Purchasers” has the meaning specified in the second paragraph of this
Agreement.

     (ee) “Registrable Securities” means

	 	(i)	 	any Notes and the Guarantees until the earliest
of (i) their effective registration under the Securities Act and the
resale of all such Notes and Guarantees in accordance with the Shelf
Registration Statement, (ii) the date on which such Notes and
Guarantees are (A) sold pursuant to Rule 144 under circumstances in which any legend
borne by such Notes and Guarantees relating to restrictions

 

4

	 	 	 	on transferability thereof, under the Securities Act or otherwise, is
removed or (B) the expiration of the holding period applicable to the
Notes under Rule 144(k) or (iii) the date on which such Notes have
been converted (and the related Guarantees have been terminated) or
otherwise cease to be outstanding;

	 	(ii)	 	any Shares issuable upon conversion of any
Notes constituting Registrable Securities, until the earliest of (i)
their effective registration under the Securities Act and the resale of
all such Shares in accordance with the Shelf Registration Statement,
(ii) the date on which such Shares are (A) freely transferable by
persons who are not affiliates of the Company without registration
under the Securities Act or (B) the expiration of the holding period
applicable to the Shares under Rule 144(k) or (iii) the date on which
such Shares cease to be outstanding.

     (ff) “Registration Default” has the meaning assigned thereto in Section 2(d).

     (gg) “Registration Expenses” has the meaning assigned thereto in Section 5.

     (hh) “Rule 144,” “Rule 405” and “Rule 415” mean, in each case,
such rule as promulgated under the Securities Act.

     (ii) “Securities” means, collectively, the Notes and the Shares.

     (jj) “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     (kk) “Shares” means the shares of common stock of the Company, par value $0.01
per share, into which the Notes are convertible or that have been issued upon a conversion
from Notes into common stock of the Company.

     (ll) “Shelf Registration Statement” means the shelf registration statement
referred to in Section 2(a), as amended or supplemented by any amendment or supplement,
including post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Shelf Registration Statement.

     (mm) “Special Counsel” shall have the meaning assigned thereto in Section 5.

     (nn) “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended,
or any successor thereto, and the rules, regulations and forms promulgated thereunder.

     (oo) “Trustee” shall have the meaning assigned such term in the Indenture.

     Unless the context otherwise requires, any reference herein to a “Section” or “clause” refers
to a Section or clause, as the case may be, of this Agreement, and the words “herein,”

 

5

“hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision. Unless the context otherwise requires, any reference to a
statute, rule or regulation refers to the same (including any successor statute, rule or regulation
thereto) as it may be amended from time to time.

          2. Registration Under the Securities Act.

     (a) The Company and the Guarantors agree to file under the Securities Act a shelf
registration statement providing for the registration of, and the sale on a continuous or delayed
basis by the Holders of, all of the Registrable Securities, pursuant to Rule 415 or any similar
rule that may be adopted by the Commission. The Company and the Guarantors agree to use their
reasonable efforts to cause the Shelf Registration Statement to become effective within 180 days
after the Closing Date and to keep such Shelf Registration Statement continuously effective until
the earlier of (i) the second anniversary of the Closing Date or (ii) such time as there are no
longer any Registrable Securities outstanding (the “Effective Period”). None of the
Company’s securityholders or the Guarantors’ securityholders (other than Holders of Registrable
Securities) shall have the right to include any of the Company’s securities or the Guarantors’
securities in the Shelf Registration Statement.

     (b) The Company and the Guarantors further agree that they shall cause the Shelf
Registration Statement and the related Prospectus and any amendment or supplement thereto, as of
the effective date of the Shelf Registration Statement or such amendment or supplement, (i) to
comply in all material respects with the applicable requirements of the Securities Act; and (ii)
not to contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not misleading,
provided that the Company makes no representation with respect to any information provided by
Holders in their Notice and Questionnaires and the Company and the Guarantors agree to furnish to
the Holders of the Registrable Securities copies of any supplement or amendment prior to its
being used or promptly following its filing with the Commission; provided, however, that the
Company shall have no obligation to deliver to Holders of Registrable Securities copies of any
amendment consisting exclusively of an Exchange Act report or other Exchange Act filing otherwise
publicly available on the Company’s website. If the Shelf Registration Statement, as amended or
supplemented from time to time, ceases to be effective for any reason at any time during the
Effective Period (other than because all Registrable Securities registered thereunder shall have
been sold pursuant thereto or shall have otherwise ceased to be Registrable Securities), the
Company and the Guarantors shall use their reasonable best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof.

