Exhibit 10.26
SERVICES AGREEMENT AMENDMENT
This Services Agreement Amendment is made as of January 28, 1999 by
and among (i) Meridian Ventures, Inc., a Nevada corporation or any successor
corporation controlled by Xxxxxx X. Xxxxx, provided such successor corporation
is reasonably acceptable to the Debtor ("Meridian"), and Xxxxxx X. Xxxxx
("Xxxxx"), jointly and severally; and (ii) Barney's, Inc., a New York
corporation and its (wholly-owned and majority owned) subsidiaries which were
debtors and debtors in possession (collectively referred to as the "Company") in
Case No. 96 B 40113, pending before the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"); and (iii) Barneys New
York, Inc., a Delaware corporation ("BNY"); provided, however, that this
Services Agreement Amendment shall be effective as to Meridian, Xxxxx and the
Company whether or not executed by BNY.
WHEREAS, Meridian, Xxxxx and the Company entered into a
Services Agreement as of the first day of August, 1998;
WHEREAS, as of December 21, 1998, the Bankruptcy Court
approved a plan of reorganization of the Company;
WHEREAS, the term of the Services Agreement terminates on July 31,
1999, subject to extension in the event the parties enter into an Extension
Agreement;
WHEREAS, paragraph 11 of the Services Agreement permits the parties
to modify the Services Agreement upon mutual agreement and approval of the
Bankruptcy Court, and the parties hereby desire to modify the Services
Agreement; and
WHEREAS, the Company hereby represents and warrants to Meridian and
Xxxxx that Bankruptcy Court approval of this Services Agreement Amendment is not
required as a matter of law, and that this Services Agreement Amendment and the
obligations hereunder constitute valid, binding and fully enforceable
obligations of the Company to Meridian and Xxxxx;
NOW, THEREFORE, effective as of the date hereof, the Services
Agreement is hereby amended as follows, and agreed to and ratified in full as so
amended:
1. Clause (ii) of the first paragraph of the Services Agreement (which
paragraph begins "This Agreement . . .") is amended in its entirety to
read as follows:
(ii) Barneys New York, Inc., a Delaware corporation ("BNY"); and
(iii) Barney's, Inc., a New York corporation and its (wholly-owned
and majority owned) subsidiaries which are or were debtors and
debtors in possession (collectively, and together with BNY, referred
to as the "Debtor", the "Corporation" or the "Company") in case Xx.
00 X 00000
(xxx "Xxxx"), now or heretofore pending before the United States
Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court").
2. Paragraph 2(a) of the Services Agreement is amended in its entirety, to
read as follows:
Xxxxx shall act and serve during the term of this Agreement as the
sole President and Chief Executive Officer of the Debtor and
Affiliates and shall report to, and have direct access to each
member of, the Debtor's Board of Directors. The employment
responsibilities of the President/CEO will include those normally
held by the president and chief executive officer of a retail
corporation of similar size and nature to the Company. During the
term of this Agreement, there shall be no officer of the Company
with any comparable or superior titles, rights or responsibilities
to those of Xxxxx, other than as may be provided by paragraph
2(e)(ii). The President/CEO shall devote his full time efforts
(which shall mean an average of 50 hours per work week, excluding
reasonable vacation, personal, sick time or deminimus
non-conflicting time for Meridian) in connection with his role as
President, Chief Executive Officer and member of the Executive
Committee (if any) or any comparable committee (if any). All
employees and officers shall report directly or indirectly to the
President/CEO. Without limiting the generality of the foregoing
provisions of this paragraph 2(a) (including the provisions relating
to the reporting relationship between the President/CEO and the
Board of Directors), it is expressly understood and agreed that (i)
the President/CEO shall have the sole right to manage and supervise,
and the sole responsibility for the management and supervision of,
all subordinate senior executives, officers, consultants, financial
advisors and managers of the Debtor and Affiliates, and members of
the Pressman family in their respective consulting capacities,
subject to the right of the Board of Directors reasonably to
supervise the President/CEO's exercise of such rights and
fulfillment of such responsibilities, and (ii) no member of the
Debtor's Board of Directors shall issue any directives to any
subordinates of the President/CEO without both the express prior
written consent of the President/CEO and the express authorization
of the Board of Directors acting as such, except that nothing in
this clause (ii) shall limit such rights as the Board of Directors
may otherwise have in its capacity as such to issue reasonable
directives to executive officers. The provisions of this paragraph 2
and of paragraph 1 shall apply jointly and severally with respect to
each of the companies comprising the Debtor.
