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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12 (B) OR (G) OF
THE SECURITIES EXCHANGE ACT OF 1934
BARNEYS NEW YORK, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-4040818
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
575 Fifth Avenue
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 339-7300
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
Warrants to Purchase Common Stock
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TABLE OF CONTENTS
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PAGE
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ITEM 1. BUSINESS..............................................................1
ITEM 2. FINANCIAL INFORMATION.................................................8
ITEM 3. PROPERTIES...........................................................21
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.......................................................22
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.....................................25
ITEM 6. EXECUTIVE COMPENSATION...............................................29
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................32
ITEM 8. LEGAL PROCEEDINGS....................................................32
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........................33
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES..............................33
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED..............34
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................36
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................36
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE...............................36
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS....................................37
</TABLE>
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ITEM 1. BUSINESS.
GENERAL
Barneys New York, Inc., a Delaware corporation ("Holdings"), is the
parent company of Barney's, Inc., a New York corporation ("Barneys"), which
together with its subsidiaries (collectively, the "Company"), is a leading
upscale retailer of men's and women's apparel and accessories and items for
the home. The Company is engaged in three distribution channels which
encompass its various product offerings: the full price stores, the outlet
stores and the warehouse sale events. In addition, the Company is involved in
licensing arrangements pursuant to which the "Barneys New York" trade name is
licensed for use in Asia. See "-Licensing Arrangements" below.
Barneys was founded by Barney Pressman in 1923 under the name
Barney's Clothes, Inc. Until its emergence from bankruptcy in January 1999,
Barneys was owned by the Pressman family, certain affiliates of the Pressman
family and certain trusts of which members of the Pressman family were the
beneficiaries. Pursuant to the Plan of Reorganization for Barneys and certain
of its affiliates as confirmed by the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"), Holdings was formed
and all the equity interests in Barneys were transferred to Holdings, making
Barneys a wholly-owned subsidiary of Holdings. See "-the Reorganization"
below.
The Company operates seven full price stores (three of which are
flagship stores located in New York, Chicago and Beverly Hills and four of
which are regional stores) and 13 outlet stores throughout the United States
(see "Properties" below) under the "BARNEYS NEW YORK" trade name. Barneys
merchandise is priced from the middle to the upper end of the market and
appeals to sophisticated customers whose income levels are above average. Its
merchandising philosophy stresses a variety of fashion viewpoints. It offers
a mix of merchandise including established designers, new designers, branded
goods and private label goods. The Company purchases merchandise from a broad
range of vendors, domestic and foreign, including designers, manufacturers of
branded goods, and private label resources. Major designers include Giorgio
Armani, Prada, Jil Sander, Hermes, Donna Karan, Comme des Garcons, Robert
Clergerie and Ermenegildo Zegna. Major branded goods include Oxxford and
Hickey Freeman, and major cosmetics lines including but not limited to
Chanel, Francois Nars and Kiehls. A significant portion of the merchandise is
manufactured in Europe (primarily Italy). The flagship stores in New York and
Beverly Hills also include restaurants managed by third party contractors.
In addition to its full-price retail business, the Company has
developed two operations which focus on outlet stores and warehouse sales.
The Company conducts semi-annual warehouse sales in New York and Santa
Monica, California. Warehouse sale events operate on an extremely low cost
basis, generating significant net profit, while flattening seasonal effects
on the Company's business.
RETAILING STRATEGY
During fiscal 1998, the Company's sales were derived as follows:
82% from full price stores (71% from three flagship stores, and 11% from four
regional stores), 10% from Outlet Stores and 8% from Warehouse Sale Events.
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FULL PRICE STORES
The Company operates seven full price stores: three large flagship
stores in prime retail locations in New York, Beverly Hills, and Chicago, and
four small regional stores in Manhasset, NY, Seattle, WA, Chestnut Hill, MA,
and World Financial Center, NY.
The three large flagship stores establish and promote the Barneys
image as a pre-eminent retailer of men's and women's fashion. They provide
customers with a wide range of high quality products, including apparel,
accessories, cosmetics and items for the home. They cater to affluent,
fashion-conscious men and women. The four smaller regional stores aim to
serve similar customers in smaller urban markets. These stores provide a
limited selection of the assortment offered in the flagship stores.
Creative merchandising, store design and displays, advertising
campaigns and publicity events develop the image of Barneys as a fashion
leader. The flagship stores create aesthetic shopping environments to
showcase designer and private label merchandise with the Barneys point of
view. Customer relationships are developed with in-store service, marketing
communications, and a customer loyalty awards program.
OUTLET STORES
The Company operates 13 outlet stores across the country. The
outlet stores leverage the Barneys New York brand to reach a wider audience
by providing a lower priced version of the sophistication, style and quality
of the merchandise and retail experience provided in the full price stores.
The outlet stores also provide a clearance vehicle for full price stores'
residual merchandise. The stores operate with a low cost structure.
The outlet stores cater to budget minded yet fashion-conscious men
and women, selling designer, branded and private label apparel and
accessories. They are located in high-end outlet centers, and serve a high
number of destination shoppers and tourists.
WAREHOUSE SALE EVENTS
The Company operates four warehouse sale events, two each season in
New York and Santa Monica, California. The warehouse sale events provide
another vehicle for liquidation of end of season residual merchandise, as
well as a low cost extension of the Barneys New York brand to a wider
audience. The events attract a wide range of shoppers, mostly bargain hunters
who value quality and fashion.
THE REORGANIZATION
On January 10, 1996 (the "Filing Date"), Barneys and certain of its
subsidiaries commenced proceedings under chapter 11 of title 11, United
States Code (the "Bankruptcy Code") by filing petitions in the Bankruptcy
Court. On January 28, 1999 (the "Effective Date"), the Company emerged from
reorganization proceedings (the "Reorganization") under the Bankruptcy Code
pursuant to a Second Amended Joint Plan of Reorganization, dated November 13,
1998, as supplemented and as confirmed on December 21, 1998 by the Bankruptcy
Court (the "Plan"). The following is a summary of certain provisions of the
Plan that became effective on the Effective Date.
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EQUITY. Pursuant to the Plan, the following equity was issued:
ISSUED IN EXCHANGE FOR CLAIMS. The equity in Barneys was exchanged
for shares of common stock, $0.01 par value, of Holdings ("Holdings Common
Stock"), and certain allowed general unsecured claims and claims held by
Isetan Company Ltd. ("Isetan") against Barneys and certain of its affiliates
were exchanged for, among other things, shares of Holdings Common Stock and
warrants (as defined below).
RIGHTS OFFERING. Shares of Holdings Common Stock were issued to
certain holders of allowed general unsecured claims pursuant to the exercise
by them of rights to subscribe for shares of Holdings Common Stock
("Subscription Rights") which were issued in accordance with the Plan, and
exercised prior to consummation of the Plan. The $62.5 million offering of
Subscription Rights was guaranteed by Bay Harbour Management L.C. ("Bay
Harbour") and Whippoorwill Associates, Inc. ("Whippoorwill", and, together
with Bay Harbour, the "Plan Investors") on behalf of their discretionary
and/or managed accounts to the extent the other holders of allowed general
unsecured claims did not elect to participate in the offering. Bay Harbour
and Whippoorwill agreed to guarantee the offering of Subscription Rights
pursuant to the Amended and Restated Stock Purchase Agreement dated as of
November 13, 1998 among Barneys, Bay Harbour, Whippoorwill and the Official
Committee of Unsecured Creditors of Barneys (the "Stock Purchase Agreement").
In the offering, the Plan Investors purchased an aggregate of 6,707,531
shares of Holdings Common Stock for an aggregate price of approximately $58.2
million.
OPTION. Pursuant to the Stock Purchase Agreement, the Plan
Investors were granted an option to purchase, at an aggregate exercise price
of $5.0 million, a total of 576,122 shares of Holdings Common Stock. Pursuant
to the option, each of the Plan Investors has the right to purchase the
greater of (i) 288,061 shares of Holdings Common Stock, and (ii) 576,122
shares of Holdings Common Stock, less the number of shares purchased by the
other Plan Investor. This option expires on November 15, 1999.
ISETAN WARRANT. An affiliate of Isetan was issued a warrant (the
"Isetan Warrant") to purchase 287,724 share of Holdings Common Stock at an
exercise price of $14.68 per share. This warrant expires on January 29, 2002.
UNSECURED CREDITORS WARRANTS. Holders of certain allowed general
unsecured claims were issued warrants (the "Unsecured Creditors Warrants") to
purchase an aggregate of up to 1,013,514 shares of Holdings Common Stock at
an exercise price of $8.68 per share. These warrants expire on May 15, 2000.
PREFERRED STOCK. Holdings issued 15,000 shares of Series A
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), to the
Barneys Employees Stock Plan Trust, which was established for the benefit of
eligible employees of the Company. In addition, Holdings issued 5,000 shares
of Preferred Stock for an aggregate purchase price of $500,000 in government
securities to Bay Harbour, which it sold to a third party under a prearranged
agreement.
INDEBTEDNESS. Pursuant to the Plan, the following debt securities were
issued:
ISETAN. Barneys issued a promissory note (the "Isetan Note") in the
principal amount of $22,500,000 to Isetan. The Isetan Note bears interest at
the rate of 10% per annum payable semi-annually, and matures on January 29,
2004.
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EQUIPMENT LESSORS. On the Effective Date, certain lessors of
equipment to the Company transferred all right, title and interest in such
equipment to the Company. In exchange therefor, the Company issued promissory
notes (the "Equipment Lessors Notes") to such lessors in an aggregate
principal amount of $35,788,865. Such promissory notes bear interest at the
rate of 11-1/2% per annum payable semi-annually, mature on January 29, 2004,
and are secured by a first priority lien on the equipment that was the
subject of each of the respective equipment leases.
OTHER. Barneys paid approximately $23.3 million in cash to Isetan on
account of its allowed claims and made certain other cash payments to members
of the Pressman family and certain other holders of allowed claims pursuant
to the Plan. In addition, Barneys entered into consulting agreements with
certain members of the Pressman family.
REAL ESTATE. Pursuant to the Plan, an affiliate of Isetan became the
sole owner of the properties on which the Company's three flagship stores are
located and Barneys entered into modifications of the long-term leases for
such stores. See "PROPERTIES" below.
LICENSING. BNY Licensing entered into the licensing arrangements described
under "Licensing Arrangements" below.
LICENSING ARRANGEMENTS
BNY Licensing Corp. ("BNY Licensing"), a wholly-owned subsidiary of
Barneys, is party to licensing arrangements pursuant to which (i) two retail
stores are operated in Japan and a single in-store department is operated in
Singapore under the name "BARNEYS NEW YORK", each by an affiliate of Isetan,
and (ii) Barneys Asia Co. LLC, which is 70% owned by BNY Licensing and 30%
owned by an affiliate of Isetan (and which was formed in connection with the
Reorganization referred to above), has the exclusive right to sublicense the
BARNEYS NEW YORK trademark throughout Asia (excluding Japan). Licensing
agreements governing these arrangements were entered into in connection with
Barneys's emergence from bankruptcy. See "-the Reorganization" above.
TRADEMARKS AND SERVICE MARKS
The Company owns its principal trademarks and service marks
worldwide, including the "Barneys New York" and "Barneys" marks. In addition
to these marks, the Company owns other important trademarks and service marks
used in its business. The Company's trademarks and service marks are
registered in the United States and internationally. The term of these
registrations is generally ten years, and they are renewable for additional
ten-year periods indefinitely, so long as the marks are still in use at the
time of renewal. The Company is not aware of any claims of infringement or
other challenges to its right to register or use its marks in the United
States.
SEASONALITY
The specialty retail industry is seasonal in nature, with a high
proportion of sales and operating income generated in the November and
December holiday season. As a result, the Company's operating results are
significantly affected by the holiday selling season. Seasonality also
affects working capital requirements, cash flow and borrowings as inventories
build in September and peak in October in anticipation of the holiday selling
season. The Company's dependence on the holiday selling season for sales and
income is less than that of many retailers, because of the significant sales
and income generated by the warehouse sale events held in February and August.
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COMPETITION
The retail industry, in general, and the specialty retail store
business, in particular, are intensely competitive. Generally, the Company's
stores are in competition with both specialty stores and department stores in
the geographic areas in which they operate. The Company's outlet stores and
warehouse sale events also compete with off-price and discount stores. During
the last few years, several of the Company's significant vendor resources
have entered or expanded their presence in the retail business with their own
dedicated stores, which compete directly with the Company's stores (e.g.,
Giorgio Armani, Prada, Gucci and Helmut Lang). Several department store,
specialty store, and vendor store competitors also offer mail order catalog
shopping. The Internet is beginning to permit the development of sales venues
run by existing competitor stores or by new ventures that will also compete
with the Company. Some of the retailers with which the Company competes have
substantially greater financial resources than the Company and may have
various other competitive advantages over the Company.
The trend toward vertical integration of designer resources poses
additional competitive risk for the Company (e.g., Neiman Marcus' purchase of
an interest in the Kate Spade accessories business, LVMH's stable of designer
vendors sold through its Duty Free Shops and Galleria stores as well as
individual designer boutiques). Competition is strong not only for retail
customers, but also for vendor resources. In the Company's luxury retail
business, exclusivity of merchandise brands is very valuable, and retail
stores compete for exclusive distribution arrangements with key designer
vendors.
MERCHANDISING
In fiscal 1998, the Company's top 10 vendor brands accounted for
approximately 23% of total Company sales. The two top vendor brands each
accounted for approximately 5% of total Company sales. All of these brands
are also sold by competitor retailers in certain markets; nine of the ten
vendors also have their own dedicated retail stores. Exclusivity of
distribution of designer brands is a valuable resource in the luxury retail
business. The Company faces risk to its business if either designer vendors
withdraw Barneys from their distribution, or, conversely, if they provide
distribution to competitors.
EMPLOYEES
At May 6, 1999, the Company employed approximately 1400 people. The
Company's staffing requirements fluctuate during the year as a result of the
seasonality of the retail apparel industry, adding approximately 100
employees during the holiday selling season. Approximately 550 of the
Company's employees are represented by unions and the Company believes that
overall its relationship with its employees and the unions is good. During
its more than fifty year relationship with unions representing its employees,
the Company has never been subjected to a strike. The Company is currently
engaged in collective bargaining negotiations with the union representing
selling and non-selling associates in its Madison Avenue and World Financial
Center stores in New York City. The applicable collective bargaining
agreement with that union expired on March 31, 1999.
CAPITAL EXPENDITURES
The Company's capital expenditure plan is designated to allocate
funds to projects that are necessary to support the Company's strategic plan.
Under the terms of its $120,000,000 revolving credit facility, capital
expenditures are limited to $7,250,000 in fiscal year 1999, $7,500,000 in
fiscal year 2000, and $7,750,000 in each of fiscal years 2001 and 2002. See
"FINANCIAL INFORMATION - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources".
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CERTAIN TAX MATTERS
FEDERAL AND STATE INCOME TAXES
Pursuant to the Plan, Holdings acquired 100% of Barneys' stock.
Holdings will make a Section 338(g) election (the "Election") with respect to
the acquisition under applicable provisions of the Internal Revenue Code
("IRC"). The tax effects of making the Election would result in Barneys and
each of its subsidiaries generally being treated, for federal income tax
purposes, as having sold its assets at the time the Plan was consummated and
thereafter, as a new corporation which purchased the same assets as of the
beginning of the following day. As a result, Barneys will incur a gain or
loss at the time of the deemed sale in an amount equal to the difference
between the fair market value of its assets and its collective tax basis of
the assets at the time of the sale.
The Company may use existing net operating loss carryforwards to
reduce any gain incurred as a result of this sale. Nevertheless, the Company
will be subject to alternative minimum tax. As a result of the Election, the
Company has recorded an accrual for the alternative minimum tax liability as
a "fresh start" adjustment. Furthermore, immediately after the sale, as a
result of the IRC Section 338(g) election, Barneys will be stripped of any
remaining tax attributes, including any unutilized net operating loss
carryforwards and any unutilized tax credits. See Note 10 to Consolidated
Financial Statements.
OTHER TAXES
For the years including 1996, 1997 and 1998 the Company is subject
to various tax audits of Barneys at the present time, particularly by New
York State. Most of these audits will result in minimal, if any, additional
tax liability. The Company believes that pending audit results, in the
aggregate, will not have a material effect on the Company's financial
position, results of operations or cash flows.
LIMITED POST - CHAPTER 11 CASE OPERATING HISTORY
The Company's emergence from Chapter 11 reorganization occurred
very recently, and consequently the Company's subsequent operating history is
limited. Financial statements for future periods will not be comparable to
the historical financial statements included herein, for the reasons
discussed under "Financial Information - Management's Discussion and Analysis
of Financial Condition and Results of Operations."
FORWARD LOOKING INFORMATION
This Registration Statement contains "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward looking statements are based on management's expectations,
estimates, projections and assumptions. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates," and variations of
such words and similar expressions are intended to identify such forward
looking statements which include, but are not limited to, projections of
revenues, earnings and cash flows. These forward looking statements are
subject to risks and uncertainties which could cause the Company's actual
results or performance to differ materially from those expressed or implied
in such statements. These risks and uncertainties include, but are not
limited to, the following: general economic and business conditions, both
nationally and in those areas in which the Company operates; demographic
changes; prospects for the retail industry; competition; changes in business
strategy or development plans; the loss of management and key personnel; the
availability of capital to fund the expansion of the Company's business;
changes in consumer preferences or fashion trends; adverse weather
conditions, particularly during peak selling seasons; failure of the
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Company or third parties to be Year 2000 compliant; and changes in the Company's
relationships with designers, vendors and other suppliers.
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ITEM 2. FINANCIAL INFORMATION.
SELECTED HISTORICAL FINANCIAL DATA
The following table presents selected historical financial data as of
and for each of the five fiscal years in the period ended August 1, 1998 and for
the six months ended January 30, 1999. The selected historical data should be
read in conjunction with the financial statements and the related notes and
other information contained elsewhere in this Registration Statement, including
information set forth herein under " Management's Discussions and Analysis of
Financial Condition and Results of Operations."
The historical financial data as of and for each of the four fiscal
years in the period ended August 1, 1998 and for the six months ended January
30, 1999 are derived from financial statements audited by Ernst & Young LLP,
independent auditors. Information for the six months ended January 31, 1998 and
for the fiscal year ended July 30, 1994 is derived from management's internal
financial statements.
In conjunction with its emergence from Chapter 11, the Company changed
its fiscal year end to the Saturday closest to January 31. Previously, the
fiscal year end fell on the Saturday closest to July 31. A January fiscal year
end is in line with retail industry practice as it coincides with the end of the
fall/holiday season. Unless otherwise specified, all historical information
prior to August 2, 1998 reflects the July fiscal year end. The period between
August 2, 1998 and January 30, 1999 (the "Fall 1998 Stub Period") represents the
six month transition period to the new fiscal year.
<TABLE>
<CAPTION>
Predecessor Company (1)
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Six months Six months Fiscal years ended (2)
ended ended August 1, August 2, August 3, July 29, July 30,
January 30, January 28, 1998 1997 1996 1995 1994
1999 1998
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INCOME STATEMENT DATA
Net sales $ 181,657 $ 183,760 $ 342,967 $ 361,496 $366,424 $ 338,673 $ 291,098
EBITDA (3) 14,972 15,015 17,696 (2,143) (15,601) (92,682) (56,754)
Operating income (loss) 10,301 10,177 8,061 (15,030) (29,415) (106,841) (66,638)
Net income (loss) 293,662 (4,123) (19,953) (94,973) (71,869) (120,843) (78,144)
BALANCE SHEET DATA:
Working capital $ 41,064 $ (20,216) $ (32,249) $ (19,443) $ 19,596 $ (218,912) $ 8,017
Total assets 343,954 212,637 217,043 216,246 264,828 247,788 289,957
Long-term debt 118,533 - - - - - 183,696
SELECTED OPERATING DATA
Comparable store net
sales
(decrease) increase 1.0% 1.0% 9.3% -1.0% 4.5% 15.0% -26.3%
Number of stores
Full price stores 7 7 7 10 13 14 15
Outlet stores 13 13 13 10 7 3 2
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Total stores 20 20 20 20 20 17 17
</TABLE>
1 The income statement data presented above reflects the results of operations
for the Predecessor Company. The Plan became effective on January 28, 1999 and
the results of operations for the Successor Company for the two day period are
immaterial and are not shown separately.
2 Effective January 1999, the Company changed its fiscal year to coincide with
the Saturday closest to the end of January.
3 Earnings before interest, taxes, depreciation and amortization. Includes
non-recurring charges but excludes reorganization costs.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company is a retailer of men's and women's apparel and items for
the home. In the late 1980's, the Company and certain of its subsidiaries
entered into various transactions and agreements with Isetan or subsidiaries of
Isetan, principally related to the building of the three flagship stores and
trademark licensing arrangements. Additionally, the Company had entered into
various transactions and agreements with affiliate companies and other related
parties, primarily engaged in the operation of real estate properties and
Barneys New York credit card operations.
The Company's financial results over the past three years have been
impacted as a result of its filing for reorganization under Chapter 11 of the
Bankruptcy Code on January 10, 1996 (the "Filing Date") and subsequent emergence
from Chapter 11 reorganization on January 28, 1999 (the "Effective Date").