     (c) Each Holder of Registrable Securities agrees that if such Holder wishes to sell
Registrable Securities pursuant to the Shelf Registration Statement and related Prospectus, it
will do so only in accordance with this Section 2(c) and Section 3(b). Holders
are required to complete and deliver the Notice and Questionnaire at least 10 days prior to
the effectiveness of the Shelf Registration Statement so that the Holder may be named as a
selling securityholder in the related prospectus at the time of effectiveness. From and after the
date the Shelf Registration Statement is declared or becomes effective, the Company and the

 

6

Guarantors shall, as promptly as is practicable after the date a Notice and Questionnaire is
delivered, and in any event within fifteen (15) days after the date of receipt of such Notice and
Questionnaire, or if the use of the Prospectus has been suspended by the Company under Section
3(b) hereof at the time of receipt of the Notice and Questionnaire, fifteen (15) days after the
expiration of the period during which the use of the Prospectus is suspended:

     (i) if required by applicable law, file with the Commission a post-effective amendment
to the Shelf Registration Statement or prepare and, if required by applicable law, file a
supplement to the related Prospectus or a supplement or amendment to any document
incorporated therein by reference or file any other required document so that the Holder
delivering such Notice and Questionnaire is named as a selling security holder in the Shelf
Registration Statement and the related Prospectus in such a manner as to permit such Holder
to deliver such Prospectus to purchasers of the Registrable Securities in accordance with
applicable law and, if the Company and the Guarantors shall file a post-effective amendment
to the Shelf Registration Statement, use their reasonable efforts to cause such
post-effective amendment to be declared or to otherwise become effective under the
Securities Act as promptly as is practicable. Notwithstanding the foregoing, the Company
and the Guarantors shall not be required to file more than one post-effective amendment to
the Shelf Registration Statement or supplement to the related Prospectus during any thirty
(30) day period;

     (ii) provide such Holder copies of any documents filed pursuant to Section 2(c)(i); and

     (iii) notify such Holder as promptly as practicable after the effectiveness under the
Securities Act of any post-effective amendment filed pursuant to Section 2(c)(i);

provided that if such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set
forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in accordance
with Section 3(b). Notwithstanding anything contained herein to the contrary, the Company and the
Guarantors shall be under no obligation to name any Holder that is not a Notice Holder as a selling
securityholder in any Shelf Registration Statement or related Prospectus; provided, however, that
any Holder that becomes a Notice Holder pursuant to the provisions of this Section 2(c) (whether or
not such Holder was a Notice Holder at the time the Shelf Registration Statement was declared or
otherwise became effective) shall be named as a selling securityholder in the Shelf Registration
Statement or related Prospectus in accordance with the requirements of this Section 2(c).

     (d) If any of the following events (any such event a “Registration Default”) shall
occur, then additional interest (the “Additional Interest”) shall become payable jointly
and severally by the Company and the Guarantors to Holders in respect of the Notes as
follows:

     (i) if the Shelf Registration Statement is not declared effective and does not
otherwise become effective within 180 days following the Closing Date, then

 

7

commencing on
the 181st day after the Closing Date, Additional Interest shall accrue on the
principal amount of the outstanding Notes that are Registrable Securities at a rate of 0.25%
per annum for the first 90 days following such 181st day and at a rate of 0.50%
per annum thereafter; or

     (ii) if the Company or the Guarantors have failed to perform their obligations set
forth in Section 2(c) hereof within the time periods required therein, then commencing on
the first day after the date by which the Company and the Guarantors were required to
perform such obligations, Additional Interest shall accrue on the principal amount of the
outstanding Notes that are Registrable Securities at a rate of 0.25% per annum for the first
90 days and at a rate of 0.50% per annum thereafter;

     (iii) if the Shelf Registration Statement has been declared effective or has otherwise
become effective but such Shelf Registration Statement ceases to be effective at any time
during the Effective Period (other than pursuant to Section 3(b) hereof), then commencing on
the day such Shelf Registration Statement ceases to be effective, Additional Interest shall
accrue on the principal amount of the outstanding Notes that are Registrable Securities at a
rate of 0.25% per annum for the first 90 days following such date on which the Shelf
Registration Statement ceases to be effective and at a rate of 0.50% per annum thereafter;
or

     (iv) if the aggregate duration of Deferral Periods in any period exceeds the number of
days permitted in respect of such period pursuant to Section 3(b) hereof, then commencing on
the day the aggregate duration of Deferral Periods in any period exceeds the number of days
permitted in respect of such period (and again on the first day of any subsequent Deferral
Period during such period), Additional Interest shall accrue on the principal amount of the
outstanding Notes that are Registrable Securities at a rate of 0.25% per annum for the first
90 days and at a rate of 0.50% per annum thereafter;

provided, however, that the Additional Interest rate on the Notes shall not exceed in the aggregate
0.50% per annum and shall not be payable under more than one clause above for any given period of
time, except that if Additional Interest would be payable under more than one clause above, but at
a rate of 0.25% per annum under one clause and at a rate of 0.50% per annum under the other, then
the Additional Interest rate shall be the higher rate of 0.50% per annum; provided further,
however, that (1) upon the filing of the Shelf Registration Statement (in the case of clause (i)
above), (2) upon the effectiveness of the Shelf Registration Statement (in the case of clause (ii)
above), (3) upon the performance by the Company and the Guarantors of their obligations set forth
in Section 2(c) hereof within the time periods required therein (in the case of clause (iii)
above), (4) upon the effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of clause (iv) above), (5) upon the termination of the Deferral Period that
caused the limit on the aggregate duration of Deferral Periods in a period set forth in Section
3(b) to be exceeded (in the case of clause (v) above) or (6) upon the termination
of certain transfer restrictions on the Securities as a result of the application of Rule 144(k) or
any successor provision, Additional Interest on the Notes as a result of such clause, as the case
may be, shall cease to accrue.

