Exhibit 10.12
SERVICES AGREEMENT
dated as of August 31, 1999
between
▇▇▇▇▇▇'▇ TRADING COMPANY, INC.
and
THE LIMITED, INC.
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.............................................. 2
SECTION 1.02. Internal References...................................... 4
ARTICLE 2
PURCHASE AND SALE OF SERVICES
SECTION 2.01. Purchase and Sale of Services............................ 4
SECTION 2.02. Certain Benefits Matters................................. 5
SECTION 2.03. Additional Services...................................... 5
ARTICLE 3
SERVICE COSTS; OTHER CHARGES
SECTION 3.01. Service Costs Generally.................................. 5
SECTION 3.02. Invoicing and Settlement of Costs........................ 6
ARTICLE 4
THE SERVICES
SECTION 4.01. General Standard of Service.............................. 7
SECTION 4.02. Delegation............................................... 7
SECTION 4.03. Limitation of Liability.................................. 8
SECTION 4.04. Indemnification of The Limited by the Company............ 9
SECTION 4.05. Indemnification of the Company by The Limited............ 9
SECTION 4.06. Further Indemnification.................................. 9
SECTION 4.07. Notice of Certain Matters................................10
ARTICLE 5
TERM AND TERMINATION
SECTION 5.01. Term.....................................................10
SECTION 5.02. Termination..............................................10
SECTION 5.03. Effect of Termination....................................11
PAGE
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ARTICLE 6
ADDITIONAL AGREEMENTS
SECTION 6.01. Confidential Information................................. 12
SECTION 6.02. Associate Matters........................................ 13
SECTION 6.03. Financial Support Arrangements........................... 13
SECTION 6.04. Insurance Matters........................................ 14
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Prior Agreements......................................... 14
SECTION 7.02. Future Litigation and Other Proceedings.................. 15
SECTION 7.03. No Agency................................................ 15
SECTION 7.04. Subcontractors........................................... 15
SECTION 7.05. Force Majeure............................................ 15
SECTION 7.06. Entire Agreement......................................... 16
SECTION 7.07. Information.............................................. 16
SECTION 7.08. Notices.................................................. 17
SECTION 7.09. Governing Law............................................ 17
SECTION 7.10. Dispute Resolution....................................... 17
SECTION 7.11. WAIVER OF JURY TRIAL..................................... 18
SECTION 7.12. Severability............................................. 18
SECTION 7.13. Amendment................................................ 18
SECTION 7.14. Counterparts............................................. 18
SECTION 7.15. Services to The Limited.................................. 18
SECTION 7.16. Termination of Old Services Agreement.................... 18
SERVICES AGREEMENT
------------------
This Services Agreement (this "Agreement") is entered into as of August
31, 1999 by and between ▇▇▇▇▇▇'▇ Trading Company, Inc., an Indiana corporation
(The "Company"), and The Limited, Inc. a Delaware corporation ("The Limited").
RECITALS
WHEREAS, The Limited owned 100% of the outstanding common stock of the
Company prior to the consummation of the transactions contemplated by the
Transaction Agreement dated as of May 3rd, 1999 among the FS Stockholders, The
Limited and the Company (the "Transaction Agreement");
WHEREAS, The Limited will own approximately 40% of the outstanding
common stock of the Company after the consummation of the transactions
contemplated by the Transaction Agreement;
WHEREAS, The Limited has heretofore directly or indirectly provided
certain administrative, financial, management and other services to the Company
Entities pursuant to a Services Agreement dated as of between
---------------
The Limited and (the "Old Services Agreement");
----------------
WHEREAS, on the terms and subject to the conditions set forth herein,
the Company desires to retain The Limited as an independent contractor to
continue to provide, directly or indirectly, certain of those services to The
Company Entities after the Closing Date; and
WHEREAS, on the terms and subject to the conditions set forth herein,
The Limited desires to provide, directly or indirectly, such services to the
Company Entities.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, The Limited and the Company, for
themselves, their successors and assigns, hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01 - Definitions. (a) As used this Agreement, the following
terms will have the following meanings, applicable both to the singular and the
plural forms of the terms described:
"Agreement" has the meaning ascribed thereto in the preamble hereto, as
such agreement may be amended and supplemented from Time to time in accordance
with its terms.
"Benefits Services" means the Services set forth on Schedule C.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York or Columbus, Ohio are authorized or
required by law to close.
"Change of Control" means (i) the direct or indirect acquisition (by
merger, consolidation, business combination or otherwise) by any Person or group
of Persons of beneficial ownership (as defined in Rule 13d-1 and Rule 13d-5
under the Securities Exchange Act of 1934) of 50%,or more of the outstanding
Class A Common Stock, (ii) any merger, consolidation or other business
combination of the Company or a Subsidiary with any Person after giving effect
to which (x) the shareholders of the Company immediately prior to such
transaction do not own at least 50% of the outstanding common stock of the
ultimate parent entity of the parties to such transaction or (y) individuals
who were directors of the Company immediately prior to such transaction (or
their designees) do not constitute a majority of the board of directors of such
ultimate parent entity and (iii) the direct or indirect acquisition by any
Person or group of Persons of all substantially all assets of the Company.
