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EXHIBIT 10.21
JOINT VENTURE AGREEMENT
BETWEEN
NORDSTROM, INC.
AND
XXXXXXXXX.XXX, INC.
DATED AS OF
AUGUST 24, 1999
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TABLE OF CONTENTS
Page
ARTICLE I DEFINED TERMS.....................................................................1
1.1 Defined Terms...................................................................1
1.2 References and Titles..........................................................10
ARTICLE II REPRESENTATIONS AND WARRANTIES..................................................10
2.1 Representations and Warranties Regarding Nordstrom.............................10
2.2 Representations and Warranties of Xxxxxxxxx.xxx, Inc...........................21
ARTICLE III PRE-CLOSING AGREEMENTS.........................................................24
3.1 Conduct of Business............................................................24
3.2 No Solicitation................................................................25
3.3 Expenses.......................................................................25
3.4 Approvals; Additional Documents; and Further Assurances........................25
3.5 Access and Information.........................................................26
3.6 Notification of Certain Matters................................................26
3.7 Transfer Charges...............................................................26
3.8 Brokers or Finders.............................................................26
3.9 Bulk Sales Law.................................................................26
3.10 Employee Benefit Matters......................................................26
3.11 Employee Arrangements.........................................................27
ARTICLE IV CONDITIONS PRECEDENT; CLOSING...................................................28
4.1 Conditions to Each Party's Obligation..........................................28
4.2 Conditions to Obligation of Nordstrom..........................................28
4.3 Conditions to Obligations of the Xxxxxxxxx.xxx, Inc............................29
4.4 Closing........................................................................30
4.5 Assumption of Liabilities and Obligations......................................30
4.6 Calculation of Assuming Working Capital Liabilities............................30
ARTICLE V POST-CLOSING COVENANTS...........................................................31
5.1 Indemnification................................................................31
5.2 Store Discounts................................................................33
5.3 Employee Benefit Plans.........................................................34
5.4 Equity Incentives..............................................................35
5.5 Employees......................................................................35
5.6 Nordstrom Holdings.............................................................35
5.7 Merger of Xxxxxxxxx.xxx, Inc. and Nordstrom Holdings...........................37
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER...............................................38
6.1 Termination....................................................................38
6.2 Effect of Termination..........................................................39
6.3 Amendment......................................................................39
6.4 Extension; Waiver..............................................................39
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ARTICLE VII GENERAL PROVISIONS.............................................................40
7.1 Notices........................................................................40
7.2 Entire Agreement...............................................................42
7.3 Further Assurances; Post-Closing Cooperation...................................42
7.4 Waiver.........................................................................42
7.5 Third-Party Beneficiaries......................................................42
7.6 No Assignment; Binding Effect..................................................42
7.7 Headings.......................................................................42
7.8 Invalid Provisions.............................................................42
7.9 Governing Law..................................................................43
7.10 Construction..................................................................43
7.11 Counterparts..................................................................43
7.12 Specific Performance..........................................................43
7.13 Dispute Resolution............................................................43
Exhibits:
Exhibit A -- Form of Assumption Agreement
Exhibit B -- Form of Xxxx of Sale and Assignment
Exhibit C -- Bylaws
Exhibit D -- Form of Investors' Rights Agreement
Exhibit E -- Form of License Agreement
Exhibit F -- Form of Operating Agreement
Exhibit G -- Form of Put Agreement
Exhibit H -- Form of Restated Certificate
Exhibit I -- Form of Right of First Refusal and Co-Sale Agreement
Exhibit J -- Form of Services Agreement
Exhibit K -- Form of Stock Purchase Agreement
Exhibit L -- Form of Supply Agreement
Schedules:
Schedule 2.1(d)(i) -- Consents Required under Contracts
Schedule 2.1(d)(ii) -- Consents Required from Governmental Entities
Schedule 2.1(f) -- Financial Statements; Absence of Certain Changes or Events
Schedule 2.1(g)(i) -- Compliance with Laws
Schedule 2.1(g)(ii) -- Licenses and Permits
Schedule 2.1(h) -- Litigation
Schedule 2.1(k) -- Leased Real Property
Schedule 2.1(l) -- Personal Property
Schedule 2.1(m) -- Liens and Encumbrances
Schedule 2.1(n) -- Environmental
Schedule 2.1(o) -- Taxes
Schedule 2.1(p) -- Certain Agreements
Schedule 2.1(q) -- Employee Benefit Plans
Schedule 2.1(r) -- Employees; Labor Relations
Schedule 2.1(s) -- Intellectual Property
Schedule 3.8 -- Brokers and Finders
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Schedule 5.3 -- Excluded Benefit Plans
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AMENDED AND RESTATED JOINT VENTURE AGREEMENT
This AMENDED AND RESTATED JOINT VENTURE AGREEMENT (this
"Agreement") is made and entered into as of August 24, 1999, between Nordstrom,
Inc., a Washington corporation ("Nordstrom"), and Xxxxxxxxx.xxx, Inc., a
Delaware corporation ("Xxxxxxxxx.xxx, Inc.").
RECITALS
Nordstrom, through its wholly owned subsidiary, Xxxxxxxxx.xxx
Holdings, Inc., a Washington corporation ("Nordstrom Holdings"), and
Xxxxxxxxx.xxx, Inc. plan to form Xxxxxxxxx.xxx, LLC, a Delaware limited
liability company ("LLC"), to engage in the Business (as defined below), subject
to the terms and conditions set forth below.
AGREEMENTS
NOW, THEREFORE, in consideration of the respective
representations, warranties, agreements, and conditions hereinafter set forth,
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Defined Terms. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of Nordstrom or any
Nordstrom Affiliate to payment for merchandise sold to customers pursuant to the
Business.
"Affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with such person.
"Applicable Laws" means all applicable laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity.
"Assets" means all the tangible and intangible assets owned,
leased, or licensed by Nordstrom or any Nordstrom Affiliate that are used or
held for use primarily in connection with the Business, but specifically
excluding therefrom the Excluded Assets. Without limiting the foregoing, the
Assets to be assigned, transferred and delivered by Nordstrom and/or Nordstrom
Holdings hereunder shall include the following:
(a) the Personal Property;
(b) the Leased Real Property;
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(c) the Licenses and Permits;
(d) the Assumed Contracts;
(e) the Intellectual Property, subject to any consents
required for transfer of such Intellectual Property;
(f) the Accounts Receivable as of the close of business on
the day immediately preceding the Closing Date;
(g) all books and records relating to the Business
(excluding those described in clause (b) of the definition of "Excluded
Assets"), including executed copies of the Assumed Contracts, or if no executed
agreement exists, summaries of such Assumed Contracts transferred pursuant to
clause (e) above;
(h) all computer programs and software, and all rights and
interests of Business in and to computer programs and software used primarily in
connection with the Business (but excluding computer programs and software
maintained and operated by Nordstrom for its entire business and not primarily
for the Business), subject to any consents required for transfer of such
computer programs and software;
(i) all rights and claims of Nordstrom or any Nordstrom
Affiliate whether mature, contingent or otherwise, against third parties that
relate primarily to the Business (other than the Excluded Assets), whether in
tort, contract, or otherwise, including, without limitation, causes of action,
unliquidated rights and claims under or pursuant to all warranties, indemnities,
representations and guarantees made by manufacturers, suppliers, vendors,
sellers, transferors or predecessors (except to the extent of any counterclaim
or defense to a claim against Nordstrom or any Nordstrom Affiliate that exists
after the Closing);
(j) all intangible assets of Nordstrom or any Nordstrom
Affiliate primarily relating to the Business not specifically described above,
including goodwill; and
(k) xxxxx cash on hand as of the Closing Date of Nordstrom
and any Nordstrom Affiliate for use solely in the Business.
"Assumed Contracts" means (a) those Contracts set forth on
Schedule 2.1(p) that are identified as being assumed by the LLC, (b) all other
Contracts of Nordstrom or any Nordstrom Affiliate that relate primarily to the
Assets or the Business, and (c) all Contracts entered into by Nordstrom or any
Nordstrom Affiliate on or after the date of this Agreement and before the
Closing in the ordinary course of business that relate primarily to the Assets
or the Business.
"Assumed Liabilities" means the liabilities and obligations
assumed by the LLC at the Closing pursuant to Section 4.5(a).
"Assumed Working Capital Liabilities" means the following:
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(a) accounts payable of Nordstrom or any Nordstrom
Affiliate for goods and services primarily for the benefit of the Business
incurred in the ordinary course of business;
(b) amounts due or accrued in the ordinary course of
business for wages, salaries, profit-sharing payments, bonuses, vacations and
other employee benefits by Nordstrom or any Nordstrom Affiliate for employees
whose primary service is for the benefit of the Business as of the close of
business; and
(c) any other current liabilities of Nordstrom or any
Nordstrom Affiliate incurred in the ordinary course of business primarily for
the benefit of the Business (but excluding liabilities for product returns,
except to the extent the LLC fails to perform its obligations under the Supply
Agreement to accept returns of products sold through the Business on or before
the Closing Date or to the extent provided in the Supply Agreement).
"Assumption Agreement" means the Assumption Agreement between
Nordstrom and/or a Nordstrom Affiliate and LLC substantially in a form and
substance reasonably acceptable to Nordstrom and Nordstrom Holdings and to be
attached as Exhibit A.
"Balance Sheet" has the meaning set forth in Section 2.1(f).
"Benchmark Funds" means one or more of the following: Benchmark
Capital Partners III, L.P., Benchmark Founders' Fund III, L.P., Benchmark
Founders' Fund III-A, L.P., Benchmark Members' Fund III, L.P. and any other
affiliated venture capital funds.
"Xxxx of Sale and Assignment" means the Xxxx of Sale and
Assignment between Nordstrom and/or a Nordstrom Affiliate and the LLC
substantially in the form of Exhibit B.
"Business" shall mean the sale, supply or other distribution of
goods and services to consumers conducted by Nordstrom through (i) on-line
internet technologies, whether now known or hereafter devised, including, but
not limited to, Websites, e-mail, electronic commerce, on-line advertising and
virtual shopping, and (ii) except as provided in the following sentence, through
catalogs and other written material. Notwithstanding any other provision
contained herein, the "Business" shall exclude: (a) the sale of goods and
services to consumers making such purchases at traditional retail stores, (b)
the sale, supply or other distribution of goods and services to consumers
through catalogs, other written materials or e-mail, provided that such goods
and services are fulfilled by hand at traditional retail stores, and (c) the
supply or distribution of goods and services sold to consumers at traditional
retail stores but fulfilled at a centralized fulfillment center.
"Business Day" means any other day than (i) a Saturday or Sunday
or (ii) a day on which commercial banks in Seattle, Washington are authorized or
required to be closed.
"Closing" means the consummation of the transactions contemplated
by this Agreement in accordance with the provisions of Article IV.
"Closing Date" has the meaning set forth in Section 4.4.
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"Code" means the United States Internal Revenue Code of 1986, as
amended. All references to the Code, U.S. Treasury regulations or other
governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Competing Proposed Transaction" has the meaning set forth in
Section 3.2.
"Consents" means all governmental consents and approvals, and all
consents and approvals of third parties, in each case that are necessary in
order to transfer the Assets to the LLC pursuant to the Operating Agreement and
otherwise to consummate the transactions contemplated by the Transaction
Documents.
"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and other
modifications thereto), to which Nordstrom or any Nordstrom Affiliate is a party
or is otherwise bound and which primarily relate to the Assets or the Business.
"Employee Benefit Plans" has the meaning set forth in Section
2.1(q).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public health
and safety including the Comprehensive Environmental Response Compensation and
Liability Act, (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Emergency
Planning and Community Right to Know Act and the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the
Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the
Oil Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations and decisional law of any
Governmental Entity, as each of the foregoing may be amended and in effect on or
prior to the Closing.
"Environmental Permits" means Permits required pursuant to
Environmental Laws relating to the Business or the Assets.
"Equity Interests" means any interest in any other corporation,
association, joint venture, partnership or other business entity, whether or not
such interest is represented by a certificate or constitutes a security.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" means:
(a) all tangible and intangible assets owned, leased or
licensed by Nordstrom or any Nordstrom Affiliate that may relate to the Business
but are not used primarily in the Business;
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(b) Nordstrom's corporate books and other books and
records relating solely to internal corporate matters and any other books and
records not related to the Business;
(c) Any claims, rights and interest of Nordstrom or any
Nordstrom Affiliate in and to any (i) refunds of Taxes or fees of any nature
whatsoever relating to the Business or (ii) deposits or utility deposits
relating to the Business, in each case which relate solely to the period prior
to the Closing Date;
(d) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by Nordstrom or any
Nordstrom Affiliate relating to the Business prior to the Closing Date;
(e) All Employee Benefit Plans and all assets or funds
held in trust, or otherwise, associated with or used in connection with the
Employee Benefit Plans;
(f) All tangible and intangible personal property disposed
of or consumed in the ordinary course of business between the date of this
Agreement and the Closing Date, or as otherwise permitted under the terms
hereof; and
(g) Any collective bargaining agreement, any other
Contract not included in the Assumed Contracts and all Contracts that have
terminated or expired prior to the Closing Date in the ordinary course of
business and as permitted hereunder.