 

8

               Additional Interest on the Notes, if any, will be payable in cash on April 1 and October 1 of
each year (the “Additional Interest Payment Date”) to holders of record of outstanding
Notes that are Registrable Securities on each preceding March 15 and September 15; provided that
any Additional Interest accrued with respect to any Notes or portion thereof converted into Shares
on a conversion date prior to the Registration Default shall, in any such event, be paid instead to
the Holder who submitted such Notes or portion thereof for conversion on the applicable conversion
date on such date (or promptly following the conversion date, in the case of conversion).
Following the cure of all Registration Defaults requiring the payment of Additional Interest to the
Holders of Notes that are Registrable Securities pursuant to this Section, the accrual of
Additional Interest will cease (without in any way limiting the effect of any subsequent
Registration Default requiring the payment of Additional Interest).

               The Company shall notify the Trustee immediately upon the happening of each and every
Registration Default. The Trustee shall be entitled, on behalf of Holders of Securities, to seek
any available remedy for the enforcement of this Agreement, including for the payment of any
Additional Interest. Notwithstanding the foregoing, the parties agree that the sole monetary
damages payable for a violation of the terms of this Agreement with respect to which additional
monetary amounts are expressly provided shall be as set forth in this Section 2(d). Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or obtaining specific
performance or other equitable relief with respect to this Agreement.

              (e) A Shelf Registration Statement pursuant to this Section 2 will not be deemed to have
become effective unless it has been declared effective by the SEC or is automatically effective
upon filing with the SEC as provided by Rule 462 under the Securities Act.

     3. Registration Procedures.

          The following provisions shall apply to the Shelf Registration Statement filed pursuant to
Section 2:

     (a) The Company and the Guarantors shall:

     (i) prepare and file with the Commission a registration statement with respect to the
shelf registration on any form which may be utilized by the Company and the Guarantors and
which shall permit the disposition of the Registrable Securities in accordance with the
intended method or methods thereof, as specified in writing by the Holders of the
Registrable Securities, and use their reasonable efforts to cause such registration
statement to become effective in accordance with Section 2(a) above;

     (ii) before filing any Shelf Registration Statement or Prospectus or any amendments or
supplements thereto with the Commission, furnish to the Placement Agents and any Notice
Holder who so requests copies of all such documents proposed to
be filed and use reasonable efforts to reflect in each such document when so filed with
the Commission such comments as the Placement Agents and any such Notice Holders reasonably
shall propose within three (3) Business Days of the delivery of such copies to the Placement
Agents and any such Notice Holders;

 

9

     (iii) use their reasonable efforts to prepare and file with the Commission such
amendments and post-effective amendments to the Shelf Registration Statement and file with
the Commission any other required document as may be necessary to keep such Shelf
Registration Statement continuously effective until the expiration of the Effective Period;
cause the related Prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply with the provisions of the Securities Act
applicable to it with respect to the disposition of all Securities covered by such Shelf
Registration Statement during the Effective Period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Shelf Registration Statement as so
amended or such Prospectus as so supplemented;

     (iv) promptly notify the Notice Holders of Registrable Securities (A) when such Shelf
Registration Statement or the Prospectus included therein or any amendment or supplement to
the Prospectus or post-effective amendment has been filed with the Commission, and, with
respect to such Shelf Registration Statement or any post-effective amendment, when the same
has become effective, (B) of any request, following the effectiveness of the Shelf
Registration Statement, by the Commission or any other Federal or state governmental
authority for amendments or supplements to the Shelf Registration Statement or related
Prospectus or for additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of such Shelf Registration Statement or the initiation or
written threat of any proceedings for that purpose, including the receipt by the Company of
any notice of objection of the Commission to the use of a Shelf Registration Statement or
any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act,
(D) of the receipt by the Company or any Guarantor of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any jurisdiction
or the initiation or written threat of any proceeding for such purpose, (E) of the
occurrence of (but not the nature of or details concerning) any event or the existence of
any fact (a “Material Event”) as a result of which any Shelf Registration Statement
shall contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading, or
any Prospectus shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (provided,
however, that no notice by the Company shall be required pursuant to this clause (E) in the
event that the Company either promptly files a prospectus supplement to update the
Prospectus or a Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into the Shelf Registration Statement, which, in either case, contains the
requisite information with respect to such Material Event that results in such Shelf
Registration Statement no longer containing any untrue statement of material fact or
omitting to state a material fact necessary to make the statements contained therein not
misleading), (F) of the determination by the Company that a post-effective amendment to the Shelf Registration
Statement will be filed with the Commission, which notice may, at the discretion of the
Company (or as required pursuant to Section 3(b)), state that it constitutes a Deferral
Notice, in which event the provisions of Section 3(b) shall apply or (G) at any time when a
Prospectus is required to be delivered under the Securities Act, that the Shelf