The Company incurred reorganization costs of $13.8 million, in the six
months ended January 30, 1999, and $16.0 million, $72.2 million and $29.4
million in fiscal years 1998, 1997 and 1996, respectively. These charges
included, over the three year period, approximately $58.9 million in relation to
the closing of under-performing stores, $34.9 million in professional fees,
$18.0 million for payroll and related costs including termination costs and a
key employee retention program, and approximately $19.6 million of other
reorganization costs.
On the Effective Date, the Company restructured its capitalization in
accordance with the Plan. The application of "fresh start" reporting provisions
of the American Institute of Certified Public Accountants Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7") as of the Effective Date included adjustments to certain
assets and liabilities, which resulted in a $0.3 million one-time charge to
earnings. Also on the Effective Date, the value of the cash and securities
distributed by the Company in settlement of the claims resulted in an
extraordinary gain of $302.3 million. Further, the Company recognized
reorganization value in excess of amounts allocable to identifiable assets
("Excess Reorganization Value") of $177.8 million. This excess reorganization
value will be amortized by the straight-line method over 20 years.
In January 1999, the Company entered into a $120,000,000 revolving
credit facility (the "Credit Agreement") with Citicorp USA, Inc., General
Electric Capital Corporation, BNY Financial Corporation, and National City
Commercial Finance, Inc. that matures on January 28, 2003. The proceeds from
this facility were used to repay borrowings under the debtor in possession
credit agreement with BankBoston N.A., to pay certain claims, to pay
professional fees and to provide working capital to the Company as it emerged
from its chapter 11 proceeding pursuant to the Plan.
"FRESH-START" REPORTING
The balance sheet information at January 30, 1999 included under
"Selected Historical Financial Information" reflects the Company's Chapter 11
plan of reorganization and the application of the principles of "fresh start"
reporting in accordance with the provisions of SOP 90-7. Accordingly, such
financial information is not comparable to the Company's historical financial
information prior to the Effective Date.
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The reorganization value used as a basis for the "fresh start"
reporting was determined to be $285 million. The equity value of the Company as
of January 28, 1999 was calculated to be approximately $154.3 million based upon
this reorganization value.
"Fresh start" accounting adjustments have been made to reflect the
estimated adjustments necessary to adopt "fresh start" reporting in accordance
with SOP 90-7. "Fresh start" reporting requires that the reorganization value of
the Company be allocated to its assets in conformity with Accounting Principles
Bulletin Opinion No. 16, "Business Combinations," for transactions reported on
the basis of the purchase method. Any reorganization value greater than the fair
value of specific tangible or identified intangible assets is to be included on
the balance sheet as reorganization value in excess of amount allocable to
identifiable assets and amortized over time.
OPERATING RESULTS
Since the Filing Date, the Company has devoted a significant amount of
time to analyzing its cost structure to develop cost-reduction initiatives to
improve the overall financial condition and operating results of the Company.
The Company's present operating results reflect the continued progress made with
the cost reduction initiatives implemented since the Filing Date. In the six
months ended January 30, 1999, selling, general and administrative expenses
declined as a percentage of sales to 40.5% from 43.0% in the comparable period
last year. In 1998, the most recent full year of operations, selling, general
and administrative expenses as a percent of sales were 44.1%, significantly
below the 1996 level of 54.9%. Since the Filing Date, the Company has closed
seven full price stores, opened seven new outlet stores and reduced the
Company's headcount by more than 300. The majority of the store closings
occurred in July and August of 1997 when the Company closed its full price
stores in Texas, Michigan and the original Barneys New York store located on
17th Street in New York.
Earnings before interest, taxes, depreciation and amortization
(excluding reorganization costs) as a percent of net sales for the six months
ended January 30, 1999 and January 31, 1998, fiscal 1998 (52 weeks), fiscal 1997
(52 weeks), and fiscal 1996 (53 weeks) were as follows:
<TABLE>
<CAPTION>
Six months Six months
Ended Ended Fiscal Fiscal Fiscal
1/30/99 1/31/98 1998 1997 1996
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<S> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 52.3 51.1 52.1 53.2 52.8
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Gross profit 47.7 48.9 47.9 46.8 47.2
Selling, general and administrative
expenses (including occupancy
expenses) 40.5 42.5 44.1 48.0 54.9
Other (income) expense, net (1) (1.1) (1.8) (1.4) (0.6) (3.5)
----------------------------------------------------------------
Earnings before Interest, Taxes,
Depreciation and Amortization
(EBITDA) 8.3% 8.2% 5.2% (0.6)% (4.2)%
================================================================
</TABLE>
(1) Other income (expense) net includes Impairment and special charges (1996),
Royalty income (1998, 1997 and 1996), foreign exchange gains (1996) and other
income, net in each of the periods presented.
10
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SIX MONTHS ENDED JANUARY 30, 1999 COMPARED TO THE SIX MONTHS ENDED JANUARY 31,
1998
The emergence from Chapter 11 proceedings effective January 28, 1999
as well the implementation of the store closing program announced in 1997 are
the primary factors affecting comparability of operating results. The store
closings in 1998 were as follows: the 17th Street flagship store in mid-August
1997; the Connecticut full-price store in January 1998; and the Costa Mesa,
California full-price store in July 1998. In the six months ended January 31,
1998, the Company opened new outlet stores in Hawaii, Massachusetts and
California.
Additionally, in December 1998, in connection with the approval of the
Plan and the settlements included therein, specific uncertainties with respect
to collectibility issues of certain amounts due from affiliated entities were
resolved. Accordingly, the Company was able to reduce its affiliate receivable
reserve by approximately $1.9 million, principally representing cash payments
from an affiliate. This reserve reversal reduced selling, general and
administrative expenses and reorganization costs by approximately $0.5 million
and $1.4 million, respectively, in the six months ended January 30, 1999.
Net Sales for the six months ended January 30, 1999 were $181.7
million compared to $183.8 million a year ago, a decrease of 1.1%. This decrease
is primarily attributable to the three full price store closings since July
1997. Included in net sales for the six months ended January 31, 1998 is $5.8
million generated from stores closed under the Company's store closing program,
completed in July 1998. Comparable store sales increased approximately 1%,
principally due to an increase at full-price stores offset by weakness in both
the outlet and warehouse sale locations.
Gross profit on sales decreased 3.7% to $86.6 million for the six
months ended January 30, 1999 from $89.9 million for the six months ended
January 31, 1998, primarily due to lower revenues as a result of the store
closings. As a percentage of net sales, gross profit was 47.7% for the six
months ended January 30, 1999 compared to 48.9% in the year ago period. The
decrease resulted primarily from increased promotional markdowns in the outlet
and warehouse sale locations and non-recurrence of favorable variances on
foreign currency denominated purchases in the year ago period.
Selling, general and administrative expenses, including occupancy
expenses, declined 5.7% in the six month period ended January 30, 1999 to $73.6
million from $78.1 million in the prior year. This decrease was primarily due to
reductions in personnel and occupancy costs, related to the store closings and
corporate headcount reductions as well as continuing improvements from the
Company's cost-reduction initiatives.
There was no royalty income in the six months ended January 30, 1999,
compared to $1.7 million in the prior year. The six months ended January 31,
1998 includes $1.3 million received by the Company in connection with the
termination of a license agreement.
Interest expense decreased 14.7% in the six months ended January 30,
1999 to $4.8 million from $5.6 million a year ago. Higher interest expense
associated with the Company's short-term borrowings was offset by a significant
reduction in the portion of interest expense associated with the amortization of
related bank fees. The fee to extend the Revolving Credit and Guaranty Agreement
with BankBoston, N.A. and other lenders party thereto (the "DIP Credit
Agreement") to February 1, 1999 from August 1, 1998 was minimal in relation to
the original DIP Credit Agreement fees. Average borrowings for the 26 week
periods ended January 30, 1999 and January 31, 1998 were $82.0 million and $67.0
million, respectively, and the effective interest rate on the Company's
outstanding debt was 10.0% in the six months ended January 30, 1999 compared to
16.5% in the prior year.
11
<PAGE>
Reorganization costs increased 59.3% to $13.8 million in the six
months ended January 30, 1999 from $8.7 million in the year ago period. This
increase is mainly attributable to costs triggered in connection with the
negotiation and consummation of the Plan as well as higher employee separation
costs. Included in these amounts for the respective periods are professional
fees of $3.6 million (including $2.4 million for professionals retained by the
principal Plan Investors) and $5.1 million, provisions of $1.0 million and $1.1
million for a key employee severance and retention program, employee separation
costs of $3.1 million and $.6 million and other miscellaneous costs of $6.0
million and $1.9 million. The increase in other miscellaneous costs is
principally attributed to the remaining fee due Dickson Concepts of $3.5 million
in connection with the termination of the Dickson Concepts proposed purchase
agreement.
The Company recorded $0.3 million in "fresh-start" expense in relation
to the emergence from Chapter 11 reorganization in January 1999. Related
"fresh-start" adjustments of $167.9 million were credited to retained earnings
in the six months ended January 30, 1999 principally to eliminate the Company's
cumulative deficit as of the Effective Date.
The Company recognized a gain of $302.3 million related to debt
discharged in the Company's emergence from Chapter 11 reorganization in January
1999.
12
<PAGE>
FISCAL 1998 COMPARED TO FISCAL 1997
During 1997, the Company decided to close certain stores and reduce
personnel (the "1997 Restructuring Program"). The implementation of the 1997
Restructuring Program announced in 1997 is one of the primary factors affecting
comparability of operating results for 1998 and 1997. In July 1997, the Company
closed its full-price stores in Texas and Michigan. The store closings in 1998
were as follows: the 17th Street flagship store in mid-August 1997; the
Connecticut full-price store in January 1998; and the Costa Mesa, California
full-price store in July 1998. Additionally, in the second quarter of 1998, the
Company opened new outlet stores in Hawaii, Massachusetts and California.
Net sales for 1998 were $343.0 million compared to $361.5 million in
the prior year, a decrease of 5.1%. This decrease is primarily attributable to
the store closings pursuant to the 1997 Restructuring Program. Included in net
sales for 1997 is $63.7 million generated from stores closed under this program,
completed in July 1998. Comparable store sales increased 9.3%, principally due
to a double-digit increase at full-price stores, in part, attributable to the
Company's success in transitioning shoppers from the 17th Street store to the
Madison Avenue store. This increase was partially offset by a double-digit
decline at our outlet stores.
Gross profit on sales decreased 2.9% to $164.2 million in 1998 from
$169.2 million in 1997, primarily due to lower revenues as a result of the store
closings. As a percentage of net sales, gross profit was 47.9% in 1998 compared
to 46.8% in the prior year. The increase resulted primarily from reductions in
inventory shortages and favorable variances on foreign currency denominated
purchases.
Selling, general and administrative expenses, including occupance
expenses, declined 12.8% in 1998 to $151.2 million from $173.4 million in the
prior year. This decrease was primarily due to reductions in personnel and
occupancy costs, related to the store closings and corporate headcount
reductions as well as continuing improvements under the Company's cost-reduction
initiatives.
Royalty income increased to $1.7 million in 1998 from $0.4 million in
1997. The increase is attributable to $1.3 million the Company received upon
termination of a license agreement.
Interest expense increased 55.9% in 1998 to $12.0 million from $7.7
million in 1997. This increase resulted from a higher effective interest rate
under the Company's DIP Credit Agreement as well as higher average borrowings
throughout the year. The effective interest rate on the Company's outstanding
debt was 16.6% in 1998 compared to 14.3% in the prior year.
Depreciation expense decreased 25.2% in 1998 to $9.6 million from
$12.9 million in 1997. This decrease resulted from the store closings pursuant
to the 1997 Restructuring Program discussed above.
Reorganization costs declined 77.9% to $16.0 million in 1998 from
$72.2 million in the prior year. This decrease is mainly attributable to the
non-recurring store closings costs of $50 million incurred in 1997. Other
reorganization costs for the respective periods are professional fees of $7.4
million and $13.9 million, provisions of $1.9 million and $2.4 million for a key
employee severance and retention program and other miscellaneous costs of $6.7
million and $5.9 million. The decline in professional fees is primarily related
to reduced legal costs associated with the Chapter 11 proceedings.
13
<PAGE>
FISCAL 1997 COMPARED TO FISCAL 1996
The Chapter 11 filing on January 10, 1996 is one of the key factors
affecting comparability of operating results between 1997 and 1996. As a result
of the Chapter 11 filing on January 10, 1996, not only did the Company cease
accruing interest on pre-petition debt, but the Company also ceased accruing
stated rent expense to Isetan and affiliated companies for the Madison Avenue,
Beverly Hills and Chicago stores and to substantially all of its equipment
lessors as a result of disputes on the characterization of these obligations.
However, in accordance with interim stipulations, Orders of the Court and the
DIP Credit Agreement, the Company made "on-account" cash payments to Isetan and
the equipment lessors at rates significantly below the contractual obligations.
Accordingly, selling, general and administrative expenses from January 11, 1996
forward includes "rent" expense pursuant to the Isetan Payment Agreements and
the Equipment Lessor Agreements (collectively the "Payment Agreements")
discussed in Note 8 of the Notes to Consolidated Financial Statements. Prior to
such date, the Company recorded rent expense based on the terms of the original
obligations.
Additionally, in 1996 through the Filing Date, the Company recognized
royalty income of $1.4 million pursuant to the original terms of the licensing
agreement with Isetan and a $9.4 million translation gain on a foreign currency
denominated debt obligation to Isetan. These amounts were non-recurring in
future reporting periods.
Net sales for 1997 were $361.5 million compared to $366.4 million in
1996, a decrease of 1.3%. 1996 included 53 weeks; therefore, 1996 net sales
comparisons are presented on a 52-week basis for comparability. After adjusting
for the impact of the 53rd week in 1996, sales increased less than 1% in 1997.
The sales increase was primarily attributable to the three new outlet stores
opened in Connecticut, Arizona, and New York, as well as overall growth in the
outlet stores opened in 1996. This increased revenue in the outlet stores was
offset by a comparable store sales decrease of 1%, spread principally between
the full-price stores and the warehouse sale events. Exclusive of the restaurant
operations in the full-price stores, net sales increased 0.3% or $1.0 million,
however there was a significant shift in sales composition with net sales
declining $5.4 million at the 17th Street store offset by a $5.1 million
increase in net sales at the Madison Avenue store. The sales decrease at the
17th Street store was partially attributed to the migration of business to the
newer, larger flagship store on Madison Avenue and to the changing retail
landscape in the area surrounding the original flagship store.
Gross profit on sales decreased 2.1% to $169.2 million in 1997 from
$172.8 million in 1996. As a percentage of net sales, gross profit was 46.8% in
1997 compared to 47.2% in 1996. These variances are principally attributed to
reduced volume of the restaurant operations, principally in the higher margin
businesses associated with the dinner volume and its related alcohol sales.
Exclusive of the restaurant operations, gross profit was 46.5% in 1997 compared
to 46.6% in 1996.
Selling, general and administrative expenses, including occupancy
expenses, declined 13.8% to $173.4 million in 1997 from $201.2 million in 1996.
As a percentage of net sales, selling, general and administrative expenses were
48.0% in 1997 and 54.9% in 1996. This decrease is attributed to the Company's
continuing efforts at reducing costs pursuant to its cost reduction initiatives,
notably a $6.6 million reduction in personnel costs, $1.2 million in packaging
and supply costs, a $1.0 million reduction in advertising and related expenses
as well as a $2.0 million reduction in professional fees related to its legal,
accounting and financial advisory services. Prior to the Filing Date, the
Company incurred significant professional fees which were included in selling,
general and administrative expenses. Subsequent to the Filing Date, such
expenses are principally included in Reorganization costs. In addition, "rent"
expense associated with the Madison Avenue, Beverly Hills and Chicago stores and
14
<PAGE>
certain Equipment Leases declined approximately $12.1 million as a result of the
Payment Agreements discussed above.
Interest expense decreased 39.0% to $7.7 million in 1997 from $12.6
million in 1996. At the Filing Date, the Company had $282.0 million of
outstanding debt. As a result of the Chapter 11 filings, the Company ceased
accruing interest on this pre-petition debt as of January 10, 1996. The
Company's average borrowings under the DIP Credit Agreement from the Filing Date
to the end of 1996 of approximately $28 million have been substantially below
historical borrowing levels translating into reduced interest expense.
While operating as a debtor in possession, the Company incurred
reorganization costs of approximately $72.2 million in 1997 and $29.4 million in
1996. Included in these amounts for the respective periods are asset write-offs
(including store closing costs) of $38.8 million and $8.4 million, lease
rejection costs of $15.0 million and $1.0 million, straight line rent reversal
of $(3.8) million and $(0.1) million, professional fees of $13.9 million and
$10.0 million, provisions of $2.4 million and $0.6 million for a key employee
severance and retention program and other miscellaneous costs of $5.9 million
and $9.9 million.
LIQUIDITY AND CAPITAL
LIQUIDITY AND CAPITAL RESOURCES
CASH USED IN OPERATIONS AND WORKING CAPITAL. The Company's primary source
of liquidity has been borrowings under various credit facilities (see
description of the various credit facilities in the following section).
For the reporting periods below, net cash used in operations was as follows
($ in thousands):
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended Fiscal Fiscal Fiscal
Jan. 30, Jan. 31, Year Year Year
1999 1998 1998 1997 1996
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 293,662 $ (4,123) $(19,953) $(94,973) $(71,869)
Depreciation and amortization 5,259 7,364 13,433 14,841 14,849
Other non-cash charges (306,854) (115) 1,329 51,977 6,554
Changes in current assets and (10,317) (5,135) (5,253) 6,897 10,908
-------- -------- -------- -------- --------
liabilities
Net cash used in operating activities (18,250) (2,009) (10,444) (21,258) (39,558)
============ ============= ============ ============= =============
</TABLE>
The Company's inability to generate cash from operations and,
accordingly, its need to provide liquidity through credit facility borrowings
were primarily due to: significant reorganization costs incurred during the
Chapter 11 case; the lack of full credit support from the vendor community due
to the Chapter 11 status, which necessitated significant prepayment of
merchandise vendors; and the growth of the Company's private label credit card
portfolio, which was financed by the Company's credit facilities.
Due to the items described above, the Company had a working capital
deficiency after the first post Chapter 11 fiscal year end through the emergence
from Chapter 11 (January 28, 1999) as follows ($ in thousands):
<TABLE>
<CAPTION>
At At At At At At
Jan. 30, Jan. 28, Jan. 31, August 1, August 2, August 3,
1999 1999 1998 1998 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Working capital (deficiency) $41,064 $(40,316) $(20,216) $(32,249) $(19,443) $19,596
============= ============= ============= ============= ============= =============
</TABLE>
15
<PAGE>
Working capital (deficiency) for all periods above are net of the
amount then outstanding on the credit facilities that existed at the time,
except for January 30, 1999, where the amount then outstanding on the credit
facility ($62,096,000) is classified as long term. The classifications are
based on the terms of the credit facilities that existed at the time.
For the reporting periods below, net cash provided (used) by financing
and reorganization activities was as follows ($ in thousands):
<TABLE>
<CAPTION>
Six Months Six Months Fiscal Fiscal Fiscal
Ended Ended Year Year Year
Jan. 30, 1999 Jan. 31, 1998 1998 1997 1996
---------------- ----------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Net cash (used in) provided by
financing activities $(13,341) $2,175 $11,324 $23,113 $59,934
Net cash provided by reorganization
activities 40,243 0 0 0 0
-------- ------ ------- ------- -------
Net cash provided by financing and
reorganization activities 26,902 2,175 11,324 23,113 59,934
================ ================= ============== ================ ============
</TABLE>
Net cash provided by reorganization activities represents $62,500,000
of proceeds from the equity rights offering pursuant to the Company's Chapter 11
plan of reorganization less cash distributions related thereto.
CREDIT FACILITIES. On January 28, 1999, the Company entered into a
four year Credit Agreement with several financial institutions led by Citicorp
USA, Inc. The Credit Agreement provides a $120,000,000 revolving credit facility
with a $40,000,000 sublimit for the issuance of letters of credit. The proceeds
from this facility were used to refinance the debtor-in-possession credit
agreement with BankBoston N.A., to pay certain claims pursuant to the Chapter 11
plan of reorganization, to pay professional fees, to fund working capital in the
ordinary course of business and for other general corporate purposes not
prohibited thereunder. Obligations under the Credit Agreement are secured by a
first priority and perfected lien on substantially all unencumbered assets of
the Company.
Revolving credit availability is calculated as a percentage of
eligible inventory (including undrawn letters of credit) and Barneys New York
credit card receivables plus $20,000,000 (such amount subject to a downward
adjustment as defined). Interest rates on the Credit Agreement are either the
Base Rate (as defined) plus 1.25% or LIBOR plus 2.25%, subject to adjustment
after the first year. The Credit Agreement also provides for a fee of 1.25% to
1.75% per annum on the daily average letter of credit amounts outstanding and a
commitment fee of 0.375% on the unused portion of the facility.
The Credit Agreement contains various financial covenants principally
relating to net worth, leverage, earnings and capital expenditures. During the
fiscal year ending January 29, 2000, the Credit Agreement covenants do not allow
for any material deviation from the Company's business plan for such year. The
covenant which allows for the least deviation from the business plan is the
EBITDA covenant, where a more than 5% deviation for fiscal year 1999 of actual
EBITDA versus planned EBITDA will result in a covenant violation.
At January 30, 1999, the Company had approximately $28,045,000 of
availability under the Credit Agreement, after consideration of $62,096,000 of
revolving loans and $19,944,000 of letters of credit outstanding.