"Company Entities" means the Company and its Subsidiaries, and "Company
Entity" shall mean any of the Company Entities.
"Initial Public Offering" means the initial public offering of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act (other than a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company which plan has been approved by the Board) following which the Company's
Common Stock is traded on the New York Stock Exchange, the American Stock
Exchange or the National Association of Securities Dealers Automated Quotation
System; provided that, if such initial public offering does
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not result in (A) gross proceeds to the Company and selling shareholders, if
applicable, in excess of S50 million and (B) the sale of newly issued Common
Stock representing at least fifteen percent (15%) of the outstanding Common
Stock of the Company, then "Initial Public Offering" shall mean the next public
offering of the Company's Common Stock following which the conditions set forth
in clauses (A) and (B) above are satisfied.
"Importing Services" means the Services set forth on Schedule B.
"Limited Entities" means The Limited and its Subsidiaries, and "Limited
Entity" shall mean any of the Limited Entities.
"Real Estate/Store Planning Services" means the Services set forth on
Schedule A.
"Schedules" means Schedules A, B, and C hereto.
"Services" means the Real Estate/Store Planning Services, Importing
Services and Benefits Services.
"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Actions 4.04
Applicable Insurance 6.04
Benefits Service Costs 3.01
Company Preamble
Company Indemnified Person 4.05
Confidential Information 6.01
Employee Welfare Plans 4.02
Financial Support Arrangements 6.03
force majeure 7.05
Importing Service Costs 3.01
Limited Indemnified Person 4.03
Non-Compliance Notice 4.07
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Term Section
---- -------
Old Services Agreement Recitals
Payment Date 3.02
Prior Agreements 7.01
Real Estate/Store Planning Service Costs 3.01
Service Costs 3.01
The Limited Preamble
The Limited Plans 2.02
Transaction Agreement Recitals
(c) Any capitalized terms not defined herein shall have the meaning
given them in the Transaction Agreement.
SECTION 1.02. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and references
to the parties shall mean the paties to this Agreement.
ARTICLE 2
PURCHASE AND SALE OF SERVICES
SECTION 2.01. Purchase and Sale of Services. (a) On the terms and
subject to the conditions of this Agreement and in consideration of the Service
Costs described below, The Limited agrees to provide to the Company or procure
the provision to the Company of, and the Company agrees to purchase from The
Limited, the Services. Unless otherwise specifically agreed by The Limited and
the Company, the Services to be provided or procured by The Limited hereunder
shall be substantially similar in scope, quality, and nature to those
customarily provided to, or procured on behalf of, the Company Entities prior to
The Closing Date. It is understood and agreed that the Services to be performed
by The Limited for the Company shall be limited to those Services requested by
the Company and that The Limited shall perform such Services under the direction
and control of the Company. In furtherance of the understanding and agreement
set forth in the immediately preceding sentence, The Limited and the Company
agree To establish procedure intended to ensure that The Limited understands
clearly the scope of the Services being requested from time to time by the
Company and that the actual Services provided as procured by The Limited do not
exceed those requested by the Company.
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(b) It is understood that (i) Services to be provided to the Company
under this Agreement will, at the Company's request, be provided to Subsidiaries
of the Company and (ii) The Limited may satisfy its obligation to provide or
procure Services hereunder by causing one or more of its Subsidiaries to provide
or procure such Services. With respect to Services provided to, or procured on
behalf of, any Subsidiary of the Company, the Company agrees to pay on behalf of
such Subsidiary, all amounts payable by or in respect of such Services pursuant
to this Agreement.
SECTION 2.02. Certain Benefits Matters. Prior to the Closing Date,
certain associates of the Company participated in certain benefit plans
sponsored by The Limited ("The Limited Plans"). The Limited and the Company
agree to cooperate fully with each other in the administration and coordination
of regulatory and administrative requirements associated with The Limited Plans.
SECTION 2.03. Additional Services. In addition to the Services to be
provided or procured by The Limited in accordance with Section 2.01, if
requested by the Company, and to the extent that The Limited and the Company may
mutually agree, The Limited shall provide additional services (including
services not provided by The Limited to the Company Entities prior to the
Closing Date) to the Company. The scope of any such services, as well as the
term, costs, and other terms and conditions applicable to such services, shall
be as mutually agreed by The Limited and the Company.
