EXHIBIT 3
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 (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
NY2:\853160\03\21645.0001
(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
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Agreement Term, 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), 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 employment
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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 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
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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.
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(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.
(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.
15
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
19
be repaid and the amount of such advance shall offset, to the extent 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 pursuant
20
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, Executive
21
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 Subsidiaries and
23
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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