There can be no assurance that the Company can achieve its financial
forecasts in Fiscal Year 1999 or beyond. Any material deviations from the
Company's forecasts could require the Company
16
<PAGE>
to seek alternative sources of financing or to reduce expenditures. There can
also be no assurance that alternative financing could be obtained, or if
obtained, would be on terms acceptable to the Company.
During fiscal year 1996 through January 28, 1999, the Company's
working capital was provided by various credit facilities in effect during the
period. Credit facilities that existed at the time of the Chapter 11 filing
(January 10, 1996) were ultimately not repaid in full, but settled as part of
the Company's Chapter 11 plan of reorganization. During the Chapter 11 period,
the Company entered into two debtor-in-possession credit facilities, the first
of which was repaid in full pursuant to a refinancing on July 16, 1997 and the
second which was repaid in full pursuant to the Credit Agreement dated January
28, 1999.
CAPITAL EXPENDITURES. The Company incurred capital expenditures (net
of landlord contributions) of $22,777,000 during the three and one-half year
period ending January 30, 1999. $14,933,000 represented the cost to refurbish
existing stores, $2,065,000 was spent to open outlet stores, administrative
facility expenditures were $2,886,000 and $2,893,000 was incurred on management
information systems. Significant additional capital expenditures will be
required for the Company to upgrade its management information systems.
Pursuant to Credit Agreement covenants, the Company's total capital
expenditures for fiscal year 1999 are capped at $7,250,000. The Company will
fund these expenditures through borrowings under the Credit Agreement.
SEASONALITY
The Company's business is seasonal, with higher sales and earnings
occurring in the quarters ending in October and January of each year. These two
quarters, which include the holiday selling season, coincide with the Company's
fall selling season. Additionally, net sales and cash flow are favorably
impacted, in the quarters ending in April and October by the seasonal warehouse
sale events in New York and Santa Monica.
The following table sets forth sales and EBITDA for fiscal years 1998
and 1997. This quarterly financial data is unaudited but gives effect to all
adjustments necessary, in the opinion of management of the Company, to present
fairly this information.
<TABLE>
<CAPTION>
1998 - Quarter Ending 1997 - Quarter Ending
---------------------------------------------- ---------------------------------------------
11/1/97 1/31/98 5/2/98 8/1/98 11/2/96 2/1/97 5/3/97 8/2/97
---------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 95,890 $ 87,870 $ 87,309 $ 71,898 $ 96,721 $ 98,682 $ 87,716 $ 78,377
As % of year 28% 26% 25% 21% 27% 27% 24% 22%
EBITDA $ 7,813 $ 7,201 $ 3,463 $ (781) $ 2,781 $ 3,214 $ (2,952) $ (5,186)
============================================== =============================================
</TABLE>
17
<PAGE>
INFLATION
Inflation over the past few years has not had a significant impact on
the Company's sales or profitability.
ECONOMIC CLIMATE RISK
As a luxury goods retailer, the Company is subject to economic risk
conditioned upon the general health and stability of the U.S. economy. A
downturn in the stock market could cause the Company's business to soften,
especially in the New York area. During September 1998 when the Dow dropped
approximately 900 points, the Company's stores in the New York area experienced
a sales decrease of 10-26% versus the same period in the prior year.
YEAR 2000
The Year 2000 ("Y2K") issue relates to the inability of information
systems to properly recognize and process date-sensitive information beyond
January 1, 2000. Many computer systems and software products may not be able to
interpret dates after December 31, 1999 because such systems and products allow
only two digits to indicate the year in a date. As a result, these systems and
products are unable to distinguish January 1, 2000 from January 1, 1900, which
could have adverse consequences on the operations of an entity and the integrity
of information processing.
The Company's management recognized the need to address the Y2K issue
in all internal systems and applications. A Y2K plan was developed in April 1998
to define all applications requiring system upgrades.
Letters were mailed to all system related vendors in March through
July of 1998. The letters instructed vendors to confirm status of their systems
and/or applications in connection with Y2K compliance needs. The Company
required modifications to software and hardware systems to make reasonably
certain these applications should perform properly after December 31, 1999.
Vendors responded, providing schedules for upgrades on hardware and software
utilized by the Company. As of May, 1999, 85% of all vendors have complied with
written requests to address Y2K limitations. The remaining 15% of
software/hardware vendors have been contacted and schedules are being
coordinated with various departments and locations. Completion of modifications
is currently scheduled for Fall 1999.
The Company is modifying or replacing portions of its software systems
to attempt to make all applications Y2K compliant. The components requiring
upgrade include software related applications controlling merchandising, credit,
marketing, accounting, distribution, sales audit and store security systems. The
process has provided an opportunity to introduce the latest versions of software
as well as to upgrade hardware for loss prevention, purchasing and distribution.
New security software computers were installed at the Madison Avenue and Beverly
Hills stores. New versions of software are to be installed on the VAX system
which controls the Distribution Center sorting equipment.
The Company is utilizing both internal and external resources to
reprogram, replace and test software for Y2K modifications. All computer network
servers utilizing Novell technology will be upgraded with Y2K compliant software
versions. System related upgrades began in March 1998 when STS, the retail
system vendor, began installing Y2K compliant software on the Company's main
frame computer.
18
<PAGE>
Expenditures for Y2K related projects between April 1998 to May 1999
were $165,000, predominately to modify software applications. The Company's
management anticipates additional Y2K expenses will total approximately $50,000.
The Company's cost of the Y2K project, and the dates on which the
Company believes it will substantially complete Y2K modifications are based on
management's best estimates. Currently no contingency plan exists in the event
that Y2K modifications are not complete or ineffective but management will
periodically evaluate the need for one and adapt accordingly. There is no
certainty or guarantee that these estimates will be achieved, and actual costs
could be materially greater than anticipated. Specific factors that might cause
such differences include, but are not limited to, the availability and cost of
personnel trained in the Y2K area, the compliance by merchandise and other
suppliers and other third parties, and similar uncertainties.
No assurances can be given that the Company will be able to completely
identify or address all Year 2000 compliance issues, or that third parties with
whom the Company does business will not experience system failures as a result
of the Year 2000 issues, nor can the Company fully predict the consequences of
noncompliance.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK ASSESSMENT
Market risks relating to the Company's operations result primarily
from changes in interest rates and foreign exchange rates. To address some of
these risks the Company enters into various hedging transactions as described
below. The Company does not use financial instruments for trading purposes and
is not a party to any leveraged derivatives.
FOREIGN CURRENCY RISK
The Company periodically enters into foreign exchange forward
contracts and option contracts to hedge some of its foreign exchange exposure.
The Company's objective in managing the exposure to changes in foreign currency
exchange is to reduce earnings and cash flow volatility associated with foreign
exchange rate changes to allow management to focus its attention of its core
business issues and challenges. The Company uses such contracts to hedge
exposure to changes in foreign currency exchange rates, primarily in Western
Europe, associated with purchases denominated in foreign currency. The principal
currencies hedged are the Italian lira, German mark, British pound, and the
French franc. A uniform 10% weakening as of August 1, 1998 in the value of the
dollar relative to the currencies in which the purchases are denominated would
have resulted in a $3.8 million decrease in gross profit for the twenty-six week
period ending January 30, 1999. Comparatively, the result of a uniform 10%
weakening as of July 30, 1997 in the value of the dollar relative to the
currencies in which the purchases are denominated would have resulted in a $7.2
million decrease in gross profit for the fiscal year ended July 31, 1998.
This calculation assumes that each exchange rate would change in the
same direction relative to the U.S. dollar. In addition to the direct effects in
exchange rates, which are a changed dollar value of the resulting purchases,
changes in exchange rates also affect the volume of purchases or the foreign
currency purchase price as competitors prices become more or less attractive.
19
<PAGE>
INTEREST RATE RISK
The Company's earnings are affected by changes in short-term interest
rates as a result of its revolving credit agreement. If short-term interest
rates averaged 2% more in the twenty-six week period ended January 30, 1999 than
they did in the preceding twenty-six week period, the Company's interest expense
would have increased, and income before taxes would decrease by $0.8 million.
Comparatively, if short-term interest rates averaged 2% more in fiscal year 1998
than they did in fiscal year 1997, the Company's interest expense would have
increased, and loss before taxes would have increased by $2.0 million. In the
event of a change of such magnitude, management would likely take actions to
mitigate its exposure to the change. However, due to uncertainty of the specific
actions that would be taken and their possible effects, the sensitivity analysis
assumes no changes in the Company's financial structure.
20
<PAGE>
ITEM 3. PROPERTIES.
The Company's principal facilities include corporate offices, a
central alterations facility, a distribution center and three flagship stores.
Prior to the Effective Date, Barneys formed three subsidiaries (each, a "Lease
Subsidiary"), each of which acts as lessee and sublessor for one of the flagship
stores. On the Effective Date, pursuant to the Plan, (i) the fee interest in the
properties on which the New York and the Chicago flagship stores are located,
and the leasehold interest in the property on which the Beverly Hills flagship
store is located, were transferred to an affiliate of Isetan, (ii) such
affiliate, as lessor, entered into amended and restated leases with each of the
tenants in each of the properties, and (iii) each of such tenants assigned the
leasehold interest in the related property to one of the Lease Subsidiaries,
which in turn entered into a sublease with Barneys, in the case of the New York
and Beverly Hills stores, and with Barneys America, Inc., a subsidiary of
Barneys, in the case of the Chicago store. The lease for the New York store is
for a term of twenty years, with four options to renew of ten years each. The
lease for the Chicago store is for a term of ten years, with three options to
renew of ten years each. The lease for the Beverly Hills store is for a term of
twenty years, with three options to renew of ten years each. The leases for the
flagship stores are all triple-net leases. In the case of the Beverly Hills
flagship store, Barneys is also responsible for the rent payable pursuant to the
existing ground lease.
The Company's corporate offices, central alterations facility,
distribution center, warehouse sale locations and its 20 stores are located at
the following locations:
CORPORATE OFFICES REGIONAL STORES
New York, NY New York (World Financial Center)
Manhasset, NY
CENTRAL ALTERATIONS FACILITY Chestnut Hill, MA
Seattle, WA
New York, NY
DISTRIBUTION CENTER OUTLET STORES
Lyndhurst, NJ Harriman, NY
Worcester, MA
FLAGSHIP STORES Potomac Mills, VA
Cabazon, CA
New York, NY Sunrise, FL
Beverly Hills, CA Camarillo, CA
Chicago, IL Dawsonville, GA
Clinton, CT
New River, AZ
WAREHOUSE SALE LOCATIONS Riverhead, NY
Wrentham, MA
New York, NY Waikele, HI
Carlsbad, CA
The Company also leases certain other facilities for its semi-annual
warehouse sales. The Company believes that all of its facilities are suitable
and adequate for the current and anticipated conduct of its operations. The
Company has established a financial reserve for the planned closure of certain
outlet stores.
21
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
OWNERSHIP OF EXISTING EQUITY SECURITIES
The following table sets forth information as of May 14, 1999 with
respect to the beneficial ownership of shares of Holdings Common Stock and
Preferred Stock by (a) each person or group that is known to Holdings to be the
beneficial owner of more than 5% of the outstanding shares, (b) each director
and named executive officer of Holdings, and (c) all directors and executive
officers of Holdings as a group on such date.
<TABLE>
<CAPTION>
Common Stock
------------
Name and Address Number Percent
of Beneficial Owner of Shares of Class
------------------- --------- --------
<S> <C> <C>
Whippoorwill Associates, Inc., 5,149,468(1) 39.4%
on behalf of its Discretionary Accounts
11 Martine Avenue
White Plains, New York 10606
Bay Harbour Management L.C. 5,169,003(2) 39.5%
on behalf of its Managed Accounts
885 Third Avenue, 34th Floor
New York, New York 10022
Isetan Company Limited 1,200,785(3) 9.4%
14-1 Shinjuku 3-Chome
Shinjuku-ku, Tokyo
Japan 160-0022
Shelley F. Greenhaus 5,151,968(4) 39.4%
c/o Whippoorwill Associates, Inc.
11 Martine Avenue
White Plains, New York 10606
John Halpern 2,500(5,6) *
Yasuo Okamoto 2,500(5) *
Allen I. Questrom 186,213(7) 1.5%
Carl Spielvogel 2,500(5) *
David A. Strumwasser 5,151,968(4) 39.4%
c/o Whippoorwill Associates, Inc.
11 Martine Avenue
White Plains, New York 10606
Robert J. Tarr, Jr. 2,500(5) *
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------
Name and Address Number Percent
of Beneficial Owner of Shares of Class
------------------- --------- --------
<S> <C> <C>
Douglas P. Teitelbaum 5,171,503(8) 39.5%
c/o Bay Harbour Management L.C.
885 Third Avenue, 34th Floor
New York, New York 10022
Steven A. Van Dyke 5,171,503(8) 39.5%
c/o Bay Harbour Management L.C.
777 South Harbour Island Blvd.
Tampa, Florida 33602
Shelby S. Werner 5,151,968(4) 39.4%
c/o Whippoorwill Associates, Inc.
11 Martine Avenue
White Plains, New York 10606
Judy Collinson - -
Tom Kalenderian - -
Michael Tymash - -
Directors and Executive Officers 10,527,184 76%
as a Group
</TABLE>
- -------------------
* Less than 1%.
1 All of such shares are owned by various limited partnerships, a limited
liability company, a trust and third party accounts for which Whippoorwill
has discretionary authority and acts as general partner or investment
manager. Includes an aggregate of 288,061 shares and 297,734 respectively, of
Holdings Common Stock issuable to Whippoorwill pursuant to the option granted
to it under the Stock Purchase Agreement, and pursuant to its Unsecured
Creditors Warrants. To the extent that either Bay Harbour or Whippoorwill
does not fully exercise its option, the unexercised portion thereof may be
exercised by the other. See "BUSINESS - the Reorganization". In addition, Bay
Harbour and Whippoorwill have entered into a stockholders' agreement with
respect to their ownership in, and the voting of the capital stock of,
Holdings.
2 All of such shares are owned directly by BHB LLC, of which Bay Harbour is the
manager. Includes an aggregate of 288,061 shares and 290,690 shares,
respectively, of Holdings Common Stock issuable to Bay Harbour pursuant to the
option granted to it under the Stock Purchase Agreement, and pursuant to its
Unsecured Creditors Warrants. To the extent that either Bay Harbour or
Whippoorwill does not fully exercise its option, the unexercised portion thereof
may be exercised by the other. See "BUSINESS - the Reorganization". In addition,
Bay Harbour and Whippoorwill have entered into a stockholders' agreement with
respect to their ownership in, and the voting of the capital stock of, Holdings.
3 Includes 287,724 shares of Holdings Common Stock issuable to Isetan upon
exercise of the Isetan Warrant.
4 Includes all shares of Holdings Common Stock beneficially owned by
Whippoorwill. Mr. Greenhaus is a principal, President and Managing Director, Mr.
Strumwasser is a principal, Managing Director and General Counsel, and Ms.
Werner is a principal, Vice President and Managing Director, of Whippoorwill.
Also includes 2,500 shares of Holdings Common Stock
23
<PAGE>
issuable pursuant to options granted to each of Messrs. Greenhaus and
Strumwasser and Ms. Werner under the Company's Stock Option Plan for
Non-Employee Directors (the "Option Plan").
5 Represents shares of Holdings Common Stock issuable upon exercise of an option
granted to non-employee directors under the Option Plan.
6 Halpern, Denny & Company, of which John Halpern is a partner, is a member of
BHB LLC. Mr. Halpern disclaims beneficial ownership of any shares of Holdings
Common Stock owned by BHB LLC.
7 Represents the vested portion of shares of Common Stock issuable upon exercise
of an option granted to Mr. Questrom pursuant to his employment agreement.
8 Includes all shares of Holdings Common Stock beneficially owned by Bay
Harbour. Messrs. Teitelbaum and Van Dyke are principals of Bay Harbour. Also
includes 2,500 shares of Holdings Common Stock issuable pursuant to options
granted to each of Messrs. Teitelbaum and Van Dyke under the Option Plan.
In addition, there are 20,000 shares of Preferred Stock outstanding.
The shares of Preferred Stock vote on all matters (other than the election of
directors) with the Holdings Common Stock, together as a single class. The
Barneys Employees Stock Plan Trust owns 15,000 shares of Preferred Stock, and
Harry G. Wagner, an individual, owns 5,000 shares of Preferred Stock.
24
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of
Holdings. Except as noted below, each director will serve until the next annual
meeting of stockholders and until a successor is elected and qualified or until
his or her earlier resignation or removal. Except as noted below, the term in
office for all officers is one year and until their respective successors have
been elected and qualified, unless such officer is removed by the Board of
Directors. Except as indicated below, all directors and executive officers have
held their positions at Holdings since the Effective Date or shortly thereafter.
<TABLE>
<CAPTION>
Name Age Position(s) Held
- ---- --- ----------------
<S> <C> <C>
Shelley F. Greenhaus 46 Director
John Halpern 52 Director
Yasuo Okamoto 50 Director
Allen I. Questrom1 59 Director, Chairman of the Board, President and Chief
Executive Officer
Carl Spielvogel 70 Director
David A. Strumwasser 47 Director
Robert J. Tarr, Jr. 55 Director, Vice Chairman of the Board
Douglas P. Teitelbaum 34 Director
Steven A. Van Dyke 39 Director
Shelby S. Werner 54 Director
Judy Collinson 47 Executive Vice President - Women's Merchandising
Tom Kalenderian 42 Executive Vice President - Men's Merchandising
Edward Lambert2 38 Executive Vice President and Chief Financial Officer
Marc H. Perlowitz 44 Executive Vice President - General Counsel and Human
Resources and Secretary
Michael Tymash 42 Executive Vice President - Stores and Operations
Steven Feldman2 36 Senior Vice President and Interim Chief Financial
Officer
Vincent Phelan 33 Treasurer
</TABLE>
- -------------------
1 Allen I. Questrom became Chairman of the Board, President and Chief Executive
Officer effective May 5, 1999.
2 Edward Lambert resigned as an officer of the Company effective May 28, 1999.
Steven Feldman became interim Chief Financial Officer as of that date.
25
<PAGE>
Set forth below are the names, positions and business backgrounds of
all of the directors and executive officers of Holdings.
Shelley F. Greenhaus is a principal of Whippoorwill Associates, Inc.,
an investment management firm ("Whippoorwill"), and has served as President
and Managing Director of Whippoorwill since 1990. From January 1983 through
August 1990, Mr. Greenhaus was a Vice President and Portfolio Manager
(Distressed Securities) at Oppenheimer & Co., Inc. Prior to that, from September
1981 to January 1983, Mr. Greenhaus was a Financial Analyst at W.R. Family
Associates and from July 1978 through September 1981, he was a Financial Analyst
at Loeb Rhodes, Hornblower & Co. (Risk Arbitrage and Distressed Securities). Mr.
Greenhaus is a director of Marvel Enterprises, Inc., an entertainment based
marketing and licensing company.
John Halpern is a partner of Halpern, Denny & Company, a private
equity investment firm. Prior to that, Mr. Halpern was a founder of Bain &
Company, the international consulting firm and served as its Vice Chairman until
1990. Mr. Halpern serves on the Board of Directors of certain privately held
companies.
Yasuo Okamoto is a member of the law firm of Hughes, Hubbard & Reed
LLP. Prior to joining Hughes, Hubbard & Reed LLP, Mr. Okamoto was a partner at
Hill, Betts & Nash from 1980-1986. Mr. Okamoto is presently a member of the
Boards of Directors of Sanwa International plc and Nikon Americas, Inc. From
1990 to 1997, Mr. Okamoto was a Lecturer at the Boston University School of Law.
Allen I. Questrom was named Chairman, President and Chief Executive
Officer of Holdings on May 5, 1999, having served on the Board of Directors
since January 28, 1999. Mr. Questrom spent most of his 32 year career in retail
with Federated Department Stores, Inc. rising from management trainee to become
the corporation's youngest Chairman and Chief Executive Officer - first in 1980
of the Rich's division based in Atlanta, in 1984 of the Bullock's division based
in Los Angeles and in 1990 of Federated Department Stores, Inc., a position
which he held until May 1997. Mr. Questrom also served as President and Chief
Executive Officer of the Dallas-based Neiman-Marcus Department Store Group from
1988 until 1990. He also serves as a member of the Board of each of the Whitney
Museum of Art in New York, the Interpublic Group of Companies, Inc. and Polo-
Ralph Lauren and is on the Board of Trustees of Boston University.
Carl Spielvogel is the Chairman and Chief Executive Officer of Carl
Spielvogel Associates Inc., an investment and international counseling firm. He
was the Chairman and Chief Executive Officer of United Auto Group from 1995 to
1998, and the Chairman and Chief Executive Officer of Backer Spielvogel Bates
Worldwide, Inc., an international advertising agency from 1979 to 1995. Prior to
his employment at Backer Spielvogel, Mr. Spielvogel was employed by the
advertising agency of McCann Erickson. Mr. Spielvogel serves on the Boards of
Directors of Radio Free America, Hasbro, Inc., and Data Broadcasting Inc.