ARTICLE 3
SERVICE COSTS; OTHER CHARGES
SECTION 3.01. Service Costs Generally. (a) The parties agree that the
cost of providing the Real Estate/Store Planning Services per month shall be
calculated by adding up each of the following items: (i) the monthly salaries
and bonuses of all persons who spend at least 80% of their time on matters
related to the Real Estate/Store Planning Services in any one month, (ii) 20% of
the total amount payable pursuant to Section 3.01 (a)(i), which is intended
to represent the cost to The Limited of providing employee benefits and required
tax withholding for such persons, (iii) all direct costs incurred by The Limited
related to the Services, including fees and expenses of hiring architects,
consultants and attorneys and other out-of-pocket costs, including travel
expenses, in such month (provided that any item of out-of-pocket cost which is
expected to exceed $10,000 shall be approved by the Company prior to incurrence
of such cost), and (iv) 5% of the total amount payable under Sections 3.01
(a)(i) and 3.01 (a)(ii), in lieu of The
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Limited allocating the costs related to the Real Estate/Store Planning Services
for work by persons employed by The Limited who do not devote at least
80% of their time on matters related to the Real Estate/Store Planning Services
(collectively, the "Real Estate/Store Planning Service Costs"): provided,
however that the first $1,000,000 of the Real Estate/Store Planning Service
Costs incurred in each full fiscal year that such services are provided to the
Company shall be paid by The Limited. If the Real Estate/Store Planning Services
are purchased by the Company for less than one full fiscal year, the $1,000,000
annual amount described in the previous sentence will be decreased in such
proportion as the portion of the fiscal year for which services were not
provided relates to the full fiscal year. Attached for informational purposes
only, Schedule 3.01 (a)(i) sets forth the titles of the persons currently
spending 80% or more of their time on matters related to the Real Estate/Store
Planning Services. The parties acknowledge that the number and type of
employees spending 80% or more of their time on matters related to the Real
Estate/Store Planning Services may change from time to time based on the needs
of the Company at such time.
(b) The Limited agrees that the sole costs for The Benefits Services and
Importing Services shall be the out-of-pocket expenses incurred by The Limited
or its Affiliates for all out-of-pocket costs incurred in connection with the
Benefits Services and Importing Services (the "Other Service Costs" and
together with Real Estate/Store Planning Service Costs, the "Service Costs").
SECTION 3.02. Invoicing and Settlement of Costs. (a) The Limited will
invoice or notify the Company on a monthly basis (not later than the tenth day
of each month), in a manner substantially consistent with the billing practices
used in connection with services provided to the Company Entities prior to the
Closing Date (except as otherwise agreed), of the Service Costs, and The Limited
and the Company will agree on the form of such invoice prior to the Closing.
(b) The Company agrees to pay on or before 30 days after the date on
which The Limited invoices or notifies the Company of the Service Costs (or the
next Business Day, if such day is not a Business Day) (each, a "Payment Date")
by wire transfer of immediately available funds payable to the order of The
Limited all amounts invoiced by The Limited pursuant to this Section during the
preceding calendar month. If the Company fails to pay any monthly payment within
30 days of the relevant Payment Date, the Company shall be obligated to pay, in
addition to the amount due on such Payment Date, interest on such amount at the
short-term interest rate payable by the Company under the Credit Facility
compounded monthly from the relevant Payment Date through the date of payment.
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ARTICLE 4
THE SERVICES
SECTION 4.01. General Standard Service. Except as otherwise agreed with
the Company or described in this Agreement, and provided that The Limited is not
restricted by contract with third parties or by applicable law, The Limited
agrees that the nature, quality, and standard of care applicable to the delivery
of the Services hereunder will be substantially the same as that of the Services
which The Limited provides from time to time throughout its businesses. The
Limited shall use reasonable best efforts to ensure that the nature and quality
of Services provided to the Company's associates either by The Limited directly
or through administrators under contract shall be undifferentiated as compared
with the same services provided to or on behalf of The Limited associates under
The Limited Plans. Subject to The Limited's express obligations under this
Agreement, the management of and control over the provision of the Services
shall reside solely with The Limited. Without limiting the generality of the
foregoing, all labor matters relating to associates of The Limited (including,
without limitation, associates involved in the provision of Services to the
Company Entities) shall be within the exclusive control of The Limited, and none
of the Company Entities shall take any action affecting such matters.
SECTION 4.02. Delegation. Subject to Section 4.01 above, the Company
hereby delegates to The Limited final, binding, and exclusive authority,
responsibility, and discretion to interpret and construe the provisions of
employee welfare benefit plans in which the Company has elected to participate
and which are administered by The Limited under this Agreement (collectively,
"Employee Welfare Plans"). The Limited may further delegate such authority to
plan administrator to:
(i) provide administrative and other services,
(ii) reach factually supported conclusions consistent with the terms of
the Employee Welfare Plans;
(iii) make a full and fair review of each claim denial and decision
related to the provision of benefits provided or arranged for under the Employee
Welfare Plans, pursuant to the requirements of ERISA, if within sixty days after
receipt of the notice of denial, a claimant requests in writing a review for
reconsideration of such decisions. The plan administrator shall notify the
claimant in writing of its decision on review. Such notice shall satisfy all
ERISA requirements relating thereto; and
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(iv) notify the claimant in writing of its decision on review.
