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
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
8
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
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