David A. Strumwasser is a principal of Whippoorwill, and has served as
Managing Director and General Counsel of Whippoorwill since 1993. From 1984
through 1993, Mr. Strumwasser was a partner and co-head of the Bankruptcy and
Reorganization Practice at Berlack, Israels & Liberman LLP. Prior to that, he
practiced bankruptcy law at Anderson, Kill & Olick from 1981 to 1984, and at
Weil, Gotshal & Manges LLP from 1976 to 1979. From 1979 to 1981, Mr. Strumwasser
was an Assistant Vice President at Citicorp Industrial Credit, Inc. He is a
director of Metropolis Realty Trust, Inc., a real estate investment trust.
26
<PAGE>
Robert J. Tarr, Jr. is an independent investor and consultant. He was
the President, Chief Executive Officer and Chief Operating Officer of each of
Harcourt General Inc. and the Neiman Marcus Group Inc. from November 1991 to
January 1997. Prior to that he held a variety of positions with General Cinema
Corporation, the predecessor of Harcourt General Inc., including President and
Chief Operating Officer since 1984. Mr. Tarr presently serves on the Boards of
Directors of John Hancock Mutual Life Insurance Company, Hannaford Bros., Inc.,
Houghton Mifflin & Co., Inc. and WESCO International Inc.
Douglas P. Teitelbaum joined Bay Harbour Management L.C., an
investment management firm ("Bay Harbour") as a principal in April, 1996. Prior
to that time, Mr. Teitelbaum was first a managing director in the High Yield and
Distressed Securities Group at Bear Stearns, Inc. and previously a partner at
Dabney/Resnick, Inc., a Los Angeles based distressed securities investment
boutique. Mr. Teitelbaum serves on the Boards of Directors of EZ
Serve/Swifty-Mart Convenience Stores, Inc., EBC Holdings, Inc. and Tops
Appliance City, Inc.
Steven A. Van Dyke joined Bay Harbour (and its predecessor, Tower
Investment Group) as a principal in 1986. He is a chartered financial analyst
and is a member of both the Financial Analysts Society of Central Florida and
the Association for Investment Management and Research. Mr. Van Dyke serves on
the Boards of Directors of Buckhead America, EZ Serve/Swifty-Mart Convenience
Stores, Inc., EBC Holdings, Inc. and Tops Appliance City, Inc.
Shelby S. Werner is a principal of Whippoorwill, and has served as
a Vice President and Managing Director of Whippoorwill since 1991. Ms. Werner
joined Whippoorwill upon its formation after spending 2 years at Progressive
Partners, L.P. as a Senior Managing Director and Portfolio Manager. Shelby
Werner served on the Board of Directors of Texscan Corporation. She is a
chartered investment counselor and a chartered financial analyst.
Judy Collinson started with Barneys in 1989 as an Accessories Buyer.
Prior to her current position, she had been responsible for Accessories and
Private Label Collections. She was promoted to Executive Vice President and
General Merchandising Manager for all women's merchandising in May 1998. Ms.
Collinson is also responsible for women's shoes and cosmetics.
Tom Kalenderian is head of men's merchandising. He has been at Barneys
for 20 years. His responsibilities have increased over time until he was
promoted to Executive Vice President/Menswear in July 1997. Mr. Kalenderian is
responsible for developing and implementing menswear strategy and manages many
of the key vendor relationships for the menswear business.
Edward Lambert was appointed Chief Financial Officer of Barneys on
November 11, 1998. Prior to becoming Chief Financial Officer, Mr. Lambert worked
as a non-employee consultant to Barneys and assisted Barneys and its
subsidiaries in its Chapter 11 restructuring. Prior to Mr. Lambert's involvement
in the Chapter 11 cases of Barneys and its subsidiaries, he co-founded Meridian
Ventures, Inc., a venture management firm ("Meridian"). Mr. Lambert is the
Managing Director of Meridian. Prior to founding Meridian, he was an engagement
manager at McKinsey & Co., a management consulting firm, from 1987 to 1991. Mr.
Lambert serves on the Board of Directors of Tecstar, Inc. and the Board of
Trustees of the California Institute of Technology. The contract governing Mr.
Lambert's consulting arrangement with the Company expires May 31, 1999. See
"EXECUTIVE COMPENSATION - Agreements with Executive Officers".
Marc H. Perlowitz joined Barneys in September 1985. He was promoted to
Executive Vice President, General Counsel and Human Resources of Barneys in
October 1997. Mr. Perlowitz' responsibilities include direct responsibility for
all legal matters of Barneys and its affiliates. He is
27
<PAGE>
responsible for Human Resources which includes compensation, benefits, labor
relations, training, recruiting, employee policies and procedures and Company
communications. He is also responsible for real estate, facilities and risk
management.
Michael Tymash has been with Barneys since 1990 when he joined as the
Director of Distribution Services. Mr. Tymash's responsibilities increased from
Director, Vice President, Senior Vice President until he was promoted to
Executive Vice President. Mr. Tymash was promoted to Executive Vice President of
Barneys in 1997 and was responsible for purchasing, accounts payable, credit
card operations, imports, corporate services and the alterations department for
Barneys. In January 1999, Mr. Tymash has assumed his new position as Executive
Vice President - Stores and Operations.
Steven M. Feldman has been with Barneys since May 1996 when he joined
as Controller. He was promoted to Vice President in December 1997 and to Senior
Vice President in May 1999. Additionally, in May 1999, Mr. Feldman was appointed
as interim Chief Financial Officer in connection with the departure of Mr.
Lambert. Prior to joining Barneys, Mr. Feldman was a Senior Manager at Ernst &
Young LLP principally serving retail engagements.
Vincent Phelan has been with Barneys since August 1995 when he joined
as Director of Finance. Prior to joining Barneys, Mr. Phelan was the Deputy
Director of Finance at the United States Tennis Association, Inc. in White
Plains, NY from January 1993 to July 1995. Mr. Phelan is a certified public
accountant and was responsible for reconciling all claims filed in connection
with the Chapter 11 filing. Mr. Phelan was promoted to Vice President -
Treasurer in January 1999 and is responsible for financial planning, budgeting,
cash management, banking relations, and taxes.
None of the directors or executive officers listed herein is related
to any other director or executive officer.
None of the directors is a director of any other company with a class
of securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940, except as set forth above.
28
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
SUMMARY OF COMPENSATION
The following summary compensation table sets forth information concerning
compensation during the 12 months ended January 30, 1999, January 30, 1998, and
January 30, 1997 for services in all capacities awarded to, earned by or paid to
the Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company during the 12 months ended January 30, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name and ANNUAL COMPENSATION Other Annual All Other
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION(2)
<S> <C> <C> <C> <C> <C>
Thomas C. Shull(3) 1999 $ 485,000 $ 115,000 $ 0 $ 0
President and Chief 1998 220,000 0 0 0
Executive Officer 1997 0 0 0 0
Robert Pressman(4) 1998 834,610 0 0 23,607
Co-Chief Executive Officer 1998 848,647 15,000 0 22,647
1997 752,678 0 0 21,108
Eugene Pressman(4) 1999 807,885 12,684 0 26,680
Co-Chief Executive Officer 1998 824,441 15,000 58,924(5) 25,863
1997 724,252 0 0 23,765
Shari Gregerman(6) 1999 484,866 114,113 0 13,670
1998 452,271 127,840 51,171(7) 13,620
1997 335,863 29,006 0 12,447
Michael Tymash 1999 307,411 87,114 0 13,310
1998 264,057 73,258 0 12,448
1997 220,509 42,688 0 12,356
Thomas Kalenderian 1999 343,384 73,256 0 13,310
1998 295,547 72,373 0 13,260
1997 223,639 20,707 0 12,486
Judith Collinson 1999 306,612 72,863 0 12,530
1998 215,204 39,758 0 11,147
1997 152,224 13,558 0 9,572
John Dubel(8) 1999 518,135 129,488 0 8,510
1998 369,550 112,958 0 8,330
1997 233,514 0 0 0
</TABLE>
- -----------------
1 Other Annual Compensation includes auto, auto insurance, parking and clothing
allowances.
29
<PAGE>
2 All Other Compensation includes imputed life insurance, 401k match payments
made by the Company, and contributions by the Company to the Company's Money
Purchase Plan (a defined contribution plan).
3 The services of Thomas C. Shull were provided pursuant to an agreement with
Meridian, and the amounts are based upon an allocation provided by Meridian to
the Company. See "--Agreements with Executive Officers - Meridian Agreement"
below. Mr. Shull resigned as director, President and Chief Executive Officer
effective May 5, 1999.
4 Robert Pressman and Eugene Pressman each served as Co-Chief Executive Officers
of Barneys through May 1998. Both resigned from that position at that time and
were replaced by Thomas C. Shull.
5 Other Annual Compensation for Eugene Pressman includes $15,563 for auto and
$36,563 for clothing allowances.
6 Ms. Gregerman resigned as of February 5, 1999 and is currently receiving
severance in accordance with the Company severance plan. The Company has also
entered into an agreement with Ms. Gregerman pursuant to which she receives the
aggregate sum of $305,125 over a six month period.
7 Other Annual Compensation for Shari Gregerman includes $23,850 for auto and
$20,152 for clothing allowances.
8 John Dubel left the Company on January 15, 1999 and his salary includes a
$180,000 severance payment made in January 1999 in accordance with the terms of
his contract. The Company is also obligated to pay Mr. Dubel additional
severance in the aggregate amount of $180,000 commencing in July 1999, which
severance shall be paid over a six month period.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid $15,000
annually for his or her services as a director, $5,000 annually for each
committee of the Board of Directors on which he or she serves, $1,000 for
attendance in person at each meeting of the Board of Directors or committee and
$500 for participation by telephone. Nonemployee directors also participate in
the Company's Stock Option Plan for Non-Employee Directors (the "Option Plan").
Pursuant to the Option Plan, each Eligible Director (as defined in the Option
Plan) is granted an option to purchase 5,000 shares of Holdings Common Stock
upon their initial appointment to the Board of Directors, exercisable at the
fair market value (as determined by the Board of Directors) of Holdings Common
Stock on the date of grant. The options granted under the Option Plan expire ten
years after the date of grant and become exercisable (i) as to one-half of the
total number of shares subject to the grant on the date of grant, and (ii) as to
the remaining shares subject to the grant on the first anniversary of the date
of grant. On the date of the annual stockholders' meeting which takes place
after the initial grant, each Eligible Director may, at the discretion of the
Board of Directors, be granted an option to purchase additional shares of
Holdings Common Stock, provided such grantee is an Eligible Director in office
immediately following such annual meeting. On March 11, 1999, each of the
non-employee directors was granted an option to purchase 5,000 shares of
Holdings Common Stock, one-half of which vested on issuance, and one-half of
which will vest on March 11, 2000.
AGREEMENTS WITH EXECUTIVE OFFICERS
MERIDIAN AGREEMENT. Pursuant to an agreement dated as of August 1,
1998, among the Company, Thomas C. Shull and Meridian, as amended (the "Meridian
Agreement"), Meridian receives payments from the Company for consulting services
provided by Mr. Shull and two additional consultants, one of whom is Edward
Lambert. Pursuant to the Meridian Agreement, Mr. Shull served as President and
Chief Executive Officer, and Mr. Lambert continues to serve as Chief Financial
Officer, of Holdings and its affiliates until May 28, 1999. In consideration of
consulting services provided by Mr. Shull and two consultants, Meridian receives
a base fee at the rate of $95,000 per month, $9,500 per month to cover
Meridian's overhead and other expenses and reimbursement for reasonable
out-of-pocket
30
<PAGE>
expenses of Mr. Shull and the two consultants. In addition, Meridian received a
$100,000 performance bonus on February 1, 1999. The Company was advised by
Meridian that, for the twelve month period ending January 30, 1999, $600,000 of
the annual payments made by the Company to Meridian represent the portion of the
payments payable under the Meridian Agreement allocated by Meridian to Mr.
Shull. The Meridian Agreement terminates on May 31, 1999. Mr. Shull resigned as
President and Chief Executive Officer on May 5, 1999 and was replaced by Allen
I. Questrom.
Upon termination of the Meridian Agreement on May 31, 1999, Meridian
will be entitled to the payment of (i) $104,500 per month for a period of eight
months, (ii) $104,500 per month for a period of four additional months subject
to mitigation based on any other compensation received for the services of Mr.
Shull and two consultants during that period and (iii) payment of all earned and
accrued vacation pay (not to exceed $85,000).
ARRANGEMENT WITH ALLEN QUESTROM. Pursuant to an arrangement between
Holdings and Allen I. Questrom, Mr. Questrom serves as Chairman of the Board of
Directors, President and Chief Executive Officer of Holdings through January 31,
2003. Mr. Questrom's base salary for the period May 5, 1999 through January 31,
2000 is $150,000 per month, and for the period February 1, 2000 through January
31, 2003 is $100,000 per month. In addition, for the periods commencing February
1, 2000 Mr. Questrom is entitled to an annual performance bonus of up to 100% of
his base salary. Mr. Questrom was granted options to purchase up to 15% of the
outstanding shares of Holdings Common Stock, which will vest over the term of
his employment. One third of such options are exercisable at a price of $8.68
per share and the balance at $4.34 per share. A portion of the salary and bonus
payable to Mr. Questrom up to $3,232,662 will be retained by Holdings to pay for
the grant of a portion of such stock options. The stock options have an exercise
period of 8 years. Upon a termination of employment by the Company without cause
or by Mr. Questrom for good reason, or upon a change of control of Holdings, all
stock options which have not yet been granted will be granted and all stock
options will fully vest. In addition, a portion of the stock options will vest
upon Mr. Questrom's death or disability. Upon a termination of employment by the
Company without cause or by Mr. Questrom for good reason, Mr. Questrom will also
be entitled, for the remainder of the term of his employment, to a cash payment
equal to his base salary and target bonus, and to participate in Holdings'
benefit plans. If Mr. Questrom resigns prior to May 22, 2000, he will earn
additional compensation of $50,000 per month during the period February 1, 2000
until his date of termination, but he will not be entitled to any other deferred
compensation or to earn any bonus during that period, and he will forfeit his
stock options.
Holdings also granted Mr. Questrom certain registration rights with
respect to his shares of Holdings Common Stock. Bay Harbour, Whippoorwill and
Mr. Questrom have agreed to provide each other certain co-sale rights in
connection with any sales of their Holdings Common Stock. Mr. Questrom also
agreed to vote half of his shares as directed by Bay Harbour and half as
directed by Whippoorwill.
EMPLOYEE SEVERANCE PLAN. The Company has implemented an employee
severance plan (a "ESP") which was adopted shortly after commencement of the
reorganization cases. Employees covered under the ESP are provided with
severance rights as provided therein. The amount of severance payable depends on
a participant's position and seniority with the Company with certain minimum
severance rights existing for various position levels. For a period of two (2)
years following the Effective Date, the terms of Barneys' existing ESP will not
be terminated or amended by the Company in a manner that is adverse to the
employees covered.
31
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
REGISTRATION RIGHTS AGREEMENT. On the Effective Date, Holdings entered
into a Registration Rights Agreement with Bay Harbour, Whippoorwill and Isetan,
pursuant to which each of Bay Harbour and Whippoorwill are entitled to exercise
up to two demand registrations and unlimited short-form demand and piggyback
registration rights. In addition, Isetan was granted piggyback registration
rights.
CERTAIN BUSINESS RELATIONSHIPS.
MERIDIAN AGREEMENT. See "EXECUTIVE COMPENSATION - Agreements with
Executive Officers".
STOCK PURCHASE AGREEMENT. Pursuant to the Stock Purchase Agreement,
Bay Harbour and Whippoorwill received an option to purchase up to an aggregate
of 576,122 shares of Holdings Common Stock. In addition, Bay Harbour and
Whippoorwill backstopped the offering of Subscription Rights. See "BUSINESS--the
Reorganization". The Company also agreed to reimburse Bay Harbour and
Whippoorwill for reasonable out of pocket expenses incurred by them in
connection with the Stock Purchase Agreement and the Plan.
ISETAN. Pursuant to the Plan, the Company entered into various
agreements and arrangements with Isetan and certain of its affiliates. See
"BUSINESS - the Reorganization" and "PROPERTIES".
EQUIPMENT LESSORS. Whippoorwill owns a beneficial interest of
approximately 25% of a holder of one of the Equipment Lessors Notes, which
note is in an aggregate principal amount of $34,232,500. See ""Business--The
Reorganization."
ITEM 8. LEGAL PROCEEDINGS.
Barneys and certain of its subsidiaries commenced proceedings under
the Bankruptcy Code on January 10, 1996, and emerged therefrom on January 28,
1999. See "BUSINESS-The Reorganization." In addition, Holdings and its
subsidiaries are involved in various legal proceedings which are routine and
incidental to the conduct of their business. Management believes that none of
these proceedings, if determined adversely to Holdings or any of its
subsidiaries, would have a material adverse effect on the financial condition or
results of operations of such entities.
ADMINISTRATIVE CLAIMS
As a result of the bankruptcy, the Company is subject to various
Administrative Claims filed by various claimants throughout the bankruptcy case.
In connection with the Plan, the Company was required to establish a Disputed
Administrative Claims Cash Reserve ("Cash Reserve") while the Administrative
Claims are negotiated and settled. The initial total amount of the Cash Reserve
was $4.6 million, of which $3.3 million remains as of May 15, 1999. The Company
has reserved in its financial statements the amount it deems will be necessary
to settle these claims. There can be no assurances that the results of the
settlement of these Administrative Claims will be on terms that will not exceed
the amount reserved. For further information, reference is made to the Plan, a
copy of which is filed as an exhibit to this Registration Statement.
The Company is also engaged in litigation with the entity that managed
the Company's restaurant at its Madison Avenue flagship store until August 1996
whereby each party has filed claims
32
<PAGE>
against the other for various causes of action including the assertion of an
administrative claim by the entity in question.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
There is no current public trading market for Holdings Common Stock or the
Unsecured Creditors Warrants. An aggregate of 1,365,975 shares of Holdings
Common Stock are issuable upon exercise of outstanding options, and an aggregate
of 1,301,238 shares of Holdings Common Stock are issuable upon exercise of
outstanding warrants. In addition, the Preferred Stock, under certain
circumstances, is convertible into 162,500 shares of Holdings Common Stock. The
Company does not presently intend to apply to list the Holdings Common Stock on
any national securities exchange or The Nasdaq Stock Market.
HOLDERS
The number of record holders of Holdings Common Stock as of May 14,
1999 is 1097.
DIVIDENDS
Each share of Holdings Common Stock will be entitled to participate
equally in any dividend declared by the Board of Directors and paid by Holdings.
The Company's new working capital facility contains restrictions on Holdings's
ability to declare dividends. The Company has no present intention to declare
dividends on the Holdings Common Stock.
SIGNIFICANT STOCKHOLDERS
Bay Harbour and Whippoorwill collectively beneficially own
approximately 79% of the outstanding shares of the Holdings Common Stock. See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT." Accordingly,
they may be in a position to control the outcome of actions requiring
stockholder approval, including the election of directors. This concentration of
ownership could also facilitate or hinder a negotiated change of control of
Holdings and, consequently, have an impact upon the value of the Holdings Common
Stock. Further, the possibility that either Bay Harbour or Whippoorwill may
determine to sell all or a large portion of their shares of Holdings Common
Stock in a short period of time may adversely affect the market price of the
Holdings Common Stock. In addition, Bay Harbour and Whippoorwill have entered
into a stockholders' agreement with respect to their ownership in, and the
voting of the capital stock of, Holdings. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS".
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
Other than the securities referred to below, Holdings did not make any
recent sales of unregistered securities.
The Holdings Common Stock, the Isetan Warrant, the Unsecured Creditors
Warrants (and any exercise thereof) , the Isetan Note and the Equipment Lessors
Notes were issued pursuant to the Plan in satisfaction of certain allowed claims
against, or interests in, Barneys and its subsidiaries and pursuant to the
offering of Subscription Rights. Based upon the exemptions provided by Section
1145 of
33
<PAGE>
the Bankruptcy Code, Holdings believes that none of such securities is required
to be registered under the Securities Act of 1933, as amended in connection with
their issuance and distribution pursuant to the Plan. In addition, the shares of
Holdings Common Stock issued to Bay Harbour and Whippoorwill in respect of their
backstop of the offering of Subscription Rights, the option granted to them
pursuant to the Stock Purchase Agreement and the Preferred Stock were issued in
a transaction pursuant to the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
AUTHORIZED CAPITAL STOCK
Holdings's Certificate of Incorporation (the "Charter") provides that
the total number of all classes of stock which Holdings will have authority to
issue is 35,000,000 shares, of which 25,000,000 may be Holdings Common Stock and
10,000,000 shares may be preferred stock, having a par value of $0.01 per share.
Of such shares, there were outstanding at May 14, 1999, 12,500,022 shares of
Holdings Common Stock and 20,000 shares of Preferred Stock. Holdings is
prohibited by its Charter from issuing any class or series of non-voting
securities.
HOLDINGS COMMON STOCK
Each share of Holdings Common Stock entitles its holder to one vote.
The holders of record of Holdings Common Stock will be entitled to participate
equally in any dividend declared by the Board of Directors of Holdings. Each
share of Holdings Common Stock is entitled to share ratably in the net worth of
Holdings upon dissolution. So long as any shares of Preferred Stock are
outstanding, no dividends on Holdings Common Stock may be paid until all accrued
and unpaid dividends on the Preferred Stock have been paid.
UNSECURED CREDITORS WARRANTS
The Unsecured Creditors Warrants are exercisable for up to an
aggregate of 1,013,514 shares of Holdings Common Stock at an exercise price of
$8.68 per share. The Unsecured Creditors Warrants became exercisable on the
Effective Date and expire at 5:00 p.m., New York City time on May 15, 2000.