SECTION 4.03. Limitation of Liability. (a) Except as set forth in
clauses (c) and (e) below, the Company agrees that none of the Limited Entities
and their respective directors, officers, agents, and employees (each, a
"Limited Indemnified Person") shall have any liability, whether direct or
indirect, in contract or tort or otherwise, to any Company Entity or any other
Person for or in connection with the Services rendered or to be rendered by any
Limited Indemnified Person pursuant to this Agreement, the transactions
contemplated hereby or any Limited Indemnified Person's actions or inactions in
connection with any such Services or transactions, except for damages which have
resulted from such Limited Indemnified Person's gross negligence or willful
misconduct in connection with any such Services, actions or inactions.
(b) None of the Limited Entities shall be liable for any special,
indirect, incidental, or consequential damages of any kind whatsoever
(including, without limitation, attorneys' fees) in any way due to, resulting
from or arising in connection with any of the Services or the performance of or
failure to perform The Limited's obligations under this Agreement. This
disclaimer applies without limitation (i) to claims arising from the provision
of the Services or any failure or delay in connection therewith, (ii) to claims
for lost profits; (iii) regardless of the form of action, whether in contract,
tort (including negligence), strict liability, or otherwise; and (iv) regardless
of whether such damages are foreseeable or whether The Limited has been advised
of the possibility of such damages.
(c) None of the Limited Entities shall have any liability to any Company
Entity or any other Person for failure to perform The Limited's obligations
under this Agreement or otherwise, unless (i) such failure to perform is caused
by the gross negligence or wilful misconduct of the Limited Entity providing
such Services or (ii) such failure to perform does not generally affect the
Limited Entities receiving such Services and has a disproportionately adverse
effect on the Company Entities, taken as a whole.
(d) In addition to the foregoing, the Company agrees that it shall, in
all circumstances, use commercially reasonable efforts to mitigate and otherwise
minimize its damages and those of the other Company Entities, whether direct or
indirect, due to, resulting from or arising in connection with any failure by
The Limited to comply fully with its obligations under this Agreement.
(e) Notwithstanding the foregoing provisions of this Section, in the
event of a substantial and continuing failure on the part of The Limited to
provide or procure any material Services, the Company shall be entitled to seek
specific performance to cause The Limited to provide or procure such Services.
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SECTION 4.04. Indemnification of The Limited by the Company. The Company
agrees to indemnify and hold harmless each Limited Indemnified Person from and
against any damages, and to reimburse each Limited Indemnified Person for all
reasonable expenses as they are incurred in investigating, preparing, pursuing,
or defending any claim, action, proceeding, or investigation, whether or not in
connection with pending or threatened litigation and whether or not any Limited
Indemnified Person is a party (collectively, "Actions"), arising out of or in
connection with Services rendered or to be rendered by any Limited Indemnified
Person pursuant to this Agreement, the transactions contemplated hereby or any
Limited Indemnified Person's actions or inactions in connection with any such
Services or transactions: provided that the Company will not be responsible for
any damages of any Limited Indemnified Person that have resulted from such
Limited Indemnified Person's gross negligence or willful misconduct in
connection with any of the advice, actions, inactions, or Services referred to
above (it being understood and agreed that the provision by any Limited Entity
of any of the Services contemplated by Schedule B hereof without obtaining the
consent of any party to any contract or agreement to which any Limited Entity is
a party as of the date hereof shall not constitute gross negligence or wilful
misconduct by any Limited Entity; provided that the relevant Limited Entity has
used commercially reasonable efforts to obtain the relevant consent).
SECTION 4.05. Indemnification of the Company by The Limited. The Limited
agrees to indemnify and hold harmless the Company Entities and their respective
directors, officers, agents, and employees (each, a "Company Indemnified
Person") from and against any damages, and will reimburse each Company
Indemnified Person for all reasonable expenses as they are incurred in
investigating, preparing, or defending any Action, arising out of the gross
negligence or willful misconduct of any Limited Indemnified Person in connection
with the Services rendered or to be rendered pursuant to this Agreement.
SECTION 4.06. Further Indemnification. To the extent that any other
Person has agreed to indemnify any Limited Indemnified Person or to hold a
Limited Indemnified Person harmless and such Person provides services to The
Limited or any of its Affiliates relating directly or indirectly to any employee
plan or benefit arrangement for which Benefit Services are provided under this
Agreement, The Limited will exercise reasonable efforts (a) to make such
agreement applicable to any Company Indemnified Person so that each Company
Indemnified Person is held harmless or indemnified to the same extent as any
Limited Indemnified Person or (b) otherwise make available to each Company
Indemnified Person the benefits of such agreement.