3. Paragraph 2 of the Services Agreement is amended by deleting
sub-paragraphs (c) and (d)(i) through (iv) thereof in their entirety, and
inserting "[intentionally omitted]" in place thereof.
4. Paragraph 2 of the Services Agreement is amended by adding a new
sub-paragraph (e) to the end thereof, to read as follows:
(e)(i) Meridian will reasonably assist Debtor in securing the
services of an individual to serve as Chief Merchant (or in such
other capacity as may be specified by the Company).
(ii) If a successor to Xxxxx is selected by the Company, Xxxxx
shall, for a period of not more than four weeks (but in no event
extending beyond May 31, 1999), reasonably assist in the transition
to the successor, and shall provide such assistance as the
President/CEO or as a consultant to the Company, in the discretion
of the Company, it being understood that, during such period of
assistance, the successor may assume the title of President/CEO or
otherwise accede to some or all of the rights and responsibilities
of Xxxxx; provided that, for so long as Xxxxx serves as
President/CEO, he shall have rights and responsibilities reasonably
commensurate with such title.
5. Paragraph 4(b) of the Services Agreement is amended by deleting the first
and second sentences and inserting the following in place thereof:
The compensation payable to Meridian under this Agreement is in
consideration for the services of Xxxxxx X. Xxxxx and services
provided by Meridian of two full time consultants. It is
contemplated that the full time consultants shall be Xxxx Xxx (who
shall continue in his role as Vice President of Business Planning)
and Xxxxxx Xxxxxxx (who shall continue in his role as Chief
Financial Officer).
6. Paragraph 4(d) of the Services Agreement is amended by deleting ", full
time consultant and part time consultant" as it appears in the first
sentence, and inserting in place thereof "and full time consultants".
7. Paragraph 5(a) of the Services Agreement is amended in its entirety to
read as follows:
No later than February 1, 1999, the Debtor shall pay Meridian a
performance bonus in the amount of $100,000.
8. Paragraph 6(a)(i) of the Services Agreement is amended by the substitution
of the following for the final ";" thereof:
, which is not cured no later than five business days after
notice thereof by the Company;
9. Paragraph 6(a)(iii) of the Services Agreement is amended by substituting
"May 31, 1999" for "July 31, 1999", as the latter appears therein.
10. Paragraph 6(a)(vi) of the Services Agreement is amended in its entirety to
read "[intentionally omitted]".
11. Paragraph 6(a) of the Services Agreement is amended by substituting the
following for clauses (viii) and (ix) thereof:
or (viii) 30 days after written notice by Meridian and Xxxxx to
Debtor if Xxxxx determines in his reasonable discretion that he is
unable materially to perform his duties under this Agreement due to
any action or failure to act on the part of the Debtor, provided the
Company may elect to extend such 30-day period to up to 90 days (it
being expressly agreed and understood that nothing in this paragraph
6(a)(viii) shall extend the term of this Agreement beyond May 31,
1999 without the consent of Meridian and Xxxxx).
12. Paragraph 6(a) of the Services Agreement is amended by the addition of the
following to the end thereof:
Notwithstanding the foregoing, if Meridian and Xxxxx give notice
under clause (ii) above for a material breach, the Company may
within five business days after such notice (x) terminate Meridian
under and in accordance with paragraph 6(d)(i), provided that the
Company within such period cures any and all breaches of any
obligations to make any payments or provide any benefits then or
theretofore due, in which case paragraph 6(b)(B) shall not apply
with respect to such breach, or (y) in the case of a breach
described in paragraph 6(f)(A), (B), (D), (E) or (H), cure any and
all breaches of any obligation to make any payments or provide any
benefits and cease the acts or omissions (or both) which constitute
such breach, in which case clause (ii) shall not apply with respect
to such breach.
13. Paragraph 6(b)(B) of the Services Agreement is amended by substituting the
following for sub-clauses (1) and (2) thereof, respectively:
(1) a payment equal to the total of the Base Fee and the Flat Fee
(together, the "Payment Amount") otherwise payable through May 31,
1999, (2) a payment equal to the Payment Amount for a period of 12
months, and (3) payment of all earned and accrued vacation pay (not
to exceed $85,000, which is the earned and accrued vacation pay as
of February 28, 1999);
14. Paragraph 6(b)(C) of the Services Agreement is amended in its entirety, to
read as follows:
(C) If the termination is pursuant to paragraph 6(a)(iii) above,
Meridian shall be entitled to receive (1) a payment equal to the
Payment
Amount for a period of eight months, (2) a payment equal to the
Payment Amount for a period of four months (beginning immediately
after the completion of the payment period described in clause (1)
above), less Mitigation (as hereinafter defined), and (3) payment of
all earned and accrued vacation pay (not to exceed $85,000);
15. Each of clauses (D) and (F) of the third sentence of paragraph 6(b) of the
Services Agreement is amended by substituting the following for
sub-clauses (1) and (2) thereof, respectively:
(1) a payment equal to the Payment Amount for a period of eight
months, (2) a payment equal to the Payment Amount for a period of
four months (beginning immediately after the completion of the
payment period described in clause (1) above), less Mitigation (as
hereinafter defined), and (3) payment of all earned and accrued
vacation pay (not to exceed $85,000).