 

10

Registration
Statement, Prospectus, Prospectus amendment or supplement or post-effective amendment does
not conform in all material respects to the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the Commission thereunder;

     (v) prior to any public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, use their reasonable best efforts to register or qualify, or
cooperate with the Notice Holders of Securities included therein and their respective
counsel in connection with the registration or qualification of, such Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any such Notice
Holders reasonably requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Securities covered by
the Shelf Registration Statement; prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use its reasonable efforts to keep each such
registration or qualification (or exemption therefrom) effective during the Effective Period
in connection with such Notice Holder’s offer and sale of Registrable Securities pursuant to
such registration or qualification (or exemption therefrom) and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of such
Registrable Securities in the manner set forth in the Shelf Registration Statement and the
related Prospectus; provided that the Company and the Guarantors will not be required to
qualify generally to do business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to general service of process or to taxation in any
such jurisdiction where it is not then so subject;

     (vi) use its reasonable best efforts to prevent the issuance of, and if issued, to
obtain the withdrawal of any order suspending the effectiveness of the Shelf Registration
Statement or, in the event of an objection of the SEC pursuant to Rule 401(g)(2), promptly
file an amendment to such Shelf Registration Statement on the proper form, and to lift any
suspension of the qualification of any of the Registrable Securities for sale in any
jurisdiction in which they have been qualified for sale, in each case at the earliest
practicable date;

     (vii) upon reasonable notice, for a reasonable period prior to the filing of the Shelf
Registration Statement, and throughout the Effective Period, (i) make reasonably available
for inspection during normal business hours by a representative of, and Special Counsel
acting for, Majority Holders of the Securities being sold and any underwriter (and its
counsel) participating in any disposition of Securities pursuant to such Shelf Registration
Statement, all relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries and (ii) use reasonable best efforts to have
their officers, directors, employees, accountants and counsel supply all relevant
information reasonably requested by such representative, Special Counsel or any such
underwriter in connection with such Shelf Registration
Statement provided, however, that any information that is designated by the Company, in
good faith, as confidential at the time of delivery of such information shall be kept
confidential by such persons except information that (i) was in the possession of such
persons prior to disclosure by the Company; (ii) is publicly disclosed other than by such
persons in violation of this Agreement; (iii) is obtained by such persons from a person
other than the

 

11

Company who, to the knowledge of such person, is not bound by a
confidentiality agreement with the Company; (iv) the Company agrees may be disclosed; or (v)
is required to be disclosed in conformity with applicable securities laws or requested to be
disclosed under compulsion of law (whether by oral question, interrogatory, subpoena, civil
investigative demand or otherwise), by order or act of any court or governmental or
regulatory authority or body;

     (viii) if requested by Majority Holders of the Securities being sold in an
underwriting, their Special Counsel or the managing underwriters (if any) in connection with
such Shelf Registration Statement, use their reasonable best efforts to cause (i) their
counsel to deliver an opinion relating to the Shelf Registration Statement and the
Securities in customary form, (ii) their officers to execute and deliver all customary
documents and certificates requested by the Majority Holders of the Securities being sold,
their Special Counsel or the managing underwriters (if any) and (iii) their independent
registered public accounting firm to provide a standard form of auditor’s “cold comfort”
letters.

     (ix) if reasonably requested by the Placement Agents or any Notice Holder, promptly
incorporate in a prospectus supplement or post-effective amendment to the Shelf Registration
Statement such information as the Placement Agents or such Notice Holder shall, on the basis
of a written opinion of nationally-recognized counsel experienced in such matters, determine
to be required to be included therein by applicable law and make any required filings of
such prospectus supplement or such post-effective amendment; provided, that the Company
shall not be required to take any actions under this Section 3(a)(ix) that are not, in the
reasonable opinion of counsel for the Company, in compliance with applicable law;

     (x) promptly furnish to each Notice Holder and the Placement Agents, upon their request
and without charge, at least one (1) conformed copy of the Shelf Registration Statement and
any amendments thereto, including financial statements but excluding schedules, all
documents incorporated or deemed to be incorporated therein by reference and all exhibits;
provided, however, that the Company shall have no obligation to deliver to Notice Holders or
the Placement Agents a copy of any amendment consisting exclusively of an Exchange Act
report or other Exchange Act filing otherwise publicly available on the Company’s website;

     (xi) during the Effective Period, deliver to each Notice Holder in connection with any
sale of Registrable Securities pursuant to the Shelf Registration Statement, without charge,
as many copies of the Prospectus relating to such Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as such Notice Holder may
reasonably request; and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or
each amendment or supplement thereto by each Notice Holder in connection with any offering
and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto in the manner set
forth therein; and

     (xii) cooperate with the Notice Holders of Securities to facilitate the timely
preparation and delivery of certificates representing Securities to be sold pursuant

 

12

to the
Shelf Registration Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders thereof may request in writing at least two business
days prior to sales of Securities pursuant to such Shelf Registration Statement; provided
that nothing herein shall require the Company to deliver certificated Notes to any
beneficial holder of Notes except as required by the Indenture.