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SECTION 4.07. Notice of Certain Matters. If the Company at any time
believes that The Limited is not in full compliance with its obligations under
Section 4.01, the Company shall so notify The Limited in writing promptly (but
not later than 30 days) after formulating a belief of such non-compliance by The
Limited. Such notice (a "Non-Compliance Notice") shall set forth in reasonable
detail the basis for the Company's belief as well as the Company's view as to
the steps to be taken by The Limited to address the possible non-compliance. For
the 30 days after receipt of such a notice, appropriate representatives of The
Limited and the Company shall work in good faith to develop a plan to resolve
the matters referred to in the Non-Compliance Notice. In the event such matters
are not resolved through such discussions, the Company may elect to terminate
The Limited's obligation to provide or procure, and its obligation to purchase,
the Service or Services referred to in its Non-Compliance Notice in accordance
with Section 5.02. In the event such matters are resolved through such
discussions and the Company does not elect to terminate such Service or Services
within 60 days of the end of the 30-day period referred to in the third sentence
of this Section, the Company shall not be entitled to deliver another Non-
Compliance Notice or pursue other remedies with respect to same or any
substantially similar matter so long as The Limited complies in all material
respects with the terms of such resolution. In no event shall any termination
of this Agreement pursuant to this Section limit or affect the Company's right
to seek remedies in accordance with Section 7.10 in respect of any breach by
The Limited of any of its obligations under this Agreement prior to such
termination.
ARTICLE 5
TERM AND TERMINATION
SECTION 5.01. Term. Except as otherwise provided in this Article, in
Section 7.05 or as otherwise agreed in writing by the parties, (a) this
Agreement shall terminate upon the earlier to occur of (i) the fifth anniversary
of the Closing Date and (ii) the date which is 90 days after an Initial Public
Offering or Change of Control and (b) The Limited's obligation to provide of
procure, and the Company's obligation to purchase, a Service shall cease as of
the applicable date set forth in the applicable Schedules or such earlier date
determined in accordance with Section 5.02.
SECTION 5.02. Termination. (a) The Company may terminate this Agreement
in whole or from time to time with respect to one or more of the Services, in
whole or in part, upon giving at least 30 days' prior written notice to The
Limited.
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(b) The Limited may terminate any Service at any time if the Company
shall have failed to perform any of its material obligations under this
Agreement relating to any such Service. The Limited has notified the Company in
writing of such failure and such failure shall have continued for a period of 30
days after receipt by the Company of written notice of such failure.
(c) The Company may terminate any Service at any time if The Limited
shall have failed to perform any of its material obligations under this
Agreement relating to any such Service, the Company has notified The Limited in
writing of such failure, and such failure shall have continued for a period of
30 days after receipt by The Limited of written notice of such failure.
SECTION 5.03. Effect of Termination. (a) Other than as required by law,
upon termination of any Service pursuant to Section 5.02, and upon termination
of this Agreement in accordance with its terms, The Limited will have no further
obligation to provide the terminated Service (or any Service, in the case of
termination of this Agreement), and the Company will have no obligation to pay
any fees relating to such Services or make any other payments hereunder,
provided that notwithstanding such termination, (i) the Company shall remain
liable to The Limited for fees owed and payable in respect of Services provided
prior to the effective date of the termination; (ii) The Limited shall continue
to charge the Company for services required to be provided after the termination
of such Service and the Company shall be obligated to pay such expenses in
accordance with the terms of this Agreement; and (iii) the provisions of
Articles 4, 5, 6 and 7 shall survive any such termination indefinitely.
(b) Following termination of This Agreement with respect to any Service,
The Limited and the Company agree to cooperate in providing for an orderly
transition of such Service to the Company or to a successor service provider.
Without limiting the foregoing, The Limited agrees to (i) provide, within 30
days of the termination, copies in a format designated by The Limited, of all
records relating directly or indirectly to benefit determinations of the
Company's associates, including but not limited to compensation and service
records, correspondence, plan interpretive policies, plan procedures,
administration guidelines, minutes, or any data or records required to be
maintained by law, (ii) provide, for a period of 30 days after the termination
of the Real Estate/Store Planning Services if such termination is prior to the
date specified by Section 5.01, access to and copies of store and real estate
planning records and materials relating to any of the Company's properties in
order to provide orderly transition for transferring responsibility for such
services to the Company or another provider of such services, and (iii) work
with the Company in developing a transition schedule.
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ARTICLE 6
ADDITIONAL AGREEMENTS
SECTION 6.01. Confidential Information. (a) The Company and The Limited
hereby covenant and agree to hold in trust and maintain confidential all
Confidential Information relating to the other party or any of such other
party's Subsidiaries. Without limiting the generality of the foregoing,
Confidential Information relating to a party or any of its Subsidiaries shall be
disclosed only to those associates of the other party who need to know such
information in connection with their ordinary course employment activities and
in no event shall any such Confidential Information be disclosed to any other
Person. "Confidential Information" shall mean all information, materials and
processes relating to a party or any Subsidiary of such party obtained by the
other party or any Subsidiary of such other party at any time (whether prior to
or after the date hereof and whether in connection with this Agreement or
otherwise) in any format whatsoever (whether orally, visually, in writing,
electronically or in any other form) and shall include, but not be limited to,
economic and business information or data, business plans, computer software
and information relating to associates, vendors, customers, products, fashion,
design, stores, financial performance and projections, processes, strategies,
systems and real estate, but shall not include (i) information which becomes
generally available other than by release in violation of the provisions of this
Section, (ii) information which becomes available on a non-confidential basis
to a party from a source other than the other party to this Agreement, provided
the party in question reasonably believes that such source is not or was not
bound to hold such information confidential and (iii) information acquired or
developed independently by a party without violating this Section or any other
confidentiality agreement with the other party. Notwithstanding any provision of
this Section to the contrary, a party may disclose such portion of the
Confidential Information relating to the other party to the extent, but only to
the extent, the disclosing party reasonably believes that such disclosure is
required under law or the rules of a securities exchange; provided that the
disclosing party first notifies the other party hereto of such requirement and
allows such party a reasonable opportunity to seek a protective order or other
appropriate remedy to prevent such disclosure. The parties acknowledge that
money damages would not be a sufficient remedy for any breach of the provisions
of this Section and that the non-breaching party shall be entitled to equitable
relief in a court of law in the event of, or to prevent, a breach or threatened
breach of this Section.
