Exhibit 10.29
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as of May 5, 1999 ("Agreement
Date"), is made between Barneys New York, Inc., a Delaware corporation having
its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Company"), and Xxxxx X. Xxxxxxxx ("Executive"), residing at 000 Xxxx 00xx
Xxxxxx, Xxxxxxxxx 00X, Xxx Xxxx, Xxx Xxxx 00000.
ARTICLE I
PURPOSES
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and its stockholders
to obtain the services of the Executive on the terms and conditions set forth
herein.
ARTICLE II
CERTAIN DEFINITIONS
In addition to the terms specifically defined elsewhere in
this Agreement, the following terms shall have the respective meanings indicated
(unless the context indicates otherwise):
2.1 "Article" means an article of this Agreement.
2.2 "Cause" means any of the following:
(a) Executive's final conviction of a felony or plea of
nolo contendere to a felony charge, which conviction is non-appealable or for
which the period for filing an appeal has expired;
(b) Executive's material willful breach of his duties under
this Agreement which is not cured by the Executive within ten (10) days of
receipt of written notice thereof from the Board to the Executive; provided,
that the following acts or omissions are not curable: (i) repeated instances of
such breach; (ii) any material willful breach by the Executive of the covenants
set forth in ARTICLE X; (iii) any knowing and intentional or willful material
misrepresentation or omission by the Executive to the Board, Executive Committee
or Principal Stockholders in the performance of his duties under this Agreement
regarding the financial condition of the Company or any other material aspect of
the Company's business; (iv) any act or omission by the Executive taken with the
intent of the Executive to gain, directly or indirectly, a profit to which the
Executive was not legally entitled; (v) willful theft of material property; (vi)
willful physical assault
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(excluding incidental, accidental or inconsequential contact) of any other
individual on the premises of the Company or in the course of performing
services for the Company; and (vii) material fraud perpetrated on the Company;
or
(c) Executive's habitual neglect of his duties which is not
cured within ten (10) days of receipt of written notice thereof from the Board
to the Executive.
Cause shall not include any one or more of the following:
(i) negligence of the Executive (other than his habitual neglect of duty); (ii)
any act or omission believed by the Executive in good faith to have been in and
not opposed to the interests of the Company and its Subsidiaries (without intent
of the Executive to gain, directly or indirectly, a profit to which the
Executive was not legally entitled) and reasonably believed by the Executive not
to have been improper or unlawful; (iii) an error in judgment made by the
Executive in good faith and not constituting a willful neglect or disregard of
his duties hereunder; or (iv) any act or omission with respect to which Notice
of Termination of employment of the Executive is given more than twelve (12)
months after the earliest date on which any non-employee director of the
Company, who was not a party to the act or omission, knew of such act or
omission.
2.3 "Change of Control" of the Company means the occurrence
of any of the following:
(a) (x) any person or other entity (other than any of the
Company's Subsidiaries, the Principal Stockholders, the Executive and their
affiliates), including any person as defined in Section 13(d)(3) of the 1934
Act, becomes the beneficial owner, as defined in Rule 13d-3 of the 1934 Act,
directly or indirectly, of more than (i) fifty percent (50%) of the Voting Stock
of the Company or (ii) the Voting Stock of the Company beneficially owned,
directly or indirectly, by the Principal Stockholders, the Executive and their
respective affiliates ("Principal Stockholders Group"), and (y) in the case of
clause (ii) only, the Principal Stockholders Group own, in the aggregate, less
than forty percent (40%) of the Voting Stock of the Company;
(b) the Board approves the sale of all or substantially all
of the property or assets of the Company and such sale is consummated;
(c) the Board approves a consolidation or merger of the
Company with another corporation (other than with any of the Company's
Subsidiaries) and such consolidation or merger is consummated, unless such
consummation would result in the stockholders of the Company immediately before
the occurrence of such consolidation or merger owning, in the aggregate, (i) at
least sixty-five percent (65%) of the Voting Stock of the surviving entity, or
(ii) more than fifty percent (50%) of the Voting Stock of the surviving entity,
and the Principal Stockholders Group own, in the aggregate, at least thirty-five
percent (35%) of the Voting Stock of the surviving entity; or
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(d) a change in the Board occurs with the result that the
members of the Board on the Agreement Date ("Incumbent Directors") no longer
constitute a majority of such Board; provided, that any person becoming a
director whose election or nomination for election was supported by a majority
of the Incumbent Directors shall be considered an Incumbent Director for
purposes hereof; and provided, further, that any director whose appointment or
nomination occurs and is required and made by any person other than the Company
and its affiliates (including the Principal Stockholders) in connection with an
acquisition of Voting Stock of the Company pursuant to a merger, consolidation,
purchase of shares or similar transaction involving the Company shall not be
treated as an Incumbent Director.
2.4 "Code" means the Internal Revenue Code of 1986, as
amended.
2.5 "Disability" means any medically determinable physical
or mental impairment that has lasted for a period of at least six (6) months,
can be expected to be permanent or of indefinite duration, and renders the
Executive unable to perform the duties required under this Agreement, as
certified by a physician jointly selected by the Company or its insurers and the
Executive or the Executive's legal representative.
2.6 "EBITDA" means, with respect to each fiscal year of the
Company, the Company's consolidated earnings before interest, income taxes,
depreciation, amortization and extraordinary items for such fiscal year, as
determined in accordance with generally accepted accounting principles and
certified to by the Company's outside independent auditors.
2.7 "Executive Committee" means the Executive Committee of
the Board as appointed from time to time.
2.8 "Good Reason" means any of the following:
(a) the assignment to the Executive of any duties
materially inconsistent with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3.1, or any other action by the
Company which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an action not taken in
bad faith and which is remedied by the Company within ten (10) days after
receipt of written notice thereof given by the Executive, provided that repeated
instances of such action shall be evidence of the bad faith of the Company;
(b) any material failure by the Company to comply with any
provision of this Agreement, other than a failure not occurring in bad faith and
which is remedied by the Company within ten (10) days after receipt of written
notice thereof given by the Executive, provided that repeated failures shall be
evidence of the bad faith of the Company;
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(c) failure of the Executive to be elected or reelected
Chairman of the Board and Chief Executive Officer of the Company or to be
elected or reelected to membership on the Board;
(d) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
(e) the delivery to Executive of a Notice of Consideration
pursuant to Section 4.3(b) if, within a period of 90 days thereafter, the Board
fails for any reason to terminate Executive for Cause in compliance with all of
the substantive and procedural requirements of Section 4.3; or
(f) a termination of employment by the Executive for any
reason or no reason during the three-month period commencing on the date of a
Change of Control that has not been agreed to in writing by the Executive.