The number of shares for which the Unsecured Creditors Warrants are
exercisable, and the exercise price of the Unsecured Creditors Warrants, are
subject to antidilution adjustment if the number of shares of Holdings Common
Stock is increased by a dividend or other share distribution, or by a stock
split or other reclassification of shares of Holdings Common Stock. In addition,
the exercise price of the Unsecured Creditors Warrants is subject to decrease if
Holdings distributes, to all holders of Holdings Common Stock, evidences of its
indebtedness, any of its assets (other than cash dividends), or rights to
subscribe for shares of Holdings Common Stock expiring more than 45 days after
the issuance thereof.
In the event that Holdings merges or consolidates with another person,
the holders of the Unsecured Creditors Warrants will be entitled to receive, in
lieu of shares of Holdings Common Stock or other securities issuable upon
exercise of the Unsecured Creditors Warrants, the greatest amount of securities,
cash or other property to which such holder would have been entitled as a holder
of Holdings Common Stock or such other securities.
34
<PAGE>
PREFERRED STOCK
20,000 shares of Series A Preferred Stock are outstanding. The
Preferred Stock has an aggregate liquidation preference of $2,000,000 (the
"Liquidation Preference"), plus any accrued and unpaid dividends thereon
(whether or not declared). Dividends on the Preferred Stock are cumulative
(compounding annually) from the Effective Date and are payable when and as
declared by the Board of Directors of Holdings, at the rate of 1% per annum on
the Liquidation Preference. No dividends shall be payable on any shares of
Holdings Common Stock until all accrued and unpaid dividends on the Preferred
Stock have been paid.
The shares of Preferred Stock are not redeemable prior to the sixth
anniversary of the Effective Date. On or after the sixth anniversary of the
Effective Date, the Preferred Stock is redeemable at the option of Holdings for
cash, in whole or in part, at an aggregate redemption price equal to the
Liquidation Preference, plus any accrued and unpaid dividends thereon. In
addition, Holdings is required to redeem the Preferred Stock in whole on the
tenth anniversary of the Effective Date at an aggregate redemption price equal
to the Liquidation Preference, plus any accrued and unpaid dividends thereon.
The shares of Preferred Stock are convertible, in whole or in part, at
the option of the holders thereof, any time on or after the earlier of the fifth
anniversary of the Effective Date and the consummation of a rights offering by
Holdings (which offering meets certain conditions), into 162,500 shares of
Holdings Common Stock. Any accrued and unpaid dividends on the Preferred Stock
will be cancelled upon conversion. Conversion rights will be adjusted to provide
antidilution protection for stock splits, stock combinations, mergers or other
capital reorganization of Holdings. In addition, upon a sale of Holdings,
Holdings's right to redeem the Preferred Stock and the holders' right to convert
the Preferred Stock will be accelerated. The Preferred Stock has one vote per
share and votes together with the Holdings Common Stock on all matters other
than the election of directors.
CERTAIN CORPORATE GOVERNANCE MATTERS
Except as the Delaware General Corporation Law (the "General
Corporation Law"), the Charter or the By-Laws of Holdings (the "By-Laws") may
otherwise provide, the holders of a majority of the issued and outstanding
shares of the capital stock entitled to vote shall constitute a quorum at a
meeting of stockholders for the transaction of any business. The holders of a
majority of such shares present may adjourn the meeting until a quorum has been
obtained.
Each stockholder entitled to vote in accordance with the terms of the
Charter and By-Laws shall be entitled to one vote, in person or by proxy, for
each share of stock entitled to vote held by such stockholder. In the election
of directors, the vote need not be by written ballot, and a plurality of the
votes present at the meeting shall elect. Any other action shall be authorized
by a majority of the votes cast except as otherwise required by the General
Corporation Law. Except as otherwise required by law or the Charter, action
required or permitted to be taken at any meeting of stockholders, may be taken
without a meeting, without prior notice and without a vote, by written consent
of the holders of shares representing the votes that would be necessary to
authorize or take such action at a meeting.
The Board of Directors is expressly authorized to adopt, amend or
repeal the By-laws. The stockholders are expressly authorized to repeal or
change By-laws adopted by the Board of Directors, and to adopt new By-laws. The
stockholders may prescribe that any By-law made by them shall not be altered,
amended or repealed by the Board of Directors.
35
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Charter provides for the indemnification, to the fullest extent
permitted by the General Corporation Law, of all persons who may be
indemnified by Holdings under the General Corporation Law, which would
include the directors, officers, employees and agents of Holdings. The
indemnification provided by the Charter does not limit or exclude any rights,
indemnities or limitations of liability to which any person may be entitled,
whether as a matter of law, under the By-Laws, by agreement, vote of the
stockholders or disinterested directors of Holdings or otherwise. The Charter
also does not absolve directors of liability for (1) any breach of the
directors' duty of loyalty to Holdings or its stockholders, (2) acts or
omissions which are not in good faith or which involve intentional misconduct
or a knowing violation of law, (3) any matter in respect of which such
director shall be liable under Section 174 of Title 8 of the General
Corporation Law or any amendment thereto or successor provision thereto,
which makes directors personally liable for unlawful dividends or unlawful
stock repurchases or redemptions in certain circumstance and expressly sets
forth a negligence standard with respect to such liability, or (4) any
transaction from which the director derived an improper personal benefit.
Under Delaware law, directors, officers, employees and other
individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation (a
"derivative action")) if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of Holdings
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe their conduct was unlawful. A similar standard of care is
applicable in the case of a derivative action, except that indemnification
only extends to expenses (including attorneys' fees) incurred in connection
with defense or settlement of such an action and Delaware law requires court
approval before there can be any indemnification of expenses where the person
seeking indemnification has been found liable to Holdings.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See "Item 15. Financial Statements and Exhibits" and the Consolidated
Financial Statements included herewith.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
36
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
See Index to Consolidated Financial Statements and
Schedules included herewith.
(b) EXHIBITS
The exhibits listed on the Exhibit Index following the
Consolidated Financial Statements hereof are filed herewith in response to
this Item.
37
<PAGE>
BARNEYS NEW YORK, INC. AND SUBSIDIARIES
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended January 30, 1999 and Fiscal Years ended 1998, 1997 and 1996
INDEX
Report of Independent Auditors.......................................... F-1
Audited Consolidated Financial Statements:
Consolidated Balance Sheets as of January 30, 1999, August 1, 1998
and August 2, 1997................................................. F-2
Consolidated Statements of Operations for the six months ended
January 30, 1999, and fiscal years 1998, 1997 and 1996............. F-3
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
for the six months ended January 30, 1999, and fiscal years 1998,
1997 and 1996...................................................... F-4
Consolidated Statements of Cash Flows for the six months ended
January 30, 1999, and fiscal years 1998, 1997 and 1996............. F-5
Notes to Consolidated Financial Statements.............................. F-6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of Barneys New York, Inc.
We have audited the accompanying consolidated balance sheet of Barneys New York,
Inc. and subsidiaries as of January 30, 1999 (Successor Company balance sheet)
and of Barney's, Inc. and subsidiaries as of August 1, 1998 and August 2,
1997 (Predecessor Company balance sheets), and the related consolidated
statements of operations, cash flows and changes in stockholder's equity
(deficit) for the six months ended January 30, 1999 and each of the three
fiscal years in the period ended August 1, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurances about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As more fully described in Note 2 to the consolidated financial statements,
effective January 28, 1999, the Company emerged from protection under Chapter
11 of the U.S. Bankruptcy Code pursuant to a Reorganization Plan which was
confirmed by the Bankruptcy Court on December 21, 1998. Accordingly, the
accompanying January 30, 1999 balance sheet has been prepared in conformity
with AICPA Statement of Position 90-7 "Financial Reporting for Entities in
Reorganization Under the Bankruptcy Code," for the Successor Company as a new
entity with assets, liabilities and a capital structure having carrying
values not comparable with prior periods as described in Note 3.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Barneys New York, Inc. and subsidiaries as of January 30, 1999, and of
Barney's, Inc. and subsidiaries as of August 1, 1998 and August 2, 1997, and
the consolidated results of their operations and their cash flows for the six
months ended January 30, 1999 and for each of the three fiscal years in the
period ended August 1, 1998 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
May 24, 1999
F-1
<PAGE>
Barneys New York, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
SUCCESSOR |
COMPANY | PREDECESSOR COMPANY
JANUARY 30, | AUGUST 1, AUGUST 2,
1999 | 1998 1997
-------- | --------- ---------
<S> <C> | <C> <C>
ASSETS |
Current assets: |
Cash and cash equivalents $ 6,824 | $ 3,478 $ 5,442
Restricted cash 5,082 | -- --
Receivables, less allowances of $4,356, $4,386 and $5,016 27,841 | 22,107 16,583
Inventories 65,551 | 68,983 61,234
Other current assets 6,347 | 6,502 11,973
-------- | --------- ---------
Total current assets 111,645 | 101,070 95,232
Fixed assets at cost, less accumulated depreciation |
and amortization of $0, $38,226 and $32,274 51,356 | 114,639 119,151
Excess reorganization value 177,767 | -- --
Other assets 3,186 | 1,334 1,863
-------- | --------- ---------
|
Total assets $343,954 | $ 217,043 $ 216,246
======== | ========= =========
|
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |
Current liabilities: |
DIP credit agreement $ -- | $ 75,437 $ 64,113
Accounts payable 15,996 | 17,324 8,460
Accrued expenses 54,585 | 40,558 42,102
-------- | --------- ---------
Total current liabilities 70,581 | 133,319 114,675
|
Long-term debt 118,533 | -- --
Other long-term liabilities -- | 4,640 3,603
Liabilities subject to compromise -- | 372,272 371,203
|
Deferred credits -- | 162,446 162,446
Minority interest -- | 12,000 12,000
|
Commitments and contingencies |
|
Redeemable Preferred Stock 500 | -- --
|
Shareholders' equity (deficit): |
Preferred stock--$100 par value; authorized |
400,000 shares--issued 327,695 shares -- | 32,770 32,770
Common stock--$.01 par value; authorized |
25,000,000 shares--issued 12,500,000 shares 125 | -- --
Common stock--$20 par value; authorized |
15,000 shares--issued 8,560 shares -- | 171 171
Additional paid-in capital 154,215 | 38,950 38,950
Retained deficit -- | (539,525) (519,572)
-------- | --------- ---------
Total shareholders' equity (deficit) 154,340 | (467,634) (447,681)
-------- | --------- ---------
|
Total liabilities and shareholders' equity (deficit) $343,954 | $ 217,043 $ 216,246
======== | ========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements.
F-2
<PAGE>
Barneys New York, Inc. and Subsidiaries
Consolidated Statements of Operations
Predecessor Company
(In thousands)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JANUARY 30, FOR THE FISCAL YEARS
1999 1998 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 181,657 $ 342,967 $ 361,496 $ 366,424
Cost of sales 95,084 178,755 192,302 193,610
--------- --------- --------- ---------
Gross profit 86,573 164,212 169,194 172,814
Expenses:
Selling, general and administrative (including occupancy
expense of $11,728, $25,453, $33,235 and $41,737) 73,634 151,191 173,392 201,184
Depreciation and amortization 4,671 9,635 12,886 13,814
Impairment and special charges -- -- 255 2,184
Royalty income and foreign exchange gains -- (1,653) (420) (11,292)
Other - net (2,033) (3,022) (1,889) (3,661)
--------- --------- --------- ---------
Income (loss) before interest and financing costs, reorganization
costs, "fresh-start" revaluation, income taxes and extraordinary item 10,301 8,061 (15,030) (29,415)
Interest and financing costs (excludes contractual interest of
$11,012, $22,024, $22,024 and $11,794) 4,758 11,967 7,674 12,575
--------- --------- --------- ---------
Income (loss) before reorganization costs, "fresh-start" revaluation,
income taxes and extraordinary item 5,543 (3,906) (22,704) (41,990)
Reorganization costs 13,834 15,970 72,207 29,407
Fresh-start revaluation 294 -- -- --
--------- --------- --------- ---------
Loss before income taxes and extraordinary item (8,585) (19,876) (94,911) (71,397)
Income taxes 38 77 62 472
--------- --------- --------- ---------
Loss before extraordinary item (8,623) (19,953) (94,973) (71,869)
Extraordinary item - gain on debt discharge 302,285 -- -- --
--------- --------- --------- ---------
Net income (loss) $ 293,662 $ (19,953) $ (94,973) $ (71,869)
========= ========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these financial statements
F-3
<PAGE>
Barneys New York, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
(In thousands)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
COMMON PREFERRED PAID-IN EARNINGS
STOCK STOCK CAPITAL (DEFICIT) TOTAL
----- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PREDECESSOR COMPANY
Balances at July 29, 1995 $ 171 $ 32,770 $ 38,950 $(352,730) $(280,839)
Net Loss -- -- -- (71,869) (71,869)
----- -------- --------- --------- ---------
Balances at August 3, 1996 171 32,770 38,950 (424,599) (352,708)
Net Loss -- -- -- (94,973) (94,973)
----- -------- --------- --------- ---------
Balances at August 2, 1997 171 32,770 38,950 (519,572) (447,681)
Net Loss -- -- -- (19,953) (19,953)
----- -------- --------- --------- ---------
Balances at August 1, 1998 171 32,770 38,950 (539,525) (467,634)
Net income for the six months ended
January 30, 1999 -- -- -- 293,662 293,662
Fresh-start adjustments (171) (32,770) (38,950) 245,863 173,972
Issuance of Successor Company stock 125 -- 148,855 -- 148,980
Issuance of Successor Company warrants -- -- 5,360 -- 5,360
----- -------- --------- --------- ---------
SUCCESSOR COMPANY
Balances at January 30, 1999 $ 125 $ -- $ 154,215 $ -- $ 154,340
===== ======== ========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these financial statements.
F-4
<PAGE>
Barneys New York, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Predecessor Company
(In thousands)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JANUARY 30, FOR THE FISCAL YEARS
1999 1998 1997 1996
--------- --------- --------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 293,662 $ (19,953) $ (94,973) $(71,869)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Reorganization items:
Extraordinary gain on debt discharge (302,285) -- -- --
Fresh-start revaluation 294 -- -- --
Real estate losses and asset write-offs, net -- 29 49,991 12,357
Write-off of deferred financing costs -- -- -- 2,897
Depreciation and amortization 4,671 9,635 12,886 13,814
Amortization of DIP financing costs 588 3,798 1,955 1,035
Deferred rent (252) (368) (39) 21
Receivables provision (1,888) 1,043 1,324 2,042
Real estate losses and asset write-offs, net -- 4 600 1,037
Foreign exchange gains and net interest on Isetan Loan -- -- -- (10,808)
Other -- 92 -- --
Decrease (increase) in:
Receivables (6,759) (5,316) (763) (15,769)
Inventories 2,032 (7,749) 338 (4,688)
Other current assets (622) 1,673 (3,140) (8,867)
Long-term assets (2,723) 529 101 (992)
Increase (decrease) in:
Accounts payable and accrued expenses (4,968) 6,139 10,462 40,232
--------- --------- --------- --------
Net cash used in operating activities (18,250) (10,444) (21,258) (39,558)
--------- --------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed asset additions (2,112) (3,047) (5,799) (13,255)
Restricted cash (5,082) -- -- --
Contributions from landlords -- 203 1,234 --
Net repayments from affiliates 1,888 -- 143 (8,379)
--------- --------- --------- --------
Net cash used in investing activities (5,306) (2,844) (4,422) (21,634)
--------- --------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of debt 265,383 385,834 128,939 99,000
Repayments of debt (278,724) (374,510) (105,826) (39,066)
--------- --------- --------- --------
Net cash (used) provided by financing activities (13,341) 11,324 23,113 59,934
--------- --------- --------- --------
CASH FLOWS FROM REORGANIZATION ACTIVITIES:
Proceeds from subscription rights offering 62,607 -- -- --
Cash distributions pursuant to the Plan (22,364) -- -- --
--------- --------- --------- --------
Net cash provided by reorganization activities 40,243 -- -- --
--------- --------- --------- --------
Net increase (decrease) in cash and cash equivalents 3,346 (1,964) (2,567) (1,258)
Cash and cash equivalents - beginning of period 3,478 5,442 8,009 9,267
--------- --------- --------- --------
Cash and cash equivalents - end of period $ 6,824 $ 3,478 $ 5,442 $ 8,009
========= ========= ========= ========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these financial statements.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Barneys New York, Inc. ("Holdings") and Subsidiaries (collectively the
"Company") is a retailer of men's and women's apparel and accessories and items
for the home. The Company operates 20 stores throughout the United States,
including its three flagship stores in New York, Beverly Hills and Chicago which
are leased from an affiliate of Isetan Co. Ltd. ("Isetan"), a minority
stockholder of Holdings. The Company has also entered into licensing
arrangements, pursuant to which the Barneys New York trade name is licensed for
use in Asia.
The consolidated financial statements of the Company during the
bankruptcy proceedings (the "Predecessor Company financial statements") are
presented in accordance with American Institute of Certified Public Accountants'
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" ("SOP 90-7"). Pursuant to guidance provided by SOP
90-7, the Company adopted fresh start reporting as of January 28, 1999 upon its
emergence from bankruptcy.
Under fresh start reporting, a new reporting entity is deemed to be
created and the recorded amounts of assets and liabilities are adjusted to
reflect their estimated fair values at the Effective Date (as defined below). A
black line has been drawn to separate the Successor Company's consolidated
balance sheet from those of the Predecessor Company to signify that they are
different reporting entities and such balance sheets have not been prepared on
the same basis. The operating results of the Successor Company for the
intervening period from January 28, 1999 to January 30, 1999 were immaterial and
therefore included in the operations of the Predecessor Company.
The Company changed its fiscal year-end to the Saturday closest to
January 31 to coincide with its emergence from bankruptcy and to be more
comparable with industry practices. Accordingly, the financial statements for
the current period are as of and for the six months ended January 30, 1999.
References in these financial statements to "1998" and "1996" are for the 52
weeks ended August 1, 1998 and August 3, 1996, respectively. References to
"1997" are for the 53 weeks ended August 2, 1997. References in these financial
statements to "1999" are for the 52 weeks ending January 29, 2000.
As used herein, Successor Company refers to Barneys New York, Inc. and
subsidiaries from the Effective Date to January 30, 1999 and Predecessor Company
refers to Barney's, Inc. and subsidiaries prior to the Effective Date.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. REORGANIZATION CASE:
(A) PLAN OF REORGANIZATION -
On January 10, 1996 (the "Filing Date"), Barney's, Inc. ("Barneys") and
certain subsidiaries of Barneys (collectively the "Barneys Debtors") and an
affiliate, Preen Realty, Inc. ("Preen") and certain subsidiaries of Preen
(collectively the "Preen Debtors") (together the Barneys Debtors and Preen
Debtors referred to as the "Debtors") filed voluntary petitions under chapter 11
of the United States Bankruptcy Code (the "Bankruptcy Code"). Pursuant to an
order of the Court, the individual Chapter 11 cases of the Debtors were
consolidated for procedural purposes only and were jointly administered by the
United States Bankruptcy Court for the Southern District of New York (the
"Court"). Subsequent to the Filing Date, the Debtors operated their businesses
as debtors in possession subject to the jurisdiction and supervision of the
Court.
In the Chapter 11 cases, substantially all liabilities as of the Filing
Date were subject to compromise under a plan of reorganization pursuant to the
provisions of the Bankruptcy Code. Under the Bankruptcy Code, the Barneys
Debtors assumed or rejected real estate leases, employment contracts, personal
property leases, service contracts and other unexpired executory pre-petition
contracts, subject to Court approval. Parties affected by the rejections filed
claims with the Court in accordance with the reorganization process.
On January 28, 1999 (the "Effective Date"), the Company emerged from
reorganization proceedings (the "Reorganization") under the Bankruptcy Code
pursuant to a Second Amended Joint Plan of Reorganization, dated November 13,
1998, as supplemented and as confirmed on December 21, 1998 by the Bankruptcy
Court (the "Plan"). Consequently, the Company has applied the reorganization and
fresh-start reporting adjustments to the consolidated balance sheet as of
January 30, 1999, the closest fiscal month end to the Effective Date.
The following is a summary of certain provisions of the Plan that
became effective on the Effective Date.
EQUITY -
Pursuant to the Plan, the following equity was issued:
COMMON STOCK ISSUED IN EXCHANGE FOR CLAIMS. The equity in Barneys was
exchanged for shares of common stock in a new company created under the Plan,
Barneys New York, Inc. ("Holdings Common Stock"), and certain allowed general
unsecured claims and claims held by Isetan against Barneys and certain of its
affiliates exchanged for, among other things, shares of Holdings Common Stock
and warrants (as defined below).
RIGHTS OFFERING. Shares of Holdings Common Stock were issued to certain
holders of allowed general unsecured claims pursuant to the exercise by them of
rights to subscribe for shares of Holdings Common Stock ("Subscription Rights")
which were issued in accordance with the Plan and exercised prior to
consummation of the Plan. The $62.5 million offering of Subscription Rights was
guaranteed by Bay Harbour Management L.C. ("Bay Harbour") and Whippoorwill
Associates, Inc. ("Whippoorwill", and, together with Bay Harbour, the "Plan
Investors") on behalf of their discretionary and/or managed accounts to the
extent the other
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
holders of allowed general unsecured claims did not elect to participate in the
offering. Bay Harbour and Whippoorwill agreed to guarantee the offering of
Subscription Rights pursuant to the Amended and Restated Stock Purchase
Agreement dated as of November 13, 1998 among Barneys, Bay Harbour, Whippoorwill
and the Official Committee of Unsecured Creditors of Barneys (the "Stock
Purchase Agreement"). In the offering, the Plan Investors purchased an aggregate
of 6,707,531 shares of Holdings Common Stock for an aggregate price of
approximately $58.2 million.