     (b) Upon (A) the issuance by the Commission of a stop order suspending the effectiveness of
the Shelf Registration Statement or the initiation of proceedings with respect to the Shelf
Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of
any event or the existence of any Material Event as a result of which the Shelf Registration
Statement shall contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein not misleading, or
any Prospectus shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or (C) the occurrence or
existence of any corporate development that, in the discretion of the Company, makes it
appropriate to suspend the availability of the Shelf Registration Statement and the related
Prospectus, the Company will (i) in the case of clause (B) above, subject to the third sentence
of this provision, as promptly as is practicable prepare and file a post-effective amendment to
such Shelf Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document that would be incorporated
by reference into such Shelf Registration Statement and Prospectus so that such Shelf
Registration Statement does not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein not
misleading, and such Prospectus does not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading, as
thereafter delivered (or, to the extent permitted by law, made available) to the purchasers of
the Registrable Securities being sold thereunder, and, in the case of a post-effective amendment
to the Shelf Registration Statement, subject to the third sentence of this provision, use
reasonable efforts to cause it to be declared effective or otherwise become effective as promptly
as is practicable, and (ii) give notice to the Notice Holders that the availability of the Shelf
Registration Statement is suspended (a “Deferral Notice”). Upon receipt of any Deferral
Notice, each Notice Holder agrees not to sell any Registrable Securities pursuant to the Shelf
Registration Statement until such Notice Holder’s receipt of copies of the supplemented or
amended Prospectus provided for in clause (i) above, or until it is advised in writing by the
Company that the Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference in such
Prospectus. The Company will use its reasonable best efforts to ensure that the use of the
Prospectus may be resumed (x) in the case of clause (A) above, as promptly as is practicable, (y)
in the case of clause (B) above, as soon as, in the sole judgment of the Company, public
disclosure of such Material Event would not be prejudicial to or contrary to the interests of the
Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable
thereafter and (z) in the case of clause (C) above, as soon as, in the discretion of the Company,
such suspension is no longer appropriate; provided that the period during which the availability
of the Shelf Registration Statement and any Prospectus is suspended (the “Deferral

 

13

Period”), without the Company incurring any obligation to pay Additional Interest pursuant to
Section 2(d), shall not exceed 120 days in the aggregate in any 12 month period.

     (c) Each Holder of Registrable Securities agrees that upon receipt of any Deferral Notice
from the Company, such Holder shall forthwith discontinue (and cause any placement or sales agent
or underwriters acting on their behalf to discontinue) the disposition of Registrable Securities
pursuant to the registration statement applicable to such Registrable Securities until such
Holder (i) shall have received copies of such amended or supplemented Prospectus and, if so
directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies, then in such Holder’s possession of the Prospectus
covering such Registrable Securities at the time of receipt of such notice or (ii) shall have
received notice from the Company that the disposition of Registrable Securities pursuant to the
Shelf Registration may continue.

     (d) The Company and the Guarantors shall, so long as any Registrable Securities remain
outstanding, cause each Additional Guarantor upon the creation or acquisition by the Company of
such Additional Guarantor, to (i) execute and deliver a supplemental indenture to the Indenture
and (ii) deliver to the Trustee an opinion of counsel to the effect that (A) the supplemental
indenture has been duly executed and authorized and (B) the supplemental indenture constitutes a
valid, binding and enforceable obligation of such Additional Guarantor, except insofar as
enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof
is subject to general principles of equity.

     (e) The Company may require each Holder of Registrable Securities as to which any
registration pursuant to Section 2(a) is being effected to furnish to the Company such
information regarding such Holder and such Holder’s intended method of distribution of such
Registrable Securities as the Company may from time to time reasonably request in writing, but
only to the extent that such information is required in order to comply with the Securities Act.
Each such Holder by executing and delivering a Notice and Questionnaire shall be deemed to have
agreed to notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Holder to the Company or of the occurrence of any event
in either case as a result of which any Prospectus relating to such registration contains or
would contain an untrue statement of a material fact regarding such Holder or such Holder’s
intended method of disposition of such Registrable Securities or omits to state any material fact
regarding such Holder or such Holder’s intended method of disposition of such Registrable
Securities required to be stated therein or necessary to make the statements therein not
misleading, and promptly to furnish to the Company any additional information required to correct
and update any previously furnished information or required so that such Prospectus shall not
contain, with respect to such Holder or the disposition of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

     (f) The Company shall comply with all applicable rules and regulations of the Commission and
make generally available to its securityholders earning statements (which need not be audited)
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar rule promulgated under the Securities Act) no later than (i) 40

 

14

days after the end of any
12-month period (or 60 days after the end of any 12-month period if such period is a fiscal year)
if the Company is at such time an “accelerated filer” and (ii) 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year)
if the Company is not an “accelerated filer” commencing on the first day of the first fiscal
quarter of the Company commencing after the effective date of the Shelf Registration Statement,
which statements shall cover said 12-month periods.