2.9 "IRS" means the Internal Revenue Service.
2.10 "1934 Act" means the Securities Exchange Act of 1934,
as amended.
2.11 "Notice of Termination" means a written notice given
in accordance with Section 12.8 and which sets forth (a) the specific
termination provision in this Agreement relied upon by the party giving such
notice, (b) in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under such termination
provision, and (c) if the Termination Date is other than the date of receipt of
such Notice of Termination, the Termination Date.
2.12 "Principal Stockholders" means Bay Harbour Management
L.C., Whippoorwill Associates, Inc and their respective affiliates (other than
the Company and its Subsidiaries).
2.13 "Stock Options" means "Initial Options" (as defined in
Section 3.5(a)), additional options issued pursuant to Section 3.5(h) and
"Additional Options" (as defined in Section 3.6).
2.14 "Subsidiary" means a corporation as defined in Section
424(f) of the Code with the Company being treated as the employer corporation
for purposes of this definition.
2.15 "Termination Date" means the date of receipt of the
Notice of Termination or any later date specified in such notice, which date
shall be not more than fifteen (15) days after the giving of such notice;
provided, however, that (a) if the Executive's employment is terminated by
reason of death, then the Termination Date shall be the date of Executive's
death and (b) if the Executive's employment is terminated by reason of
Disability, then the Termination Date shall be the date on which such Disability
is certified to by a jointly selected physician in accordance with Section 2.5.
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2.16 "Voting Stock" of a corporation means all classes of
capital stock of such corporation normally entitled to vote for the election of
directors of such corporation.
ARTICLE III
POSITION, DUTIES, COMPENSATION AND BENEFITS
3.1 Position and Duties.
(a) During the Agreement Term, the Executive shall be
employed as the Chairman of the Board, President and Chief Executive Officer of
the Company with duties, responsibilities, powers and authorities commensurate
with such positions. The Executive shall have broad discretion and authority to
manage and direct the day-to-day affairs of the Company. Neither the Board nor
the Executive Committee shall manage and direct the day-to-day affairs of the
Company, except to the extent affected by the exercise by the Board or Executive
Committee of its corporate governance duties and responsibilities, including,
but not limited to, issuance of shares of common or preferred stock of the
Company; material financing transactions; approval, adoption and amendment of
employee compensation and benefit plans, programs or policies; administration of
executive incentive compensation plans, programs or policies; and approval of
any annual business plan and capital expenditure plan. The Executive shall meet
with the Board on a periodic basis and shall meet with the Executive Committee
on a monthly basis (if requested by the Co-Chairs of the Executive Committee)
regarding the Company's performance sufficient to enable the Board and the
Executive Committee to fulfill their corporate governance responsibilities. The
Executive promptly shall disclose to the Executive Committee and other members
of the Board any indication of interest by any person (as defined in Section
13(d)(3) of the 0000 Xxx) to purchase shares of the Company's common stock or
any other transaction which could result in a Change of Control of the Company.
Executive's services shall be performed principally at the Company's corporate
offices in New York City, New York.
(b) During the Agreement Term (other than any periods of
vacation, sick leave or Disability to which the Executive is entitled), the
Executive shall devote substantially all of the Executive's attention and time
to the business and affairs of the Company to discharge the duties assigned to
the Executive in accordance with this Agreement, and to use the Executive's best
efforts to perform faithfully and efficiently such duties. During the Agreement
Term, the Executive may (1) serve on corporate, civic or charitable boards or
committees, (2) deliver lectures, fulfill speaking engagements or teach at
educational institutions, (3) provide consulting services to other business
entities, including those in the retail clothing industry, and (4) manage
personal investments, so long as such activities, either individually or in the
aggregate, do not materially interfere or conflict with the performance of the
Executive's duties under this Agreement and subject to the covenants set forth
in ARTICLE X.
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3.2 Agreement Term. The term of this Agreement means the
period commencing on the Agreement Date and ending on January 31, 2003
("Agreement Term").
3.3 Salary and Bonus.
(a) Upon signing this Agreement, the Executive shall be
paid by the Company as soon as practicable thereafter a cash lump sum equal to
$64,500.
(b) During the Agreement Term, the Executive shall earn a
salary ("Salary") at the rate of $100,000 per month, which amount shall be
retained by the Company as described in Section 3.5(i).
(c) During the Agreement Term constituting the period
commencing on May 5, 1999 and ending on January 31, 2000, the Executive shall
earn additional compensation ("Additional Compensation") of $50,000 per month,
which amount shall be retained by the Company as described in Section 3.5(i).
(d) During the Agreement Term constituting the period
commencing on February 1, 2000 and ending on January 31, 2003, the Executive
shall also earn an annual bonus for each fiscal year of the Company ("Bonus")
equal to the following amount: (1) if the Company achieves 100% of business plan
target EBITDA for such fiscal year, 50% of annual Salary ("Target Bonus"); (2)
if the Company achieves 125% or more of business plan target EBITDA for such
fiscal year, 100% of annual Salary; and (3) if the Company achieves between 100%
and 125% of business plan target EBITDA for such fiscal year, the sum of (i)
Target Bonus and (ii) for each 1% above 100% of business plan target EBITDA, an
additional 2% of annual Salary. The Bonus for each fiscal year shall be paid to
Executive by the Company in cash not later than the March 31 next following the
end of such fiscal year or, if later, the fifth (5th) business day after the
Company's receipt of its audited financial statements for such fiscal year,
unless such Bonus is retained by the Company as described in Section 3.5(i).
3.4 Other Benefits.
(a) Specified Benefits. During the Agreement Term, the
Executive shall be entitled to receive the following benefits from the Company:
(1) Air Travel. First class airfare (i) for all business-related travel
of the Executive and (ii) for the Executive's spouse for all
business-related travel of the Executive with respect to which the
Executive, in his sole and absolute discretion, elects to be
accompanied by his spouse.
(2) Automobile. On-call, 24-hour limousine services.
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(3) Executive Secretary. A full-time executive secretary reasonably
selected by the Executive.