"Executive Employee" means any employee of Nordstrom or any
Nordstrom Affiliate that (i) is a member of the executive group of the Business
or (ii) reports directly to any such member.
"Financial Statements" has the meaning set forth in Section
2.1(f).
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court, tribunal or other instrumentality of
the United States, any foreign country or any state, county, parish or
municipality, jurisdiction, or other political subdivision thereof.
"Hazardous Material" means (a) any chemical, material, substance
or waste including, containing or constituting petroleum or petroleum products,
solvents (including chlorinated solvents), nuclear or radioactive materials,
asbestos in any form that is or could become friable, radon, lead-based paint,
urea formaldehyde foam insulation or polychlorinated biphenyls, (b) any
chemicals, materials, substances or wastes which are now defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes, "toxic
substances," "toxic pollutants" or words of similar import under any
Environmental Law; or (c) any other chemical, material, substance or waste which
is regulated by any Governmental Entity or which could constitute a nuisance.
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"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" means any party entitled indemnification
pursuant to Section 5.1 hereof.
"Indemnifying Party" means any party required to indemnify
another party pursuant to Section 5.1 hereof.
"Inc. Bylaws" means the Xxxxxxxxx.xxx, Inc. Bylaws in the form
attached as Exhibit C.
"Inc. Plan" means any equity incentive plan proposed to be
adopted by Xxxxxxxxx.xxx, Inc.
"Inc. Transaction Documents" means the Restated Certificate,
Stock Purchase Agreement, Investors' Right Agreement, Put Agreement and each
Right of First Refusal and Co-Sale Agreement.
"Initial Public Offering" means an initial public offering of the
shares of common stock of Xxxxxxxxx.xxx, Inc. or its counterpart pursuant to a
registration statement declared effective under the Securities Act resulting in
gross proceeds of at least $20 million and underwritten by a nationally
recognized investment bank.
"Intellectual Property" means all Know-how, copyrights, copyright
registrations and applications for registration, Patents, Trademarks and all
other intellectual property rights whether registered or not, licensed to or
owned by Nordstrom or any Nordstrom Affiliate, which are reasonably necessary
for the operation of the Business, excluding the Trademarks that are licensed to
the LLC pursuant to the License Agreement and excluding licenses to Nordstrom or
any Nordstrom Affiliate of rights in software.
"Investors' Rights Agreement" means the Investors' Rights
Agreement among Xxxxxxxxx.xxx, Inc., Nordstrom Holdings, the Benchmark Funds and
the other investors named therein, substantially in the form of Exhibit D
attached hereto.
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information and all other trade secrets and confidential or proprietary
technical and business information.
"Knowledge" means, with respect to a specified party hereto, the
actual knowledge of any executive officer of such party.
"Leased Real Property" means all of the leasehold interests,
easements, licenses, rights to access and rights-of-way of Nordstrom or any
Nordstrom Affiliate which are used primarily in the Business, which are
identified and described in Schedule 2.1(k), together with any addition or
permitted deletion thereto between the date hereof and the Closing Date.
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"Liabilities and Costs" means any and all damages, losses,
claims, liabilities, charges, judgments, penalties, costs and expenses
(including court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding).
"Licenses" means all other Permits issued by any Governmental
Entity to Nordstrom or any Nordstrom Affiliate and that are used primarily in
the Business.
"License Agreement" means the License Agreement to be entered
into among, LLC and Nordstrom or one or more Nordstrom Affiliates substantially
in the form of Exhibit E attached hereto.
"Liens" shall mean any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
transfer restriction or other encumbrance of any nature whatsoever.
"LLC Transaction Documents" means the Operating Agreement, the
License Agreement, the Services Agreement and the Supply Agreement.
"LLC Shares" shall mean shares of the LLC, consisting of Series A
Preferred Shares ("LLC Series A Preferred Shares"), Series B Preferred Shares
("LLC Series B Preferred Shares") and Common Shares ("LLC Common Shares").
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties (taken as a whole), condition (financial or
otherwise), results of operations, assets (taken as a whole), liabilities, or
prospects of the Business.
"Merger" means a merger or other business combination of the LLC,
Xxxxxxxxx.xxx, Inc. and/or Nordstrom Holdings.
"Nordstrom Affiliate" means each Affiliate of Nordstrom (but not
Xxxxxxxxx.xxx, Inc.)
"Nordstrom Entities" means each of Nordstrom, Nordstrom Holdings,
and each other Nordstrom Affiliate that is a party to one of the Transaction
Documents.
"Option" has the meaning set forth in Section 2.1(b).
"Order" means any judgment, decree, order, writ, permit or
license.
"Operating Agreement" means the Limited Liability Company
Agreement of the LLC to be entered into among the LLC, Xxxxxxxxx.xxx, Inc. and
Nordstrom Holdings in substantially the form of Exhibit F attached hereto.
"Patents" means all patent and patent applications (including all
reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) used primarily in the Business that are owned by
Nordstrom or any Nordstrom Affiliate.
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"Permits" means all permits, registrations, licenses, approvals,
authorizations and the like.
"Permitted Encumbrances" means (a) statutory liens for current
taxes not yet due and payable, (b) in the case of leases of real property,
agreements with, and/or conditions imposed on the issuance of land use permits,
zoning, business licenses, use permits, or other entitlements of various types
issued by city, county, state, and federal governmental bodies or agencies,
necessary or beneficial to the continued use and occupancy of the Assets or the
conduct of the Business, which do not, individually or in the aggregate,
materially impair the use of such leased real property in the Business or
operation of the Assets, (c) mechanics', carriers', workers', repairers', and
other similar liens imposed by law arising or incurred in the ordinary course of
business for obligations not yet due, which do not, individually or in the
aggregate, materially impair the Business or operation of the Assets to which
such liens relate or any part thereof, (d) in the case of leases of vehicles,
rolling stock, and other personal property, encumbrances, which do not,
individually or in the aggregate, materially impair the operation of the
Business at the facility at which such leased equipment or other Personal
Property is located, and (e) other liens, charges or encumbrances incidental to
the Business or the ownership of the Assets which were not incurred in
connection with the borrowing of money or the advance of credit which in the
aggregate do not materially detract from the value of the Assets or materially
interfere with the Business.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, or other
entity.
"Personal Property" means all of the inventory, machinery,
equipment, computer programs, computer software, tools, motor vehicles,
furniture, furnishings, leasehold improvements, office equipment, inventories,
supplies, plant, spare parts, Equity Interests, and other tangible or intangible
personal property owned or leased by Nordstrom or any Nordstrom Affiliate and
which are used or held for use primarily in the Business, including the personal
property which is listed on Schedule 2.1(1) hereto, together with any additions
thereto between the date hereof and the Closing Date less any dispositions made
in accordance with Section 3.1.
"Put Agreement" means the Put Agreement among the Benchmark
Funds, the other investors listed in the Stock Purchase Agreement and Nordstrom
in substantially the form of Exhibit G attached hereto.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of a Hazardous Material into the Environment.
"Restated Certificate" means the Amended and Restated Certificate
of Incorporation of Xxxxxxxxx.xxx, Inc. in substantially the form of Exhibit H
attached hereto.
"Right of First Refusal and Co-Sale Agreement" means the Right of
First Refusal and Co-Sale Agreement to be entered into between the Benchmark
Funds and the other investors
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named in the Stock Purchase Agreement, on the one hand, and Nordstrom Holdings
and certain other Persons, on the other hand, substantially in the form attached
as Exhibit I.
"Schedules" means the Schedules attached hereto.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Services Agreement" means the Services Agreement between the LLC
and Nordstrom substantially in the form of Exhibit J attached hereto.
"Stock Purchase Agreement" means the Preferred Stock Purchase
Agreement among Xxxxxxxxx.xxx, Inc., Nordstrom Holdings, the Benchmark Funds and
the other investors named therein substantially in the form attached hereto as
Exhibit K.
"Supply Agreement" means the Supply Agreement between the LLC and
Nordstrom substantially in the form of Exhibit L attached hereto.
"Subsidiary" with respect to any Person means any corporation or
other entity of which more than fifty percent (50%) of the shares of outstanding
capital stock or other interests possessing the voting power (under ordinary
circumstances) in electing the board of directors are, at the time as of which
any determination is being made, owned by such Person either directly or
indirectly through Subsidiaries.
"Target Employees" has the meaning set forth in Section
2.1(q)(ii).
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind, including,
but not limited to, income, corporate, capital, excise, property, sales, use,
turnover, value added, gross receipts and franchise taxes, deductions,
withholdings and customs duties, imposed by any Taxing Authority and any
payments with respect thereto required under any tax-sharing agreement, under
any express or implied obligation to indemnify any other person, or as a result
of being a member of an affiliated, consolidated, combined, unitary or other
group for tax purposes.
"Taxing Authority" means any governmental department, commission,
board, bureau, agency, court or other instrumentality of the United States or
any other Country or of any state, county, parish, municipality, jurisdiction,
or other political subdivision of the United States or any other Country.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, logos, and all other names and slogans used primarily in
the Business, whether or not
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registered, and any applications or registrations therefor, and (b) any
associated goodwill incident thereto owned by Nordstrom or any Nordstrom
Affiliate.
"Transaction Documents" means this Agreement, the Inc.
Transaction Documents and the LLC Transaction Documents.
"Transfer Charges" has the meaning set forth in Section 3.7.
"Website" means any interactive site or area, including any
interactive site or area located on the World Wide Web portion of Internet or on
any commercial service or network (including services such as AOL), which is
accessed via the use of any protocols, standards or platforms (including
Internet or Internet derivative protocols, standards and platforms) for remote
access by narrowband or broadband telecommunications, including POTS, ISDN,
cable, fiber optics and hybrid CD-ROM, regardless of whether access to such site
or area is secured through cable, telephone, satellite or otherwise and
regardless of whether the same is received or operated in conjunction with a
personal computer or television, together with any successor into which any of
the foregoing may evolve.
1.2 References and Titles. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections,
and other subdivisions of this Agreement unless expressly provided otherwise.
Titles appearing at the beginning of any Articles, Sections, subsections, or
other subdivisions of this Agreement are for convenience only, do not constitute
any part of such Articles, Sections, subsections or other subdivisions, and
shall be disregarded in construing the language contained therein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties Regarding Nordstrom. Nordstrom
represents and warrants to Xxxxxxxxx.xxx, Inc. as follows (with the
understanding that Xxxxxxxxx.xxx, Inc. is relying on such representations and
warranties in entering into and performing this Agreement).
(a) Organization and Qualification. Each Nordstrom Entity
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets and properties. Each Nordstrom Entity is duly
qualified, licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary except where the failure to be so licensed or
admitted would not have a Material Adverse Effect. Nordstrom Holdings has no
Subsidiaries. Nordstrom Holdings does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
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exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity other than
the LLC.
(b) Capital Structure. As of the date hereof, 1,000 shares
of common stock of Nordstrom Holdings, par value $0.0001 per share ("Nordstrom
Holdings Common Stock") were issued and outstanding and owned of record and
beneficially by Nordstrom, free and clear of any Liens. There are not
outstanding any subscriptions, options, warrants, rights (including phantom
stock or stock appreciation rights) or preemptive rights (collectively, referred
to as "Options") or other contracts, commitments, understandings or
arrangements, including any right of conversion or exchange under any
outstanding security instrument or agreement obligating Nordstrom Holdings to
issue or sell any shares of capital stock of Nordstrom Holdings or to grant,
extend or enter into any Nordstrom Holdings Option with respect thereto.
(c) Authority Relative to this Agreement. Each Nordstrom
Entity has full corporate power and authority to enter into each Transaction
Document to which it is a party and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by each Nordstrom Entity of each
Transaction Document to which it is a party and the consummation by each
Nordstrom Entity of the transactions contemplated hereby and thereby have been
duly and validly approved by the board of directors of such Nordstrom Entity,
and no other corporate proceedings on the part of any Nordstrom Entity are
necessary to authorize the execution, delivery and performance by such Nordstrom
Entity of each Transaction Document to which it is a party and the consummation
by such Nordstrom Entity of the transactions contemplated hereby and thereby.
(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery by each Nordstrom
Entity of each Transaction Document to which it is a party does not and will
not, as the case may be, and the performance by such Nordstrom Entity of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
proprieties of such Nordstrom Entity under any of the terms, conditions or
provisions of (i) the certificate of incorporation or bylaws (or other
comparable charter documents) of such Nordstrom Entity, or (ii) (A) any
Applicable Laws or Orders of any Governmental Entity applicable to such
Nordstrom Entity or any of its assets or properties, or (B) except as set forth
on Schedule 2.1(d)(i), any Contracts to which such Nordstrom Entity is a party
or by which such Nordstrom Entity or any of its assets or properties is bound.
(ii) Except as set forth on Schedule 2.1(d)(ii), no
Consent of any Governmental Entity or other public or private third party is
necessary or required under any of the terms, conditions or provisions of any
Applicable Law or Order of any Governmental Entity or any Contract to which any
Nordstrom Entity is a party or by which any Nordstrom Entity or any of its
assets or properties is bound for the execution and delivery by such Nordstrom
Entity
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of each Transaction Document to which it is a party for the performance by such
Nordstrom Entity of its obligations hereunder or thereunder, or for the
consummation of the transactions contemplated hereby or thereby.