16. Paragraph 6(b)(E) of the Services Agreement is amended in its entirety, to
read as follows:
(E) If the termination is pursuant to paragraph 6(a)(iv), Meridian
shall be entitled to receive (1) a payment equal to the Payment
Amount for a period of 12 months, and (2) payment of all earned and
accrued vacation pay (not to exceed $85,000); and
17. Paragraph 6(c) of the Services Agreement is amended by substituting "four"
for "six", as the latter appears therein, and by substituting "ninth" for
"seventh", as the latter appears therein.
18. Paragraph 6(d) of the Services Agreement is amended by substituting "June
30, 1999" for "July 31, 1999", as the latter appears therein.
19. Paragraph 6 of the Services Agreement is amended by redesignating
sub-paragraph (d) as sub-paragraph (e), and by inserting a new
sub-paragraph (d), to read as follows:
(d) (i) If Meridian or Xxxxx is terminated by the Company prior to
May 31, 1999, and such termination is for a reason not specified in
paragraph 6(a), Meridian shall be entitled to receive (1) a payment
equal to the Payment Amount otherwise payable through May 31, 1999,
(2) a payment equal to the Payment Amount for a period of eight
months, (3) a payment equal to the Payment Amount for a period of
four months (beginning immediately after the completion of the
payment period described in clause (1) above), less Mitigation, and
(4) payment of all earned and accrued vacation pay (not to exceed
$85,000), it being expressly understood that in such case, paragraph
6(b)(B) shall not apply.
(ii) In consideration of Meridian's efforts during the
transition to successor Company management, including such efforts
as are contemplated by paragraph 2(e), Meridian shall receive an
unconditional severance payment of $105,000, payable during the
first week of February of 1999, and an unconditional severance
payment of $120,000 per month, payable in advance during the first
week of March, April and May of 1999. The severance amounts payable
under this paragraph 6(d)(ii) shall be in addition to, and not in
lieu of, any amounts payable under any other provision of this
Agreement and in addition to any amounts otherwise payable under any
plan, policy, program, agreement, arrangement or other commitment of
the Company, other than any severance plan or policy. For purposes
of calculating the amounts payable under paragraphs 6(b), 6(c) and
(6)(d)(i), each reference to the Base Fee shall continue to be
$95,000.
20. Paragraph 6 of Services Agreement is amended by adding a new sub-paragraph
(f) to the end thereof, to read as follows:
(f) For purposes of this paragraph 6, the Debtor shall be deemed to
be in "material breach" of this Agreement under the following
circumstances:
(A) the reduction of Xxxxx'x title, authority, duties or
responsibilities, or the assignment to the President/CEO of duties
inconsistent with Xxxxx'x positions with the Company as stated in
paragraph 2 hereof, other than as contemplated by paragraph
2(e)(ii);
(B) any other breach of paragraph 2;
(C) a reduction in the compensation payable under paragraph
4;
(D) the Company's failure to pay the President/CEO or
Meridian any amounts otherwise due hereunder or under any plan,
policy, program, agreement, arrangement or other commitment of the
Company in which he participates;
(E) the Board of Directors approval of or consent to any
action that Xxxxx reasonably believes in good faith would have a
materially adverse effect on the existing fiscal year 1999 Business
Plan initiatives and financial goals taken as a whole;
(F) any failure of the Company to procure from any success
an agreement in form and substance reasonably satisfactory to
Meridian and Xxxxx to perform this Agreement, or any other breach of
paragraph 12(b);
(G) any breach of paragraph l2(c); or
(H) any other material breach by the Company of this
Agreement.
21. Paragraph 6 of the Services Agreement is amended by adding a new
sub-paragraph (g) to the end thereof, to read as follows:
(g) In the event Meridian and Xxxxx are terminated under 6(a)(i) or
Meridian or Xxxxx terminate their services in violation of the terms
hereof, the amount of the Base Fee and payment under 6(d)(ii) for
such month, in the aggregate, that Meridian and Xxxxx shall be
permitted to retain shall be equal to (i) the aggregate amount of
the Base Fee and the amount of the payment under paragraph 6(d)(ii)
for the month, multiplied by (ii) a fraction (A) the numerator of
which is the number of days in such month through the effective date
of termination and (B) the denominator of which is the number of
days in such month, and the balance shall be refunded to the Company
within ten business days.