(4) Employee Discount. An employee discount on all purchases from the
Company equivalent to the employee discount provided from time to time
to members of the Board, without any limitation on the total amount of
purchases subject to such discount.
(b) Savings and Retirement Plans. During the Agreement
Term, the Executive shall be entitled to participate in all savings and
retirement plans (other than the Barneys Employees Stock Plan) provided by the
Company from time to time applicable to senior executives of the Company
generally.
(c) Welfare Benefit Plans. During the Agreement Term, the
Executive and the Executive's spouse and children shall be eligible to
participate in, and receive, without duplication, all benefits under, welfare
benefit plans provided from time to time by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, dependent life, accidental death and travel
accident insurance plans) applicable to senior executives of the Company and
their spouses and children generally and in accordance with the terms of such
plans; provided, however, that the Executive shall not be entitled to
participate in any severance pay plan of the Company except to the extent the
amount of severance pay under any such plan exceeds the amount payable under
Article V.
(d) Other Fringe Benefits. During the Agreement Term, the
Executive shall be entitled to fringe benefits (in addition to the specified
benefits described in Section 3.4(a)) provided by the Company from time to time
in accordance with the most favorable fringe benefit plans applicable to senior
executives of the Company generally.
(e) Expenses. During the Agreement Term, the Executive
shall be entitled to reimbursement of all reasonable business-related expenses
incurred by the Executive upon the Company's receipt of accountings in
accordance with the terms of the most favorable policies applicable to senior
executives of the Company generally.
(f) Office and Support Staff. During the Agreement Term,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments and to secretarial and other assistance,
provided by the Company from time to time, in each case in accordance with the
most favorable policies applicable to senior executives of the Company
generally.
(g) Vacation. During the Agreement Term, the Executive
shall be entitled to paid vacation provided by the Company from time to time in
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accordance with the most favorable policies applicable to senior executives of
the Company generally, but in no event less than five weeks per year.
3.5 Initial Options.
(a) Grant of Initial Options. The Company shall grant to
the Executive nonqualified options to purchase 2,234,559 shares of the Company's
common stock ("Initial Options"). The Initial Options constituting Full Price
Options (as defined below) shall be granted as of May 5, 1999. The Initial
Options constituting Discounted Options (as defined below) shall be granted as
of January 21, 2000 (or earlier as provided in Section (f)) unless the Executive
provides a Notice of Termination before such date.
(b) Exercise Price of Initial Options. The exercise price
of the Initial Options covering 744,853 shares of the Company's common stock
shall be $8.68 per share ("Full Price Options"). The exercise price of the
remaining Initial Options covering 1,489,706 shares of the Company's common
stock shall be $4.34 per share ("Discounted Options").
(c) Vesting of Initial Options.
(1) Twenty-five percent (25%) of the Full Price Options shall be fully
vested and immediately exercisable, in whole or in part, on May 5,
1999, and an additional twenty-five (25%) of the Full Price Options
shall become fully vested and immediately exercisable, in whole or in
part, as of May 5 of each of 2000, 2001 and 2002; provided, that the
Executive remains employed by the Company on such dates.
(2) Fifty percent (50%) of the Discounted Options shall vest at the
same rate that compensation is earned by the Executive and retained by
the Company in accordance with Section 3.5(i) ("Earned Discounted
Options"); provided, that no vesting shall occur prior to May 22, 2000
but shall occur on May 22, 2000 and thereafter; and provided, further,
that the Executive remains employed by the Company on such dates. The
remaining fifty percent (50%) of the Discounted Options shall vest on
January 31, 2003 ("Matching Discounted Options"); provided, that the
Executive remains employed by the Company on such date.
(d) Exercise Period of Initial Options. Subject to the
other provisions of this Section 3.5, each Initial Option shall, upon becoming
vested and exercisable, remain exercisable through and including May 5, 2007.
(e) Death or Disability.
(1) In the event of the Executive's termination of employment on
account of the Executive's death or Disability during the Agreement
Term, in each case solely as a result of an injury
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sustained in an accident occurring while the Executive was performing
work for the Company (including business travel), 100% of the unvested
Full Price Options and 100% of a number of the Matching Discounted
Options equal to the number of vested Earned Discounted Options
immediately prior to the date of such death or Disability, as the case
may be, shall become fully vested and immediately exercisable, in whole
or in part, upon the date of such death or Disability, as the case may
be.
(2) In the event of the Executive's termination of employment on
account of the Executive's death or Disability as a result of any other
reason, fifty percent (50%) of the unvested Full Price Options and
fifty percent (50%) of a number of the Matching Discounted Options
equal to the number of vested Earned Discounted Options immediately
prior to the date of such death or Disability, as the case may be,
shall become fully vested and immediately exercisable, in whole or in
part, upon the date of such death or Disability, as the case may be.
(3) None of the unvested Earned Discounted Options or Matching
Discounted Options equal to the number of such unvested Earned
Discounted Options immediately prior to the date of the Executive's
death or Disability shall vest on account of the Executive's death or
Disability as a result of any reason. However, in the event that the
Executive, his legal representative or his estate elects within 180
days after the date of such death or Disability, as the case may be, to
pay $4.34 (exclusive of the exercise price) for up to fifty percent
(50%) of the unvested Earned Discounted Options, the number of such
unvested Earned Discounted Options so elected, plus an equal number of
Matching Discounted Options, shall become fully vested and immediately
exercisable, in whole or in part, upon such payment.
(f) Termination by Company without Cause or by Executive
for Good Reason; Change of Control. All Initial Options to be granted shall be
granted and all Initial Options shall become fully vested and immediately
exercisable, in whole or in part, upon (1) Executive's termination of employment
by the Company without Cause (other than as a result of Executive's death or
Disability), (2) Executive's termination of employment for Good Reason, or (3) a
Change of Control of the Company.
(g) Termination by Company for Cause or by Executive
without Good Reason. Notwithstanding any other provision of this Section 3.5 and
subject to Section 5.6, in the event that the Executive's employment is
terminated by the Company for Cause or by the Executive without Good Reason
(other than as a result of Executive's death or Disability) prior to the end of
the Agreement Term, (1) the vested portion of the Initial Options may be
exercised until the earlier of (A) the last day of the 24-month period
commencing on the date of such termination of
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employment or (B) the expiration of the term of the Initial Options; (2)
Executive shall forfeit vested Full Price Options with respect to a number of
shares that exceeds the number of shares that would have vested if such Full
Price Options vested ratably on a monthly basis over the Agreement Term; and (3)
Executive shall forfeit unvested Earned Discounted Options and all Matching
Discounted Options.
