EXHIBIT 10.35
First Amendment to Employment Agreement
Xxxxxx Xxxxx
This First Amendment to the Employment Agreement between Xxxxxx Xxxxx
("Executive") and Barneys New York, Inc. ("Company") dated January 8, 2001
("Employment Agreement") is made and effective as of this 10th day of January,
2003 by the Executive and the Company.
1. Section 3.2 of the Employment Agreement is hereby amended and restated in its
entirety to read as follows:
The term of this Agreement means the period commencing on the
Agreement Date and ending on January 31, 2005 ("Agreement Term");
provided that (i) if the Company is then actively engaged in good
xxxxx xxxx fide discussions with one or two interested buyers each of
whom is financially able to take over control of the Company or (ii)
if the Company has been actively searching for a new Chief Executive
Officer for at least three months immediately prior to that date and
has by then identified one or two candidates for that position, upon
written notice by the Company to the Executive prior to the
expiration of the Agreement Term the Company may extend the Agreement
Term for no more than six (6) additional months in order to conclude
a transaction which could result in a Change in Control or to hire a
new Chief Executive Officer; provided further that in the event the
discussions then underway with such buyers and such candidates end
before the end of the additional six-month extension of the Agreement
Term, Executive shall be entitled to resign and shall be
unconditionally released from any further employment with the
Company. During any such extension of the Agreement Term, the
Executive shall receive an increased salary of 150% of his salary
rate immediately prior to such extension and shall not be eligible
for any annual bonus with respect to such period.
2. Section 3.3(c) of the Employment Agreement is hereby amended and restated to
read as follows:
(c)(i) During the Agreement Term constituting the period
commencing on February 1, 2001 and ending on January 31,
2003, the Executive shall also earn an annual bonus for
each full fiscal year of the Company equal to the following
amount:
(1) if the Company achieves 90% of the business
plan target EBITDA for such fiscal year, 50% of
annual Salary paid with respect to such year;
(2) if the Company achieves 100% of business plan
target EBITDA for such year, 75% of annual Salary
paid with respect to such year ("Target Bonus");
(3) if the Company achieves 125% of business plan
target EBITDA for such fiscal year, 100% of
annual Salary paid with respect to such year; and
(4) if the Company achieves 150% or more of
business plan target EBITDA for such fiscal year,
125% of annual Salary paid with respect to such
year.
(ii) During the Agreement Term constituting the period
commencing on February 1, 2003 and ending on January 31,
2005, the Executive shall earn an annual bonus for each
full fiscal year of the Company equal to the following
amount: if the Company achieves 90% of the business plan
target EBITDA for such fiscal year, 90% of his annual
Salary paid with respect to such year, plus an additional
percentage of his annual Salary paid with respect to such
year equal to the additional percentage of the Company's
business plan target EBITDA for such year in excess of 90%
of the Company's business plan target EBITDA for such year,
without limit.
(iii) 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.
3. Section 3.5(d) is amended by deleting "2007" as it appears therein and
replacing such year with "2008" and by deleting "2004" as it appears therein and
replacing such year with "2005".
4. Section 3.5 is amended by adding a new subsection (e) at the end thereof to
read as follows:
(e) Equity Compensation Guarantee.
(1) In the event that the Executive does not voluntarily resign from
his employment with the Company in breach of the Employment Agreement
prior to January 31, 2005, or such later date to which the Agreement
Term may be extended pursuant to the first proviso of Section 3.2,
the Company hereby guarantees that the aggregate value of all stock
options granted to Executive shall, as of the date of the first
Change of Control that occurs, be at least equal to the greater of:
(i) the Target Value (as defined below) in the event the Company
achieves a cumulative amount of EBITDA ("Cumulative EBITDA
Threshold") through January 31, 2005 (or such shorter period as may
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be provided below) greater than the minimum amount mutually agreed to
by Executive and the Executive Committee or (ii) $5,000,000. In the
event the applicable Target Value exceeds the aggregate value of all
of the Executive's stock options granted by the Company as of the
date of a Change of Control, the Company shall make a lump sum cash
payment to the Executive equal to the amount, if any, of such excess
promptly following the Change of Control.
(2) Definitions.
"Target Value" means the amount guaranteed to be earned by Executive
in respect of stock options granted by the Company to the Executive
and shall be determined based on the cumulative amount of EBITDA
during the Measurement Period. The Target Value shall be a minimum of
$5 million and shall be $10 million if the Company achieves at least
the highest Cumulative EBITDA Threshold during the Measurement
Period. If the Company achieves cumulative EBITDA during the
Measurement Period between the lowest and highest Cumulative EBITDA
Thresholds, the Target Value shall be a pro rata amount determined by
straight line interpolation. The Target Value shall be adjusted in
the event Executive's employment with the Company is terminated prior
to January 31, 2004 by reason of his death or Disability so that the
Target Value is in the same proportion as the aggregate number of
shares underlying the vested and exercisable portion of Executive's
options (including shares that were purchased by exercising such
options) bears to 792,234.
