Exhibit 10.2
FORM OF
SERVICES AGREEMENT
This Services Agreement (this "Agreement") is entered into as of
[______], 1996 by and between Abercrombie & Fitch Co., a Delaware corporation
("Abercrombie & Fitch"), and The Limited, Inc. a Delaware corporation ("The
Limited").
RECITALS
WHEREAS, Abercrombie & Fitch is issuing shares of Class A Common
Stock, $0.01 par value per share ("Class A Common Stock"), to the public in an
offering (the "Initial Public Offering") registered under the Securities Act
of 1933, as amended;
WHEREAS, The Limited beneficially owns all of the issued and
outstanding Abercrombie & Fitch Class B Common Stock, par value $0.01 per share
("Class B Common Stock");
WHEREAS, The Limited has heretofore directly or indirectly
provided certain administrative, financial, management and other services to
Abercrombie & Fitch or its Subsidiaries;
WHEREAS, on the terms and subject to the conditions set forth
herein, Abercrombie & Fitch desires to retain The Limited as an independent
contractor to provide, directly or indirectly, certain of those services to
Abercrombie & Fitch and its Subsidiaries (as defined below) after the Closing
Date (as defined below); and
WHEREAS, on the terms and subject to the conditions set forth
herein, The Limited desires to provide, directly or indirectly, such services
to Abercrombie & Fitch and its Subsidiaries.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, The Limited and Abercrombie
& Fitch, for themselves, their successors and assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the
following terms will have the following meanings, applicable both to the
singular and the plural forms of the terms described:
"Abercrombie & Fitch" has the meaning ascribed thereto in the
preamble hereto.
"Abercrombie & Fitch Entities" means Abercrombie & Fitch and its
Subsidiaries and "Abercrombie & Fitch Entity" shall mean any of the
Abercrombie & Fitch Entities.
"Abercrombie & Fitch Indemnified Person" has the meaning ascribed
thereto in Section 4.05.
"Actions" has the meaning ascribed thereto in Section 4.04.
"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.
"Associate Discount Program" means the program which allows the
associates of The Limited and Abercrombie & Fitch to purchase items at agreed
upon discount rates at each of the Subsidiaries of The Limited and Abercrombie
& Fitch.
"Benefit Billing" has the meaning ascribed thereto in Section 3.01.
"Benefits Services" has the meaning ascribed thereto in Section 3.05.
"Change Notice" has the meaning ascribed thereto in Section 3.07.
"Class A Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Class B Common Stock" has the meaning ascribed thereto in the
recitals to this Agreement.
"Closing Date" means the date of the closing of the initial sale of
Class A Common Stock in the Initial Public Offering.
"Common Stock" means the Class B Common Stock, the Class A Common
Stock and any other class of Abercrombie & Fitch capital stock representing
the right to vote generally for the election of directors.
"Customary Billing" has the meaning ascribed thereto in Section 3.01.
"Employee Welfare Plans" has the meaning ascribed thereto in Section
4.02.
"Initial Public Offering" has the meaning ascribed thereto in the
recitals to this Agreement.
"Limited Entities" means The Limited and Subsidiaries of The Limited
and "Limited Entity" shall mean any of The Limited Entities.
"Limited Indemnified Person" has the meaning ascribed thereto in
Section 4.03.
"Pass-Through Billing" has the meaning ascribed thereto in Section
3.01.
"Payment Date" has the meaning ascribed thereto in Section 3.06.
"Percent of Sales Billing" has the meaning ascribed thereto in
Section 3.01.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization,
government (and any department or agency thereof) or other entity.
"Prior Agreements" has the meaning ascribed thereto in the recitals
to this Agreement.
"Schedule I" means the first schedule hereto which lists the Services
(other than Services relating to employee plan and benefit matters) to be
provided by The Limited to Abercrombie & Fitch and sets forth the related
billing methodology.
"Schedule II" means the second schedule attached hereto which lists
the Services relating to employee plans and benefit arrangements to be
provided by The Limited to Abercrombie & Fitch and sets forth the related
billing methodology.
"Schedules" has the meaning ascribed thereto in Section 3.01.
"SEC" means the United States Securities and Exchange Commission.