(h) Anti-Dilution Adjustment of Initial Options. If at any
time on or before May 16, 2000, the Company issues, or the Board commits to be
issued, additional equity of the Company (including upon exercise or conversion
of options and warrants outstanding as of the Agreement Date and including upon
conversion of any convertible stock issued after the Agreement Date, but
excluding conversion of any convertible preferred stock outstanding as of the
Agreement Date) in the aggregate up to twenty million dollars ($20,000,000) to
the Principal Stockholders or any other person (excluding employees, officers
and directors of the Company), the Company shall, as of the date the additional
equity actually is issued, grant to the Executive nonqualified options equal to
fifteen percent (15%) of such additional equity at the same purchase or exercise
price and with the same vesting schedules as are applicable to the Initial
Options constituting Full Price Options and Matching Discounted Options (i.e.,
two-thirds vest when the Full Price Options vest and one-third vests on January
31, 2003, provided, that the Executive remains employed by the Company on such
dates; all such additional options shall become fully vested and immediately
exercisable, in whole or in part, upon (1) Executive's termination of employment
by the Company without Cause (other than as a result of Executive's death or
Disability), (2) Executive's termination of employment for Good Reason, (3) a
Change of Control of the Company or (4) Executive's termination of employment on
account of the Executive's death or Disability, in each case solely as a result
of an injury sustained in an accident occurring while the Executive was
performing work for the Company (including business travel); and one-half of
such additional options that are then unvested shall become fully vested and
immediately exercisable, in whole or in part, upon Executive's termination of
employment on account of Executive's death or Disability as a result of any
other reason) and shall remain exercisable for the same period as the Initial
Options described in this Section 3.5. Any additional options granted pursuant
to this Section 3.5(h) shall be rounded to the nearest whole share. There shall
be no other adjustment to the Initial Options on account of the presently
outstanding options, warrants and convertible securities of the Company.
(i) Deferral of Compensation. The Executive shall defer,
and the Company shall retain, on a pre-tax basis the Executive's Salary and
Bonus earned under this Agreement (including amounts payable under Article V in
lieu thereof) to pay for the grant of the Discounted Options: (1) the
Executive's Salary and Additional Compensation for
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each month during the period May 5, 1999 through January 31, 2000, totaling
$1,350,000, (2) the Executive's Salary for each month during the period February
1, 2000 through January 31, 2001, totaling $1,200,000, (3) the Executive's Bonus
with respect to the Company's fiscal year ending on January 31, 2001, up to
$682,662, to provide a total aggregate amount equal to $3,232,662, and (4) if
the Executive's Bonus with respect to the Company's fiscal year ending on
January 31, 2001 is less than $682,662, such amount of the Executive's Salary
for each month or portion thereof after January 31, 2001 as necessary to provide
a total aggregate amount equal to $3,232,662.
3.6 Additional Options:
(a) Grant of Additional Stock Options. If at any time prior
to January 3, 2001, the Company issues in the aggregate up to five percent (5%)
of the currently outstanding number of shares of common stock (whether as stock
or stock options) to existing executive vice presidents or other senior
executives ("Additional Equity"), the Company shall, as of the date the
Additional Equity actually is issued, grant to the Executive nonqualified
options equal to fifteen percent (15%) of such Additional Equity ("Additional
Options"). Any Additional Options granted pursuant to this Section 3.6(a) shall
be rounded to the nearest whole share.
(b) Exercise Price of Additional Options. The per share
exercise price of each Additional Option shall be equal to the same purchase or
exercise price as the Additional Equity, as evidenced by the purchase price or
other consideration given for the Additional Equity.
(c) Vesting and Exercise Period of Additional Options.
Additional Options shall vest and become exercisable in accordance with the same
vesting schedules as are applicable to the Initial Options constituting Full
Price Options and Matching Discounted Options (i.e., two-third vest when the
Full Price Options vest and one-third vests on January 31, 2003, provided, that
the Executive remains employed by the Company on such dates; all such Additional
Options shall become fully vested and immediately exercisable, in whole or in
part, upon (1) Executive's termination of employment by the Company without
Cause (other than as a result of Executive's death or Disability), (2)
Executive's termination of employment for Good Reason, (3) a Change of Control
of the Company or (4) Executive's termination of employment on account of the
Executive's death or Disability, in each case solely as a result of an injury
sustained in an accident occurring while the Executive was performing work for
the Company (including business travel); and one-half of such Additional Options
that are then unvested shall become fully vested and immediately exercisable, in
whole or in part, upon Executive's termination of employment on account of
Executive's death or Disability as a result of any other reason) and shall
remain exercisable for the same period as the Initial Options described in
Section 3.5.
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ARTICLE IV
TERMINATION OF EMPLOYMENT
4.1 Disability. The Executive's employment shall terminate
automatically upon the Executive's Disability during the Agreement Term.
4.2 Death. The Executive's employment shall terminate
automatically upon the Executive's death during the Agreement Term.
4.3 Cause.
(a) Subject to the provisions of Section 4.3(b), during the
Agreement Term, the Company may terminate the Executive's employment for Cause.
(b) The Company may not terminate the Executive's
employment for Cause unless:
(1) no fewer than forty-five (45) days prior to the Termination Date,
the Company provides Executive with written notice (the "Notice of
Consideration") of its intent to consider termination of Executive's
employment for Cause, including a detailed description of the specific
reasons which form the basis for such consideration;
(2) for a period of not less than thirty (30) days after the date
Notice of Consideration is provided, Executive shall have the
opportunity to appear before the Board, with or without legal
representation, at Executive's election, to present arguments and
evidence on his own behalf; and (3) following the presentation to the
Board as provided in clause (2) above or following Executive's failure
to appear before the Board at a date and time specified in the Notice
of Consideration (which date shall not be less than thirty (30) days
after the date the Notice of Consideration is provided), the Executive
may be terminated for Cause if (A) the Board, by a more than
seventy-five percent (75%) vote of its members (excluding Executive if
he is a member of the Board and any other member of the Board
reasonably believed by the Board to be involved in the events leading
the Board to terminate Executive for Cause), determines that the
actions or inactions of the Executive specified in the Notice of
Consideration occurred, that such actions or inactions constitute
Cause, and that Executive's employment should accordingly be terminated
for Cause; and (B) the Board provides Executive with Notice of
Termination.