(e) Assets. The Assets and the Excluded Assets include all
assets used or held for use in the Business.
(f) Financial Statements, Absence of Certain Changes or
Events.
(i) Nordstrom has delivered to Xxxxxxxxx.xxx, Inc.
copies of the unaudited balance sheets of the Business as of January 31, 1998
and 1999, together with the related unaudited statements of income of the
Business for the two years ended January 31, 1998, and 1999, (the unaudited
balance sheet of the Business as of January 31, 1999 is referred to as the
"Balance Sheet") (collectively, the "Financial Statements"). The Financial
Statements were prepared with accounting principles applied on a consistent
basis throughout the periods covered thereby and present fairly in all material
respects the financial position, results of operations of the Business as of
such dates and for the periods then ended.
(ii) Except as disclosed in Schedule 2.1(f), there
is no liability or obligation of any kind, whether accrued, absolute, fixed,
contingent, or otherwise, relating to the Business that is not reflected or
reserved against in the Balance Sheet, other than (A) liabilities incurred in
the ordinary course of business in a manner consistent with past practice since
January 31, 1999, or (B) any such liability or obligation which would not be
required to be presented in financial statements prepared in a manner consistent
with past practice in the preparation of the Financial Statements. Except as
disclosed in Schedule 2.1(f), there is no liability or obligation referred to in
clause (B) of the preceding sentence, except for any such liabilities or
obligations that are not reasonably expected to have a Material Adverse Effect.
(iii) Except as disclosed in Schedule 2.1(f), since
January 31, 1999, Nordstrom has conducted the Business only in the ordinary
course consistent with past practice and nothing has occurred that would have
been prohibited by Section 3.1 if the terms of such section had been in effect
as of and after January 31, 1999. From January 31, 1999 until the date of this
Agreement, there has not occurred, any event, circumstance, or fact that could
reasonably be expected to result in a Material Adverse Effect. To the Knowledge
of Nordstrom, there are no pending or proposed statutes, rules, or regulations,
nor any current or pending developments or circumstances, that could reasonably
be expected to have a Material Adverse Effect.
(g) Compliance with Applicable Laws.
(i) The Business has been conducted in compliance
with each Applicable Law, except as set forth in Schedule 2.1(g)(i) or where a
failure to do so would not have a Material Adverse Effect. No investigation or
review by any Governmental Entity with respect to the Business is pending or, to
the Knowledge of Nordstrom, threatened. In addition, Nordstrom has duly and
timely filed, or caused to be so filed, with the appropriate Governmental
Entities all reports, statements, documents, registrations, filings, or
submissions with respect to
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the operation of the Business, where the failure to duly or timely file such
reports, statements, documents, registrations, filings, or submissions would not
have a Material Adverse Effect.
(ii) Schedule 2.1(g)(ii) is a true and complete
list of all material Permits issued to Nordstrom or any Nordstrom Affiliate
primarily relating to the Business by any Governmental Entity and held by them
as of the date of this Agreement.
(h) Absence of Litigation. Except as set forth on Schedule
2.1(h), there is no claim, action, suit, inquiry, judicial, or administrative
proceeding, grievance, or arbitration pending (nor, to the Knowledge of
Nordstrom, threatened or is there any reasonable basis therefor to the Knowledge
of Nordstrom) relating to the Business or any of the Assets by or before any
arbitrator or Governmental Entity, nor are there any pending or unfunded
settlements or any investigations relating to the Business or any of the Assets
pending (nor, to the Knowledge of Nordstrom, threatened or is there any
reasonable basis therefor) by or before any arbitrator or Governmental Entity.
Except as set forth in Schedule 2.1(h), there is no Order of any Governmental
Entity or arbitrator outstanding relating to the Business or any of the Assets.
There is no action, suit, inquiry, judicial, or administrative proceeding
pending or, to the Knowledge of Nordstrom, threatened against Nordstrom or any
Nordstrom Affiliate relating to the transactions contemplated by this Agreement
or the Transaction Documents.
(i) Insurance. Nordstrom and/or the Nordstrom Affiliates
has policies of insurance and bonds of the type and in amounts customarily
carried by persons conducting a business similar to the Business. There is no
material claim pending under any of such policies or bonds related to the
Business as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and Nordstrom is otherwise in compliance
with the material terms of such policies and bonds. Nordstrom has no Knowledge
of any threatened termination of, or material premium increase with respect to,
any of such policies, notice or information or the delivery of any inaccurate or
erroneous notice or information, which limits or impairs the rights of Nordstrom
or any Nordstrom Affiliate under any such insurance policies in such a manner as
could reasonably be expected to have a Material Adverse Effect. Excluding
insurance policies that have expired and been replaced in the ordinary course of
business, no insurance policy has been canceled within the last two years prior
to the date hereof.
(j) Intentionally Omitted.
(k) Leased Real Property. Schedule 2.1(k) contains an
accurate description of all the leasehold interests relating to the Business.
Except as otherwise disclosed on Schedule 2.1(k) Nordstrom is not, and to the
Knowledge of the Nordstrom, no other party is, in material default under any
lease described in Schedule 2.1(k). Subject to obtaining the Consents disclosed
in Schedule 2.1(k), Nordstrom has the full legal power and authority to assign
its rights under the leases listed in Schedule 2.1(k) to the LLC. All leasehold
interests listed in Schedule 2.1(k) (including the improvements thereon) are
available for immediate use in the conduct of the Business as currently
conducted.
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(l) Personal Property. Except as set forth on Schedule
2.1(l), Nordstrom has good title to, or a valid leasehold or license interest in
all Personal Property and none of the Personal Property is subject to any Lien
or other encumbrances, except for Permitted Encumbrances. Nordstrom is not, and
to the Knowledge of the Nordstrom, no other party is, in material default under
any of the leases, licenses and other Contracts relating to the Personal
Property. The Personal Property (i) is in good operating condition and repair
(ordinary wear and tear excepted), and (ii) is available for immediate use in
the Business as currently conducted.
(m) Liens and Encumbrances. Except as set forth on
Schedule 2.1(m), all of the Assets, including leases, are free and clear of all
Liens, except for Permitted Encumbrances.
(n) Environmental Matters.
(i) Nordstrom or a Nordstrom Affiliate possesses
all Environmental Permits necessary to or required for the operation of the
Business, except where the failure to possess such Environmental Permits could
not reasonably be expected to have a Material Adverse Effect.
(ii) Nordstrom or a Nordstrom Affiliate is in
compliance with (i) all terms, conditions and provisions of its Environmental
Permits; and (ii) all Environmental Laws relating to the Business or the Assets,
except where the failure to so comply would not have a Material Adverse Effect.
(iii) None of Nordstrom or any Nordstrom Affiliate
nor, to the Knowledge of Nordstrom, any predecessor of Nordstrom nor any entity
previously owned by Nordstrom has received any notice of alleged, actual or
potential responsibility for, or any inquiry regarding, (i) any Release or
threatened or suspected Release of any Hazardous Material relating to the
Business or Assets, or (ii) any violation of Environmental Law relating to the
Business or Assets.
(iv) None of Nordstrom or any Nordstrom Affiliate
nor, to the Knowledge of Nordstrom, any predecessor of Nordstrom nor any entity
previously owned by Nordstrom has any obligation or liability with respect to
any Hazardous Material relating to the Business or Assets, including any Release
or threatened or suspected Release of any Hazardous Material relating to the
Business or Assets, and to the Knowledge of Nordstrom there are no events, facts
or circumstances which could reasonably be expected to form the basis of any
such obligation or liability.
(v) No Releases of Hazardous Material(s) have
occurred at, from, in, to, on, or under any Leased Real Property while Nordstrom
has occupied the Leased Real Property and, to Nordstrom's Knowledge, no
Hazardous Material is present in, on, about or migrating to or from any Leased
Real Property.
(vi) None of Nordstrom or any Nordstrom Affiliate
nor any entity previously owned by Nordstrom, has transported or arranged for
the treatment, storage, handling,
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disposal or transportation of any Hazardous Material at or to any location used
primarily in the Business.
(vii) No Leased Real Property is a current or
proposed Environmental Clean-up Site.
(viii) There are no Liens under or pursuant to any
Environmental Law on any Leased Real Property.
(ix) There is no (i) underground storage tank,
active or abandoned, (ii) polychlorinated biphenyl containing equipment, (iii)
asbestos-containing material, (iv) radon, (v) lead-based paint or (vi) urea
formaldehyde at any Leased Real Property that has a Material Adverse Effect.
(x) Except as set forth or Schedule 2.1(n), there
have been no environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or for Nordstrom or any Nordstrom Affiliate or, to
the Knowledge of Nordstrom or any Nordstrom Affiliate, by or for any other
Person with respect to any Leased Real Property while Nordstrom or any Nordstrom
Affiliate has occupied the Leased Real Property, which have not been delivered
to Xxxxxxxxx.xxx, Inc. prior to execution of this Agreement.
(xi) Except as set forth on Schedule 2.1(n), none
of Nordstrom or any Nordstrom Affiliate is a party, whether as a direct
signatory, assignor or assignee, guarantor, successor, or third party
beneficiary, to, and is not otherwise bound by, any lease or other contract
under which Nordstrom or any Nordstrom Affiliate is obligated or may be
obligated by any representation, warranty, covenant, restriction,
indemnification or other undertaking respecting Hazardous Materials or under
which any other person is or has been released respecting Hazardous Materials
relating to the Leased Real Property.
(o) Taxes. Nordstrom has filed or caused to be filed all
Tax Returns relating to the Business or the Assets which are required to be
filed by Nordstrom, all such Tax Returns which have been filed are accurate and
complete in all material respects, and Nordstrom or a Nordstrom Affiliate has
timely paid all Taxes shown on such returns or on any Tax assessment received by
Nordstrom or a Nordstrom Affiliate to the extent that such Taxes have become
due, except for Taxes that are being contested in good faith. Except for
Permitted Encumbrances, there are no Liens for Taxes upon the Assets. Nordstrom
or a Nordstrom Affiliate has not received notice of any Tax deficiency or
delinquency of a material nature. Except as set forth on Schedule 2.1(o), no
audit by the Internal Revenue Service or a state taxing authority of Nordstrom
or a Nordstrom Affiliate relating to the Business or the Assets is pending or
threatened (nor, to the Knowledge of Nordstrom, is there any reasonable basis
therefor). All monies required to be withheld by Nordstrom or a Nordstrom
Affiliate from employees or collected from customers for Taxes and the portion
of any Taxes to be paid by Nordstrom or a Nordstrom Affiliate to governmental
agencies or set aside in accounts for such purposes relating to the Business or
the Assets have been so paid or set aside, or such monies have been reserved
against and entered upon the books and are reflected in the Financial Statements
and Balance Sheet. There is no legal, administrative, or tax proceedings
pursuant to which Nordstrom or any
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Nordstrom Affiliate is or could be made liable for any taxes, penalties,
interest, or other charges of any material nature, the liability for which could
extend to the LLC as transferee of the Assets or by operating the Business.
Nordstrom or a Nordstrom Affiliate will pay all Taxes relating to the operation
of the Business before the Closing Date when and as such Taxes are due to the
extent that such Taxes could, if unpaid, have to be paid by Xxxxxxxxx.xxx, Inc.
or otherwise adversely affect the Business or the Assets; provided that the
parties will pro-rate as of the Closing Date all Taxes that accrued or are
attributable to periods on or before the Closing Date.
(p) Certain Agreements. Schedule 2.1(p) hereto lists each:
(A) union Contract or any employment or consulting Contract or arrangement
providing for future compensation, written or oral, with any officer,
consultant, director or employee which is not terminable by Nordstrom or a
Nordstrom Affiliate without liability or penalty on thirty days or less notice;
(B) plan, Contract or arrangement, written or oral, providing for bonuses,
pensions, deferred compensation, severance pay or benefits, retirement payments,
profit-sharing or the like (except to the extent any such plan, Contract or
arrangement is an Employee Benefit Plan); (C) joint venture Contract or
arrangement; (D) Contract under which any party thereto remains obligated to
provide goods or services having a value, or to make payments aggregating in
excess of $50,000 per year; (E) Contract for any Leased Real Property; (F)
Contract or lease for Personal Property in which the Business is required to
make payments exceeding $50,000 on an annual basis; (G) license Contract, either
as licensor or licensee, providing for the license of Intellectual Property
(excluding non-exclusive software licenses granted to customers or end-users in
the ordinary course of business); (H) Contract containing covenants purporting
to limit the ability of Nordstrom or any Nordstrom Affiliate to operate the
Business; (I) material Contract providing for indemnification; (J) Contract or
commitment relating to capital expenditures which involves future payments in
excess of $50,000 on an annual basis; (K) Contract relating to the disposition
or acquisition of any Assets (other than the ordinary course of business); (L)
purchase order or Contract for the purchase of materials or supplies involving
payments exceeding $50,000 on an annual basis; and (M) other Contract that is
material to the operation of the Business;
in each case, only to the extent that (i) Nordstrom or a Nordstrom Affiliate is
a party thereto or the Assets are bound thereby and (ii) such Contract,
arrangement, plan, lease, commitment or purchase order relates primarily to the
Business.