"Service Costs" has the meaning ascribed thereto in Section 3.01.
"Services" has the meaning ascribed thereto in Section 2.01.
"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. Subsidiary, when
used with respect to The Limited or Abercrombie & Fitch, shall also include
any other entity affiliated with The Limited or Abercrombie & Fitch, as the
case may be, that The Limited and Abercrombie & Fitch may hereafter agree in
writing shall be treated as a "Subsidiary" for the purposes of this Agreement.
"The Limited" has the meaning ascribed thereto in the preamble
hereto.
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 parties to this Agreement.
ARTICLE II
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 Abercrombie &
Fitch, or procure the provision to Abercrombie & Fitch of, and Abercrombie &
Fitch agrees to purchase from The Limited, the services described in Schedules
I and II (the "Services"). Unless otherwise specifically agreed by The
Limited and Abercrombie & Fitch, the Services to be provided or procured by
The Limited hereunder shall be substantially similar in scope, quality, and
nature to those provided to, or procured on behalf of, the Abercrombie & Fitch
Entities prior to the Closing Date.
(b) It is understood that (i) Services to be provided to
Abercrombie & Fitch under this Agreement will, at Abercrombie & Fitch'
request, be provided to Subsidiaries of Abercrombie & Fitch 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 Abercrombie & Fitch, Abercrombie & Fitch agrees to pay on behalf of such
Subsidiary all amounts payable by or in respect of such Services; provided
that, without in any way limiting the obligations of Abercrombie & Fitch to
pay for such Services, Abercrombie & Fitch may allow [Abercrombie & Fitch
Service Corp.], a Delaware corporation, to make such payments on its behalf.
Section 2.02. Additional Services. In addition to the
Services to be provided or procured by The Limited pursuant to Section 2.01,
if requested by Abercrombie & Fitch, and to the extent that The Limited and
Abercrombie & Fitch may mutually agree, The Limited shall provide additional
services (including services not provided by The Limited to the Abercrombie &
Fitch Entities prior to the Closing Date) to Abercrombie & Fitch 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
Abercrombie & Fitch.
ARTICLE III
SERVICE COSTS; OTHER CHARGES
Section 3.01. Service Costs Generally. (a) Schedules I
and II hereto (collectively, the "Schedules") indicate, with respect to
each Service listed therein, whether the costs to be charged to Abercrombie
& Fitch for such Service or program are determined by (i) the customary
billing method ("Customary Billing"), (ii) the pass-through billing method
("Pass-Through Billing"), (iii) the percentage of Abercrombie & Fitch' net
sales method ("Percent of Sales Billing") or (iv) based upon a calculation
of certain costs relating to employee benefit plans and benefit
arrangements ("Benefit Billing"). The Customary Billing, Pass-Through
Billing, Percent of Sales Billing and Benefit Billing methods applicable to
Services provided to Abercrombie & Fitch are collectively referred to
herein as the "Service Costs". Abercrombie & Fitch agrees to pay to The
Limited in the manner set forth in Section 3.06 the Service Costs
applicable to each of the Services provided by The Limited.
(b) As provided herein, The Limited shall permit eligible
Abercrombie & Fitch associates to participate in certain of The Limited's
employee benefit plans. In addition to reimbursing The Limited for the
Services as set forth herein, Abercrombie & Fitch shall reimburse The Limited
for The Limited's costs (including any contributions and premium costs and
including certain third-party expenses and allocations of certain Limited
personnel expenses), generally in accordance with past practice, subject to
Section 3.05 hereof, relating to participation by Abercrombie & Fitch
associates in any of The Limited's benefit plans. It is the express intent of
the parties that Service Costs relating to the administration of Abercrombie &
Fitch employee plans and the performance of related Services will not exceed
reasonable compensation for such Services as defined in 29 CFR Section
2550.408c-2.
Section 3.02. Customary Billing. The costs of Services
determined by the Customary Billing method shall be comparable to the costs
charged from time to time to other businesses operated by The Limited for
comparable services.