(c) A passage of time of less than twelve (12) months prior
to delivery of Notice of Termination or a failure by the Company to include in
the Notice of Termination any fact or circumstance which contributes to a
showing of Cause shall not waive any right of the Company under this Agreement
or preclude the Company from asserting such fact or circumstance in enforcing
rights under this Agreement, provided that such fact or circumstance is a basis
to support Executive's termination of employment for Cause as specified in both
the Notice of Consideration and Notice of Termination.
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(d) The Board, by unanimous vote of its members (excluding
Executive if he is a member of the Board and any other member of the Board
reasonably believed by the Board to be involved in the events leading the Board
to terminate Executive for Cause), may relieve the Executive of his duties,
without such act constituting Good Reason, during the consideration of his
termination for Cause following a Notice of Consideration. The Executive shall
be restored to his duties if the Board fails to issue a Notice of Termination
within thirty (30) days following the Executive's appearance before the Board
or, if Executive does not request or fails to make an appearance before the
Board.
4.4 Good Reason.
(a) During the Agreement Term, the Executive may terminate
his employment for Good Reason provided that the Executive has (i) provided at
least ten (10) days prior written notice to the Board of his intent to resign
for Good Reason, including a detailed description of the specific reasons which
form the basis for Good Reason and (ii) if requested by any member of the Board,
attend a meeting of the Board or the Executive Committee to be held within
fifteen (15) days following such notice to discuss his resignation for Good
Reason.
(b) Any termination of employment by the Executive for Good
Reason shall be communicated to the Company by Notice of Termination. A passage
of time of less than twelve (12) months prior to delivery of Notice of
Termination or a failure by the Executive to include in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive under this Agreement or
preclude the Executive from asserting such fact or circumstance in enforcing
rights under this Agreement.
4.5 Other Resignation. During the period after January 31,
2000 and before the twenty-first (21st) day after the Company's audited
financial statements for the year ending January 31, 2000 have been delivered to
the Company (but not later than May 21, 2000), the Executive may terminate his
employment for any reason or no reason by delivery of a Notice of Termination to
the Board.
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ARTICLE V
OBLIGATIONS OF THE COMPANY UPON TERMINATION OF EMPLOYMENT
5.1 If by the Executive for Good Reason or by the Company
Other Than for Cause or Disability or Death. If, during the Agreement Term, the
Company shall terminate Executive's employment other than for Cause, Disability
or death, or if the Executive shall terminate employment for Good Reason, the
Company's obligations to the Executive shall be as follows:
(a) The Company shall immediately pay the Executive, in
addition to all vested rights arising from the Executive's employment as
specified in Article III, a cash amount equal to the sum of the following
amounts:
(1) all amounts of Salary, Additional Compensation and Bonus previously
accrued to the benefit of the Executive and not retained by the Company
pursuant to Section 3.5(i) ("Accrued Obligations"); and
(2) an amount equal to the product of (A) the number of years
(including a fraction of a year determined by dividing the number of
days in a partial year by 365) remaining in the Agreement Term as of
the Termination Date, multiplied by (B) the sum of (i) annual Salary
and (ii) Target Bonus, and subject to retention by the Company pursuant
to Section 3.5(i).
(b) On the Termination Date, the Executive shall become
fully vested in, and may thereupon exercise, in whole or in part, any and all
Stock Options granted to the Executive subject to the other provisions of the
Agreement.
(c) Until the last day of the Agreement Term, the Company
shall continue to provide to the Executive and the Executive's spouse and
children medical, prescription, dental, individual life and group life insurance
plans and programs, in accordance with the most favorable plans provided from
time to time by the Company applicable to senior executives and their spouses
and children generally. The Executive's rights under this Section 5.1(c) shall
be in addition to, and not in lieu of, any post-termination continuation
coverage or conversion rights the Executive may have pursuant to applicable law,
including without limitation, continuation coverage required by 4980 of the
Code.
5.2 If by the Company for Cause. If, during the term of the
Agreement Term, the Company shall terminate the Executive's employment for
Cause, this Agreement (other than Articles X and XI) shall terminate without
further obligation by the Company to the Executive, other than (a) the
obligation immediately to pay Executive in cash all Accrued Obligations and (b)
the obligations of the Company under all Stock Options granted to the Executive
that have vested as of the Termination Date, subject to Article III.
14
5.3 If by the Executive Other Than for Good Reason. If,
during the term of the Agreement Term, the Executive shall terminate employment
during the Agreement Term other than for Good Reason, Disability or death, this
Agreement (other than Articles X and XI) shall terminate without further
obligation by the Company, other than (a) the obligation immediately to pay the
Executive in cash all Accrued Obligations and (b) the obligations of the Company
under all Stock Options granted to the Executive that have vested as of the
Termination Date, subject to Article III.
5.4 If upon Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Agreement Term,
this Agreement (other than Articles X and XI) shall terminate without further
obligation to the Executive, other than (a) the obligation immediately to pay
the Executive or his legal representative in cash all Accrued Obligations, (b)
the Executive's right after the date of Executive's Disability to receive
disability and other benefits in accordance with the disability and other
applicable benefit plans in effect on the date of Executive's Disability and (c)
the obligations of the Company under all Stock Options granted to the Executive
pursuant to Article III.
5.5 If upon Death. If the Executive's employment is
terminated by reason of the Executive's death during the Agreement Term, this
Agreement shall terminate without further obligation to the Executive's legal
representatives under this Agreement, other than (a) the obligation immediately
to pay the Executive's estate or beneficiary in cash all Accrued Obligations,
(b) the right of the Executive's family to receive benefits in accordance with
the applicable benefit plans in effect on the date of Executive's death, and (c)
the obligations of the Company under all Stock Options granted to the Executive
pursuant to Article III.
5.6 Other Resignation. If the Executive shall terminate
employment pursuant to 4.5 (other than for Good Reason pursuant to 4.4), (a)
Executive shall immediately receive the compensation deferred in accordance with
3.5(i), (b) Executive shall not be entitled to earn any Bonus in accordance with
3.3(d), (c) Executive shall forfeit his rights to all Stock Options, and (d) the
Executive shall be subject to the covenants set forth in s 10.1 and 10.2. In the
event of such termination, Executive shall earn additional compensation of
$50,000 per month during the period commencing on February 1, 2000 and ending on
the Termination Date. The Executive agrees to continue employment with the
Company and use the Executive's best efforts to ensure a smooth transition
through the earliest of (a) the date that a new Chief Executive Officer has been
employed by the Company, (b) a period of four (4) months has elapsed since the
date of the Executive's Notice of Termination, or (c) such date as the Company
elects after receipt of the Executive's Notice of Termination.