OPTION. Pursuant to the Stock Purchase Agreement, the Plan Investors
were granted an option to purchase, at an aggregate exercise price of $5.0
million, a total of 576,122 shares of Holdings Common Stock. Pursuant to the
option, each of the Plan Investors has the right to purchase the greater of (i)
288,061 shares of Holdings Common Stock, and (ii) 576,122 shares of Holdings
Common Stock, less the number of shares purchased by the other Plan Investor.
This option expires on November 15, 1999.
ISETAN WARRANT. Isetan was issued a warrant (the "Isetan Warrant") to
purchase 287,724 share of Holdings Common Stock at an exercise price of $14.68
per share. This warrant expires on January 29, 2002.
UNSECURED CREDITORS WARRANTS. Holders of certain allowed general
unsecured claims were issued warrants (the "Unsecured Creditors Warrants") to
purchase an aggregate of up to 1,013,514 shares of Holdings Common Stock at an
exercise price of $8.68 per share. These warrants expire on May 15, 2000.
PREFERRED STOCK. Holdings issued 15,000 shares of Series A Preferred
Stock, par value $0.01 per share (the "Preferred Stock"), to the Barneys
Employees Stock Plan Trust, which was established for the benefit of employees
of the Company. In addition, Holdings issued 5,000 shares of Preferred Stock for
an aggregate purchase price of $500,000 in government securities to Bay Harbour,
which it resold to a third party under a prearranged agreement.
INDEBTEDNESS -
Pursuant to the Plan, the following debt securities were issued:
ISETAN. Barneys issued a subordinated promissory note (the "Isetan
Note") in the principal amount of $22,500,000 to Isetan. The Isetan Note bears
interest at the rate of 10% per annum payable semi-annually, and matures on
January 29, 2004.
EQUIPMENT LESSORS. On the Effective Date, certain lessors of equipment
to the Company transferred all right, title and interest in such equipment to
the Company. In exchange therefor, the Company issued subordinated promissory
notes (the "Equipment Lessors Notes") to such lessors in an aggregate principal
amount of $35,788,865. Such promissory notes bear interest at the rate of
11-1/2% per annum payable semi-annually, mature on January 29, 2004, and are
secured by a first priority lien on the equipment that was the subject of each
of the respective equipment leases.
OTHER SETTLEMENTS -
Pursuant to the Plan, the following occurred:
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ISETAN. Barneys paid approximately $23.3 million in cash to Isetan on
account of its allowed claims, an affiliate of Isetan became the sole owner of
the properties (including leasehold interests) in which the Company's three
flagship stores are located and Barneys entered into modifications of the
long-term leases (the "New Isetan Leases") for such stores. Accordingly, any
leasehold interests recorded on the Predecessor Company's books were eliminated.
PRESSMAN FAMILY. Barneys made certain cash payments to members of the
Pressman family (the principal equity holders of the Predecessor Company) and
entered into consulting agreements with certain members of the Pressman family.
LICENSING. BNY Licensing Corp. ("BNY Licensing"), a wholly-owned
subsidiary of Barneys, is party to licensing arrangements pursuant to which (i)
two retail stores are operated in Japan and a single in-store department is
operated in Singapore under the name "BARNEYS NEW YORK", each by an affiliate of
Isetan, and (ii) Barneys Asia Co. LLC, which is 70% owned by BNY Licensing and
30% owned by an affiliate of Isetan (and which was formed in connection with the
Reorganization discussed above), has the exclusive right to sublicense the
BARNEYS NEW YORK trademark throughout Asia (excluding Japan). Isetan received an
absolute assignment of 90% of the annual minimum royalties pursuant to item (i)
above in satisfaction of certain prepetition debt.
INTERCOMPANY CLAIMS. On the Effective Date, substantially all
intercompany claims against the Debtors were either released and cancelled by
means of contribution, distribution or otherwise, or were offset against any
mutual intercompany claims with any remaining amount released and discharged
with no further consideration.
ADMINISTRATIVE CLAIMS. As a result of the bankruptcy, the Company is
subject to various Administrative Claims filed by various claimants throughout
the bankruptcy case. In connection with the Plan, the Company was required to
establish a disputed Administrative Claims Cash Reserve while the Administrative
Claims are negotiated and settled. The total amount of the cash reserve was
$4,600,000 and is included in restricted cash at January 30, 1999. The Company
has reserved in its financial statements the amount it believes will be
necessary to settle these claims.
GUARANTEE OF OBLIGATIONS. Holdings guaranteed the obligations of
Barneys and its subsidiaries under the Isetan Note, the Equipment Lessors Notes,
the New Isetan Leases and the new Licensing Arrangements.
(B) EXTRAORDINARY GAIN ON DISCHARGE OF DEBT -
The value of cash and securities required to be distributed under the
Plan was less than the value of the allowed claims on and interests in the
Predecessor Company; accordingly, the Predecessor Company recorded an
extraordinary gain of $302,285,000 related to the discharge of prepetition
liabilities in the six months ended January 30, 1999. Payments, distributions
associated with the prepetition claims and obligations and provisions for
settlements are reflected in the January 30, 1999 balance sheet. The
consolidated financial statements at January 30, 1999 give effect to the
issuance of all common stock and notes in accordance with the Plan.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The extraordinary gain recorded by the Predecessor Company was
determined as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Liabilities subject to compromise at the effective date $ 369,747
Less:
Cash distributions pursuant to the Plan (1,156)
Assumption of prepetition liabilities (9,119)
Value of new common stock and warrants issued to prepetition
creditors (57,187)
-------------
Extraordinary gain on debt discharge $ 302,285
=============
</TABLE>
In the accompanying Predecessor Company consolidated balance sheets,
the principal categories of claims classified as Liabilities subject to
compromise are identified below.
AUGUST 1, AUGUST 2,
1998 1997
-------- --------
(in thousands)
Unsecured debt $233,060 $233,084
BNY Licensing Yen loan payable to Isetan 49,129 49,129
Pre-petition accrued interest 1,467 1,467
Trade and expense payables 58,124 58,055
Lease rejection claims 15,638 15,638
Other claims 14,854 13,830
-------- --------
Total $372,272 $371,203
======== ========
(C) RESTRUCTURING PROGRAMS -
As a result of continuing efforts to improve Predecessor Company
profitability, during 1997, the Predecessor Company decided to close certain
stores and reduce personnel (the "1997 Restructuring Program"). The store
closings and personnel reductions resulted in headcount reductions in excess of
300 employees. Sales and operating results (without corporate overhead
allocations) respectively relating to the stores closed were $7,954,000 and
$(527,000), $63,751,000 and $(4,300,000), and $69,937,000 and $(3,165,000) for
1998, 1997 and 1996, respectively. Included in these results are depreciation
and amortization charges of $425,000, $3,560,000 and $3,486,000 for 1998, 1997
and 1996, respectively.
In 1997, the Predecessor Company recorded $52,510,000 of reorganization
costs resulting from the aforementioned decisions. $38,767,000 of the costs
represented the write-down of fixed assets in the affected stores, $15,038,000
represented the cost associated with the rejection of the store leases and
$2,519,000 related to employee termination costs. Offsetting these costs in 1997
was a $3,814,000 reversal of accrued rent previously recorded to straight-line
rent over the lease term. In 1998 and the six months ended January 30, 1999, the
Predecessor Company recorded additional employee termination costs of $1,881,000
and $3,139,000, respectively.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
As of January 30, 1999, the severance related reserves provided in 1998
and 1997 have been utilized as intended.
The Company has recorded a fresh-start adjustment for the planned
closure of certain outlet stores. This adjustment is reflected in the Successor
Company balance sheet at January 30, 1999.
3. FRESH START REPORTING:
As indicated in Note 1, the Company adopted fresh-start reporting as of
January 28, 1999. In adopting fresh start reporting, the Company was required to
determine its enterprise value, which represents the fair value of the entity
before considering its liabilities. The financial advisors to the creditors
committee determined the Company's enterprise value of $285,000,000.
The adjustments to reflect the adoption of fresh start reporting,
including the adjustments to record assets and liabilities at their fair market
values, have been reflected in the following balance sheet reconciliation as of
January 30, 1999 as fresh start adjustments. In addition, the Successor
Company's balance sheet was further adjusted to eliminate existing equity and to
reflect the aforementioned $285,000,000 enterprise value, which includes the
establishment of $177,767,000 of reorganization value in excess of amounts
allocable to net identifiable assets ("Excess Reorganization Value"). The Excess
Reorganization Value is being amortized using the straight-line method over a
20-year useful life.
The reorganization value has been allocated on a preliminary basis to
the net assets of the Predecessor Company as part of fresh-start accounting. The
significant fresh-start adjustments relate to the elimination of the Predecessor
Company's equity; the establishment of certain liabilities; the revaluation of
fixed assets and other leasehold interests based upon their estimated fair
market values; and the adjustments of other assets and liabilities to their fair
market value.
Reconciliation of the Predecessor Company balance sheet as of January
30, 1999 to that of the Successor Company showing the adjustments thereto to
give effect to the discharge of prepetition debt and fresh-start reporting
appears on the following page.
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Predecessor Reorgani- Fresh-start Successor
Company zation Adjustments Company
--------- --------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash $ 5,806 $ 1,018 $ -- $ 6,824
Restricted cash 4,386 696 -- 5,082
Receivables 28,866 -- (1,025) 27,841
Inventories 66,951 -- (1,400) 65,551
Other current assets 6,180 500 (333) 6,347
--------- --------- --------- --------
Total current assets 112,189 2,214 (2,758) 111,645
Fixed assets 112,080 (61,240) 516 51,356
Excess reorganization value -- 60,676 117,091 177,767
Other assets 2,357 829 -- 3,186
--------- --------- --------- --------
Total assets $ 226,626 $ 2,479 $ 114,849 $343,954
========= ========= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Debtor in possession credit agreement $ 83,389 $ (83,389) $ -- $ --
Accounts payable 15,996 -- -- 15,996
Accrued expenses 48,734 591 5,260 54,585
Subscription Rights offering liability 4,386 (4,386) -- --
--------- --------- --------- --------
Total current liabilities 152,505 (87,184) 5,260 70,581
Long-term debt -- 120,385 (1,852) 118,533
Other long-term liabilities 5,894 -- (5,894) --
Liabilities subject to compromise 369,747 (369,747) -- --
Deferred credits and minority interest 174,446 (174,446) -- --
Redeemable Preferred Stock -- 500 -- 500
Shareholders' equity (deficit)
Preferred stock 32,770 -- (32,770) --
Common stock 171 125 (171) 125
Additional paid-in capital 38,950 133,144 (17,879) 154,215
Accumulated deficit (547,857) 379,702 168,155 --
--------- --------- --------- --------
Total shareholders' equity (deficit) (475,966) 512,971 117,335 154,340
--------- --------- --------- --------
Total liabilities and shareholders' equity (deficit) $ 226,626 $ 2,479 $ 114,849 $343,954
========= ========= ========= ========
</TABLE>
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(A) PRINCIPLES OF CONSOLIDATION -
The consolidated financial statements include the accounts of the
Predecessor or Successor Company and its wholly-owned and majority-owned
subsidiaries. Intercompany investments and transactions have been eliminated in
consolidation.
(B) CASH AND CASH EQUIVALENTS -
All highly liquid investments with a remaining maturity of three months
or less at the date of acquisition are classified as cash equivalents. The
carrying value approximates their fair value.
(C) ACCOUNTS RECEIVABLE AND FINANCE CHARGES -
The Company provides credit to its customers and performs on-going
credit reviews of its customers. Concentration of credit risk is limited because
of the large number of customers. Finance charge income recorded in the six
months ended January 30, 1999 approximated $1,978,000. Finance charge income
recorded in fiscal 1998, 1997 and 1996 approximated $3,280,000, $3,202,000 and
$1,315,000, respectively.
(D) INVENTORIES -
Merchandise inventories are stated at the lower of FIFO (first-in,
first-out) cost or market, as determined by the retail inventory method.
Merchandise is purchased from many different vendors based throughout the world.
In certain instances, the Company has formal and informal arrangements with
vendors covering the supply of goods. While no vendor supplies the Company with
more than 10% of its inventory, if certain vendors were to suspend shipments,
the Company might, in the short term, have difficulty identifying comparable
sources of supply. However, management believes that alternative supply sources
do exist to fulfill the Company's requirements should a supply disruption occur
with any major vendor.
(E) FIXED ASSETS -
Fixed assets of the Predecessor Company are recorded at cost.
Depreciation is computed using the straight-line method. Fully depreciated
assets are written off against accumulated depreciation. Furniture, fixtures and
equipment are depreciated over their useful lives. Leasehold improvements are
amortized over the shorter of the useful life or the lease term.
Pursuant to SOP 90-7, property and equipment were restated at
approximate fair market value at January 30, 1999.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(F) EXCESS REORGANIZATION VALUE -
Excess reorganization value represents the adjustment of the Company's
balance sheet for reorganization value in excess of amounts allocable to
identifiable assets. Excess reorganization value is being amortized using the
straight-line method over 20 years.
(G) EARNINGS PER COMMON SHARE -
Earnings per common share is computed as net income (loss) divided by
the weighted average number of common shares outstanding. Earnings per common
share has not been included herein as the computation would not provide
meaningful results as the capital structure of the Successor Company is not
comparable to that of the Predecessor Company.
(H) IMPAIRMENT OF ASSETS -
The Company records impairment losses on long-lived assets used in
operations when events and circumstances indicate that the assets might be
impaired and the undiscounted cash flows estimated to be generated by the
related assets are less than the carrying amounts of those assets.
(I) FOREIGN EXCHANGE CONTRACTS -
The Company enters into certain foreign currency hedging instruments
(forward and option contracts), from time to time, to reduce the risk associated
with currency movement related to committed inventory purchases denominated in
foreign currency. Gains and losses that offset the movement in the underlying
transactions are recognized as part of such transactions.
As of January 30, 1999, the Company had outstanding approximately
$6,050,000 of forward contracts maturing in 1999.
(J) NET SALES -
Net sales include sales of merchandise, net of returns. Bulk sales of
merchandise to jobbers are not included in Net sales, but rather the net profit
or loss on these sales is reflected as an adjustment to Cost of sales.
(K) ADVERTISING EXPENSES -
The Company expenses advertising costs upon first showing. Advertising
expenses were approximately $2,041,000 in the six months ended January 30, 1999
and $3,324,000, $3,818,000 and $4,009,000 in fiscal 1998, 1997 and 1996,
respectively.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(L) INCOME TAXES -
The Company records income tax expense using the liability method.
Under this method, deferred tax assets and liabilities are estimated for the
future tax effects attributable to temporary differences between the financial
statement and tax basis of assets and liabilities.
(M) ESTIMATES -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
(N) RECLASSIFICATION -
Certain prior year amounts have been reclassified to conform to current
year presentation.
5. FIXED ASSETS:
Fixed assets consist of the following:
<TABLE>
<CAPTION>
SUCCESSOR SUCCESSOR
COMPANY PREDECESSOR COMPANY COMPANY
JANUARY 30, AUGUST 1, AUGUST 2, ESTIMATED
1999 1998 1997 USEFUL LIFE
(IN YEARS)
--------- --------- --------- ----------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Furniture, fixtures and equipment $ 46,145 | $ 13,859 $ 15,406 3 to 7
Leasehold improvements 5,211 | 139,006 136,019 2 to 14
--------- | --------- ---------
Total 51,356 | 152,865 151,425
Less: Accumulated depreciation and |
amortization -- | (38,226) (32,274)
|
Net fixed assets $ 51,356 | $ 114,639 $ 119,151
========= | ========= =========
</TABLE>
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. DEBT - SUCCESSOR COMPANY:
(A) REVOLVING CREDIT FACILITY -
In January 1999, the Company entered into a $120,000,000 revolving
credit facility with a $40,000,000 sublimit for the issuance of letters of
credit (the "Credit Agreement") with Citicorp USA, Inc., General Electric
Capital Corporation, BNY Financial Corporation, and National City Commercial
Finance, Inc. maturing on January 28, 2003. The proceeds from this Credit
Agreement were used to repay borrowings under the debtor in possession credit
agreement, to pay certain claims, to pay professional fees and to provide
working capital to the Company as it emerged from its Chapter 11 proceeding
pursuant to the Plan. At January 30, 1999, there were outstanding loans of
approximately $62,096,000 and $19,044,000 was committed under unexpired letters
of credit. Additionally, as collateral for performance on certain leases and as
credit guarantees, Barneys is contingently liable under standby letters of
credit in the amount of approximately $2,489,000 (See Note 8).
Revolving credit availability is calculated as a percentage of eligible
inventory (including undrawn documentary letters of credit) and a percentage of
the Barneys private label credit card receivables plus $20,000,000 (such amount
subject to a downward adjustment as defined). Interest rates on the Facility are
the Base Rate (as defined), which approximates Prime, plus 1.25% or LIBOR plus
2.25%, subject to adjustment after the first year. The interest rate at January
30, 1999 was 9%.
The Credit Agreement contains various financial covenants principally
relating to net worth, leverage, earnings and capital expenditures. During the
fiscal year ending January 29, 2000, the Credit Agreement covenants do not allow
for any material deviation from the Company's business plan for such year. The
covenant which allows for the least deviation from the business plan is the
EBITDA covenant, where a more than 5% deviation for fiscal year 1999 of actual
EBITDA versus planned EBITDA will result in a covenant violation.
Obligations under the Facility are secured by a first priority and
perfected lien on all unencumbered property of the Company. The Facility
provides for a fee of 1.25% to 1.75% per annum on the daily average letter of
credit amounts outstanding and a commitment fee of 0.375% on the unused portion
of the facility.
In connection with the Facility, the Company incurred fees of
$2,825,000 that will be amortized over the life of the facility as interest and
financing costs. These fees were principally paid in December 1998 and January
1999 and are included in Other assets at January 30, 1999.
(B) ISETAN NOTE -
Barneys issued the Isetan Note in the principal amount of $22,500,000.
The Isetan Note bears interest at the stated rate of 10% per annum payable
semi-annually, and matures on January 29, 2004. The first interest payment is
due August 15, 1999 and is to be paid in cash unless a majority of independent
directors of the Company determine, with respect to the first
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
four interest payments due, that it is in the best interests of Barneys to defer
those payments and add them to the outstanding principal amount.
The fair value of the Isetan Note was estimated to be approximately
$20,648,000. This amount is not necessarily representative of the amount that
could be realized or settled. The difference between the face amount and the
fair market value has been recorded as a debt discount at January 30, 1999. The
fair market value was based upon a valuation from an investment banking firm
utilizing discounted cash flows and comparable company methodology.
(C) EQUIPMENT LESSORS NOTES -
The Company issued the Equipment Lessors Notes in an aggregate
principal amount of approximately $35,789,000. Such promissory notes bear
interest at the stated rate of 11-1/2% per annum payable semi-annually, mature
on January 29, 2004, and are secured by a first priority lien on the equipment
that was the subject of each of the respective equipment leases. The first
interest payments were made on February 15, 1999.
The estimated fair value of the Equipment Lessors Notes approximates
face value as estimated by an investment banking firm utilizing discounted cash
flows and comparable company methodology.
7. DEBT - PREDECESSOR COMPANY:
(A) DEBTOR IN POSSESSION CREDIT AGREEMENT -
From January 11, 1996 through the Effective Date, Barneys had debtor in
possession revolving credit facilities. At August 1, 1998 and August 2, 1997
there were outstanding loans of approximately $75,437,000 and $64,113,000,
respectively. On January 28, 1999, all loans outstanding pursuant to the
Predecessor Company's debtor in possession credit facility were repaid in full.
(B) INTEREST PAID -
During the six months ended January 30, 1999 the Company paid interest
of $4,095,000. During fiscal 1998, 1997 and 1996 the Company paid interest of
$5,614,000, $5,467,000 and $11,698,000, respectively.
(C) OTHER OBLIGATIONS -
The table that follows and the descriptions of the financing
arrangements contained herein is based on the original contractual terms and
maturities of the related financial instrument. As a result of the Chapter 11
filings, the Company breached covenants in substantially all of its then
existing debt agreements. The amounts outstanding are classified as Liabilities
subject to compromise at both August 1, 1998 and August 2, 1997.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Prepetition debt consists of the following:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Revolving credit facility, with Chemical Bank as Agent; interest rate
of 8.5%(i)* $ 72,911
Term loan facility, with Chemical Bank as Agent; interest rate of
7.1875% (i) * 35,000
Republic National Bank of New York note due on January 10, 1996 at 8%
(ii)* 25,000
Senior notes due between 1998 and 2000 at 8.32%
issued April 1994 (iii)* 40,000
Senior notes due between 1998 and 2000 at 7.18%
issued June 1993 (iii)* 60,000
BNY Licensing Yen loan payable to Isetan 49,129
------------
Long-term debt $ 282,040
============
</TABLE>
* In Default
(i) FINANCING AGREEMENTS -
In September 1995, the Company entered into a credit facility with a
group of lenders, with Chemical Bank as Agent, which permitted borrowings up to
$120,000,000 on an unsecured basis. Proceeds from this facility were used to
refinance various existing credit agreements and to pay off, pursuant to the
terms of such facility, the outstanding debt of certain affiliated entities,
which Barneys had guaranteed. The scheduled due date of this facility was
February 28, 1998. Interest was calculated at various interest rates, one of
which was the prime rate. The credit facility provided for revolving credit
loans, issuance of letters of credit and term loans. The term loan portion of
the facility was $35,000,000 with the following scheduled repayment terms:
$5,000,000 on October 1, 1997, $5,000,000 on January 1, 1998 and $25,000,000 on
February 28, 1998.