Section 3.03Pass-Through Billing. The costs of Services
determined by the Pass-Through Billing method shall be equal to the
third-party costs and expenses incurred by The Limited or any of its
Subsidiaries on behalf of any Abercrombie & Fitch Entity. If The Limited
incurs costs or expenses on behalf of Abercrombie & Fitch or any of its
Subsidiaries as well as other businesses operated by The Limited, The Limited
will allocate any such costs or expenses in good faith between the various
businesses on behalf of which such costs or expenses were incurred as The
Limited shall determine in the exercise of The Limited's reasonable judgment.
The Limited shall apply usual and accepted accounting conventions in making
such allocations and The Limited or its agents shall keep and maintain such
books and records as may be reasonably necessary to make such allocations.
The Limited shall make copies of such books and records available to any
business upon request and with reasonable notice.
Section 3.04 Percent of Sales. Services for which the billing
methodology is the Percent of Sales method shall not be billed individually.
Instead, The Limited shall provide all such Services for an aggregate annual
cost equal to the amount obtained by multiplying (x) The Limited Service
Corp.'s (or any successor) projected budget for Services to be provided to all
Subsidiaries of The Limited, including Abercrombie & Fitch, for the relevant
year by (y) the projected net sales for the year of the Abercrombie & Fitch'
Subsidiaries divided by The Limited's net sales (the "Net Sales Ratio"). At
the end of the fiscal year, actual expenses versus budgeted expenses for
Services will be compared and any overage or shortfall will be allocated based
on the Net Sales Ratio. The Limited Service Corp.'s budget for Services to be
provided to Abercrombie & Fitch shall be determined on a basis consistent with
the manner in which The Limited Service Corp. determines the budgets for other
businesses operated by The Limited.
Section 3.05. Benefit Billing. (a) Prior to the Closing
Date, certain associates of Abercrombie & Fitch participated in certain
benefit plans sponsored by The Limited ("The Limited Plans"). On and after
the Closing Date, Abercrombie & Fitch associates shall continue to be eligible
to participate in The Limited Plans, subject to the terms of the governing
plan documents as interpreted by the appropriate plan fiduciaries. On and
after the Closing Date, subject to regulatory requirements and the provisions
of Section 4.01 hereof, The Limited will continue to provide Benefits Services
to and in respect of Abercrombie & Fitch associates with reference to The
Limited Plans as it administered the plans prior to the Closing Date.
(b) The costs payable by Abercrombie & Fitch for Services
relating to employee plans and benefit arrangements ("Benefits Services") may
be charged on the basis of Customary Billing, Pass-Through Billing, Percent of
Sales Billing or Benefit Billing. In addition, costs associated with certain
plans and programs identified in Schedule II will be paid principally through
employee payroll deductions for such plans and programs. Benefit Services
consists of those categories of Services which are more fully described on
Schedule II attached hereto.
(c) Each party to this Agreement may request changes in the
applicable terms of or services relating to The Limited Plans, approval of
which shall not be unreasonably withheld; provided, however, that approval of
changes in the terms of any of The Limited Plans shall be in the sole
discretion of The Limited.
(d) The Limited and Abercrombie & Fitch agree to cooperate
fully with each other in the administration and coordination of regulatory and
administrative requirements associated with The Limited Plans. Such
coordination, upon request, will include (but is not limited to) the
following: sharing payroll data for determination of highly compensated
associates, providing census information (including accrued benefits) for
purposes of running discrimination tests, providing actuarial reports for
purposes of determining the funded status of any plan, review and coordination
of insurance and other independent third party contracts, and providing for
review of all summary plan descriptions, requests for determination letters,
insurance contracts, Forms 5500, financial statement disclosures and plan
documents.
Section 3.06. Invoicing and Settlement of Costs. (a) The
Limited will invoice or notify Abercrombie & Fitch on a monthly basis (not
later than the fifth day of each month), either directly or through The
Limited's intracompany billing system, in a manner substantially consistent
with the billing practices used in connection with services provided to the
Abercrombie & Fitch Entities prior to the Closing Date (except as otherwise
agreed), of the Service Costs. In connection with the invoicing described in
this Section 3.06(a), The Limited will provide to Abercrombie & Fitch the same
billing data and level of detail as it customarily provided to the Abercrombie
& Fitch Entities prior to the Closing Date and as it customarily provides to
other businesses operated by The Limited and such other data as may be
reasonably requested by Abercrombie & Fitch.