In the event that the Executive's employment is terminated during the Agreement
Term for any reason, Executive shall resign as Chairman of the Board and as a
member of the Board, and all other positions with the Company and its
subsidiaries, unless otherwise mutually agreed in writing by the Company and the
Executive.
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ARTICLE VI
EQUITY OWNERSHIP PROVISIONS
6.1 Tag-Along Rights. The Executive shall have tag-along
rights as set forth in that certain Stockholders Agreement, dated as of the date
hereof, among Bay Harbour Management L.C. for its managed accounts, Whippoorwill
Associates, Inc. as agent and/or general partner for its discretionary accounts
and as investment advisor to Whippoorwill/Barney's Obligations Trust - 1996, and
the Executive ("Stockholders Agreement").
6.2 Drag-Along Rights. The Executive shall be subject to
certain drag-along rights as set forth in the Stockholders Agreement.
6.3 Voting of Shares. The Executive agrees to vote the
shares of the Company's common stock hold by him from time to time as set forth
in the Stockholders Agreement.
6.4 Registration. The Executive shall have certain rights
to request registration of his shares of Company common stock under the
Securities Act of 1933, as amended, as set forth in that certain Registration
Rights Agreement, dated as of the date hereof, between the Company and the
Executive.
ARTICLE VII
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the
reasonable computation of the Company's independent auditors, which
determination shall be certified to by such auditors and set forth in a written
certificate and may set forth assumptions upon which such determination is based
("Certificate") delivered to the Executive and the Company) that any benefit
received or deemed received by the Executive from the Company pursuant to this
Agreement or otherwise (collectively, "Payments") is or will become subject to
any excise tax under 4999 of the Code or any similar tax payable under any
United States federal, state, local or other law (such excise tax and all such
similar taxes collectively, "Excise Taxes"), then the Company shall, as soon as
practicable after receipt of such Certificate, pay the Executive an amount
("Gross-up Payment") equal to the product of :
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in 7.4).
16
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the
preparation and delivery to the Executive and the Company of a Certificate. The
Company shall, in addition to complying with 7.2, cause all determinations and
certifications under this Article VII to be made as soon as reasonably possible
and in adequate time to permit the Executive to prepare and file the Executive's
individual tax returns on a timely basis (including any extension thereof).
7.2 Determination by the Executive.
(a) If the Company shall fail to deliver a Certificate to
the Executive and to pay to the Executive the amount of the Gross-up Payment, if
any, within thirty (30) days after receipt from the Executive of a written
request for a Certificate, or if at any time following receipt of a Certificate
the Executive disputes the amount of the Gross-up Payment set forth therein, the
Executive may elect to demand the payment of the amount which the Executive, in
accordance with an opinion of counsel to the Executive ("Executive Counsel
Opinion"), determines to be the Gross-up Payment. Any such demand by the
Executive shall be made by delivery to the Company of a written notice which
specifies the Gross-up Payment determined by the Executive and an Executive
Counsel Opinion (including applicable worksheets) regarding such Gross-up
Payment (such written notice and opinion collectively, "Executive's
Determination"). Within thirty (30) days after delivery of the Executive's
Determination to the Company, the Company shall either (1) pay the Executive the
Gross-up Payment set forth in the Executive's Determination (less the portion of
such amount, if any, previously paid to the Executive by the Company) or (2)
deliver to the Executive a Certificate specifying the Gross-up Payment
determined by the Company's independent auditors, together with an opinion of
the Company's counsel ("Company Counsel Opinion"), and pay the Executive the
Gross-up Payment specified in such Certificate.
(b) If the Executive does not make a request for, and the
Company does not deliver to the Executive, a Certificate, the Company shall, for
purposes of 7.3, be deemed to have determined that no Gross-up Payment is due.
7.3 Additional Gross-up Amounts. If, despite the initial
conclusion of the Company and/or the Executive that certain Payments are neither
subject to Excise Taxes nor to be counted in determining whether other Payments
are subject to Excise Taxes (any such item, a "Non-Parachute Item"), it is later
determined (pursuant to the subsequently-enacted provisions of the Code, final
regulations or published rulings of the IRS, final judgment of a court of
competent jurisdiction or the Company's independent auditors) that any of the
Non-Parachute Items are subject to Excise Taxes, or are to be counted in
determining whether any Payments are subject to Excise Taxes, with the result
17
that the amount of Excise Taxes payable by the Executive is greater than the
amount determined by the Company or the Executive pursuant to 7.1 or 7.2, as
applicable, then the Company shall pay the Executive an amount (which shall also
be deemed a Gross-up Payment) equal to the product of
(a) the sum of (1) such additional Excise Taxes and (2) any
interest, fines, penalties, or expenses incurred by the Executive as a result of
having taken a position in accordance with a determination made pursuant to 7.1
or 7.2, as applicable,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a
fraction, the numerator of which is one (1.0), and the denominator of which is
one (1.0) minus the sum, expressed as a decimal fraction, of the effective rates
of all federal, state, local and other income and other taxes and any Excise
Taxes applicable to the Gross-up Payment. (If different rates of tax are
applicable to various portions of a Gross-up Payment, the weighted average of
such rates shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a
legal opinion of nationally recognized employee benefits tax counsel that there
is a reasonable basis to support a conclusion that the Gross-up Payment
determined by the Executive has been calculated in accordance with this Article
VII and applicable law. "Company Counsel Opinion" means a legal opinion of
nationally recognized employee benefits tax counsel that there is a reasonable
basis and substantial authority (within the meaning of Internal Revenue Code
6662(d)) to support a conclusion that the Gross-up Payment set forth in the
Certificate of the Company's independent auditors has been calculated in accord
with this Article VII and applicable law.