Each such Contract described in Schedule 2.1(p) or required to be
so described is a valid and binding obligation of Nordstrom or a Nordstrom
Affiliate and is in full force and effect without amendment. Nordstrom and, to
the Knowledge of Nordstrom, each other party to such Contracts, has performed in
all material respects the obligations required to be performed by it under such
Contracts and is not (with or without lapse of time or the giving of notice, or
both) in material breach or default thereunder. Schedule 2.1(k) identifies, as
to each such Contract listed thereon, whether the consent of the other party
thereto is required in order for such Contract to continue in full force and
effect upon the consummation of the transactions contemplated hereby or whether
such Contract can be canceled by the other party without liability to such other
party due to the consummation of the transactions contemplated hereby. A
complete copy of each written Contract set forth in Schedule 2.1(p) will be
provided to Xxxxxxxxx.xxx, Inc. within three Business Days after the date
hereof.
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(q) Employee Benefit Plans; ERISA.
(i) Definition of ERISA Affiliate. The term "ERISA
Affiliate" means Nordstrom and each person (as defined in section 3(9) of ERISA)
that, together with Nordstrom, would be treated as a single employer under
section 4001(b) of ERISA or that would be deemed to be a member of the same
"controlled group" within the meaning of section 414(b) or (c) of the Code.
(ii) Employee Benefit Plans. Except for the plans
and agreements listed in Schedule 2.1(q) (collectively, the "Employee Benefit
Plans"), no ERISA Affiliate maintains, is a party to, contributes to or is
obligated to contribute to, for the benefit of any employee engaged in the
Business as of the date hereof (a "Target Employee"), and the Target Employees
or former Target Employees and their dependents or survivors do not receive
benefits under, any of the following (whether or not set forth in a written
document):
(A) Any employee benefit plan, as defined in
section 3(3) of ERISA;
(B) Any bonus, deferred compensation, incentive,
restricted stock, stock purchase, stock option, stock appreciation
right, phantom stock, supplemental pension, executive compensation,
cafeteria benefit, dependent care, director or employee loan, fringe
benefit, sabbatical, severance, termination pay or similar plan,
program, policy, agreement or arrangement;
(C) Any merchandise discount program or similar
program; or
(D) Any plan, program, agreement, policy,
commitment or other arrangement relating to the provision of any benefit
described in section 3(1) of ERISA to former employees or directors or
to their survivors, other than procedures intended to comply with the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
(i) Terminated Plans. No ERISA Affiliate has, since
January 1, 1993, terminated, suspended, discontinued contributions to or
withdrawn from any employee pension benefit plan, as defined in section 3(2) of
ERISA, including (without limitation) any multi-employer plan, as defined in
section 3(37) of ERISA, that covered Target Employees.
(ii) Documents. Nordstrom has made available to
Xxxxxxxxx.xxx, Inc. complete, accurate and current copies of each of the
following:
(A) The text (including amendments) of each of
the Employee Benefit Plans, to the extent reduced to writing;
(B) A summary of each of the Employee Benefit
Plans, to the extent not previously reduced to writing;
(C) With respect to each Employee Benefit Plan
that is an employee benefit plan (as defined in section 3(3) of ERISA),
the following:
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(I) The most recent summary plan
description, as described in section 102 of ERISA;
(II) Any summary of material modifications
that has been distributed to participants but has not been
incorporated in an updated summary plan description furnished
under Subparagraph (I) above; and
(III) The annual report, as described in
section 103 of ERISA, and (where applicable) actuarial reports,
for the three most recent plan years for which an annual report
or actuarial report has been prepared; and
(D) With respect to each Employee Benefit Plan
that is intended to qualify under section 401(a) of the Code, the most
recent determination letter concerning the plan's qualification under
section 401(a) of the Code, as issued by the Internal Revenue Service,
and any subsequent determination letter application.
(i) ERISA Compliance. With respect to each Employee
Benefit Plan that is an employee benefit plan (as defined in section 3(3) of
ERISA), the requirements of ERISA applicable to such Employee Benefit Plan have
been satisfied, except to the extent that a failure to satisfy any of such
requirements would not have a Material Adverse Effect.
(ii) COBRA Compliance. With respect to each
Employee Benefit Plan that is subject to COBRA, the requirements of COBRA
applicable to such Employee Benefit Plan have been satisfied, except to the
extent that a failure to satisfy any of such requirements would not have a
Material Adverse Effect.
(iii) FMLA Compliance. With respect to each
Employee Benefit Plan that is subject to the Family Medical Leave Act of 1993,
as amended, the requirements of such Act applicable to such Employee Benefit
Plan have been satisfied, except to the extent that a failure to satisfy any of
such requirements would not have a Material Adverse Effect.
(iv) Qualification Requirements. Each Employee
Benefit Plan that is intended to qualify under section 401(a) of the Code meets
the requirements for qualification under section 401(a) of the Code and the
regulations thereunder, except to the extent that such requirements may be
satisfied by adopting retroactive amendments under section 401(b) of the Code
and the regulations thereunder. Each such Employee Benefit Plan has been
administered in accordance with its terms (or, if applicable, such terms as will
be adopted pursuant to a retroactive amendment under section 401(b) of the Code)
and the applicable provisions of ERISA and the Code and the regulations
thereunder, except to the extent that a failure to be so administered would not
have a Material Adverse Effect.
(v) Funding. No ERISA Affiliate has any accumulated
funding deficiency under section 412 of the Code or any termination or
withdrawal liability under Title IV of ERISA, except to the extent that any such
liability would not have a Material Adverse Effect. For purposes of determining
any accumulated funding deficiency under section 412 of
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the Code, the term "ERISA Affiliate" shall include any entity that is deemed to
be a member of the same "controlled group" within the meaning of section 414(m)
or (o) of the Code.
(vi) Contributions. All contributions, premiums or
other payments due from any ERISA Affiliate to (or under) any Employee Benefit
Plan have been fully paid or adequately provided for on the books and financial
statements of such ERISA Affiliate. Except for the Assumed Working Capital
Liabilities and as elsewhere provided under this Agreement, no liability for
such contributions, premiums or other payments will attach to the assets of the
Business.
(vii) Consequences of Transactions. The Employee
Benefit Plans permit, or may prior to the Closing Date be amended to permit,
continued participation on the same terms and conditions by the Target Employees
following their transfer to the LLC, provided the LLC remains an ERISA
Affiliate.
(r) Employees; Labor Relations.
(i)Employees of Business. Within five (5) business
days from the date hereof Schedule 2.1(r) shall be completed to set forth a true
and complete list of all individuals employed in the Business as of the date
hereof and, in the case of employees with an annual base salary of $100,000 or
more, the position and base compensation payable to each such individual,
together with a description of any written or oral employment agreement,
consulting agreement or termination or severance agreement between such
individual and Nordstrom or any Nordstrom Affiliate.
(ii) Collective Bargaining. With respect to any
Target Employee, neither Nordstrom nor any Nordstrom Affiliate is a party to or
is subject to (A) a labor or collective bargaining agreement or arrangement or
(B) except as provided in Schedule 2.1(r), any labor or employment dispute.
(iii) Consequences of Transactions. Except as
disclosed on Schedule 2.1(r), or to the extent that such amounts would not
result in a Material Adverse Effect, the consummation of the transactions
contemplated herein, including (without limitation) the transfer of the Target
Employees to the LLC and/or Xxxxxxxxx.xxx, Inc., will not result in (A) any
additional amount becoming payable to any Target Employee or independent
contractor engaged in the Business, (B) the acceleration of payment or vesting
of any benefit, option or right to which any Target Employee or independent
contractor engaged in the Business may be entitled, (C) the forgiveness of any
indebtedness of any Target Employee or independent contractor engaged in the
Business or (D) any cost becoming due or accruing to the Business or
Xxxxxxxxx.xxx, Inc. with respect to any Target Employee or independent
contractor engaged in the Business, other than such costs relating to the
continued participation of the LLC in such Employee Benefit Plans pursuant to
Sections 3.11 and 5.3 hereof. Compliance with the terms of this Agreement,
including (without limitation) the transfer of the Target Employees to the LLC
and/or Xxxxxxxxx.xxx, Inc., will not violate any agreement with any Target
Employee.
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(iv) Parachute Payments. Except as disclosed on
Schedule 2.1(r), neither Nordstrom nor any Nordstrom Affiliate is obligated to
make any payment or transfer any property that would be considered a "parachute
payment" under section 280G(b)(2) of the Code to any Target Employee who is
employed by the LLC and/or Xxxxxxxxx.xxx, Inc.
(v) Injuries. To the Knowledge of Nordstrom, no
Target Employee has been injured in the work place or in the course of his or
her employment except for injuries which are covered by insurance or for which a
claim has been made under workers' compensation or similar laws.
(vi) Compliance With IRCA. With respect to the
Target Employees, Nordstrom and the Nordstrom Affiliates have complied in all
material respects with the verification requirements and the record-keeping
requirements of the Immigration Reform and Control Act of 1986 ("IRCA"); to the
Knowledge of Nordstrom, the information and documents on which Nordstrom and the
Nordstrom Affiliates relied to comply with IRCA with respect to the Target
Employees are true and correct; and there have not been any discrimination
complaints filed against Nordstrom or any Nordstrom Affiliate by the Target
Employees pursuant to IRCA, and to the Knowledge of Nordstrom, there is no basis
for the filing of such a complaint.
(vii) Employee Complaints. Except as set forth in
Schedule 2.1(r), neither Nordstrom nor any Nordstrom Affiliate has received or
been notified of any complaint by any Target Employee, applicant, union or other
party of any discrimination or other conduct related to the Business and
forbidden by law or contract nor, to the Knowledge of Nordstrom, is there a
basis for any such complaint, except such complaints as could not reasonably be
expected to have a Material Adverse Effect on the Business.
(viii) Government Filings. Nordstrom or a Nordstrom
Affiliate has filed all required reports and information with respect to the
Target Employees that are due prior to the Closing Date and otherwise has
complied in its hiring, employment, promotion, termination and other labor
practices with all applicable federal and state law and regulations, including
without limitation those within the jurisdiction of the United States Equal
Employment Opportunity Commission, United States Department of Labor and state
and local human rights or civil rights agencies, except to the extent that any
such failure to file or comply would not have a Material Adverse Effect on the
Business. Nordstrom or a Nordstrom Affiliate has filed or shall file any such
reports and information that are required to be filed prior to the Closing Date.
(s) Intellectual Property. To Nordstrom's Knowledge,
except as set forth in Schedule 2.1(s), Nordstrom and/or Nordstrom Affiliates
have sufficient title and ownership of the Intellectual Property (other than the
trademark "NORDSTROM") necessary to conduct the Business as now conducted. To
Nordstrom's best knowledge, Nordstrom has and/or Nordstrom Affiliates have
sufficient title and ownership of the trademark "NORDSTROM" to conduct the
Business as now conducted. The Intellectual Property constitutes all Know-how,
copyrights, copyright registrations and applications for registration, Patents,
Trademarks and all other intellectual property rights reasonably necessary to
conduct the Business. Except as set forth on Schedule 2.1(s), there are (i) no
Patents and (ii) no outstanding options, licenses, or agreements of any kind
relating to the Intellectual Property, nor is Nordstrom and/or any Nordstrom
Affiliate
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bound by or a party to any options, licenses or agreements of any kind with
respect to the Intellectual Property except for off-the-shelf end user software
license and support/maintenance agreements. Except as set forth in Schedule
2.1(s), neither Nordstrom nor any Nordstrom Affiliate has received any
communications alleging that Nordstrom and/or any Nordstrom Affiliate has in
connection with the Business violated or, by conducting the Business as
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity. Neither Nordstrom nor any Nordstrom Affiliate is aware that
any of its employees is obligated under any Contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the Business or
that would conflict with the Business. Except as set forth in Schedule 2.1(s),
neither the execution nor delivery of Transaction Documents, nor the carrying on
of the Business will, to the Knowledge of Nordstrom or any Nordstrom Affiliate,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees is now obligated. Neither Nordstrom nor any Nordstrom
Affiliate believes it is or will be necessary to utilize any inventions of any
of its employees (or people it currently intends to hire for the Business) made
prior to or outside the scope of their employment by Nordstrom or any Nordstrom
Affiliate.
(t) Affiliate. There are no Contracts or other
arrangements relating primarily to the Business in which any officer, director,
stockholder or employee of or consultant to Nordstrom or any Nordstrom Affiliate
has a material financial interest.
(u) No Dispositions. Since January 31, 1999, there has not
occurred any sale, lease, transfer, assignment, abandonment or other disposition
of any material amount of Assets other than any disposition of (i) obsolete
property, (ii) property in connection with the acquisition of replacement
property of equal value, or (iii) assets disposed of in the ordinary course of
business and consistent with past practices.
(v) Restrictions on Business. There is no material
Contract or Order (or any administrative or judicial proceeding, pending or
threatened that may result in any such agreement or Order) binding on Nordstrom
or any Nordstrom Affiliate which has or could reasonably be expected to have the
effect of prohibiting or materially impairing the operation of the Business or
the ownership or use of the Assets.