22. Paragraph 6 of the Services Agreement is amended by adding a new
sub-paragraph (h) to the end thereof, to read as follows:
(h) Notwithstanding any other provision hereof, if Xxxxx'x services
to the Company are terminated before May 31, 1999, and the
termination is not under paragraph 6(a)(i) or 6(a)(ii), then the
Company may elect to have Meridian continue to provide the services
of Xxxxxx Xxxxxxx ("Xxxxxxx") as Chief Financial Officer, if he is
then serving in such capacity, through May 31, 1999 or such earlier
date as the Company may elect on at least five business days'
notice, or such other date as may otherwise apply under paragraph
6(a) substituting "Xxxxxxx" for "Xxxxx" as the latter appears
therein. If the Company makes such election:
(A) two months' of the Payment Amount otherwise to be paid
upon the termination of Xxxxx'x services shall not be paid upon such
cessation, but rather shall be paid upon the cessation of Xxxxxxx'x
services if such cessation is for any reason other than as provided
in paragraph 6(a)(i) (and shall not be paid if such termination is
under paragraph 6(a)(i));
(B) in no event shall Xxxxxxx'x acts or omissions constitute
a basis for termination under paragraph 6(a)(i) if Xxxxxxx in good
faith believes, after consulting with the Company's independent
accountants upon notice to the Company, that such acts or omissions
are appropriate under applicable accounting or related rules;
(C) and if Xxxxxxx ceases to provide services and paragraph
6(a)(ii) applies with respect to such cessation, any amounts arising
in connection with Xxxxx'x cessation of services which are then not
yet paid
under paragraph 6(c) because they constitute Mitigation shall
thereupon immediately be paid in full; and
(D) all other provisions of this Agreement (including
without limitation, the provisions of paragraphs 6(b), 6(c) and
6(d)) shall apply with respect to the cessation of Xxxxx'x services
without regard to this paragraph 6(h), it being expressly agreed and
understood that under no circumstances whatsoever shall there be any
adverse effects on Meridian or Xxxxx (other than as expressly set
forth under paragraph 6(h)(A)) that may arise by virtue of or
otherwise in connection with Xxxxxxx'x continuing performance of
services, the manner in which Xxxxxxx performs continuing services
or any failure by Xxxxxxx to perform continuing services.
23. Paragraph 11 of the Services Agreement is amended in its entirety, to read
as follows:
11. MODIFICATION. This Agreement may only be modified in
writing by mutual agreement of the parties hereto.
24. Paragraph 12 of the Services Agreement is amended in its entirety, to read
as follows:
12. ASSIGNMENT; BARNEYS NEW YORK, INC. (a) This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the
Company, Meridian and Xxxxx and their respective heirs, legal
representatives, successors and permitted assigns. Subject to
paragraph 12(b), this Agreement is a personal service contract and
may not be assigned by either party (except, in the case of Xxxxx,
by will or by operation of laws of intestate succession).
(b) In the event of any sale, transfer or other disposition
of all or substantially all of the Company's assets or business,
whether by merger, consolidation or otherwise (including without
limitation any reorganization or other event or condition pursuant
to which one or more companies, whether newly formed or otherwise,
become direct or indirect parents of the Company), whether newly
formed or otherwise, the Company's obligations hereunder shall be
assigned to, and assumed by, the successor or successors of the
Company; provided that the Company shall, notwithstanding such
assignment and assumption, remain liable and otherwise responsible
for the fulfillment of the terms and conditions of this Agreement.
(c) As soon as practicable (but in no event more than 10
days) after January 28, 1999, the Company (exclusive, for purposes
of this
paragraph 12(c), of BNY) shall procure BNY's execution of this
Agreement as a party hereto.
25. Paragraph 15 of the Services Agreement is amended to add the following to
the end thereof:
The Company shall pay all reasonable legal fees and expenses
incurred by Meridian or Xxxxx in connection with the negotiation and
execution of the January 28, 1999 amendment of this Agreement
promptly, but in no event more than 10 business days, following
receipt of invoices therefor.
Except as amended hereby, the Services Agreement is hereby ratified and
confirmed in all respects and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
BARNEY'S, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
--------------------------------
Title: Executive VP
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BARNEYS NEW YORK, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
--------------------------------
Title: Executive VP
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MERIDIAN VENTURES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx, President
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, as an individual