     (g) The Company shall provide a CUSIP number for all Registrable Securities covered by the
Shelf Registration Statement not later than the initial effective date of such Shelf Registration
Statement and provide the Trustee for the Notes and the transfer agent for the Shares with
printed certificates for the Registrable Securities that are in a form eligible for deposit with
The Depository Trust Company.

     (h) The Company shall use its reasonable efforts to provide such information as is required
for any filings required to be made with the National Association of Securities Dealers, Inc.

     (i) Until the expiration of two years after the Closing Date, the Company will not, and will
not permit any of its “affiliates” (as defined in Rule 144) to, resell any of the Securities that
have been reacquired by any of them except pursuant to an effective registration statement under
the Securities Act.

     (j) The Company shall cause the Indenture to be qualified under the Trust Indenture Act in a
timely manner.

     (k) The Company shall enter into such customary agreements and take all such other
necessary, reasonable and lawful actions in connection therewith (including those requested by
the Majority Holders of the Registrable Securities covered by the Shelf Registration Statement)
in order to expedite or facilitate disposition of such Registrable Securities.

     4. Holder’s Obligations.

     Each Holder agrees, by acquisition of the Registrable Securities, that no Holder of
Registrable Securities shall be entitled to sell any of such Registrable Securities pursuant to the
Shelf Registration Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(c) hereof
(including the information required to be included in such Notice and Questionnaire) and the
information set forth in the next sentence. Each Notice Holder agrees promptly to furnish to the
Company all information required to be disclosed in order to make the information previously
furnished to the Company by such Notice Holder not misleading and any other information regarding
such Notice Holder and the distribution of such Registrable Securities as may be required to be
disclosed in the Shelf Registration Statement under applicable law or
pursuant to Commission comments. Each Holder further agrees not to sell any Registrable Securities
pursuant to the Shelf Registration Statement without delivering, or causing to be delivered, a
Prospectus to the purchaser thereof and, following termination of the Effective Period, to notify
the Company, within 10 business days of a request by the Company, of the

 

15

amount of Registrable
Securities sold pursuant to the Shelf Registration Statement and, in the absence of a response, the
Company may assume that all of the Holder’s Registrable Securities were so sold.

     5. Registration Expenses.

     The Company agrees to bear and to pay or cause to be paid promptly upon request being made
therefor all expenses incident to the performance by the Company and the Guarantors of or
compliance with this Agreement, including, but not limited to, (a) all Commission and any NASD
registration and filing fees and expenses, (b) all fees and expenses in connection with the
qualification of the Securities for offering and sale under the State securities and Blue Sky laws
referred to in Section 3(a)(v) hereof, including reasonable fees and disbursements of one counsel
for the placement agent or underwriters, if any, in connection with such qualifications, (c) all
expenses relating to the preparation, printing, distribution and reproduction of the Shelf
Registration Statement, the related Prospectus and each amendment or supplement to each of the
foregoing, the certificates representing the Securities and all other documents relating hereto,
(d) fees and expenses of the Trustee under the Indenture, any escrow agent or custodian, and of the
registrar and transfer agent for the Shares, (e) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses of any opinions or
“cold comfort” letters required by or incident to such performance and compliance) and (f)
reasonable fees, disbursements and expenses (not to exceed $250,000 in the aggregate) of not more
than one counsel for the Holders of Registrable Securities retained in connection with the Shelf
Registration Statement, as selected by the Company (unless reasonably objected to by the Majority
Holders of the Registrable Securities being registered, in which case the Majority Holders shall
select such counsel for the Holders) (“Special Counsel”), and fees, expenses and
disbursements of any other Persons, including special experts, retained by the Company in
connection with such registration (collectively, the “Registration Expenses”). To the
extent that any Registration Expenses are incurred, assumed or paid by any Holder of Registrable
Securities or any underwriter or placement agent therefor, the Company shall reimburse such Person
for the full amount of the Registration Expenses so incurred, assumed or paid promptly after
receipt of a documented request therefor. Notwithstanding the foregoing, the Holders of the
Registrable Securities being registered shall pay all underwriting discounts and commissions and
placement agent fees and commissions attributable to the sale of such Registrable Securities and
the fees and disbursements of any counsel or other advisors or experts retained by such Holders
(severally or jointly), other than the counsel and experts specifically referred to above.