(w) Disclosure. No representation or warranty by Nordstrom
contained in this Agreement or in any certificate furnished pursuant to this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
2.2 Representations and Warranties of Xxxxxxxxx.xxx, Inc.
Xxxxxxxxx.xxx, Inc. represents and warrants to Nordstrom as follows (with the
understanding that Nordstrom is relying on such representations and warranties
in entering into and performing this Agreement):
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(a) Organization and Qualification. Xxxxxxxxx.xxx, Inc. is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its assets and properties. Xxxxxxxxx.xxx, Inc. is duly qualified, licensed
or admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary. Xxxxxxxxx.xxx, Inc. has no Subsidiaries. Except as contemplated by
the Transaction Documents, Xxxxxxxxx.xxx, Inc. does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
(b) Xxxxxxxxx.xxx, Inc.'s Capital Stock. As of the date
hereof, Xxxxxxxxx.xxx, Inc.'s authorized capital stock consists solely of 10,000
shares of common stock, par value $0.0001 per share (the "Inc. Common Stock") of
which, as of the date hereof, 1,000 were issued and outstanding and none were
reserved for issuance. All the outstanding shares of the Inc. Common Stock are
owned of record and beneficially by an entity affiliated with the Benchmark
Funds, as nominee for the Benchmark Funds, free and clear of any Liens. Except
for transactions contemplated by this Agreement, there are no outstanding
Options, subscriptions, options, warrants, rights (including phantom stock or
stock appreciation rights) or preemptive rights (collectively, referred to as
"Options") or other contracts, commitments, understandings or arrangements,
including any right of conversion or exchange under any outstanding security
instrument or agreement, obligating Xxxxxxxxx.xxx, Inc. to issue or sell any
shares of capital stock of Xxxxxxxxx.xxx, Inc. or to grant, extend or enter into
any Xxxxxxxxx.xxx, Inc. Option with respect thereto. As of the Closing Date,
Xxxxxxxxx.xxx, Inc.'s authorized capital stock shall consist of 33,033,033.03
shares of Inc. Common Stock and 25,885,885.88 shares of preferred stock, par
value $0.0001 per share ("Inc. Preferred Stock"), 21,020,720.72 shares of which
shall have been designated as Series A Preferred Stock, none of which shall be
issued and outstanding, 300.30 shares of which shall have been designated as
Series B Preferred Stock, up to 300.30 shares of which may be issued and
outstanding as of the Closing Date, and 4,864,864.86 shares of which shall have
been designated as Series C Preferred Stock, up to 4,864,864.86 shares of which
may be issued and outstanding as of the Closing Date. As of the Closing Date,
[4,504,000.00] shares of Inc. Common Stock (less the number of shares of the LLC
reserved for issuance pursuant to an equity incentive plan of the LLC) shall be
reserved for issuance pursuant to the Inc. Plan.
(c) Xxxxxxxxx.xxx, Inc.'s Assets. Xxxxxxxxx.xxx, Inc. has
conducted no business since the date of its incorporation. Except for
transactions contemplated by the Transaction Documents, Xxxxxxxxx.xxx, Inc. has
no assets or liabilities and does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
(d) Authority Relative to this Agreement. Xxxxxxxxx.xxx,
Inc. has full corporate power and authority to enter into this Agreement and to
perform its obligations under the Transaction Documents and to consummate the
transactions contemplated hereby and
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thereby. The execution, delivery and performance of the Transaction Documents
and the consummation by Xxxxxxxxx.xxx, Inc. of the transactions contemplated
hereby and thereby have been duly and validly approved by the board of directors
of Xxxxxxxxx.xxx, Inc., and no other corporate proceedings on the part of
Xxxxxxxxx.xxx, Inc. are necessary to authorize the execution, delivery and
performance by Xxxxxxxxx.xxx, Inc. of the Transaction Documents to which it is a
party and the consummation by Xxxxxxxxx.xxx, Inc. of the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by Xxxxxxxxx.xxx, Inc. and constitutes a legal, valid and
binding obligation, enforceable against Xxxxxxxxx.xxx, Inc. in accordance with
its terms.
(e) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of the Transaction
Documents by Xxxxxxxxx.xxx, Inc. does and will not, and the performance by
Xxxxxxxxx.xxx, Inc. of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to any
person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of Xxxxxxxxx.xxx, Inc. under any of
the terms, conditions or provisions of (i) the certificate of incorporation or
bylaws of Xxxxxxxxx.xxx, Inc., or (ii) (x) any Applicable Laws or any Order of
any Governmental Entity applicable to Xxxxxxxxx.xxx, Inc. or any of its assets
or properties, or (y) any Contract to which Xxxxxxxxx.xxx, Inc. is a party or by
which Xxxxxxxxx.xxx, Inc. or any of its assets or properties is bound.
(ii) No Consent or other public or private third
party is necessary or required under any of the terms, conditions or provisions
of any Applicable Law or Order of any Governmental Entity or any Contract to
which Xxxxxxxxx.xxx, Inc. is a party or by which Xxxxxxxxx.xxx, Inc. or any of
its assets or properties is bound for the execution and delivery of the
Transaction Documents to which Xxxxxxxxx.xxx, Inc. is a party, the performance
by Xxxxxxxxx.xxx, Inc. of its obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby and thereby.
(f) Absence of Undisclosed Liabilities. Xxxxxxxxx.xxx,
Inc. does not have any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any nature.
(g) Disclosure. No representation or warranty made by
Xxxxxxxxx.xxx, Inc. contained in this Agreement or in any certificate furnished
by Xxxxxxxxx.xxx, Inc. pursuant to this Agreement contains or will contain an
untrue statement of material fact, or omits or will omit to state a material
fact necessary, in the light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading.
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ARTICLE III
PRE-CLOSING AGREEMENTS
3.1 Conduct of Business. Except as contemplated by this Agreement
or to the extent that Xxxxxxxxx.xxx, Inc. shall otherwise consent in writing,
which consent shall not be unreasonably withheld, from the date of this
Agreement until the Closing, Nordstrom covenants and agrees that it shall:
(a) conduct the Business in the ordinary course consistent
with past practice;
(b) use commercially reasonable efforts to preserve intact
the present Business organization and to keep available the services of its
present officers, employees and independent contractors used in the Business and
preserve its relationships with customers, suppliers and others having business
dealings with the Business;
(c) maintain the Assets in their current condition, except
for ordinary wear and tear;
(d) not amend in any material respect, terminate, or fail
to use all commercially reasonable efforts to renew any material Contract
(provided that Nordstrom shall not be required to renew any material Contract on
terms that are materially less favorable to Nordstrom), or default in any
material respect (or take or omit to take any action that, with or without the
giving notice or passage of time, would constitute a material default) under any
material Contract or enter into any new material Contract;
(e) not merge or consolidate the Business with or into any
other legal entity, or dissolve, or liquidate the Business;
(f) not adopt or amend any Employee Benefit Plan or
collective bargaining agreement, or increase by more than 5% in any manner the
compensation or fringe benefits of any officer, or employee used in the Business
(whether employees or independent contractors), except as required by law or
pursuant to an applicable written Contract,
(g) not terminate any Executive Employee without prior
consultation with Xxxxxxxxx.xxx, Inc. regarding the basis for such termination;
(h) not acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or assets),
lease, or dispose of any material amount of Assets except in the ordinary course
of business and consistent with past practice, whether in one or more
transactions;
(i) not mortgage, pledge, or subject to any Lien, other
than Permitted Encumbrances, any of the Assets;
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(j) not change in any material respect its existing
practices and procedures with respect to the collection of Accounts Receivable
and, except with respect to good faith attempts consistent with past practice to
obtain payment of a past due receivable, or except in accordance with existing
practices, a contested receivable, offer to discount the amount of any
outstanding receivable or extend any other incentive (whether to the account
debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(k) not agree to or make any commitment, orally or in
writing, to take any actions prohibited by this Agreement.
3.2 No Solicitation. Until the earlier of the Closing and the
date of termination of this Agreement pursuant to the provisions of Section 6.1
hereof, Nordstrom will not, nor will Nordstrom permit any of its directors,
officers, agents, employees, Affiliates, attorneys, accountants, financial
advisers or other representatives (collectively, "Representatives") to (directly
or indirectly): (i) solicit, encourage, initiate, entertain, review or
participate in any negotiations or discussions with respect to an offer or
proposal, oral, written, or otherwise, formal or informal to acquire all or any
part of the Business, whether by purchase of assets, exclusive license, joint
venture formation, purchase of stock, business combination or otherwise, (ii)
disclose any information not customarily disclosed to any Person concerning the
Business and which Nordstrom believes would be used for the purposes of
formulating any such offer or proposal, (iii) assist, cooperate with, facilitate
or encourage any Person to make any offer or proposal to acquire all or any part
of the Business (directly or indirectly), (iv) agree to, enter into a contract
regarding, approve, recommend or endorse any transaction involving the
acquisition of all or any part of the Business (a "Competing Proposed
Transaction"), or (v) authorize or permit any of Nordstrom's Representatives to
take any such action. Nordstrom shall notify Xxxxxxxxx.xxx, Inc. as promptly as
practical if any proposal or offer (formal or information, oral, written or
otherwise), or any inquiry or contact with any Persons with respect thereto,
regarding a Competing Proposed Transaction is made or is outstanding on the date
hereof, such notice to include the identity of the Person proposing such
Competing Proposed Transaction and the terms thereof, and shall keep
Xxxxxxxxx.xxx, Inc. apprised, on a current basis of the status of any such
Competing Proposed Transaction and of any modifications to the terms thereof.
Xxxxxxxxx.xxx, Inc. immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties other than Nordstrom
conducted heretofore with respect to any Competing Proposed Transaction.
3.3 Expenses. Upon consummation of the transactions contemplated
by this Agreement to be consummated at the Closing, the LLC shall pay the
reasonable fees and expenses of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx &
Xxxxxxxxx, LLP in connection with the negotiation and effectuation of the terms
and conditions of the Transaction Documents and the transactions contemplated
hereby and thereby.
3.4 Approvals; Additional Documents; and Further Assurances.
Nordstrom and Xxxxxxxxx.xxx, Inc. shall use their best efforts to (i) obtain all
Consents, (ii) do and perform all such other acts and things and (iii) execute
and deliver such other instruments and agreements as
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may be necessary or desirable for effecting fully the consummation of the
Transaction Documents and the transactions contemplated hereby and thereby.
3.5 Access and Information. Until the Closing, Nordstrom shall
afford to Xxxxxxxxx.xxx, Inc. and its representatives (including accountants and
counsel) full access, during normal business hours, upon reasonable notice and
in such manner as will not unreasonably interfere with the conduct of the
business of Nordstrom, to all properties, books, records, and Tax Returns
relating to the Business and all other information relating to the Business,
together with the opportunity to make copies of such books, records, and other
documents and to discuss the Business with such corporate officers, other
personnel, accountants, consultants, and counsel for Nordstrom as Xxxxxxxxx.xxx,
Inc. deems reasonably necessary or appropriate for the purposes of familiarizing
itself with the Business.
3.6 Notification of Certain Matters. Each party to this Agreement
shall give prompt written notice to the other party of (a) the occurrence, or
failure to occur, of any event of which it becomes aware that has caused or that
would be likely to cause any representation or warranty of such party contained
in this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Closing Date, (b) the failure of such party, or any
officer, director, employee, or agent of such party, to comply with or satisfy
in any material respect any covenant, condition, or agreement to be complied
with or satisfied by it hereunder, and (c) in the case of Nordstrom, the
occurrence of any threat made to Nordstrom by any Executive Employee to resign
or otherwise terminate their employment or independent contractor relationship
with Nordstrom. No such notification shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder.
3.7 Transfer Charges. Nordstrom and Xxxxxxxxx.xxx, Inc. agree to
use commercially reasonable efforts to minimize any taxes, charges, filing fees
or other assessments of any Taxing Authority or other Governmental Entity
(collectively "Transfer Charges") that will result from the transfer of the
Assets to the LLC pursuant to the Transaction Documents. The LLC agrees that it
will pay up to $175,000 of any Transfer Charges, and Nordstrom agrees that it
will pay any Transfer Charges in excess of $175,000.
3.8 Brokers or Finders. Except as set forth in Schedule 3.8, each
party represents and warrants to the other that no agent, broker, investment
banker, or other person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee payable by Nordstrom or Xxxxxxxxx.xxx,
Inc. in connection with any of the transactions contemplated by this Agreement.
3.9 Bulk Sales Law. The parties do not believe that any bulk
sales or fraudulent conveyance statute applies to the transactions contemplated
by this Agreement. Nordstrom agrees to indemnify and hold the LLC harmless
against any claim made against LLC by any creditor of Nordstrom as a result of a
failure to comply with any such statute.
3.10 Employee Benefit Matters. Nordstrom shall take all necessary
actions to cause the Employee Benefit Plans to permit continued participation by
the Target Employees following their transfer to the LLC, provided the LLC
remains an ERISA Affiliate. Such
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participation shall be in accordance with Section 5.3 hereof and on the terms
and conditions that apply to similarly situated employees employed by Nordstrom
and the Nordstrom Affiliates. At the earlier of October 1, 2002 or at the point
in time when the LLC ceases to be a Nordstrom ERISA Affiliate, the LLC may
continue to participate in such Employee Benefit Plans only with the consent of
Nordstrom.