(b) Notwithstanding the provisions of Section 6.01(a), upon a Change of
Control, the parties shall (i) promptly (but in no event later than 30 days
after the
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occurrence of such Change of Control) return to the other party or destroy all
Confidential Information in its possession (or that of any of its Subsidiaries)
relating to the other party or any of its Subsidiaries, (ii) no longer be
permitted to use such Confidential Information in its business or operations (or
the business or operations of any of its Subsidiaries) and (iii) promptly (but
in no event later than 30 days after the occurrence of such Change of Control)
deliver a written certificate to the other party executed by an executive
officer of such party expressly acknowledging the obligations set forth in
clauses (i) and (ii) of this sentence and certifying that such party has and
will continue to adhere to such requirements.
SECTION 6.02. Associate Matters. For so long as any Services are being
provided to any Company Entity and for one year thereafter, each of The Limited
and the Company agree that (without the prior written consent of the other) it
will not, and will cause each of its Subsidiaries not to, directly or
indirectly, (i) solicit or otherwise attempt to induce or influence any
associate of the other party (or any of its Subsidiaries) to leave employment
with his or her then-current employer or (ii) employ any exempt or salaried
associate of the Other party (or any of its Subsidiaries) other than any such
associates who were assigned solely to a single store location.
SECTION 6.03. Financial Support Arrangements. (a) The Company agrees to
cooperate reasonably with any efforts undertaken by any Limited Entity intended
to release the Limited Entities from their obligations under any guarantees
(including, without limitation, guarantees of lease obligations), letters of
credit, surety bonds and other financial support arrangements maintained as of
the date hereof by any Limited Entity in connection with the business or
operations of any Company Entity (collectively, the "Financial Support
Arrangements").
(b) If, after the date hereof, (i) any amounts are drawn on or paid
under any Financial Support Arrangement by any Limited Entity or (ii) any
Limited Entity or any of its Subsidiaries pays any fees, costs or expenses
relating to any Financial Support Arrangement, the Company shall reimburse The
Limited for such amounts promptly after receipt from The Limited of notice
thereof accompanied by written evidence of the underlying payment obligation.
(c) The Company will not, and will not permit any of its Subsidiaries
to, take any action (including, without limitation, entering into any agreement
that could result in a Change of Control) that could materially and adversely
affect the ability of the Company to satisfy its obligations under any material
contract, agreement or arrangement in respect of which a Financial Support
Arrangement is in place unless, prior to the taking of such action, appropriate
provision is made
13
such that, in the reasonable judgment of The Limited. The Limited's exposure
under any Financial Support Arrangement is not materially increased as a result
of the taking of any such action.
SECTION 6.04. Insurance Matters. (a) From and after the date of this
Agreement, The Limited shall not, and shall cause each of its Subsidiaries not
to take or fail to take any action if such action or inaction, as the case may
be, would adversely affect the applicability of any insurance in effect on the
date of this Agreement that covers all or any part of the assets, liabilities,
business or employees of any Company Entity with respect to events occurring
prior to the Closing Date ("Applicable Insurance"), it being understood that in
no event shall any Limited Entity be obligated to pay premiums with respect to
periods after the Closing Date in respect of Applicable Insurance.
(b) The Limited agrees that, from and after the Closing Date, all
Applicable Insurance directly or indirectly applicable to any assets,
liabilities, business or employees of any Company Entity shall be for the
benefit of the Company Entities it being understood that such Applicable
Insurance shall also be for the benefit of The Limited and its Subsidiaries to
the extent directly or indirectly applicable to any assets, liabilities,
business or employees of any Limited Entity. Without limiting the generality of
the foregoing, from and after the Closing Date and upon the Company's
reasonable request, The Limited shall use its reasonable efforts to modify,
amend or assign all Applicable Insurance policies and arrangements so that the
Company is the direct beneficiary of such Applicable Insurance with all rights
to enforce, obtain the benefit of and take all other action in respect of such
Applicable Insurance; provided that, if the modifications, amendments or
assignments contemplated by this Section are not permissible, The Limited shall,
and shall cause each of its Subsidiaries to, use its reasonable efforts to enter
into such other arrangements as the Company may reasonably request to ensure
that the Company Entities are entitled to the benefit (to the fullest extent set
forth in the relevant policies and arrangements) of any Applicable Insurance.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Prior Agreements. In the event there is any conflict
between the provisions of this Agreement, on the one hand, and provisions of
prior services agreements among any Limited Entity and any of the Company's
businesses (the "Prior Agreements"), on the other hand, the provisions of this
14
Agreement shall govern and such provisions in the Prior Agreements are deemed to
be amended so as to conform with this Agreement.