(b) Abercrombie & Fitch agrees to pay on or before 30 days
after the date on which The Limited invoices or notifies Abercrombie & Fitch
of the Service Costs after the Closing Date (or the next Business Day, if such
day is not a Business Day) (each, a "Payment Date"), at The Limited's option
upon reasonable notice to Abercrombie & Fitch, through The Limited's
intra-company billing system, cash management systems, or, if requested by The
Limited, by wire transfer of immediately available funds payable to the order
of The Limited and without set off, all amounts invoiced by The Limited
pursuant to paragraph (a) during the preceding calendar month (or since the
Closing Date, in the case of the first Payment Date). If Abercrombie & Fitch
fails to pay any monthly payment within 90 days of the relevant Payment Date,
Abercrombie & Fitch shall be obligated to pay, in addition to the amount due
on such Payment Date, interest on such amount at the prime, or best rate
announced by Banc One Corp. plus 3% per annum compounded monthly from the
relevant Payment Date through the date of payment.
(c) Except as otherwise provided in the Schedules or agreed in
writing by the parties, Abercrombie & Fitch shall take such action as is
necessary to establish bank accounts (to be funded by Abercrombie & Fitch) or
to otherwise fund all wage and salary payments to Abercrombie & Fitch
associates and to fund all medical, retirement and other benefit claims
payable to or on behalf of Abercrombie & Fitch associates and their dependents
to the extent not covered by third party insurance. Payroll services and
benefit claims processing activities performed by The Limited or The Limited's
subcontractors shall be coordinated to facilitate payments. Following prior
written notice of not less than 15 business days, The Limited shall be
relieved of any obligation to deliver benefit and payroll services under this
Agreement to the extent that such bank accounts or other funding arrangements
are not established at the time drafts are presented for payment, or at any
time when there are insufficient funds in the relevant account or such other
arrangements fail to satisfy a properly presented claim.
Section 3.07. Amended Schedules. (a) Prior to January 31 of
each year for so long as the relevant Services continue to be provided under
this Agreement, The Limited shall prepare and deliver to Abercrombie & Fitch
updated versions of Schedules I and II (to the extent applicable), setting
forth with respect to the Services described in such schedules, any proposed
changes in billing methodology and, to the extent available, the Service Costs
estimated to be payable for such Services for the then current fiscal year.
Except as Abercrombie & Fitch and The Limited may otherwise agree, and except
as specifically described in this Agreement (including the Schedules), the
method of allocating and charging the costs reflected on Schedules I and II,
and any updated versions of such schedules, shall be consistent with The
Limited's prior practices with respect to the allocation of costs for services
to the Abercrombie & Fitch Entities immediately prior to the Closing Date;
provided that if The Limited changes the method of allocating and charging
such costs to The Limited businesses generally, such revised method shall also
be applied to Abercrombie & Fitch and Abercrombie & Fitch shall be notified in
writing not less than 60 days in advance of implementing such revised method
(a "Change Notice"). If a revised method of allocating and charging costs for
particular Services would result in a significant increase in the amount of
Service Costs that Abercrombie & Fitch would be obligated to pay under this
Agreement as compared to those that would be payable were such method not
revised, then, notwithstanding Article VI, Abercrombie & Fitch shall have the
right during the 45-day period following receipt of The Limited's Change Notice
to terminate such Services upon written notice to The Limited, and such
termination shall be effective on the implementation date of the change in
methodology. Such change in allocation method shall be deemed accepted by
Abercrombie & Fitch if no such notice of termination is received by The
Limited during such 45-day period, and thereafter any termination shall be
governed by the provisions of Article VI. For purposes of this paragraph (a),
a "significant increase" means, with respect to any amount, an aggregate
increase of more than 10% over the base amount of Service Costs applicable to
all such Services; provided such increase is at least $1,000,000.
ARTICLE IV
THE SERVICES
Section 4.01. General Standard of Service. Except as
otherwise agreed with Abercrombie & Fitch 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; provided that in no event shall such
standard of care be less than the standard of care that The Limited has
customarily provided to the Abercrombie & Fitch Entities with respect to the
relevant Service prior to the Closing Date. The Limited shall use its
reasonable efforts to ensure that the nature and quality of Services provided
to Abercrombie & Fitch 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.