3.11 Employee Arrangements. Nordstrom shall use commercially
reasonable efforts to cause the Target Employees to be employed by the LLC
and/or Xxxxxxxxx.xxx, Inc. immediately following the Closing. Employment with
the LLC and/or Xxxxxxxxx.xxx, Inc. shall be offered to the Target Employees
pursuant to offer or notification letters that (a) expressly reserve the right
of the LLC and Xxxxxxxxx.xxx, Inc. to modify compensation levels and employee
benefit programs after December 31, 1999, including (without limitation) the
right to discontinue the participation of the Target Employees in the Employee
Benefit Plans and to substitute new employee benefit plans specific to the LLC
and/or Xxxxxxxxx.xxx, Inc., and (b) acknowledge that the Target Employees will
be employees at will of the LLC and/or Xxxxxxxxx.xxx, Inc. and that such
transfer of employment will not constitute a separation of employment with
Nordstrom for purposes of its Employee Benefit Plans. Without the prior written
consent of Xxxxxxxxx.xxx, Inc., neither Nordstrom nor any Nordstrom Affiliate
shall encourage or solicit any Target Employee to be employed by Nordstrom or
any Nordstrom Affiliate following the Closing. Neither Nordstrom nor any
Nordstrom Affiliate shall attempt to prevent the LLC or Xxxxxxxxx.xxx, Inc. from
hiring a former employee of Nordstrom or any Nordstrom Affiliate who seeks
employment with the LLC or Xxxxxxxxx.xxx, Inc. provided that notice is provided
to Nordstrom prior to the time any offer is made to any such former employee.
Without the prior written consent of Nordstrom, neither
Xxxxxxxxx.xxx, Inc. nor the LLC shall encourage or solicit any person employed
by Nordstrom or any Nordstrom Affiliate who is not engaged in the Business as of
the date hereof to be employed by Xxxxxxxxx.xxx, Inc. or the LLC following
Closing. Neither Xxxxxxxxx.xxx, Inc. nor the LLC shall attempt to prevent
Nordstrom or any Nordstrom Affiliate from hiring a former employee of
Xxxxxxxxx.xxx, Inc. or the LLC who seeks employment with Nordstrom or any
Nordstrom Affiliate provided that notice is provided to Xxxxxxxxx.xxx, Inc.
prior to the time any offer is made to any such former employee.
3.12 Delivery and Acceptance of Schedules. Nordstrom shall
deliver to Xxxxxxxxx.xxx, Inc. all Schedules required to be delivered by it
pursuant to this Agreement within three (3) Business Days after the date hereof.
Xxxxxxxxx.xxx, Inc. shall have three (3) Business Days after receipt of the
Schedules to review and approve the disclosures contained therein. The parties
shall promptly meet and attempt to negotiate in good faith any disclosures which
are the subject of dispute, but Xxxxxxxxx.xxx, Inc. shall not be required to
accept any such disclosures that are different in any material respect with
information furnished to Xxxxxxxxx.xxx, Inc. or its Affiliates on or before the
date hereof.
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ARTICLE IV
CONDITIONS PRECEDENT; CLOSING
4.1 Conditions to Each Party's Obligation. The respective
obligations of Nordstrom and Xxxxxxxxx.xxx, Inc. to effect the transactions
contemplated hereby are subject to the satisfaction on or prior to the Closing
Date of the following conditions:
(a) Governmental Consents. All Consents from any
Governmental Entity (if any) necessary for consummation of the transactions
contemplated by this Agreement shall have been timely obtained, and any waiting
period applicable to the consummation of such transactions under the HSR Act
shall have expired or been terminated.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other Order issued by
any Governmental Entity or other legal or regulatory restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect; nor shall there be any action taken, or any Applicable Law or Order
enacted, entered, enforced or deemed applicable to the transactions contemplated
hereby that would prohibit the consummation of such transactions.
(c) No Action. No Governmental Entity shall have notified
either party to this Agreement that such Governmental Entity intends to commence
proceedings to restrain or prohibit the transactions contemplated hereby or
force rescission, unless such Governmental Entity shall have withdrawn such
notice and abandoned any such proceeding prior to the time which otherwise would
have been the Closing Date.
(d) Inc. Transaction Documents. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware; the
Inc. Bylaws shall have been duly adopted by the board of directors of
Xxxxxxxxx.xxx, Inc; the Stock Purchase Agreement, Investors' Rights Agreement,
the Put Agreement and the Right of First Refusal and Co-Sale Agreements shall
have been executed and delivered by the parties thereto; and the Closing (as
defined in the Stock Purchase Agreement) shall have occurred.
(e) LLC Transaction Documents. Nordstrom and
Xxxxxxxxx.xxx, Inc. shall have executed and delivered the Operating Agreement;
the Closing (as defined in the Operating Agreement) shall have occurred;
Nordstrom and the LLC shall have executed and delivered the Xxxx of Sale and
Assignment, any other documents reasonably necessary to effect the transfer of
the Assets and the Assumption Agreement; and the License Agreement, the Supply
Agreement and the Service Agreement shall have been executed and delivered by
the parties thereto.
4.2 Conditions to Obligation of Nordstrom. The obligation of
Nordstrom to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Nordstrom:
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(a) Representations and Warranties. The representations
and warranties of Xxxxxxxxx.xxx, Inc. set forth in this Agreement shall be true
and correct in all material respects (provided that any representation or
warranty of Xxxxxxxxx.xxx, Inc. contained herein that is qualified by a
materiality or knowledge standard shall not be further qualified hereby) as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, and Nordstrom shall have received a certificate to such
effect signed on behalf of Xxxxxxxxx.xxx, Inc. by the chief executive officer
and the chief financial officer of Xxxxxxxxx.xxx, Inc. in their official
capacities.
(b) Performance of Obligations. Xxxxxxxxx.xxx, Inc. shall
have performed in all material respects all obligations required to be performed
by it under this Agreement prior to the Closing Date, and Nordstrom shall have
received a certificate to such effect signed on behalf of Xxxxxxxxx.xxx, Inc. by
the chief executive officer and the chief financial officer of the
Xxxxxxxxx.xxx, Inc.
(c) Consents. Nordstrom shall have been furnished with
evidence satisfactory to it that Xxxxxxxxx.xxx, Inc. has obtained each Consent
required in order to permit the consummation of the transactions contemplated
hereby (except for such Consents the failure of which to receive could not
reasonably be expected to have a Material Adverse Effect).
(d) Legal Opinion. Nordstrom shall have received from
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, counsel to
Benchmark Capital, in form and substance reasonably satisfactory to Nordstrom.
4.3 Conditions to Obligations of the Xxxxxxxxx.xxx, Inc.. The
obligation of Xxxxxxxxx.xxx, Inc. to effect the transactions contemplated hereby
is subject to the satisfaction of the following conditions unless waived, in
whole or in part, by Xxxxxxxxx.xxx, Inc.
(a) Representations and Warranties. The representations
and warranties of Nordstrom set forth in this Agreement shall be true and
correct in all material respects (provided that any representation or warranty
of Nordstrom contained herein that is qualified by a materiality or knowledge
standard shall not be further qualified hereby) as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date, and
Xxxxxxxxx.xxx, Inc. shall have received a certificate to such effect signed on
behalf of Nordstrom by the chief executive officer and the chief financial
officer of Nordstrom.
(b) Performance of Obligations of Nordstrom. Nordstrom
shall have performed in all material respects the obligations required to be
performed by it under this Agreement prior to the Closing Date, and
Xxxxxxxxx.xxx, Inc. shall have received a certificate to such effect signed on
behalf of Nordstrom by the chief executive officer and the chief financial
officer of Nordstrom.
(c) Legal Opinion. Xxxxxxxxx.xxx, Inc. shall have received
from Xxxx Xxxxxx Spears Lubersky LLP, counsel to Nordstrom, in form and
substance reasonably satisfactory to Xxxxxxxxx.xxx, Inc.
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(d) No Material Adverse Change. There shall have occurred
no material adverse change in the Business or the Assets since the date hereof.
4.4 Closing. Subject to the satisfaction or waiver of the
conditions set forth in this Article IV, the Closing will take place at the
offices of Xxxx Xxxxxx Xxxxxx Lubersky LLP, 0000 0xx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx, at 10:00 a.m., local time (or at such other place and time
as Nordstrom and Xxxxxxxxx.xxx, Inc. may agree) on a date selected by Nordstrom
which date shall be within two (2) business days after the date on which the
conditions set forth in this Article IV have been satisfied or waived in
accordance therewith (the "Closing Date"). The parties to this Agreement shall
use their best efforts to cause the Closing to occur no later than October 31,
1999.
4.5 Assumption of Liabilities and Obligations.
(a) As of the Closing, the LLC shall assume and undertake
to pay, discharge and perform all the obligations and liabilities of Nordstrom
or any Nordstrom Affiliate relating to (i) the Assumed Working Capital
Liabilities as of the close of business on the day immediately preceding the
Closing Date; (ii) the Assumed Contracts assumed by the LLC relating to the time
period beginning on or arising out of events occurring on or after the Closing
Date, (iii) commitments of Nordstrom or any Nordstrom Affiliate relating to the
Business entered into in the ordinary course of business which are consistent
with the past practice of Nordstrom or such Nordstrom Affiliate, to the extent
such commitments relate to goods and services to be received by the LLC after
the Closing Date and (iv) pending non-material worker's compensation claims, a
case by a former employee who worked for the Business, and a non-material EEOC
charge for age discrimination. Other than as specified in the first sentence of
this Section 4.5(a), the LLC shall assume no liabilities or obligations of
Nordstrom or such Nordstrom Affiliate as of the Closing Date that relate to the
Business and shall not be liable therefor.
(b) All other obligations and liabilities of Nordstrom or
any Nordstrom Affiliate relating to the Business, including (i) obligations or
liabilities under any contract not included in the Assumed Contracts, (ii)
obligations or liabilities under any Assumed Contract for which a Consent, if
required, has not been obtained as of the Closing, (iii) any obligations and
liabilities arising under the Assumed Contracts that relate to the time period
prior to the Closing Date or arise out of events occurring prior to the Closing
Date and (iv) any forfeiture, claim or pending litigation or proceeding relating
to the Business prior to the Closing Date, shall remain and be the obligation
and liability solely of Nordstrom.
4.6 Calculation of Assumed Working Capital Liabilities. Within
twenty (20) days after the Closing Date, Nordstrom shall notify Xxxxxxxxx.xxx,
Inc. of its good faith determination of the Assumed Working Capital Liabilities
and provide Xxxxxxxxx.xxx, Inc. with supporting documentation reasonably
necessary to evaluate such determination. If Xxxxxxxxx.xxx, Inc. disagrees with
such determination, Xxxxxxxxx.xxx, Inc. shall give prompt written notice thereof
to Nordstrom, but in no event later than ten (10) days after notice of such
determination, specifying in reasonable detail the nature and extent of such
disagreement. Any disagreement not resolved within ten (10) days after
Xxxxxxxxx.xxx, Inc. furnishes such notice shall be resolved pursuant to Section
7.13 hereof.
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ARTICLE V
POST-CLOSING COVENANTS
5.1 Indemnification.
(a) Subject to the provisions of this Section 5.1,
Xxxxxxxxx.xxx, Inc. shall indemnify and hold harmless Nordstrom and each
officer, director, employee, stockholder and Affiliate of Nordstrom and each
Nordstrom Entity (collectively the "Nordstrom Indemnitees") from and against any
and all Liabilities and Costs incurred by them that arise out of any breach or
default by Xxxxxxxxx.xxx, Inc. of any of the representations, warranties,
covenants or agreements under any Transaction Document to which Xxxxxxxxx.xxx,
Inc. is a party.
(b) Subject to the provisions of this Section 5.1,
Nordstrom shall indemnify and hold harmless Xxxxxxxxx.xxx, Inc. and each
officer, director, employee, stockholder and Affiliate of Xxxxxxxxx.xxx, Inc.
(collectively the "Xxxxxxxxx.xxx, Inc. Indemnitees") from and against any and
all Liabilities and Costs incurred by them that arise out of (i) any breach or
default by Nordstrom or any Nordstrom Entity of any of the representations,
warranties, covenants or agreements under any Transaction Document to which
Nordstrom or any Nordstrom Entity is a party, or (ii) any obligations or
liabilities of the Business that are not assumed by the LLC pursuant to Section
4.5 hereof.
(c) Subject to the provisions of this Section 5.1,
Xxxxxxxxx.xxx, Inc. and Nordstrom shall cause the LLC to indemnify and hold
harmless the Nordstrom Indemnitees from and against any and all Liabilities and
Costs incurred by them that arise out of any obligations or liabilities of the
Business that are required to be assumed by the LLC pursuant to Section 4.5
hereof and any obligations or liabilities of the Business solely to the extent
that they arise out of events occurring on or after the Closing Date that are
not otherwise the subject of indemnification in favor of Xxxxxxxxx.xxx, Inc. or
the LLC hereunder.