SECTION 7.02. Future Litigation and Other Proceedings. In the event that
the Company (or any of its Subsidiaries or any of its or their officers or
directors) or The Limited (or any of its Subsidiaries or any of its or their
officers or directors) at any time after the date hereof initiates or becomes
subject to any litigation or other proceedings before any governmental authority
or arbitration panel with respect to which the parties have no prior agreements
(as to indemnification or otherwise), the party (and its Subsidiaries and its
and their officers and directors) that has not initiated and is not subject to
such litigation or other proceedings shall comply, at the other party's expense,
with any reasonable requests by the other party for assistance in connection
with such litigation or other proceedings (including by way of provision of
information and making available of employees as witnesses). In the event that
the Company (or any of its Subsidiaries or any of its or their officers or
directors) and The Limited (or any of its Subsidiaries or any of its or their
officers or directors) at any time after the date hereof initiate or become
subject to any litigation or other proceedings before any governmental authority
or arbitration panel with respect to which the parties have no prior agreements
(as to indemnification or otherwise), each party (and its officers and
directors) shall, at their own expense, coordinate their strategies and actions
with respect to such litigation or other proceedings to the extent such
coordination would not be detrimental to their respective interests and shall
comply, at the expense of the requesting party, with any reasonable requests of
the other party for assistance in connection therewith (including by way of
provision of information and making available of employees as witnesses).
SECTION 7.03. No Agency. Nothing in this Agreement shall constitute or
be deemed to constitute a partnership or joint venture between the parties
hereto or, except to the extent provided in Section 4.02, constitute or be
deemed to constitute any party the agent or employee of the other party for any
purpose whatsoever and neither party shall have authority or power to bind the
other or to contract in the name of, or create a liability against, the other in
any way or for any purpose.
SECTION 7.04. Subcontractors. The Limited may hire or engage one or more
subcontractors to perform all or any of its obligations under this Agreement;
provided that, subject to Section 4.03, The Limited will in all cases remain
primarily responsible for all obligations undertaken by it in this Agreement
with respect to the scope, quality and nature of the Services provided to the
Company.
SECTION 7.05. Force Majeure. (a) For purposes of this Section, "force
majeure" means an event beyond the control of either party, which by its nature
15
could not have been foreseen by such party or, if it could have been foreseen,
was unavoidable and includes without limitation, acts of God, storms, floods,
riots, fires, sabotage, civil commotion or civil unrest, interference by civil
or military authorities, acts of war (declared or undeclared) and failure of
energy sources.
(b) Without limiting the generality of Section 4.03(a), neither party
shall be under any liability for failure to fulfill any obligation under this
Agreement, so long as and to the extent to which the fulfillment of such
obligation is prevented, frustrated, hindered, or delayed as a consequence of
circumstances of force majeure; provided that such party shall have exercised
all due diligence to minimize to the greatest extent possible the effect of
force majeure on its obligations hereunder.
(c) Promptly on becoming aware of force majeure causing a delay in
performance or preventing performance of any obligations imposed by this
Agreement (and termination of such delay), the party affected shall give written
notice to the other party giving details of the same, including particulars of
the actual and, if applicable, estimated continuing effects of such force
majeure on the obligations of the party whose performance is prevented or
delayed. If such notice shall have been duly given, and actual delay resulting
from such force majeure shall be deemed not to be a breach of this Agreement,
and the period for performance of the obligation to which it relates shall be
extended accordingly; provided that if force majeure results in the performance
of a party being delayed by more than 60 days, the other party shall have the
right to terminate this Agreement with respect to any Service effected by such
delay forthwith by written notice.
SECTION 7.06. Entire Agreement. This Agreement (including the Schedules
constituting a part of this Agreement) and any other writing signed by the
parties that specifically references this Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
SECTION 7.07. Information. Subject to applicable law and privileges,
each party hereto covenants and agrees to provide the other party with all
information regarding itself and transactions under this Agreement that the
other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
16
SECTION 7.08. Notices. Any notice, instruction, direction or demand
under the terms of this Agreement required to be in writing will be duly given
upon delivery, if delivered by hand, facsimile transmission, intercompany mail,
or mail to the following addresses:
(a) If to the Company, to:
▇▇▇▇▇▇'▇ Trading Company, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to The Limited, to:
The Limited, Inc.
Three Limited Parkway
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
SECTION 7.09. Governing Law. This Agreement shall be construed in
accordance with and governed by the substantive internal laws of the State of
New York.