"Measurement Period" means the period from the first day of the
Company's 2002 fiscal year through the end of the Company's 2004
fiscal year; provided, however, in the event Executive's employment
is terminated for any reason (other than his voluntary resignation in
breach of the Employment Agreement) or a Change of Control occurs
prior to the end of the Company's 2004 fiscal year, the Measurement
Period shall be the period from the first day of the Company's 2002
fiscal year until the later of the end of the Company's 2002 fiscal
year or the end of the Company's fiscal year immediately preceding
the Executive's Termination Date. For example, if a Change of Control
occurs on November 30, 2003, the Measurement Period shall be the
Company's 2002 fiscal year, and if a Change of Control instead occurs
a year later (i.e. November 30, 2004), the Measurement Period shall
be the Company's 2002 and 2003 fiscal years.
(3) For purposes of this Section 3.5(e), the aggregate value of
Executive's stock options granted by the Company shall be determined
as of the date of a Change of Control and shall include the aggregate
value of shares of stock acquired pursuant and subject to stock
options in excess of the aggregate exercise price therefor. In the
event the shares of Stock received under a stock option have been
sold or otherwise transferred prior to the date of a Change of
Control, the value of such shares shall be the gross amount actually
realized in cash by Executive or, in the case of a gift, discounted
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sale or other transfer without full and adequate consideration
entirely in cash, the last sales price on the last day on which
shares of Stock were actually traded prior to the date of transfer
multiplied by the number of such shares sold or transferred by
Executive.
(4) In the event the Executive becomes entitled to the guarantee
hereunder, this Section 3.5(e) shall survive the expiration of the
Agreement Term such that the guarantee shall be determined, and an
amount (if any) shall be payable thereunder, upon the first Change of
Control that occurs after such expiration.
(5) In the event Executive desires to sell or otherwise transfer any
shares of Stock acquired from any stock options, the Executive shall
provide the Board with at least 10 business days' prior written
notice of such sale or transfer ("Sale Notice"). The Sale Notice
shall generally describe the proposed transaction, including the
price at which the sale or other transfer is being made (or the
equivalent cash price based on the last sale price on the last day on
which shares of Stock were actually traded prior to the date of such
notice). The Company shall have ten (10) business days from the date
it receives such notice to decide whether to (i) purchase the shares
of Stock at the price set forth in the Sale Notice, (ii) permit the
Executive to complete his proposed sale or other transfer in
accordance with the terms described in the Sale Notice or (iii)
direct the Executive to defer any such sale or transfer for a period
of up to six (6) months (and the Company may at any time during such
deferral period purchase the shares at the greater of the cash price
set forth in the Sale Notice or the last sale price on the last day
on which shares of Stock were actually traded prior to the date of
such purchase). In the event the Company directs the Executive to
defer his proposed sale or other transfer for a period of up to six
(6) months, the Company shall, prior to the end of such six-month
period, either allow the Executive to participate in a third party
transaction at a price no less than the price set forth in the Sale
Notice or, absent any such transaction, purchase such shares at the
greater of the price set forth in the Sale Notice or the last sale
price on the last day on which shares of Stock were actually traded
prior to the date of such purchase. In the event any sale or transfer
by Executive of his shares is deferred for more than 60 days after
the date that a Sale Notice was received by the Company at the
Company's direction, the Company shall arrange for a letter of credit
or other means of securing its obligation to Executive under this
Section 3.5 that is reasonably satisfactory to the Executive.
Notwithstanding any other provision of this Section 3.5, this
paragraph shall not apply to a sale, gift or other transfer of shares
of Stock by the Executive to his spouse or his children, his estate
or to any trust or other entity for the exclusive benefit for any of
them, and such shares shall be treated as if they were still owned by
the Executive solely for purposes of this Section 3.5.
5. Section 4.1 of the Employment Agreement is hereby amended to read as follows:
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4.1 [Deleted].
6. Section 5.2 of the Employment Agreement is hereby amended and restated to
read as follows:
Termination for Cause or By Executive Other Than For Good Reason. If
the Company shall terminate the Executive's employment for Cause or
the Executive shall terminate employment other than for Good Reason
during the Agreement Term, this Agreement (other than Articles IX and
X) 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 and Stock Awards granted to the
Executive that have vested as of the Termination Date, subject to
Article III.
7. Section 5.3 of the Employment Agreement is hereby amended to read as follows:
5.3 [Deleted].
8. The Company shall make a restricted stock award to the Executive on the first
day of the Company's 2003 fiscal year in the amount of 200,000 shares of common
stock of the Company upon the terms and conditions set forth in the form of
Restricted Stock Award Agreement attached hereto and made a part hereof.
In Witness Whereof the parties hereto have duly executed this Amendment as of
the date first above written.
BARNEYS NEW YORK, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: Executive Vice President
/s/ XXXXXX XXXXX
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XXXXXX XXXXX
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