(d) Nordstrom represents and warrants to Xxxxxxxxx.xxx
that at the time of the Merger, Nordstrom Holdings shall have no liabilities for
Taxes other than an amount (the "Allowable Tax Amount") equal to the excess, if
any, of (i) the Taxes that Nordstrom Holdings would have incurred solely by
reason of receiving allocations and distributions from the LLC had Nordstrom
Holdings had no assets other than its membership interest in the LLC and had
Nordstrom Holdings at all times been a stand-alone corporation that was not
included in any consolidated, combined, unitary or similar group of corporations
or other entities for tax purposes over (ii) the amount of all distributions
received by Nordstrom Holdings from the LLC. Nordstrom agrees to indemnify
Xxxxxxxxx.xxx, Inc. for any Tax liability of Nordstrom Holdings attributable to
periods prior to the Merger (whether or not due and payable at the time of the
Merger) to the extent such Tax liability exceeds the Allowable Tax Amount.
(e) An Indemnified Party shall give prompt written notice
to any Indemnifying Party of the commencement or assertion of any action,
proceeding, demand, or claim by a third party (collectively, a "third-party
action") in respect of which such Indemnified Party shall seek indemnification
hereunder. Any failure so to notify an Indemnifying Party shall
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not relieve such Indemnifying party from any liability that it, he, or she may
have to such Indemnified Party under this Section 5.1 unless the failure to give
such notice materially and adversely prejudices such Indemnifying Party. The
Indemnifying Party shall have the right to assume control of the defense of,
settle, or otherwise dispose of such third-party action on such terms as they
deem appropriate; provided, however, that:
(A) The Indemnified Party shall be entitled, at
his, her, or its own expense, to participate in the defense of such third-party
action (provided, however, that the Indemnifying Party shall pay the attorneys'
fees of the Indemnified Party if (i) the employment of separate counsel shall
have been authorized in writing by any such Indemnifying Party in connection
with the defense of such third-party action, (ii) the Indemnifying Party shall
not have employed counsel reasonably satisfactory to the Indemnified Party to
have charge of such third party action, (iii) the Indemnified Party shall have
reasonably concluded that there may be defenses available to such Indemnified
Party that are different from or additional to those available to the
Indemnifying Party, or (iv) the Indemnified Party's counsel shall have advised
the Indemnified Party in writing, with a copy to the Indemnifying Party, that
there is a conflict of interest that could make it inappropriate under
applicable standards of professional conduct to have common counsel);
(B) The Indemnifying Party shall obtain the prior
written approval of the Indemnified Party before entering into or making any
judgment, settlement, compromise, admission, or acknowledgment of the validity
of such third-party action or any liability in respect thereof if, pursuant to
or as a result of such settlement, compromise, admission, or acknowledgment,
injunctive or other equitable relief would be imposed against the Indemnified
Party or if, in the opinion of the Indemnified Party, such settlement,
compromise, admission, or acknowledgment could have a material adverse effect on
its business or, in the case of an Indemnified Party who is a natural person, on
his or her assets or interests;
(C) No Indemnifying Party shall consent to the
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such third-party
action; and
(D) The parties hereto shall extend reasonable
cooperation in connection with the defense of any third-party action pursuant to
this Section 5.1 and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery proceedings,
hearings, trials, and appeals as may be reasonably requested.
(f) In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 5.1(e) because no
third-party action is involved (a "direct cost"), the Indemnified Party shall
notify the Indemnifying Party in writing of any Liabilities and Costs which such
Indemnified Party claims are subject to indemnification under the terms hereof.
The failure of the Indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim unless the resulting delay materially
prejudices the position of the Indemnifying Party with respect to such claim.
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(g) Notwithstanding anything to the contrary stated
herein, (i) the Xxxxxxxxx.xxx, Inc. Indemnities shall not be entitled to
indemnification for Liabilities and Costs pursuant to Section 5.1(b) until the
total of all Liabilities and Costs with respect to such matters exceeds $100,000
and then only to the extent of such excess; and (ii) Nordstrom's Indemnities
shall not be entitled to indemnification for Liabilities and Costs pursuant to
Sections 5.1(a) or 5.1(c) until the total of all Liabilities and Costs with
respect to such matters exceeds $100,000 and then only to the extent of such
excess.
(h) No Indemnifying Party shall be liable for any
Liabilities and Costs pursuant to this Section 5.1 unless a written claim for
indemnification in accordance with this Section 5.1 is given by the Indemnified
Party to the Indemnifying Party with respect thereto on or before the later of
the second anniversary of the Closing Date (the "Notice Termination Date"). The
Notice Termination Date shall occur sooner in the event of an Initial Public
Offering, but in no event any earlier than the first anniversary of the Closing
Date.
(i) The amount of any Liabilities and Costs to be
recovered by Nordstrom Indemnities or Xxxxxxxxx.xxx, Inc. Indemnities shall be
net of insurance proceeds received that mitigate the Liabilities or Costs.
(j) The parties agree that the exclusive remedies of the
parties for any Liabilities and Costs arising out of or based upon the matters
set forth in Section 5, or otherwise under this Agreement, shall be (i) the
indemnification obligations of the parties set forth in Section 5, subject to
the limitations on such obligations set forth in this Agreement or (ii) specific
performance or injunctive or declaratory relief. The parties agree that the
remedy of rescission shall not be available as a result of the breach of this
Agreement except where the conduct of the breaching party constitutes fraud.
5.2 Store Discounts. Nordstrom maintains an employee discount
program (the "Nordstrom Merchandise Discount Program") intended to qualify for
tax-favored treatment under Code Section 132 and the Regulations thereunder.
(a) Continuing Reciprocal Agreement. From the date hereof
until the LLC ceases to be an ERISA Affiliate (as defined in 2.1(q)(i) of the
Agreement), (i) employees of the LLC (and their eligible family members) shall
be entitled to receive qualified employee discounts under the Nordstrom
Merchandise Discount Program on their purchases of goods from Nordstrom and (ii)
the Nordstrom Merchandise Discount Program shall apply to the purchase of goods
from the LLC by employees of Nordstrom, the LLC and all Nordstrom ERISA
Affiliates. Neither Nordstrom nor the LLC shall be required to make any
reimbursement to the other for such discounts; provided, however, that nothing
in this paragraph shall alter the right of Nordstrom to change the terms of the
Nordstrom Merchandise Discount Program to the extent required to preserve the
tax-favored treatment of such discount program to employees under Code Section
132.
(b) Post Affiliate Status. Beginning on the date that the
LLC ceases to be an ERISA Affiliate, or on such earlier date as required by Code
Section 132, goods purchased through the LLC shall cease to be available for the
Nordstrom Merchandise Discount Program
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and the discounts available to employees of Nordstrom and its ERISA Affiliates
on purchases made through the LLC shall cease.
(c) Nature of Discount. The discounts available to
employees of the LLC on merchandise purchased through Nordstrom shall continue
on substantially similar terms and conditions as, and in percentage discounts
that are no greater than those provided under, the Nordstrom Merchandise
Discount Program, as the same may be amended from time to time, and such
discount shall continue to be made available to employees of the LLC until the
earlier of: (i) the LLC ceasing to maintain a comparable merchandise discount
program for its employees; or (ii) Nordstrom ceasing to maintain the Nordstrom
Merchandise Discount Program. The LLC shall not have any obligation to reimburse
Nordstrom for discounts provided pursuant to this paragraph; provided, however,
that the LLC shall not alter the terms or conditions of such discount program,
without the prior written consent of Nordstrom.
(d) Nordstrom Exclusive Right. Nordstrom will maintain the
exclusive right to determine all aspects of the Nordstrom Merchandise Discount
Program, including eligibility, percentage discounts and all other terms and
conditions of that program.
5.3 Employee Benefit Plans. The employees of the LLC, if
otherwise eligible, shall be permitted to participate in the Employee Benefit
Plans set forth in Schedule 2.1(q), with the exception of those Employee Benefit
Plans set forth in Schedule 5.3 from the Closing Date until such future date as
the LLC shall communicate to Nordstrom by giving not less than 60 days' advance
notice in writing, but in any event not later than the earlier of October 1,
2002, or the date the LLC is no longer an ERISA Affiliate of Nordstrom. Such
participation shall be on the terms and conditions that apply to similarly
situated employees employed by Nordstrom and the Nordstrom Affiliates. The LLC
and/or Xxxxxxxxx.xxx, Inc. shall make timely employer contributions to Nordstrom
or to the Employee Benefit Plans (as appropriate) for the cost of benefits
(including administrative expenses) incurred on behalf of their employees, as
required by the terms of or to provide the benefits under such Employee Benefit
Plans, and shall promptly remit any contributions made by such employees to such
Employee Benefit Plans. Except as required by law or to the extent such Employee
Benefit Plans currently provide, Nordstrom shall not amend the Employee Benefit
Plans or change such plans' cost structure in a manner that differentiates
between (a) the employees of the LLC and (b) the similarly situated employees of
Nordstrom or any Nordstrom Affiliate, division or business unit. By giving
Nordstrom not less than 60 days' advance notice in writing, the LLC and/or
Xxxxxxxxx.xxx, Inc. may adopt new employee benefit plans specific to the LLC
and/or Xxxxxxxxx.xxx, Inc., provided the design of such new plans does not cause
Nordstrom's existing plans to lose eligibility for preferential tax treatment.
Nordstrom shall use its best efforts to facilitate a transition from the
Employee Benefits Plans to such new employee benefit plans. To the extent the
LLC and/or Xxxxxxxxx.xxx, Inc. establishes its own employee benefit plans, LLC
and/or Xxxxxxxxx.xxx, Inc. shall be considered the "plan sponsor" and "plan
administrator" of such plans (as such terms are defined in ERISA), LLC and/or
Xxxxxxxxx.xxx, Inc. shall be solely responsible for the funding and legal
compliance of such plans in accordance with, but not limited to, the
requirements described in 2.1(q)(v) - (x), and LLC and/or Xxxxxxxxx.xxx, Inc.
shall indemnify and hold Nordstrom harmless from and against any liability
associated with the design, administration and funding of such plans. Subject to
the foregoing, nothing in this Section 5.3
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shall be interpreted or construed as limiting the right of Nordstrom to
otherwise alter, amend or terminate any Employee Benefit Plan, or its underlying
terms or provisions.
5.4 Equity Incentives. Following the Closing, the employees of
the LLC and/or Xxxxxxxxx.xxx, Inc. shall be eligible to be considered for stock
option grants as follows:
(a) The LLC shall maintain an option plan that provides
for the grant of nonstatutory options to purchase LLC shares. Such options shall
not be exercisable prior to the merger contemplated by Section 5.7.
(b) Xxxxxxxxx.xxx, Inc. shall maintain an option plan that
provides for the grant of nonstatutory options to purchase shares of the common
stock of Xxxxxxxxx.xxx, Inc. Participation in such plan shall be limited to
management-level employees of the Business who are employed by Xxxxxxxxx.xxx,
Inc. Such options shall be exercisable at any time.
(c) Whenever Xxxxxxxxx.xxx, Inc. grants an option to one
of its employees to purchase shares of is common stock, the LLC shall grant to
Xxxxxxxxx.xxx, Inc. an option to purchase an identical number of LLC shares.
Whenever Xxxxxxxxx.xxx, Inc. issues shares of its common stock to one of its
employees upon exercise of an option, Xxxxxxxxx.xxx, Inc. shall exercise its
option and purchase from the LLC an identical number of LLC shares.
(d) Twenty-five percent of the shares of common stock or
LLC shares subject to each option granted by Xxxxxxxxx.xxx, Inc. or the LLC
shall vest on the first anniversary of the date of grant, and the balance of
such shares shall vest in 36 equal monthly increments upon completion of each
month of service thereafter.
(e) The shares of common stock or LLC shares subject to
the options granted by Xxxxxxxxx.xxx, Inc. or the LLC shall be subject to a
customary right of first refusal in favor of Xxxxxxxxx.xxx, Inc. and the LLC,
respectively. Such options shall also include customary provisions relating to
lock-up agreements with underwriters.
5.5 Employees. At the discretion of the LLC, the management-level
Target Employees shall be employed jointly by the LLC and Xxxxxxxxx.xxx, Inc.
immediately following the Closing. The other Target Employees shall be employed
by the LLC immediately following the Closing. At the discretion of the LLC, all
newly hired management-level employees engaged in the Business shall be employed
by the LLC or jointly by the LLC and Xxxxxxxxx.xxx, Inc. The other newly hired
employees engaged in the Business shall be employed by the LLC. Each newly hired
employee engaged in the Business shall acknowledge in writing that (a)
compensation levels and employee benefit programs may be modified after December
31, 1999, and (b) such employee will be an employee at will.