7.6 Amount Increased or Contested. The Executive shall
notify the Company in writing of any claim by the IRS or other taxing authority
that, if successful, would require the payment by the Company of a Gross-up
Payment. Such notice shall include the nature of such claim and the date on
which such claim is due to be paid. The Executive shall give such notice as soon
as practicable, but no later than ten (10) business days after the Executive
first obtains actual knowledge of such claims; provided, however, that any
failure to give or delay in giving such notice shall affect the Company's
obligations under this Article VII only if and to the extent that such failure
results in actual prejudice to the Company. The Executive shall not pay such
claim less than thirty (30) days after the Executive gives such notice to the
Company (or, if sooner, the date on which payment of such claim is due). If the
Company notifies the Executive in writing before the expiration of such period
that it desires to contest such claim, the Executive shall:
18
(a) give the Company any information that it reasonably
requests relating to such claim,
(b) take such action in connection with contesting such
claim as the Company reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith to contest
such claim, and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including related interest
and penalties, imposed as a result of such representation and payment of
reasonable costs and expenses. Without limiting the foregoing, the Company shall
control all proceedings in connection with such contest and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and xxx for
a refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and provided, further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-up Payment would be payable. The Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an
amount advanced by the Company pursuant to 7.6, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall promptly
pay the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to 7.6, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such determination before the expiration of thirty (30) days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
19
thereof, the amount of Gross-up Payment required to be paid. Any contest of a
denial of refund shall be controlled by Section 7.6.
ARTICLE VIII
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs reasonable legal fees in an
effort to secure, establish entitlement to, or obtain benefits under this
Agreement (including, without limitation, the fees and other expenses of the
Executive's legal counsel in connection with the delivery of the Executive
Counsel Opinion referred to in Section 7.5 or in connection with enforcing the
Executive's rights to indemnification in Article XI) and the Executive prevails,
the Company shall reimburse the Executive for such fees and expenses.
(b) The Company will pay the Executive (i) for the
Executive's reasonable legal fees and expenses in negotiating this Agreement and
(ii) as may be necessary or appropriate, the Executive's reasonable legal fees
and expenses up to $25,000 annually for Executive to consult with counsel
regarding the Executive's compliance with the terms of this Agreement.
8.2 Interest. If the Company does not pay any amount due to
the Executive under this Agreement within three (3) days after such amount
became due and owing, interest shall accrue on such amount from the date it
became due and owing until the date of payment at an annual rate equal to two
percent (2.0%) above the base commercial lending rate announced by The Chase
Manhattan Bank in effect from time to time during the period of such nonpayment.
ARTICLE IX
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company. The Executive's right to receive
when due the payments and other benefits provided for under and in accordance
with the terms of this Agreement is absolute, unconditional and subject to no
set-off, counterclaim or legal or equitable defense. Any claim which the Company
may have against the Executive, whether for a breach of this Agreement or
otherwise, shall be brought in a separate action or proceeding and not as part
of any action or proceeding brought by the Executive to enforce any rights
against the Company under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to
mitigate the amounts payable by the Company under this Agreement upon any
termination of employment by seeking new employment following termination.
Except as specifically otherwise provided in this Agreement, all amounts payable
20
pursuant to this Agreement shall be paid without reduction regardless of any
amounts of salary, compensation or other amounts which may be paid or payable to
the Executive as the result of the Executive's employment by another employer;
provided, however, that after a termination of employment by the Executive for
Good Reason as defined in Section 2.8(f), any amounts payable under ARTICLE V to
the Executive shall be subject to mitigation to the extent of compensation
arising from or attributable to services performed, directly or indirectly, by
the Executive as a consultant, employee, officer or director for the Company or
any of its affiliates or successors, if the Executive's principal duties and
responsibilities with respect to such services pertain to or include the
Company's business.
ARTICLE X
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the
policy of the Company and its Subsidiaries to maintain as secret and
confidential all valuable and unique information and techniques acquired,
developed or used by the Company and its Subsidiaries relating to their
business, operations, employees and customers, which gives the Company and its
Subsidiaries a competitive advantage in the retail clothing industry and other
businesses in which the Company and its Subsidiaries are engaged, including
trade secrets ("Confidential Information"). Executive recognizes that all such
Confidential Information is the sole and exclusive property of the Company and
its Subsidiaries, and that disclosure of Confidential Information would cause
damage to the Company and its Subsidiaries. Executive agrees that, except as
required by the duties of his employment with the Company and/or its
Subsidiaries and except in connection with enforcing the Executive's rights
under this Agreement or if compelled by a court or governmental agency, in each
case provided that prior written notice is given to the Company, he will not,
without the consent of the Company, disseminate or otherwise disclose any
Confidential Information obtained during his employment with the Company and/or
its Subsidiaries for so long as such information is valuable and unique.
10.2 Nonsolicitation. During the Agreement Term and, if
Executive's employment is terminated for any reason, thereafter for a period of
one (1) year, Executive shall not (a) employ any employee of the Company and/or
its Subsidiaries or (b) interfere with the Company's or any of its Subsidiaries'
relationship with, or endeavor to entice away from the Company and/or its
Subsidiaries any person, firm, corporation, or other business organization who
or which at any time (whether before or after the date of Executive's
termination of employment), was an employee, customer, vendor or supplier of, or
maintained a business relationship with, any business of the Company and/or its
Subsidiaries which was conducted at any time during the period commencing one
(1) year prior to the termination of employment.
10.3 Noncompetition. During the Agreement Term prior to
Executive's termination of employment, and if the Executive is terminated for
Cause or resigns without Good Reason, thereafter for a period of one (1) year,
21
Executive shall not engage in any Competitive Activity (as defined below)
without the prior approval of the Board. "Competitive Activity" means, directly
or indirectly, to carry on, be engaged in or have any financial interest, either
as principal, manager, agent, consultant, officer, stockholder, partner,
investor, lender or employee or in any other capacity, in any of the following
corporations or their respective Subsidiaries: Saks Fifth Avenue, Neiman Marcus
Corporation, Bergdorf Xxxxxxx or Nordstrom. After Executive's termination of
employment, unless Executive is terminated for Cause or resigns without Good
Reason (other than pursuant to Section 4.5), Executive shall not be implicitly
or explicitly restricted from engaging in Competitive Activity subject to his
satisfaction of his obligations under Sections 10.1 and 10.2.
10.4 Remedy. Executive and the Company specifically agree
that, in the event that Executive shall breach his obligations under this
Article X, the Company and its Subsidiaries will suffer irreparable injury and
shall be entitled to injunctive relief therefor, and shall not be precluded from
pursuing any and all remedies it may have at law or in equity for breach of such
obligations; provided, however, that such breach shall not in any manner or
degree whatsoever limit, reduce or otherwise affect the obligations of the
Company under this Agreement, and in no event shall an asserted breach of the
Executive's obligations under this Article X constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement;
and provided, further, that any breach of Section 10.3 shall not include a claim
for injunctive relief against the Executive.