SECTION 7.10. Dispute Resolution. Subject to Sections 4.03(e), 6.01 and
6.02, the parties hereto agree that any dispute arising out of or in connection
with this Agreement or the transactions contemplated hereby shall be submitted
to arbitration. The parties shall negotiate in good faith and use all reasonable
efforts to agree upon a resolution of any dispute after receipt of written
notice of such dispute from a party. If the parties cannot agree on an amicable
settlement within 30 days from written submission of the matter by the party to
the other party, the
17
matter shall be submitted to arbitration. Each party shall select one arbitrator
and the two arbitrators so appointed shall select a third arbitrator. In the
event such arbitrators cannot agree upon a third arbitrator, a third arbitrator
shall be selected in accordance with the rules as then in effect of the American
Arbitration Association. The decision of two of the three arbitrators so
appointed shall be conclusive and binding upon the parties to this Agreement.
Any such arbitration shall be held in Columbus, Ohio under the rules to be
mutually agreed upon by the arbitrators selected by the parties or, if no such
agreement can be reached, under the rules as then in effect of the American
Arbitration Association. Each party to any such arbitration shall pay its own
expenses; provided that the fees, costs and expenses of the third arbitrator
shall be held equally by the parties.
SECTION 7.11. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 7.12. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if not
containing the particular invalid or unenforceable provision, and the rights and
obligations of each party shall be construed and enforced accordingly.
SECTION 7.13. Amendment. This Agreement may only be amended by a written
agreement executed by both parties hereto.
SECTION 7.14. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
SECTION 7.15. Services to The Limited. The Company agrees to permit the
Limited Entities to use the trademarks and service marks owned by the Company
Entities at no cost to any Limited Entity in The Limited's annual reports to
shareholders for fiscal years 1998 and 1999 and publicity materials and for
other similar purposes through the end of fiscal year 1999.
SECTION 7.16. Termination of Old Services Agreement. Effective as of the
date hereof, The Limited's obligation to provide or procure, and the Company's
obligation to purchase, services under the Old Services Agreement shall
terminate automatically without any further action by any party.
18
IN, WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized representatives.
▇▇▇▇▇▇'▇ TRADING COMPANY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Acting President, CEO, Executive VP,
COO and CFO
THE LIMITED, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Controller
Real Estate/Store Planning Services - Schedule A
The Limited's obligation to provide or procure, and the Company's
obligation to purchase, the services described in this Schedule shall terminate
on the earlier of (i) the fifth anniversary of the Closing Date and (ii) 90 days
after an Initial Public Offering or Change of Control.
Services
The Limited or an Affiliate of The Limited shall provide advisory
services related to real estate and store planning including:
. Initial design of space
. Production of architectural and mechanical drawings of the store design
. Construction of store to drawing specifications
. Purchasing, shipment, and installation of materials
. Project management and accumulation of capital costs
In no event shall "Real Estate/Store Planning Services" include incurring or
funding any construction or other related costs.
1
Importing Services - Schedule B
The Limited's obligation to provide or procure. and the Company's
obligation to purchase, the services described in this Schedule shall terminate
upon the earlier of (i) the fifth anniversary of the Closing Date, (ii) an
Initial Public Offering or Change of Control, (iii) with respect to any
particular service, the termination of any contract with such third party in
effect on the date hereof and (iv) the date on which The Limited, together with
its Affiliates, ceases to hold at least 50% of the aggregate Shares owned by it
on the date hereof.
Service
The Limited or an Affiliate of The Limited shall make available to the
Company the commercial terms negotiated by The Limited for:
. ocean and air freight shipping
. customs brokerage
. letters of credit for imports
2
Human Resources and Benefits Services - Schedule C
The Limited's obligation to provide or procure, and the Company's
obligation to purchase, the services described in this Schedule shall terminate
three months after the Closing Date, except for these services required for the
transition to hire a new Savings and Retirement Plan Record Keeper which shall
terminate upon the earlier of (i) six months after the Closing Date and (ii) the
date on which a new Savings and Retirement Plan Record Keeper is hired.
Service
-------
Medical/Dental Programs
Benefits/Claims
---------------
. Claims costs for the Company associates participating in the following
The Limited Plans and programs:
. Medical Plan
. Short Term Disability Plan
. Prescription Drug Plan
. Dental Plan
Administration
--------------
. Administration of above the Company plans and programs,
including
. maintenance of eligibility files upon the Company's notification of status
changes
. claim adjudication under the terms of applicable plans
. maintenance of toll-free telephone lines for inquiries, etc.
. support services (internal and external, including COBRA)
Participant Contributions
-------------------------
. Participant contributions for deductions above plans
or direct ▇▇▇▇ to associates/retirees
Other Benefit Plans
Life Insurance
--------------
. Life insurance for the Company (including Accidental Death and
Dismemberment)
3
Schedule 3.01(a)(i)
Position
Real Estate Director & Senior Development Counsel
Administrative Assistant
Lawyer
Store Planning Senior Director of Store Planning
Manager of Architectural Services
Senior Design Manager
Purchasing Manager
Designer
Construction Manager
Engineering Manager
Purchasing Agent
Purchasing Expediter & Administrative Assistant
4