5.6 Nordstrom Holdings. Except as contemplated by the Transaction
Documents, Nordstrom Holdings shall not engage in any business or directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint ventureship or other business association
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or entity prior to the Merger. Nordstrom shall cause Nordstrom Holdings to at
all times be a wholly owned Subsidiary of Nordstrom. Without limiting the
foregoing, Nordstrom Holdings will not take any of the following actions prior
to the Merger without the priority written consent of Xxxxxxxxx.xxx, Inc., which
consent shall not be unreasonably withheld:
(i) amend its certificate of incorporation or
bylaws (or other comparable corporate charter documents);
(ii) declare, set aside or pay any dividends on or
make other distributions (whether payable in cash, stock, property or otherwise)
in respect of any of its capital stock; (B) split, combine, reclassify or take
similar actions with respect to any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (C) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing such liquidation
or a dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (D) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock;
(iii) deliver, issue, sell, pledge or encumber or
authorize or propose the issuance, delivery, sale, pledge or encumbrance of, any
shares of its capital stock or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of its capital stock of, or any
other ownership interest in, Nordstrom Holdings, or (B) issue any stock
appreciation rights, restricted stock or similar equity based rights;
(iv) adopt any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, pension,
retirement, insurance employment or other employee or retiree benefit agreement,
trust, plan or other arrangement for the benefit of any Person;
(v) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other business
organization or division or make any investment in another entity, or sell,
pledge, dispose of, or encumber or authorize or propose the sale, pledge,
disposition or encumbrance of any of its assets;
(vi) authorize or propose or enter into any
contract, agreement, commitment or arrangement involving amounts in excess of
$25,000;
(vii) create, assume or incur any indebtedness for
borrowed money or guarantee any such indebtedness or assume, guarantee, endorse
or become liable on the obligation of any Person in excess of $25,000 in
aggregate;
(viii) engage in any business other than the
ownership of its membership interests in the LLC;
(ix) settle or compromise any federal, state, local
or foreign income tax, involving amounts in excess of $25,000, except to the
extent Nordstrom takes actions that affect Nordstrom Holdings as a result of a
consolidated tax return;
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(x) settle or compromise any litigation (whether or
not commenced prior to the date of this Agreement) or settle, pay or compromise
any claims not required to be paid, involving amounts in excess of $25,000;
(xi) create, assume, or incur any mortgage, lien,
pledge, charge or other security interest or encumbrance of any kind in respect
of any of its property of any character, involving amounts in excess of $25,000;
(xii) consolidate with or merge with any other
Person or sell, lease or transfer or otherwise dispose of all or any substantial
portion of its assets;
(xiii) purchase or acquire any capital assets or
make any capital expenditures;
(xiv) sell, lease, transfer, pledge, encumber or
otherwise dispose of any of its LLC Shares, including, without limitation,
through a merger or consolidation with such other Person; or
(xv) enter into any contract, agreement, commitment
or arrangement to do or engage in any of the foregoing.
5.7 Merger of Xxxxxxxxx.xxx, Inc. and Nordstrom Holdings. At such
time as the board of directors of Xxxxxxxxx.xxx, Inc. shall determine in
contemplation of an Initial Public Offering, Nordstrom Holdings shall merge with
Xxxxxxxxx.xxx, Inc. pursuant to an agreement and plan of merger reasonably
satisfactory to Nordstrom and Xxxxxxxxx.xxx, Inc. providing, among other things,
that:
(i) Xxxxxxxxx.xxx, Inc. shall be the surviving
corporation in the merger;
(ii) Xxxxxxxxx.xxx, Inc. shall succeed to and
assume all of the rights and obligations of Nordstrom Holdings pursuant to
applicable corporate law;
(iii) the certificate of incorporation and bylaws
of Xxxxxxxxx.xxx, Inc. in effect immediately prior to the effective time of the
merger shall be the certificate of incorporation and bylaws of the surviving
corporation;
(iv) the board of directors and officers of
Xxxxxxxxx.xxx, Inc. in effect immediately prior to the effective time of the
merger shall be the board of directors and bylaws of the surviving corporation;
(v) the capital stock of Nordstrom Holdings held by
Nordstrom immediately prior to the effective time of the merger shall be
converted into a number of shares of Series A Preferred Stock of Xxxxxxxxx.xxx,
Inc. equal to the number of Series A shares of the LLC owned by Nordstrom
Holdings immediately prior to such effective time subject to appropriate
adjustment for any stock split, stock dividend, combination, reclassification,
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reorganization or other similar event affecting the Series A Preferred Stock of
Xxxxxxxxx.xxx, Inc. or the Series A shares of the LLC);
(vi) each option to acquire a LLC Common Share
shall be assumed by Xxxxxxxxx.xxx, Inc. and shall become an option to purchase
one share of Common Stock of Xxxxxxxxx.xxx, Inc.
Notwithstanding the foregoing, if reasonably possible, Xxxxxxxxx.xxx, Inc. will
effect the transactions contemplated above by means of a different structure to
minimize the tax liabilities of all parties.
5.8 Xxxxxxxxx.xxx, Inc. Series A Preferred Stock. Until such time
as there are any outstanding shares of Series A Preferred Stock, Xxxxxxxxx.xxx,
Inc. shall not amend its Amended and Restated Certificate of Incorporation to
alter or change the rights, preferences or privileges of the share of such
Series A Preferred Stock, if such Series A Preferred Stock would be adversely
affected by such amendment in a manner different from other then outstanding
series of Xxxxxxxxx.xxx, Inc. Preferred Stock (it being understood that, without
limiting the foregoing, different series of Preferred Stock shall not be
affected differently because of proportional differences in the amounts of their
respective issue prices, liquidation preferences, and dividend preferences that
arise out of differences in the original issue price for each such series). The
foregoing covenant will terminate upon issuance of any Series A Preferred Stock
to Nordstrom. Xxxxxxxxx.xxx, Inc. shall reserve shares of its Series A Preferred
Stock in an amount equal to the number of shares of such preferred stock
issuable to Nordstrom in the merger described in Section 5.7.
5.9 Non-Exclusive License. Effective as of Closing,
Xxxxxxxxx.xxx, Inc. shall grant to Nordstrom and the Nordstrom Affiliates a
non-exclusive royalty free worldwide right and license to use such Intellectual
Property as is reasonably necessary for the operation of the business of
Nordstrom and the Nordstrom Affiliates, subject to customary and reasonable
terms.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 Termination. Except as provided in Section 6.2 below, this
Agreement may be terminated at any time prior to the Closing:
(a) by mutual agreement of Nordstrom and Xxxxxxxxx.xxx,
Inc.;
(b) by Nordstrom or Xxxxxxxxx.xxx, Inc. if: (i) the
Closing has not occurred before 5 p.m. (Pacific Time) on October 31, 1999
(provided, however, that the right to terminate this Agreement under this
Section 6.1(b)(i) shall not be available to any party whose willful failure to
fulfill any obligation hereunder has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date); (ii) there shall be a
final nonappealable Order of a federal or state court in effect preventing
consummation of the transactions contemplated by
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this Agreement, or (iii) be any Applicable Law shall make consummation of the
transactions contemplated by this Agreement illegal;
(c) by Nordstrom (if it is not in breach in any material
respect of any of its representations, warranties, covenants, or agreements in
this Agreement) if (i) there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement by Xxxxxxxxx.xxx,
Inc. and (ii) (A) Xxxxxxxxx.xxx, Inc. is not using its reasonable efforts to
cure such breach, or has not cured such breach within thirty (30) days, after
notice of such breach to Xxxxxxxxx.xxx, Inc. (provided, however, that, no cure
period shall be required for a breach which by its nature cannot be cured) and
(B) as a result of such breach any of the conditions set forth in Section 4.1 or
Section 4.2, as the case may be, would not then be satisfied; or
(d) by the Xxxxxxxxx.xxx, Inc., (if it is not in breach of
any material respect of any of its representations, warranties, covenants or
agreements in this Agreement) if (i) there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement by
Nordstrom and (ii)(A) Nordstrom is not using its reasonable efforts to cure such
breach, or has not cured such breach within thirty (30) days, after notice of
such breach to Nordstrom (provided, however, that no cure period shall be
required for a breach which by its nature cannot be cured), and (B) as a result
of such breach the conditions set forth in Section 4.1 or Section 4.3, as the
case may be, would not then be satisfied; or
6.2 Effect of Termination. In the event of a valid termination of
this Agreement as provided in Section 6.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Nordstrom or
Xxxxxxxxx.xxx, Inc., or their respective officers, directors or shareholders or
Affiliates, provided, however, that each party shall remain liable for any
breaches of this Agreement prior to its termination.
6.3 Amendment. Except as is otherwise required by Applicable Law,
this Agreement may be amended by the parties hereto at any time by execution of
an instrument in writing signed on behalf of each of the parties hereto.
6.4 Extension; Waiver. At any time prior to the Closing,
Nordstrom and Xxxxxxxxx.xxx, Inc. may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements, covenants or conditions for
the benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
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ARTICLE VII
GENERAL PROVISIONS
7.1 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission
against facsimile confirmation or mailed by prepaid first class certified mail,
return receipt requested, or mailed by overnight courier prepaid, to the parties
at the following addresses or facsimile numbers:
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If to Nordstrom to:
Nordstrom, Inc.
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx,
Executive Vice President and
Chief Financial Officer
Attn: Corporate Secretary
with a copy to:
Xxxx Xxxxxx Spears Lubersky LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
If to Xxxxxxxxx.xxx, Inc.
Xxxxxxxxx.xxx, Inc.
c/o Benchmark Capital
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: President and Chief Executive Officer
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxx
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section 7.1, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided for in this Section 7.1, be deemed given upon
facsimile confirmation, (iii) if delivered by mail in this manner described
above to the address as provided for in this Section 7.1, be deemed given on the
earlier of the third Business Day following mailing or upon receipt and (iv) if
delivered by overnight courier to the address as provided in this Section 7.1,
be deemed given on the earlier of the first Business Day following the date sent
by such overnight courier or upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person to
whom a
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copy of such notice is to be delivered pursuant to this Section 7.1). Any party
from time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such change
to the other party hereto.
7.2 Entire Agreement. This Agreement and the Exhibits and
Schedules hereto constitute the entire Agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understanding, both written and oral, among the parties with respect to the
subject matter hereof.
7.3 Further Assurances; Post-Closing Cooperation. At any time or
from time to time after the Closing the parties shall execute and deliver to the
other party such other documents and instruments, provide such materials and
information and take such other actions as the other party may reasonably
request to consummate the transactions contemplated by the Transaction Documents
and otherwise to cause the other party to fulfill its obligations hereunder and
thereunder and the transactions contemplated hereby and thereby.
7.4 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
7.5 Third-Party Beneficiaries. Except as contemplated by Section
5.1 with respect to Nordstrom Indemnities and Xxxxxxxxx.xxx, Inc. Indemnities,
terms and provisions of this Agreement are intended solely for the benefit of
each party hereto and their respective successors or permitted assigns, and it
is not the intention of the parties to confer third-party beneficiary rights,
and this Agreement does not confer any such rights, upon any other Person.
7.6 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party and
any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
7.7 Headings. The headings and table of contents used in this
Agreement have been inserted for convenience of reference only and do not define
or limit the provisions hereof.
7.8 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such
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illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
7.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Washington,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Washington or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Washington.
7.10 Construction. The parties hereto agree that this Agreement
is the product of negotiation between sophisticated parties and individuals, all
of whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather than shall be
given a fair and reasonable construction without regard to the rule of contra
proferentem.
7.11 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
7.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Except where this Agreement specifically provides for
arbitration, it is agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
7.13 Dispute Resolution. The parties desire to resolve disputes
arising out of this Agreement without litigation. Accordingly, except for an
action seeking a temporary restraining order or injunction related to the
purposes of this Agreement, suit to compel compliance with this dispute
resolution process, or entry and enforcement of any judgment on any arbitration
award, the parties agree to meet and negotiate in good faith to resolve any
dispute arising under this Agreement. The location, format, frequency, duration
and conclusion of these discussions shall be left to the discretion of the
parties. The discussions will commence within fifteen (15) days after notice of
a dispute from any party.
(a) If a determination is made by any party that
continuation of the negotiation process is not warranted, the dispute shall be
first submitted to mediation by a mediator pursuant to the Commercial Mediation
Rules of the American Arbitration Association. Any party may demand such
mediation in accordance with the procedures set out in those rules, which shall
commence within thirty (30) days of such demand.
(b) If a determination is made by any party that
continuation of the mediation process is not warranted or if all of the matters
in dispute are not resolved through
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mediation, the dispute shall be submitted to binding arbitration by an
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. Any party may demand such arbitration in accordance
with the procedures set out in those rules, which shall commence within thirty
(30) days of such demand. Each party to the dispute shall have the right to take
the deposition of individuals and expert witnesses designated by the other
party. Each party to the dispute shall also have the right to request production
of relevant documents, the scope and enforcement of which shall be governed by
the arbitrator. Additional discovery may be only by order of the arbitrator, and
only upon a showing of substantial need. The arbitrator shall be authorized to
issue subpoenas for the purpose of requiring attendance of witnesses at
depositions. The parties to the dispute may submit written briefs. The
arbitrator shall rule on the dispute by issuing a written opinion within thirty
(30) days after the close of hearings. The award rendered by arbitration shall
be final, binding and nonappealable judgment, and the award may be entered in
any court of competent jurisdiction in the United States. Special, consequential
or punitive damages shall not be awarded by the arbitrator.
(c) Any mediation or arbitration shall be held in Seattle,
Washington, or such other location as mutually agreed upon by the parties to the
dispute. The mediator or arbitrator shall control the scheduling so as to
process the matter expeditiously. The times specified herein may be extended
upon mutual agreement of the parties to the dispute or by the arbitrators upon a
showing of good cause.
IN WITNESS WHEREOF, Nordstrom and Xxxxxxxxx.xxx, Inc. have caused
this Agreement to be signed, all as of the date first written above.
NORDSTROM, INC.
------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
XXXXXXXXX.XXX, INC.
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
44