10.5 This Article X shall survive any termination of this
Agreement.
ARTICLE XI
INDEMNIFICATION; NON-EXCLUSIVITY OF RIGHTS
11.1 Indemnification. The Executive shall be indemnified
and held harmless by the Company to the greatest extent permitted under
applicable Delaware law as the same now exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification than was permitted prior
to such amendment) if Executive was, is, or is threatened to be made, a party to
any pending, completed or threatened action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, and whether
formal or informal, by reason of the fact that Executive is or was, or had
agreed to become, a director, officer, employee, agent, or fiduciary of the
Company or any other entity which Executive is or was serving at the request of
the Company ("Proceeding"), against all expenses (including without limitation,
all reasonable attorneys' fees, retainers, court costs, transcripts, fees of
experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all other
reasonable disbursements or expenses customarily required in connection with
asserting or defending claims) ("Expenses") and all claims, damages, liabilities
22
and losses (including, without limitation, judgments; fines; liabilities under
the Code or the Employee Retirement Income Security Act of 1974, as amended, for
damages, excise taxes or penalties; damages, fines or penalties arising out of
violation of any law related to the protection of the public health, welfare or
the environment; and amounts paid or to be paid in settlement) incurred or
suffered by the Executive or to which the Executive may become subject for any
reason. A Proceeding shall not include any proceeding to the extent it concerns
or relates to a matter described in Section 8.1(a).
11.2 Advancement of Expenses and Costs. All Expenses
incurred by or on behalf of the Executive in defending or otherwise being
involved in a Proceeding shall be paid by the Company in advance of the final
disposition of a Proceeding, including any appeal therefrom, within thirty (30)
days after the receipt by the Company of a statement or statements from the
Executive requesting such advance or advances from time to time. Such statement
or statements shall evidence the Expenses incurred by the Executive in
connection therewith, together with supporting invoices, receipts and other
documentation.
11.3 Effect of Certain Proceedings. The termination of any
Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, except, in each case, to the extent that the terms
thereof expressly so provide, shall not, of itself (a) adversely affect the
rights of the Executive to indemnification, or (b) create a presumption that the
Executive did not meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification or contribution is
not permitted by applicable law.
11.4 Other Rights to Indemnification. The Executive's
rights of indemnification and advancement of Expenses provided by this Article
XI shall not be deemed exclusive of any other rights to which the Executive may
now or in the future be entitled under applicable law, the certificate of
incorporation, by-laws, agreement, vote of stockholders, or resolution of the
Board of the Company, or other provisions of this Agreement or any other
agreement, or otherwise.
11.5 Representations. The Company represents and warrants
that this Article XI does not conflict with or violate its certificate of
incorporation or by-laws, and agrees that it will not amend its certificate of
incorporation or by-laws in a manner that would limit the rights of the
Executive hereunder. The Company represents that the execution, delivery and
performance of this Agreement by the Company has been duly and validly
authorized by its Board.
11.6 Survival of Indemnity. This Article XI shall survive
any termination of the relationship of the Executive with the Company, and shall
be binding on, and inure to the benefit of the successors and assigns of the
Company and the successors, assigns, heirs and personal representatives of the
Executive.
11.7 Non-Exclusivity of Rights. This Agreement shall not
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans provided by the Company or any of its
23
Subsidiaries and for which the Executive may qualify, nor shall this Agreement
limit or otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
of the Company or any of its Subsidiaries and any other payment or benefit
required by law at or after the Termination Date shall be payable in accordance
with such plan or applicable law except as expressly modified by this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Representations; Nondisclosure. The Executive will not
disclose to the Company or use, or induce the Company to use, any proprietary
information, trade secrets or confidential business information of others. The
Executive represents and warrants that he is not a party to any agreement,
contract or understanding, employment or otherwise, which would restrict or
prohibit him in any way from undertaking or performing employment in accordance
with the terms and conditions of this Agreement.
12.2 No Assignability. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
12.3 Successors. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Any successor to the business
and/or assets of the Company which assumes or agrees to perform this Agreement
by operation of law, contract, or otherwise shall be jointly and severally
liable with the Company under this Agreement as if such successor were the
Company.
12.4 Payments to Beneficiary. If the Executive dies before
receiving amounts to which the Executive is entitled under this Agreement, such
amounts shall be paid in a lump sum to the beneficiary designated in writing by
the Executive, or if none is so designated, to the Executive's estate.
12.5 Non-alienation of Benefits. Benefits payable under
this Agreement shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution
or levy of any kind, either voluntary or involuntary, before actually being
received by the Executive, and any such attempt to dispose of any right to
benefits payable under this Agreement shall be void.
24
12.6 Severability. If any one or more articles, sections or other portions of
this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
12.7 Amendments. This Agreement shall not be altered,
amended or modified except by written instrument executed by the Company and
Executive.
12.8 Notices. All notices and other communications under
this Agreement shall be in writing and delivered by hand or by first class
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx X. Xxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxxxxxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Sonnenschein, Nath & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Company:
Barneys New York, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
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12.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
12.10 Governing Law. This Agreement shall be interpreted
and construed in accordance with the laws of the State of New York, without
regard to its conflict of laws principles.
12.11 Captions. The captions of this Agreement are not a
part of the provisions hereof and shall have no force or effect.
12.12 Tax Withholding. The Company may withhold from any
amounts payable under this Agreement any federal, state or local taxes
that are required to be withheld pursuant to any applicable law or regulation.
12.13 No Waiver. The Executive's failure to insist upon
strict compliance with any provision of this Agreement shall not be deemed a
waiver of such provision or any other provision of this Agreement. A waiver of
any provision of this Agreement shall not be deemed a waiver of any other
provision, and any waiver of any default in any such provision shall not be
deemed a waiver of any later default thereof or of any other provision.
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12.14 Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to its subject
matter.
IN WITNESS WHEREOF, the Executive and the Company have
executed this Agreement effective as of the date first
above written, executed February 1, 2000.
BARNEYS NEW YORK, INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------
Title: Executive Vice President
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
XXXXX X. XXXXXXXX
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