Section 4.02. Delegation. Subject to Section 4.01 above,
Abercrombie & Fitch 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 Abercrombie & Fitch
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 administrators 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.
Administrator shall notify the claimant in writing of its decision on
review. Such notice shall satisfy all ERISA requirements relating
thereto; and
(iv) notify the claimant in writing of its decision on review.
Section 4.03. Limitation of Liability. Abercrombie & Fitch
agrees that none of The Limited and its Subsidiaries 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 Abercrombie & Fitch 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.
Section 4.04. Indemnification of The Limited by Abercrombie &
Fitch. Abercrombie & Fitch 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 Abercrombie & Fitch 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.
Section 4.05. Indemnification of Abercrombie & Fitch by The
Limited. The Limited agrees to indemnify and hold harmless Abercrombie &
Fitch and its Subsidiaries and their respective directors, officers, agents,
and employees (each, a "Abercrombie & Fitch Indemnified Person") from and
against any damages, and will reimburse each Abercrombie & Fitch 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 affiliate of The Limited 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 (x) to make
such agreement applicable to any Abercrombie & Fitch Indemnified Person so
that each Abercrombie & Fitch Indemnified Person is held harmless or
indemnified to the same extent as any Limited Indemnified Person or (y)
otherwise make available to each Abercrombie & Fitch Indemnified Person the
benefits of such agreement.
Section 4.07. Reports. The Limited shall provide or shall
cause to be provided to Abercrombie & Fitch with data or reports requested by
Abercrombie & Fitch relating to (i) benefits paid to or on behalf of
Abercrombie & Fitch associates under The Limited Plans, including but not
limited to financial statements, claims history, and census information, and
(ii) other information relating to the Services that is required to satisfy
any reporting or disclosure requirement of ERISA or the Code. The Limited
will provide such information within a reasonable period of time after it is
requested. The costs for reports which are substantially similar to reports
prepared by The Limited or on behalf of The Limited generally for its
businesses shall be billed as part of the Benefit Costs. The cost for
additional reports shall be billed as incremental costs in accordance with
Section 3.06.
ARTICLE V
ADDITIONAL AGREEMENT
Section 5.01. Notice. Unless otherwise agreed in writing by
the parties, Abercrombie & Fitch agrees to provide The Limited with at least
two months prior written notice of any material change in the eligible
Abercrombie & Fitch associates and retirees covered by The Limited Plan, and
any change in the scope of Services to be provided by The Limited with respect
to such plans and arrangements. Notwithstanding the preceding sentence, if
Abercrombie & Fitch provides The Limited with less than two months notice of
any such change and The Limited is nonetheless able, with reasonable efforts,
to effectuate such change with such shorter notice, than The Limited shall
implement the requested change.
ARTICLE VI
TERM AND TERMINATION
Section 6.01. Term. Except as otherwise provided in this
Article VI or in Section 7.05 or as otherwise agreed in writing by the
parties, this Agreement shall have an initial term of five years from the
Closing Date, and will be renewed automatically thereafter for successive
one-year terms unless either Abercrombie & Fitch or The Limited elects not to
renew this Agreement upon not less than six-months' written notice.
Section 6.02. Termination. (a) After the initial five year
term, Abercrombie & Fitch may from time to time terminate this Agreement with
respect to one or more of the Services, in whole or in part, upon giving at
least six months prior notice to The Limited; provided that Abercrombie &
Fitch may not terminate those Services which it was not allowed to terminate
prior to the Closing Date.
(b) This Agreement will be subject to early termination by
either Abercrombie & Fitch or The Limited upon six months' written notice if
The Limited ceases to own shares of Common Stock representing more than 50% of
the combined voting power of the Common Stock of Abercrombie & Fitch.
(c) The Limited may, at its option, terminate this Agreement
as it relates to any given Service if The Limited would otherwise be required
to provide such Service with respect to any employee benefit plan or program
that is not substantially similar to a corresponding plan or program of The
Limited (as such plans and programs of The Limited exist from time to time) or
if the method of delivering such Service would no longer be substantially
similar to the manner in which such Service was delivered to the Abercrombie &
Fitch Entities, as such delivery may change from time to time.