     6. Indemnification.

     (a) The Company and each of the Guarantors shall jointly and severally indemnify and hold
harmless each Placement Agent and each Holder (including, without limitation, the Purchasers),
its affiliates, their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls any such Placement Agent or Holder within the meaning of the
Securities Act or the Exchange Act (all such Placement
Agents, Holders and other persons being collectively referred to for purposes of this
Section 6 and Section 7 as a Holder) from and against any loss, claim, damage or liability, joint
or several, or any action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of Securities), to which that Holder

 

16

may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act,
any other federal or state statutory law or regulation, at common law or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any such Registration
Statement, (ii) any untrue statement or alleged untrue statement of a material fact contained in
any Prospectus, any Free Writing Prospectus or any “issuer information” (“Issuer
Information”) filed or required to be filed pursuant to Rule 433(d) under the Securities Act
or (ii) any omission or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and shall reimburse each Holder promptly upon demand
for any legal or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises out of, or is
based upon, an untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any information provided by a
Holder in its most recent Notice and Questionnaire; and provided, further, that with respect to
any such untrue statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 6(a) shall not inure to the benefit of any Holder from whom
the person asserting any such loss, claim, damage, liability or action received Securities to the
extent that such loss, claim, damage, liability or action of or with respect to such Holder
results from the fact that both (A) a copy of the final prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to such person and
(B) the untrue statement in or omission from the related preliminary prospectus was corrected in
the final prospectus unless, in either case, such failure to deliver the final Prospectus was a
result of non-compliance by the Company or any Guarantor with Section 4. This indemnity
agreement shall be in addition to any liability that the Company or the Guarantor may otherwise
have.

          The Company and the Guarantors also shall jointly and severally indemnify and hold harmless as
provided in this Section 6(a) or contribute as provided in Section 7 hereof with respect to any
loss, claim, damage, liability or action of each underwriter, if any, of Securities registered
under the Shelf Registration Statement, its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls such underwriter
within the meaning of the Securities Act or the Exchange Act on substantially the same basis as
that of the indemnification of the selling Holders provided in this paragraph (a) and shall, if
requested by any Holder, enter into an underwriting agreement reflecting such agreement.

     (b) Each Holder shall indemnify and hold harmless the Company, each Guarantor and their
respective affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company or any
Guarantor within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6(b) and Section 7 as the Company), from and against any
loss, claim, damage or liability, joint or several, or any action in respect thereof, to which
the Company may become subject, whether commenced or threatened, under the Securities Act,

 

17

the
Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with any information furnished to the Company by such Holder in
its most recent Notice and Questionnaire, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred; provided, however, that
no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Securities pursuant to such Shelf Registration
Statement. This indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.

     (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any
claim or the commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party pursuant to Section 6(a) or 6(b), notify the
indemnifying party in writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any liability which
it may have under this Section 6 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to assume the defense
of such claim or action, the indemnifying party shall not be liable to the indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than the reasonable costs of investigation;
provided, however, that an indemnified party shall have the right to employ its own counsel in
any such action, but the fees, expenses and other charges of such counsel for the indemnified
party will be at the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action within a

 

18

reasonable
time after receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements contained in
Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall be liable for any
settlement of any such action 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 action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability by reason of such
settlement or judgment or if the indemnifying party has not paid the expenses and fees for which
it is liable 20 days after notice by the indemnified party of request for reimbursement. No
indemnifying party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on claims that are the
subject matter of such proceeding and (ii) does not include a statement or admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.

     (d) The provisions of this Section 6 and Section 7 shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder, the Company, the Guarantors
or any of the indemnified Persons referred to in this Section 6 and Section 7, and shall survive
the sale by a Holder of securities covered by the Shelf Registration Statement.

     7. Contribution.

     If the indemnification provided for in Section 6 is unavailable or insufficient to hold
harmless an indemnified party under Section 6(a) or 6(b), then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received
by the Company and the Guarantors from the offering and sale of the Notes, on the one hand, and a
Holder with respect to the sale by such Holder of Securities, on the other, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and each of the Guarantors on the one hand and such Holder on the
other with respect to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Subsidiary Guarantor shall be

 

19

deemed to be
equal to the total net proceeds from the initial offering of the Notes (before deducting expenses).
The relative benefits received by the Holders shall be deemed to be equal to the value of having
the Securities registered under the Securities Act. Benefits received by any underwriter shall be
deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover
page of the Prospectus forming a part of the Shelf Registration Statement which resulted in such
losses, claims, damages or liabilities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Company and each of the
Guarantors or information supplied by the Company and each of the Guarantors on the one hand or to
any information contained in the relevant Notice and Questionnaire supplied by such Holder on the
other, the intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that
it would not be just and equitable if contributions pursuant to this Section 7 were to be
determined by pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7 shall be deemed to include, for purposes of this
Section 7, any legal or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 7, an indemnifying party that is a Holder of Securities shall not be
required to contribute any amount in excess of the amount by which the total price at which the
Securities sold by such indemnifying party to any purchaser exceeds the amount of any damages which
such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders’
obligations to contribute pursuant to this Section 7 are several and not joint.

     8. Rule 144A and Rule 144.

     So long as any Registrable Securities remain outstanding, the Company shall use its reasonable
best efforts to file the reports required to be filed by it under Rule 144A(d)(4) under the
Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the written request of any Holder of Registrable
Securities, make publicly available other information so long as necessary to permit sales of such
Holder’s securities pursuant to Rules 144 and 144A. The Company and the Guarantors covenant that
they will take such further action as any Holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the exemptions provided by
Rules 144 and 144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
written request of any Holder of Registrable Securities, the Company and the Guarantors shall
deliver to such Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.