(ii) REPUBLIC NATIONAL BANK NOTE -
The Republic National Bank Note was an unsecured note in the amount of
$25,000,000 with a scheduled maturity date of January 10, 1996.
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(iii) SENIOR NOTES -
Senior notes were unsecured, with scheduled interest payments due
semi-annually on June 15 and December 15. Principal on the aggregate $100
million senior notes was payable by its terms as follows:
1998 - $25,000,000, 1999 - $25,000,000, 2000 - $50,000,000.
8. COMMITMENTS AND CONTINGENCIES:
(A) LEASES -
The Company leases real property and equipment under agreements that
expire at various dates. Certain leases contain renewal provisions and generally
require the Company to pay utilities, insurance, taxes and other operating
expenses. In addition, certain real estate leases provide for escalation rentals
based upon increases in lessor's costs or provide for additional rent contingent
upon the Company increasing its sales.
At January 30, 1999, total minimum rentals at contractual rates are as
follows for the respective fiscal years:
THIRD
PARTIES ISETAN TOTAL
----------- ----------- -----------
(In thousands)
1999 $ 7,686 $ 12,222 $ 19,908
2000 7,465 12,480 19,945
2001 7,490 12,720 20,210
2002 7,155 12,942 20,097
2003 6,348 28,200 34,548
Thereafter 140,004 214,995 354,999
----------- ----------- -----------
Total minimum rentals $ 176,148 $ 293,559 $ 469,707
=========== =========== ===========
Total rent expense for the six months ended January 30,1999 was
$14,632,000 including percentage rent of $57,000. Total rent expense in fiscal
1998, 1997 and 1996 was $31,696,000, $40,175,000 and $54,219,000, respectively
which included percentage rent of $319,000, $98,000 and $3,240,000 in each of
the respective years.
On January 10, 1996, the Company ceased accruing stated rent expense
(both base rent and percentage rent) to Isetan and its affiliated companies for
the Madison Avenue, Beverly Hills and Chicago stores and to substantially all of
its equipment lessors as a result of disputes on the characterization of these
obligations. These matters were resolved as part of the Plan.
During the bankruptcy, in accordance with interim stipulations, orders
of the Court and the debtor-in-possession credit agreements the Company made "on
account" cash payments to Isetan and the equipment lessors at rates
substantially below the contractual amounts. The amount of these payments,
included in Selling, general and administrative expenses are detailed below
along with the corresponding contractual amount for each of the periods
reported.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ISETAN OCCUPANCY COSTS EQUIPMENT LESSOR COSTS
RECORDED CONTRACTUAL RECORDED CONTRACTUAL
------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C>
Six months ended
January 30, 1999 $ 4,611 $ 10,248 $ 2,687 $ 7,750
Fiscal 1998 9,223 22,510 5,642 15,500
Fiscal 1997 9,297 22,164 6,427 15,500
January 11, 1996 to
August 2, 1996 6,231 11,929 3,300 8,900
</TABLE>
The recorded equipment lessor costs in the six months ended January 30,
1999 and fiscal 1998 exclude amounts recorded as reorganization costs related to
closed stores.
(B) LEASE LETTERS OF CREDIT -
At January 30, 1999, Barneys had prepetition letters of credit
outstanding in the amount of $1,346,000 in connection with certain leases.
Subsequent to January 30, 1999, substantially all of these prepetition letters
of credit were cancelled.
(C) LITIGATION -
The Company is party to certain other litigation and asserted claims
and is aware of other potential claims. Management believes that pending
litigation in the aggregate will not have a material effect on the Company's
financial position.
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. REORGANIZATION COSTS:
The effects of transactions occurring as a result of the Barneys
Debtors' Chapter 11 filings and reorganization efforts have been segregated from
ordinary operations and are comprised of the following:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JANUARY 30, FISCAL YEAR
1999 1998 1997 1996
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Professional fees $ 3,637 $ 7,381 $ 13,869 $ 9,974
Asset write-offs, net - 29 38,767 8,382
Lease rejection costs - - 15,038 600
Straight line rent reversal - - (3,814) (95)
Payroll and related costs 5,274 4,565 5,574 2,629
Other 4,923 3,995 2,773 7,917
---------- ---------- ---------- ----------
Total reorganization costs $ 13,834 $ 15,970 $ 72,207 $ 29,407
========== ========== ========== ==========
</TABLE>
During the six months ended January 30, 1999, the Company paid
Reorganization costs of $12,511,000, net of amounts received from an affiliate
(see Note 11). During fiscal 1998, 1997 and 1996, the Company paid
Reorganization costs of $18,105,000, $14,512,000 and $5,859,000, respectively.
Included in Other reorganization costs in the six months ended January
30, 1999 and Fiscal 1998 is $3,500,000 and $1,500,000, respectively paid to
Dickson Concepts (International) Limited in connection with the termination of
an asset purchase agreement and the consummation of the Plan.
Accrued expenses at January 30, 1999 and August 1, 1998 includes fees
payable to professionals pertaining to court approved "holdbacks" or fees not
awarded, during the bankruptcy of approximately $6,900,000 and $7,400,000,
respectively. Substantially all of these fees will be paid in 1999.
10. INCOME TAXES:
Pursuant to the Plan, Holdings acquired 100% of the Predecessor
Company's stock. Holdings will make a Section 338(g) election (the "Election")
with respect to the acquisition under applicable provisions of the Internal
Revenue Code ("IRC"). The tax effects of making the Election would result in
Barneys and each of its subsidiaries generally being treated, for federal income
tax purposes as having sold its assets to a new corporation which purchased the
same assets as of the beginning of the following day. As a result, the
Predecessor Company will incur a gain or loss at the time of the deemed sale in
an amount equal to the difference between the fair market value of its assets
and its collective tax basis of the assets at the time of the sale.
The Company may use existing net operating loss carryforwards to reduce
any gain incurred as a result of this sale. The Company will, however, be
subject to alternative minimum tax. As a result of the Election, the Company has
recorded a $1,000,000 alternative minimum tax liability as a "fresh start"
adjustment. Furthermore, immediately after the sale, as a result of the
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Election, the Predecessor Company will be stripped of any remaining tax
attributes, including any unutilized net operating loss carryforwards and any
unutilized tax credits.
In the six months ended January 30, 1999 and fiscal 1998, 1997 and
1996, the Company recorded a provision for income taxes of approximately
$38,000, $77,000, $62,000 and $472,000, respectively, which principally relates
to state and local income and franchise taxes. In the comparable periods, the
Company paid capital, franchise and income taxes, net of refunds, of
approximately $19,000, $18,000, $35,000 and $63,000, respectively.
Deferred tax assets and liabilities of the Predecessor Company
reflected the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. On the Effective Date, the significant
differences related to deferred credits, net operating loss carryforwards of
approximately $230,804,000 and its reserve for affiliate receivables. The
Predecessor Company also had an investment tax credit carryover and a minimum
tax credit carryover of approximately $4,717,000 and $626,000, respectively, at
January 28, 1999.
The components of deferred taxes were as follows:
<TABLE>
<CAPTION>
JANUARY 28, AUGUST 1, AUGUST 2,
1999 1998 1997
----------- ----------- ----------
(In thousands)
<S> <C> <C> <C>
Current deferred tax assets $ 17,953 $ 8,507 $ 5,706
Noncurrent deferred tax assets 181,584 185,363 180,843
----------- ----------- ----------
Total deferred tax assets 199,537 193,870 186,549
Less: Valuation allowance (199,537) (193,870) (186,549)
----------- ----------- ----------
Net deferred tax asset $ - $ - $ -
=========== =========== ==========
</TABLE>
As of January 30, 1999 in conjunction with the Election, the remaining
tax attributes associated with the Predecessor Company's deferred tax assets are
no longer available.
For the period ended January 28, 1999 and fiscal 1998, 1997 and 1996,
income taxes reported differ from the amounts that would result from applying
statutory tax rates as net operating loss carryforwards which arose in such
periods provided no tax benefit since their future utilization was uncertain.
Accordingly, the Predecessor Company increased its valuation allowance by
approximately $5,667,000, $7,321,000, $50,477,000 and $22,294,000, in the
respective periods.
For the six months ended January 30, 1999, no income taxes were
reported in conjunction with the gain on discharge of debt as such amounts are
excluded from taxable income under IRC Section 108.
For the years including 1996, 1997 and 1998, the Company is subject to
various tax audits of the Predecessor Company's tax returns, particularly by New
York State. Most of these audits will result in minimal, if any, additional tax
liability. The Company believes that pending audit results, in the aggregate,
will not have a material effect on the Company's financial position, results of
operations or cash flows.
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has been audited by the Internal Revenue Service through
the fiscal year ended June 1990. The results of such audits did not have a
material effect on the Company's financial position.
11. RELATED PARTY TRANSACTIONS:
Subsidiaries of Holdings lease the Madison Avenue, Beverly Hills and
Chicago stores from Isetan. Pursuant to the terms of these leases, the Company
is required to pay base rent, as defined, and all operating expenses. Total rent
expense (excluding operating expenses) related to these leases was approximately
$4,611,000 in the six months ended January 30, 1999 and $9,223,000, $9,297,000
and $15,804,000, in fiscal 1998, 1997 and 1996, respectively.
In addition, the Predecessor Company had previously entered into
various transactions and agreements with affiliate companies and other related
parties. The affiliates were or had been primarily engaged in the operation of
real estate properties, Barneys New York credit card operations, and certain
leased departments. The following information summarizes the activity between
the Predecessor Company and balances due to or from these related parties at
January 30, 1999, August 1, 1998 and August 2, 1997 and for the six months ended
January 30, 1999 and the fiscal years ended 1998, 1997 and 1996, respectively.
Substantially all of the agreements and transactions described below had either
ceased or been terminated prior to November 1997.
Prior to the Chapter 11 filing the Predecessor Company advanced amounts
to certain shareholders. The Predecessor Company assigned amounts due from these
shareholders to another affiliate during the year the amounts were advanced. At
August 1, 1998 and August 2, 1997 no amounts were due from these shareholders.
The Predecessor Company leased various retail, office and parking lot
properties from affiliate companies and other related parties. Under the terms
of these leases, the Predecessor Company was required to pay base rents plus
operating expenses and real estate taxes as defined. Total rent expense
(including operating expenses) relating to these leases with affiliates and
other related parties was approximately $272,000, $6,195,000 and $7,758,000, in
fiscal 1998, 1997 and 1996, respectively.
Included above was (1) office and office related premises which were
vacated in February 1997; (2) a triple net lease with respect to the operation
of the Predecessor Company's 17th Street store in New York City which the
Predecessor Company vacated in August 1997; and (3) parking lots on 17th Street
which were vacated in September 1997. Each of the leases between the Predecessor
Company and these certain affiliates, for the applicable properties, were
rejected by orders of the Court during 1997 or 1998.
The Predecessor Company sub-leased certain retail space to an
affiliate. The affiliate leases this space to a third-party retailer. The lease
between the Predecessor Company and this affiliate was rejected by order of the
Court in February 1997. Rental income under this agreement for 1997 and 1996 was
approximately $195,000 and $370,000, respectively.
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Barneys subleased retail and warehouse space from a third party that
leased said space from an affiliate. Pursuant to the terms of the sublease,
Barneys was required to pay base rent and all operating expenses as defined. The
sublease was rejected by order of the Court in December 1998. Total rent expense
(including operating expenses) related to this sublease was approximately
$374,000 in the six months ended January 30, 1999 and $2,055,000, $2,265,000 and
$2,765,000 in fiscal 1998, 1997 and 1996, respectively.
Pursuant to a purported lease between the Predecessor Company, an
affiliate, and Isetan, if the annual minimum rent to be received by a joint
venture between the affiliate and Isetan relating to certain office space was
less than $13,700,000 after January 1, 1996, the Predecessor Company was to fund
the short-fall. The Predecessor Company was disputing this purported lease and
had not made any payments related to the short-fall. In November 1996 pursuant
to Court approval, the Predecessor Company rejected the purported lease, if it
was construed to be a lease, together with those provisions of other agreements
that pertain solely to the purported leasing of such office space and any rent
obligations relating thereto. No rent expense was recorded related to this
purported lease.
During the six months ended January 30, 1999 and fiscal 1998, 1997 and
1996 the Predecessor Company charged affiliates approximately $1,000,000,
$418,000, $583,000 and $466,000, respectively, for various expenses. In December
1998, in connection with the approval of the Plan and the settlements included
therein, uncertainties were resolved with respect to collectibility issues of
certain amounts due from affiliated entities. Accordingly, the Predecessor
Company was able to reduce its affiliate receivable reserve by approximately
$1,900,000, principally representing cash payments from an affiliate. This
reserve reversal reduced Selling, general and administrative expenses and
reorganization costs by approximately $500,000 and $1,400,000, respectively, in
the six months ended January 30, 1999.
Barneys licensed the right to sell certain branded merchandise from an
affiliate. Royalty expense incurred related to this license was $86,322 in the
six months ended January 30, 1999 and $171,000, $127,000 and $115,000 in fiscal
1998, 1997, and 1996, respectively. Pursuant to the Plan, the affiliate
transferred its rights in this license to Barneys.
Various affiliates operated beauty salons and restaurants located in
certain retail stores of the Predecessor Company. Pursuant to operating license
agreements, the affiliates were entitled to receive the sales proceeds less
license costs and certain other fees ("the net proceeds"). During 1997, the
Predecessor Company advanced to these affiliates approximately $211,000 less
than the net proceeds. In addition, pursuant to these agreements, the
Predecessor Company earned license fee income of approximately $794,000 and
$121,000 in 1997 and 1996, respectively. The Predecessor Company had fully
reserved the receivables due from these affiliates. During 1997, all beauty
salon and restaurant operating licenses with affiliates were terminated.
At August 1, 1998 and August 2, 1997, the Predecessor Company was due
approximately $28,730,000 and $28,575,000 respectively, from affiliates. The
Predecessor Company had a full reserve against these balances at the respective
year-ends. In addition at August 1, 1998 and August 2, 1997, approximately
$2,760,000 and $2,733,000 respectively, was due to various other affiliates of
the Predecessor Company and was principally included in Liabilities subject to
compromise.
F-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. STOCKHOLDERS' EQUITY:
Holdings' Certificate of Incorporation (the "Charter") provides that
the total number of all classes of stock which Holdings will have authority to
issue is 35,000,000 shares, of which 25,000,000 will be Holdings Common Stock,
and 10,000,000 shares will be preferred stock both having a par value of $0.01
per share. Of such shares, there were outstanding at January 30, 1999,
12,500,000 shares of Holdings Common Stock and 20,000 shares of Preferred Stock.
Holdings is prohibited by its Charter from issuing any class or series of
non-voting securities.
(A) HOLDINGS COMMON STOCK
Each share of Holdings Common Stock entitles its holder to one vote.
The holders of record of Holdings Common Stock will be entitled to participate
equally in any dividend declared by the Board of Directors of Holdings. Each
share of Holdings Common Stock is entitled to share ratably in the net worth of
Holdings upon dissolution. So long as any shares of Preferred Stock are
outstanding, no dividends on Holdings Common Stock may be paid until all accrued
and unpaid dividends on the Preferred Stock have been paid.
(B) UNSECURED CREDITORS WARRANTS
The Unsecured Creditors Warrants are exercisable for up to an aggregate
of 1,013,514 shares of Holdings Common Stock at an exercise price of $8.68 per
share. The Unsecured Creditors Warrants became exercisable on the Effective Date
and expire at 5:00 p.m., New York City time on May 15, 2000.
The number of shares for which the Unsecured Creditors Warrants are
exercisable, and the exercise price of the Unsecured Creditors Warrants, are
subject to antidilution adjustment if the number of shares of Holdings Common
Stock is increased by a dividend or other share distribution, or by a stock
split or other reclassification of shares of Holdings Common Stock. In addition,
the exercise price of the Unsecured Creditors Warrants is subject to decrease if
Holdings distributes, to all holders of Holdings Common Stock, evidences of its
indebtedness, any of its assets (other than cash dividends), or rights to
subscribe for shares of Holdings Common Stock expiring more than 45 days after
the issuance thereof.
In the event that Holdings merges or consolidates with another person,
the holders of the Unsecured Creditors Warrants will be entitled to receive, in
lieu of shares of Holdings Common Stock or other securities issuable upon
exercise of the Unsecured Creditors Warrants, the greatest amount of securities,
cash or other property to which such holder would have been entitled as a holder
of Holdings Common Stock or such other securities.
(C) PREFERRED STOCK
20,000 shares of Series A Preferred Stock are outstanding. The
Preferred Stock has an aggregate liquidation preference of $2,000,000 (the
"Liquidation Preference"), plus any accrued and unpaid dividends thereon
(whether or not declared). Dividends on the Preferred Stock are cumulative
(compounding annually) from the Effective Date and are payable when and as
declared by the Board of Directors of Holdings, at the rate of 1% per annum on
the Liquidation Preference. No dividends shall be payable on any shares of
Holdings Common Stock until all accrued and unpaid dividends on the Preferred
Stock have been paid.
F-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The shares of Preferred Stock will not be redeemable prior to the sixth
anniversary of the Effective Date. On or after the sixth anniversary of the
Effective Date, the Preferred Stock will be redeemable at the option of Holdings
for cash, in whole or in part, at an aggregate redemption price equal to the
Liquidation Preference, plus any accrued and unpaid dividends thereon. In
addition, Holdings will be required to redeem the Preferred Stock in whole on
the tenth anniversary of the Effective Date at an aggregate redemption price
equal to the Liquidation Preference, plus any accrued and unpaid dividends
thereon.
The shares of Preferred Stock will be convertible, in whole or in part,
at the option of the holders thereof, any time on or after the earlier of the
fifth anniversary of the Effective Date and the consummation of a rights
offering by Holdings (which offering meets certain conditions), into 162,500
shares of Holdings Common Stock. Any accrued and unpaid dividends on the
Preferred Stock will be cancelled upon conversion. Conversion rights will be
adjusted to provide antidilution protection for stock splits, stock
combinations, mergers or other capital reorganization of Holdings. In addition,
upon a sale of Holdings, Holdings's right to redeem the Preferred Stock and the
holders' right to convert the Preferred Stock will be accelerated. The Preferred
Stock has one vote per share and votes together with the Holdings Common Stock
on all matters other than the election of directors.
(D) SERIES A-1 CONVERTIBLE PREFERRED STOCK - PREDECESSOR COMPANY -
In a prior year, Barneys America authorized and issued 120,000 Series
A-1 Convertible Preferred Stock (Series A-1) to Isetan of America Inc. for an
aggregate purchase price of $12,000,000. Such amount was recorded by the Company
as Minority interest at August 1, 1998. Pursuant to the Plan, Isetan contributed
this investment to Barneys.
13. EMPLOYEE BENEFIT PLANS:
(A) EMPLOYEES STOCK PLAN -
Pursuant to the Plan, Holdings established the Barneys Employees Stock
Plan effective January 28, 1999 for all eligible employees. The assets of this
plan consist of 15,000 shares of new Holdings Preferred Stock which were
contributed to the Barneys Employees Stock Plan Trust pursuant to the Plan.
(B) UNION PLAN -
Pursuant to agreements with unions, the Company is required to make
periodic pension contributions to union-sponsored multiemployer plans which
provide for defined benefits for all union members employed by the Company.
Union pension expense aggregated $1,329,000 in the six months ended January 30,
1999 and $1,014,000, $1,137,000 and $1,171,000 in fiscal 1998, 1997 and 1996,
respectively.
With Court approval, the Predecessor Company elected to withdraw from
one of the union-sponsored multi-employer plans. Accordingly, Union pension
expense in the six months ended January 30, 1999 includes a charge of
approximately $862,000 to effectuate the withdrawal.
F-26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The value of the remaining plans unfunded vested liabilities allocable
to the Company, and for which it may be liable upon withdrawal is estimated to
be $1,365,000 at January 30, 1999. The Company, at present, has no intentions of
withdrawing from this plan.
(C) MONEY PURCHASE PLAN -
The Company's Money Purchase Plan is a noncontributory defined
contribution plan covering substantially all nonunion employees fulfilling
minimum age and service requirements and provides for contributions of 5% of
compensation (as defined) not to exceed the maximum allowable as a deduction for
income tax purposes. The Predecessor Company recorded Money Purchase Plan
expense of $295,000, $1,023,000, $1,216,000 and $1,469,000 in the six months
ended January 30, 1999 and fiscal 1998, 1997 and 1996, respectively.
(D) 401(K) PLAN -
The Company has a 401(k) defined contribution plan for the benefit of
its eligible employees who elect to participate. Employer contributions are made
to the plan in amounts equal to 50% of employee contributions, less than or
equal to 6% of their salary, as defined. Plan expense aggregated $292,000,
$596,000, $630,000 and $706,000 in the six months ended January 30, 1999 and
fiscal 1998, 1997 and 1996, respectively.