(d) The Limited may terminate any affected Service at any time
if Abercrombie & Fitch shall have failed to perform any of its material
obligations under this Agreement relating to any such Service, The Limited has
notified Abercrombie & Fitch in writing of such failure, and such failure
shall have continued for a period of 60 days after receipt of Abercrombie &
Fitch of notice of such failure.
(e) Abercrombie & Fitch may terminate any affected 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, Abercrombie &
Fitch has notified The Limited in writing of such failure, and such failure
shall have continued for a period of 60 days after receipt by The Limited of
notice of such failure.
(f) Each of Abercrombie & Fitch and The Limited agrees that
prior to exercising its rights under this Section 6.02 it will consult for a
reasonable period with the other party in advance of such termination as to
its implementation.
(g) Notwithstanding this Section 6.02, either The Limited or
Abercrombie & Fitch may terminate coverage of Abercrombie & Fitch under The
Limited's umbrella liability, property, casualty or fiduciary insurance
policies (as more fully described in Schedule I) at any time upon written
notice during the 90 days prior to the anniversary date of the policy;
provided that termination of coverage by Abercrombie & Fitch may only be for
nonpayment and only if a replacement policy, acceptable to The Limited, is
entered into by Abercrombie & Fitch.
(h) Abercrombie & Fitch may terminate any affected Service
pursuant to Section 3.07 hereof.
Section 6.03. Effect of Termination. (a) Other than as
required by law, upon termination of any Service pursuant to Section 6.01 or
Section 6.02, 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
Abercrombie & Fitch will have no obligation to pay any fees relating to such
Services or make any other payments hereunder; provided that notwithstanding
such termination, (i) Abercrombie & Fitch 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
Abercrombie & Fitch for administrative and program costs relating to benefits
paid after but incurred prior to the termination of any Service and other
services required to be provided after the termination of such Service and
Abercrombie & Fitch shall be obligated to pay such expenses in accordance with
the terms of this Agreement; and (iii) the provisions of Articles IV, V, VI
and VII shall survive any such termination. All program and administrative
costs attributable to Abercrombie & Fitch associates for The Limited Plans
that relate to any period after the effective date of any such termination
shall be for the account of Abercrombie & Fitch.
(b) Following termination of this Agreement with respect to
any Service, The Limited and Abercrombie & Fitch agree to cooperate in
providing for an orderly transition of such Service to Abercrombie & Fitch or
to a successor service provider. Without limiting the foregoing, The Limited
agrees to (i) provide, within 90 days of the termination, copies in a format
designated by The Limited, all records relating directly or indirectly to
benefit determinations of Abercrombie & Fitch 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 and (ii) work with Abercrombie &
Fitch in developing a transition schedule.
ARTICLE VII
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 The Limited or its Subsidiaries
and any of the Abercrombie & Fitch businesses (the "Prior Agreements"), on the
other hand, the provisions of this 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 Abercrombie & Fitch (or any of its officers or directors) or The
Limited (or any of its 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 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 Abercrombie & Fitch (or any of its officers or
directors) and The Limited (or any of its 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 Abercrombie & Fitch.
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 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) 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 always
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.
Section 7.08.Confidential Information. Abercrombie & Fitch and
The Limited hereby covenant and agree to hold in trust and maintain
confidential all Confidential Information relating to the other party.
"Confidential Information" shall mean all information disclosed by either
party to the other in connection with this Agreement whether orally, visually,
in writing or in any other tangible form, and includes, but is not limited to,
economic and business data, business plans, and the like, but shall not
include (i) information which becomes generally available other than by
release in violation of the provisions of this Section 7.08, (ii) information
which becomes available on a nonconfidential 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, (iii) information acquired or developed
independently by a party without violating this Section 7.08 or any other
confidentiality agreement with the other party and (iv) information that any
party hereto reasonably believes it is required to disclose by law, provided
that it 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. Without prejudice to the
rights and remedies of either party to this Agreement, a party disclosing any
Confidential Information to the other party in accordance with the provisions
of this Agreement shall be entitled to equitable relief by way of an
injunction if the other party hereto breaches or threatens to breach any
provision of this Section 7.08.