     9. Miscellaneous.

     (a) Amendments and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the provisions hereof may
not be given, unless the Company has obtained the written consent of

 

20

Majority Holders.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose Securities are being
sold pursuant to the Shelf Registration Statement and that does not directly or indirectly affect
the rights of other Holders may be given by Holders of a majority in aggregate amount of the
Securities being sold by such Holders pursuant to the Shelf Registration Statement.
Notwithstanding the foregoing, in no event shall this Section 9(a) be amended.

     (b) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier
guaranteeing next-day delivery:

     (i) if to the Company or the Guarantors, initially at the address set forth in the
Purchase Agreements;

     (ii) if to the Placement Agents, initially at their addresses set forth in the
Placement Agreement; and

     (iii) if to a Holder, to the address of such Holder set forth in the security register,
the Notice and Questionnaire or other records of the Company.

     All such notices and communications shall be deemed to have been duly given: when delivered by
hand, if personally delivered; one business day after being delivered to a next-day air courier;
five business days after being deposited in the mail; and when receipt is acknowledged by the
recipient’s telecopier machine, if sent by telecopier.

     (c) Successors and Assigns. This Agreement shall be binding upon the Company, the
Guarantors and their respective successors and assigns.

     (d) Counterparts. This Agreement may be executed in any number of counterparts
(which may be delivered in original form or by telecopier) and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

     (e) Definition of Terms. For purposes of this Agreement, (a) the term “business
day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in The City of New York are authorized or obligated by law or executive
order to close, (b) the term “subsidiary” has the meaning set forth in Rule 405 under the
Securities Act and (c) except where otherwise expressly provided, the term “affiliate” has the
meaning set forth in Rule 405 under the Securities Act.

     (f) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

     (g) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

 

21

     (h) Remedies. In the event of a breach by the Company or any of the Guarantors or
by any Holder of any of their respective obligations under this Agreement, each Holder or the
Company or any Guarantor, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery of damages for a
breach by the Company or any Guarantor of their obligations under Section 2 hereof for which
Additional Interest have been paid pursuant to Section 3 hereof), will be entitled to specific
performance of its rights under this Agreement. The Company, each Guarantor and each Holder
agree that monetary damages would not be adequate compensation for any loss incurred by reason of
a breach by it of any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

     (i) No Inconsistent Agreements. Each of the Company and each Guarantor represents,
warrants and agrees that (i) it has not entered into, and shall not, on or after the date of this
Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration rights with respect
to any of its debt securities to any person and (iii) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate principal amount
of the then outstanding Registrable Securities, it shall not grant to any person the right to
request the Company to register any debt securities of the Company under the Securities Act
unless the rights so granted are not in conflict or inconsistent with the provisions of this
Agreement.

     (j) No Piggyback on Registrations. Neither the Company nor the Guarantors nor any
of their respective security holders (other than the Holders of Registrable Securities in such
capacity) shall have the right to include any securities of the Company in any Shelf Registration
Statement other than Registrable Securities.

     (k) Severability. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term, provision, covenant
or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

     (l) Survival. The respective indemnities, agreements, representations, warranties
and each other provision set forth in this Agreement or made pursuant hereto shall remain in full
force and effect regardless of any investigation (or statement as to the results
thereof) made by or on behalf of any Holder of Registrable Securities, any director, officer
or partner of such Holder, any agent or underwriter or any director, officer or partner thereof,
or any controlling person of any of the foregoing, and shall survive delivery of and payment for

 

22

the Registrable Securities pursuant to the Purchase Agreements and the transfer and registration
of Registrable Securities by such Holder.

     (m) Securities Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of Securities is required hereunder, Securities held by the
Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders
are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders of such required
percentage.

 

 

     If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to us a counterpart hereof, whereupon this instrument will become a binding agreement among
the Company, the Guarantors and the Placement Agents in accordance with its terms.

	 	 	 	 	 
	 	Very truly yours,

EDDIE BAUER HOLDINGS, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 
	 

	 	 	 	 	 
	 	EDDIE BAUER, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 
	 

	 	 	 	 	 
	 	EDDIE BAUER FULFILLMENT

     SERVICES, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 
	 

	 	 	 	 	 
	 	EDDIE BAUER DIVERSIFIED SALES,

     LLC

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 
	 

	 	 	 	 	 
	 	EDDIE BAUER SERVICES, LLC

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	EDDIE BAUER INTERNATIONAL

     DEVELOPMENT, LLC

 	 
	 	By:  	/s/
David Taylor 	 
	 	 	Name:  	David Taylor 	 
	 	 	Title:  	Interim Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	EDDIE BAUER INFORMATION

      TECHNOLOGY, LLC

 	 
	 	By:  	/s/
David Taylor 	 
	 	 	Name:  	David Taylor 	 
	 	 	Title:  	Interim Chief Financial Officer 	 

 

 

	 	 	 	 	 

The foregoing Agreement is hereby confirmed

and accepted as of the date first above written.

J.P. MORGAN SECURITIES INC.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

GOLDMAN, SACHS & CO.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

     (Goldman, Sachs & Co.)

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