Section 7.09.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 Abercrombie & Fitch, to:
Abercrombie & Fitch Co.
Four Limited Parkway
Reynoldsburg, OH 43068
Attention: Samuel P. Fried
Fax: 614-479-7188
(b) If to The Limited, to:
The Limited, Inc.
Three Limited Parkway
Columbus, OH 43230
Attention: Samuel P. Fried
Fax: 614-479-7188
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Jeffrey Small
Fax: 212-450-4800
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
Section 7.10.Governing Law. This Agreement shall be construed
in accordance with and governed by the substantive internal laws of the State
of Delaware.
Section 7.11.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 7.12.Amendment. This Agreement may only be amended by a
written agreement executed by both parties hereto.
Section 7.13.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 7.14. Services to The Limited. (a) Abercrombie & Fitch
agrees to continue to participate in the Associate Discount Program.
(b) Abercrombie & Fitch agrees to permit The Limited and its
Subsidiaries to use the trademarks and service marks owned by Abercrombie &
Fitch or any of its Subsidiaries at no cost to The Limited or its Subsidiaries
in The Limited's annual report to shareholders and publicity materials and for
other similar purposes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their duly authorized representatives.
ABERCROMBIE & FITCH CO.
By: ____________________________________
Name:
Title:
THE LIMITED, INC.
By:____________________________________
Name:
Title:
Services Agreement - Schedule I
General Corporate Services(1)
Service Billing Methodology
- ------------------------------------------------ --------------------------
o Aircraft Services Customary Billing
o General Real Estate Services Customary Billing
o Import and Shipping Services Customary Billing
o International Expansion Services Customary Billing
o Store Planning and Construction Customary Billing
o Accounting, Public Reporting Percent of Sales Billing
and Consolidation Services
o Internal Audit Percent of Sales Billing
o Treasury and Cash Management Percent of Sales Billing
(including loans and investments)
o Corporate Development Percent of Sales Billing
o Risk Management and Administrative Percent of Sales Billing
Insurance
o Corporate Secretarial Services Percent of Sales Billing
o Marketing Data Services Percent of Sales Billing
o Executive Compensation and Customary Billing
Benefit Plan Design Services
o Governmental Affairs Percent of Sales Billing
o Human Resources and Compensation Customary Billing
o Investor and Public Relations Percent of Sales Billing
o Legal Services Percent of Sales Billing
o Tax Return Preparation and Percent of Sales Billing
Tax Planning Services
o Corporate Finance Percent of Sales Billing
o Insurance Policies Pass-Through Billing
(liability, property, casualty
and fiduciary)
o Corporate, administrative Percent of Sales Billing
and general overhead
<FN>
<F1>
(1) In each case, third-party costs incurred by The Limited on behalf of
Abercrombie & Fitch will be billed using the Pass-Through Billing methodology.
</FN>
Services Agreement - Schedule II
Benefits Services
Service Billing Methodology
- ------------------------------------- -----------------------
MEDICAL/DENTAL PROGRAMS
Benefits/Claims
o Claims costs for Abercrombie & Fitch Customary Billing
Associates participating
in the following Limited Plans
and programs:
- - Medical Plan
- - Short Term Disability Plan
- - Prescription Drug Plan
- - Dental Plan
Administration
o Administration of above Abercrombie & Fitch Customary Billing
plans and programs, including:
- - maintenance of eligibility files
upon Abercrombie & Fitch' 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
oParticipant contributions for Participant payroll
deductions above plans or direct
bill to associates/retirees
OTHER BENEFIT PLANS
oLife Insurance Customary Billing
Life insurance for Abercrombie & Fitch
Associates (including Accidental
Death and Dismemberment)
o Savings/Retirement Plans
- - Company match/retirement contribution Customary Billing
- - Participant Contributions Payroll Deduction
o Long-Term Disability Plans
- - Employer contributions Customary Billing
- - Associate contributions Payroll deduction
Other Benefit Support Services
oAudit, Legal, Actuarial Fees and Customary Billing
related recoveries
oPayroll support of benefits Customary Billing
administration (insurance,
savings, other benefit
plans and statutory requirements)
Employee Stock Purchase Program
- -Payroll Services Customary Billing