14. OTHER
Allen Questrom, a member of the Board of Directors, became the
Chairman, President and Chief Executive Officer of the Company as of May 5, 1999
and is also a member of the board of Polo Ralph Lauren Corporation. During the
six months ended January 30, 1999 and fiscal 1998, 1997 and 1996, the
Predecessor Company purchased approximately $1,012,000, $1,814,000, $212,000,
and $140,000 respectively, of products from Polo Ralph Lauren Corporation.
Approximately 39% of the Company's employees are covered under
collective bargaining agreements. The Company is currently engaged in
negotiations with the union representing employees at its New York City stores,
including the Madison Avenue flagship store. The applicable collective
bargaining agreement with this union, covering approximately 25% of employees,
expired on March 31, 1999. In addition, approximately 9% of the Company's
employees are covered under collective bargaining agreements expiring in 1999.
During 1996, the Predecessor Company recorded a gain of approximately
$5,700,000 representing the net proceeds received by the Company under life
insurance policies on an officer of the Company.
This gain is included in Expenses: Other - net.
Additionally, during 1996, the Predecessor Company recognized a
$9,440,000 translation gain on a foreign denominated debt obligation to Isetan.
This gain is included in Royalty income and foreign exchange gains.
F-27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 28, 1999
BARNEYS NEW YORK, INC.
By: /s/ Allen I. Questrom
------------------------------
Name: Allen I. Questrom
Title: President
<PAGE>
EXHIBIT INDEX
EXHIBIT NAME OF EXHIBIT
- ------- ---------------
2.1 Second Amended Joint Plan of Reorganization for Barney's, Inc.
("Barneys") and certain of its affiliates proposed by Whippoorwill
Associates, Inc., Bay Harbour Management L.C. and the Official
Committee of Unsecured Creditors dated November 13, 1998 (the "Plan
of Reorganization")
2.2 Supplement to the Plan of Reorganization dated December 8, 1998
2.3 Second Supplement to the Plan of Reorganization dated December 16,
1998
3.1 Certificate of Incorporation of Barneys New York, Inc. ("Holdings"),
filed with the Secretary of State of the State of Delaware on
November 16, 1998
3.2 Certificate of Designation for Series A Preferred Stock of Holdings
filed with the Secretary of State of the State of Delaware on
December 24, 1998.
3.3 By-laws of Holdings
4.1 Warrant Agreement between Holdings and American Stock Transfer &
Trust Company as Warrant Agent dated as of January 28, 1999
4.2 Specimen of Holdings' Common Stock Certificate
10.1 Credit Agreement, among Barneys, Barneys (CA) Lease Corp., Barneys
(NY) Lease Corp., Basco All-American Sportswear Corp., BNY Licensing
Corp. and Barneys America (Chicago) Lease Corp., as Borrowers, the
lenders party thereto, Citicorp USA, Inc. ("CUSA"), as
Administrative Agent for such lenders, and General Electric Capital
Corporation, as Documentation Agent (the "Credit Agreement"), dated
as of January 28, 1999
10.2 First Amendment to the Credit Agreement dated as of March 23, 1999.
10.3 Guarantee by Holdings in favor of CUSA as the Administrative Agent
dated as of January 28, 1999
10.4 Security Agreement by Holdings in favor of CUSA as the
Administrative Agent dated as of January 28, 1999
10.5 Pledge Agreement by Holdings in favor of CUSA as the Administrative
Agent dated as of January 28, 1999
10.6 Pledge Agreement by Barneys in favor of CUSA as the Administrative
Agent dated as of January 28, 1999
10.7 Security Agreement by Barneys in favor of CUSA as the Administrative
Agent dated as of January 28, 1999
10.8 Trademark Security Agreement by Barneys and BNY Licensing Corp. in
favor of CUSA as the Administrative Agent dated as of January 28,
1999
10.9 Cash Collateral Pledge Agreement by Barneys in favor of CUSA as the
Administrative Agent dated as of January 28, 1999
II-1
<PAGE>
EXHIBIT NAME OF EXHIBIT
- ------- ---------------
10.10 Pledge Agreement by Barneys America, Inc. in favor of CUSA as the
Administrative Agent dated as of January 28, 1999
10.11 Security Agreement by Barneys America, Inc. in favor of CUSA as the
Administrative Agent dated as of January 28, 1999
10.12 Security Agreement by PFP Fashions Inc. in favor of CUSA as the
Administrative Agent dated as of January 28, 1999
10.13 Security Agreement by Barneys (CA) Lease Corp. in favor of CUSA as
the Administrative Agent dated as of January 28, 1999
10.14 Security Agreement by Barneys (NY) Lease Corp. in favor of CUSA as
the Administrative Agent dated as of January 28, 1999
10.15 Security Agreement by Basco All-American Sportswear Corp. in favor
of CUSA as the Administrative Agent dated as of January 28, 1999
10.16 Security Agreement by Barneys America (Chicago) Lease Corp. in favor
of CUSA as the Administrative Agent dated as of January 28, 1999
10.17 Security Agreement by BNY Licensing Corp. in favor of CUSA as
Administrative Agent dated as of January 28, 1999
10.18 Subordinated Note issued by Barneys and payable to Isetan of
America, Inc. dated January 28, 1999 (the "Isetan Note")
10.19 Guarantee by Holdings of the Isetan Note dated January 28, 1999
10.20 Subordinated Note issued by Barneys and payable to Bi-Equipment
Lessors LLC, dated January 28, 1999 (the "Bi-Equipment Lessors
Note")
10.21 Guarantee by Holdings of the Bi-Equipment Lessors Note dated as of
January 28, 1999
10.22 Security Agreement by Barneys in favor of Bi-Equipment Lessors LLC
dated as of January 28, 1999
10.23 License Agreement among Barneys, BNY Licensing Corp. and Barneys
Japan Co. Ltd. dated as of January 28, 1999
10.24 Stock Option Plan for Non-Employee Directors effective as of March
11, 1999.
10.25 Services Agreement, among Meridian Ventures, Inc., Thomas C. Shull
and Barneys dated as of August 1, 1998
10.26 Services Agreement Amendment among Meridian Ventures, Inc., Thomas
C. Shull, Barneys and Holdings dated as of January 28, 1999
10.27 Registration Rights Agreement by and among Holdings and the Holders
party thereto dated as of January 28, 1999
II-2
<PAGE>
EXHIBIT NAME OF EXHIBIT
- ------- ---------------
10.28 Employment Agreement between Holdings and Allen I. Questrom to be
dated as of May 5, 1999*
10.29 Registration Rights Agreement between Holdings and Allen I. Questrom
to be dated as of May 5, 1999*
11 Statement re: computation of per share earnings
21 Subsidiaries of the registrant
27 Financial Data Schedule
- ------------------
* To be filed by amendment.
II-3
<PAGE>
Exhibit 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ----------------------------------------------X
In re : Chapter 11 Case Nos.
96 B 40113 (JLG)
BARNEY'S, INC., ET AL. :
(Jointly Administered)
Debtors. :
- ----------------------------------------------X
SECOND AMENDED JOINT PLAN OF REORGANIZATION
FOR THE DEBTORS PROPOSED BY WHIPPOORWILL
ASSOCIATES, INC., BAY HARBOUR MANAGEMENT L.C. AND
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
WEIL, GOTSHAL & MANGES LLP STROOCK & STROOCK & LAVAN LLP
767 Fifth Avenue 180 Maiden Lane
New York, New York 10153 New York, New York 10038
(212) 310-8000 (212) 806-5400
Attorneys for Whippoorwill Attorneys for the Official Committee
Associates, Inc., and Bay of Unsecured Creditors
Harbour Management L.C.
Dated: New York, New York
November 13, 1998
<PAGE>
SECOND AMENDED JOINT PLAN OF REORGANIZATION
The Plan Proponents hereby propose the following second
amended joint chapter 11 plan of reorganization for each of the Debtors:
I. SECTION ONE: DEFINITIONS AND INTERPRETATION
DEFINITIONS
The following terms used herein and in the Disclosure
Statement shall have the respective meanings defined below unless the context
otherwise requires.
1.1. AD HOC COMMITTEE ADVERSARY PROCEEDING means the adversary proceeding
captioned BEAR STEARNS & CO., INC., ET AL. V. ISETAN COMPANY OF AMERICA, ET AL.,
adversary proceeding number 97/8520A, currently pending before the Bankruptcy
Court in the Debtors' chapter 11 cases and all related motions and appeals
arising under, or related to, such adversary proceeding.
1.2. Administrative Claim means any right to payment constituting a cost
or expense of administration of the Reorganization Cases under sections 503(b)
and 507(a)(1) of the Bankruptcy Code, including (a) any actual and necessary
costs and expenses of preserving the estates of the Debtors, (b) any actual and
necessary costs and expenses of operating the businesses of the Debtors, (c) any
indebtedness or obligations incurred or assumed by the Debtors in Possession in
connection with the conduct of their business or for the acquisition or lease of
their properties, (d) any allowances of compensation and reimbursement of
expenses to the extent allowed by Final Order under section 330 or 503 of the
Bankruptcy Code entered prior to the Confirmation Date, whether fixed before or
after the Effective Date, (e) any fees or charges assessed against the estate of
the Debtors under section 1930, chapter 123, title 28, United States Code,
including any post-Confirmation Date and post-Effective Date fees and charges,
and (f) any Claims treated as Administrative Claims in accordance with this
Plan.
1.3. Aetna means Aetna Life Insurance Company.
1.4. Aetna Claims means any Claims of Aetna relating to the Aetna
Mortgage.
1.5. Aetna Mortgage means that certain mortgage loan, dated as of April
27, 1987, between Aetna and Preen, Cholderton and Amjon, in the aggregate
principal amount of $21,400,000, with respect to the collective properties
located at 138-160 West 17th Street and 113-115 Seventh Avenue, New York, New
York.
1.6. Aetna Settlement shall have the meaning ascribed to such term in
section 2.5 of this Plan.
1
<PAGE>
1.7. Affiliate means, with reference to any Entity, any other Entity that,
within the meaning of Rule 12b-2 promulgated under the Securities Exchange Act
of 1934, as amended, "controls," is "controlled by" or is under "common control
with" such Entity.
1.8. Allowed means, with reference to any Claim or Equity Interest, (a)
any Claim against or Equity Interest in any of the Debtors, proof of which was
filed within the applicable period of limitation fixed by the Bankruptcy Court
in accordance with Rule 3003(c)(3) of the Bankruptcy Rules as to which (i) no
objection to the allowance thereof has been interposed within the applicable
period of limitation fixed by this Plan, the Bankruptcy Code, the Bankruptcy
Rules, the Local Rules or a Final Order, or (ii) no action has been commenced to
avoid such Claim or Equity Interest within the applicable period of limitation
fixed by this Plan, or (iii) an objection has been interposed, to the extent
such Claim or Equity Interest has been allowed (whether in whole or in part) by
a Final Order, (b) if no proof of claim was so filed, any Claim against or
Equity Interest in the Debtors which has been listed by the Debtors in their
Schedules as liquidated in amount and not disputed or contingent as to which (i)
no objection to the allowance thereof has been interposed within the applicable
period of limitation fixed by this Plan, the Bankruptcy Code, the Bankruptcy
Rules, the Local Rules or a Final Order, or (ii) no action has been commenced to
avoid such Claim or Equity Interest within the applicable period of limitation
fixed by this Plan, or (iii) an objection has been interposed, to the extent
such Claim or Equity Interest has been allowed (whether in whole or in part) by
a Final Order, (c) any Claim arising from the recovery of property under section
550 or 553 of the Bankruptcy Code and allowed in accordance with section 502(h)
of the Bankruptcy Code, or (d) any Claim allowed hereunder; provided, however,
that with reference to any Claim, the term "Allowed" shall not, for purposes of
distribution under this Plan, include interest on such Claim from the
Commencement Date.
1.9. Amjon means Amjon Realty, Inc., a New York corporation.
1.10. Ballot means the form or forms distributed to each holder of an
impaired Claim or Equity Interest on which is to be indicated acceptance or
rejection of this Plan.
1.11. Ballot Agent means The Altman Group, Inc., 60 East 42nd Street,
Suite 1241, New York, New York 10165, telephone: (212) 681-9600, fax: (212)
681-1383.
1.12. Ballot Date means the date set by the Bankruptcy Court by which all
Ballots must be received.
1.13. BankBoston DIP Facility means that certain Revolving Credit and
Guarantee Agreement, dated as of July 16, 1997, and as amended from time to
time, among Barneys, as borrower, Barneys America, as guarantor, Preen, BNY
Licensing, BNY Leasing and each of the other subsidiaries of Barneys and Preen
named therein, as guarantors, the lenders party thereto, BankBoston Retail
Finance, Inc. (formerly known as GBFC, Inc.), as collateral agent, and
BankBoston, N.A., as administrative agent, or any successor or replacement
debtor-in-possession loan facility.
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1.14. Bankruptcy Code means the Bankruptcy Reform Act of 1978, as amended
and codified in title 11, United States Code.
1.15. Bankruptcy Court means the United States District Court for the
Southern District of New York having jurisdiction over the Reorganization Cases
and, to the extent of any reference under section 157, title 28, United States
Code, the unit of such District Court constituted under section 151, title 28,
United States Code.
1.16. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under section 2075, title 28,
United States Code.
1.17. Barneys means Barney's, Inc., a New York corporation.
1.18. Barneys Affiliates means the Entities listed on Schedule 1.18 to
this Plan.
1.19. Barneys America means Barneys America, Inc., a Delaware corporation.
1.20. Barneys America (Chicago) Lease Corp. means Barneys America
(Chicago) Lease Corp., a Delaware corporation, to be formed pursuant to section
28.3.3 of this Plan.
1.21. Barneys Asia means Barneys Asia Co. LLC, a Delaware limited
liability company, to be formed in accordance with the Restructuring
Transactions.
1.22. Barneys Asia License Agreement means the license to be granted to
Barneys Asia by BNY Licensing in accordance with the Restructuring Transactions.
1.23. Barneys (CA) Lease Corp. means Barneys (CA) Lease Corp., a Delaware
corporation, to be formed pursuant to section 28.2.4 of this Plan.
1.24. Barneys Debtors means Barneys, Barneys America, BNY Licensing, BNY
Leasing, Basco and PFP.
1.25. Barneys Japan means Barneys Japan Co. Ltd., licensee under the
Trademark License Agreement with BNY Licensing, as licensor.
1.26. Barneys (NY) Lease Corp. means Barneys (NY) Lease Corp., a Delaware
corporation, to be formed pursuant to section 28.2.4 of this Plan.
1.27. Barneys Releasees means, collectively, (a) the Barneys Affiliates,
Reen Japan and the Preen Affiliates, (b) the respective successors,
predecessors, assignors or assignees of any of the foregoing, in their capacity
as such, (c) all current or former stockholders, partners or owners of any of
the foregoing, in their capacity as such, and (d) all current and former
officers, directors, trustees and employees (other than Former Employees) of any
of the foregoing, and all current attorneys, accountants, financial
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advisors and investment bankers of or to any of the foregoing in their capacity
as such (other than John Brincko, Brincko Associates, Thomas Paccioretti and
Paccioretti Associates).
1.28. Basco means Basco All-American Sportswear Corp., a New York
corporation.
1.29. Bay Harbour means Bay Harbour Management L.C., a Florida limited
company, for its managed accounts and/or Bay Harbour Management L.C., in its
individual capacity, as the context requires.
1.30. Beverly Hills Ground Lease shall have the meaning ascribed to such
term in section 2.2.B.(i)(b) of this Plan.
1.31. Beverly Hills Property means the land and improvements relating to
the BARNEYS NEW YORK store located in Beverly Hills, California.
1.32. BI-Equipment Lessors means BI-Equipment Lessors, LLC, a New York
limited liability company.
1.33. BI-Equipment Lessors Note means the 5-year bullet maturity secured
subordinated promissory note in the aggregate principal amount of $35,250,000,
at an interest rate of 11 1/2% per annum, to be issued by Barneys on the
Effective Date in full and complete satisfaction of the Claims of BI-Equipment
Lessors against the Debtors, which promissory note shall (i) be secured by a
first priority Lien on the equipment subject to the Equipment Leases under which
BI-Equipment Lessors is the lessor, and (ii) be reduced in principal amount on a
dollar-for-dollar basis to account for the amount by which any lease payments
made by the Debtors from and after June 1, 1998 to the BI-Equipment Lessors
pursuant to the Equipment Leases under which the BI-Equipment Lessors is the
lessor or pursuant to any Bankruptcy Court approved stipulation between the
BI-Equipment Lessors and the Debtors exceeds the interest payable under the
BI-Equipment Lessors Note had such note been issued on June 1, 1998. The
BI-Equipment Lessors Note shall be substantially in the form included in the
Plan Supplement.
1.34. BI-Equipment Lessors Security Deposit means the security deposit
deposited by certain of the Debtors with BI-Equipment Lessors as security for
such Debtors' obligations under the Equipment Leases with BI-Equipment Lessors,
plus accrued interest thereon.
1.35. BNY Credit means BNY Credit, Inc., a Delaware corporation.
1.36. BNY Credit LP means BNY Credit Co., L.P., a Delaware limited
partnership.
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1.37. BNY Leasing means BNY Leasing, Inc., a Delaware corporation.
1.38. BNY Licensing means BNY Licensing Corp., a Delaware corporation.
1.39. BNY Licensing Intercompany Receivable means that certain promissory
note, dated as of December 28, 1989, with Barneys, as payor, and BNY Licensing,
as payee, in the original principal amount of $28,019,508 and any other
indebtedness owing from Barneys to BNY Licensing.
1.40. BNY Licensing Note means that certain promissory note, dated
December 28, 1989, with BNY Licensing as payor and Isetan as payee.
1.41. Breaching Purchaser shall have the meaning ascribed to such term in
section 26.5 of this Plan.
1.42. Business Day means any day other than a Saturday, a Sunday, any
other day on which banking institutions in New York City are required or
authorized to close by law or executive order.
1.43. Calireen means Calireen Realty Corp., a California corporation.
1.44. Cash means legal tender of the United States of America.
1.45. Causes of Action means any and all actions, causes of action,
liabilities, obligations, rights, suits, debts, sums of money, damages,
judgments, claims and demands whatsoever, whether known or unknown, in law,
equity or otherwise.
1.46. Chelsea means Chelsea Capital Corp., a New York corporation.
1.47. Chicago Property means the land and improvements relating to the
BARNEYS NEW YORK store located in Chicago, Illinois.
1.48. Cholderton means Cholderton Realty Corp., a New York corporation.
1.49. Claim means any (a) right to payment or alleged right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured; and (b) right to an equitable remedy or alleged right to
an equitable remedy for breach of performance of an obligation, if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy or such right to payment is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
1.50. Clerk means the Clerk of the Bankruptcy Court.
1.51. Collateral means any property or interest in property of the estate
of a Debtor subject to a Lien to secure the payment or performance of a Claim
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1.52. Commencement Date means the date on which the Debtors commenced the
Reorganization Cases.
1.53. Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
1.54. Confirmation Hearing means the hearing held by the Bankruptcy Court
to consider confirmation of this Plan, as it may be adjourned or continued from
time to time.
1.55. Confirmation Order means the order of the Bankruptcy Court
confirming this Plan.
1.56. Construction Claim means a General Unsecured Claim arising from the
construction of each of the Beverly Hills Property, the Chicago Property, the
Madison Avenue Property and the Office Unit (other than claims related to any
tenant improvements made to the Office Unit or other improvements made to the
Office Unit with Isetan's consent from the time that Isetan took over management
of the Office Unit as administrative partner, for which Barneys or New Barneys
shall not be responsible) that is not an Insured Claim.
1.57. Convenience Claim means (a) an Allowed Unsecured Claim against any
of the Debtors equal to $2,300 or less, (b) the Allowed Unsecured Claim against
any of the Debtors of a holder that has irrevocably elected on its Ballot to
reduce its Claim against any of the Debtors to the amount of $2,300 or less,
and/or (c) a Disputed Unsecured Claim against any of the Debtors that becomes an
Allowed Unsecured Claim of $2,300 or less with the consent of and in the amount
agreed to by a Debtor and the Plan Proponents.
1.58. Copelco means Copelco Capital, Inc.
1.59. Copelco Note means the 5-year bullet maturity secured subordinated
promissory note in the aggregate principal amount of $140,000, at an interest
rate of 11 1/2% per annum, to be issued by Barneys on the Effective Date in full
and complete satisfaction of the Claims of Copelco against the Debtors, which
promissory note shall (i) be secured by a first priority Lien on the equipment
subject to the Equipment Leases under which Copelco is the lessor and (ii) be
reduced in principal amount on a dollar-for-dollar basis to account for the
amount by which any lease payments made by the Debtors from and after June 1,
1998 to Copelco pursuant to the Equipment Leases under which Copelco is the
lessor or pursuant to any Bankruptcy Court approved stipulation between Copelco
and the Debtors exceeds the interest payable under the Copelco Note had such
note been issued on June 1, 1998. The Copelco Note shall be substantially in the
form included in the Plan Supplement.
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1.60. Copelco Security Deposit means the security deposit deposited by
certain of the Debtors with Copelco as security for such Debtors' obligations
under the Equipment Leases with Copelco, plus accrued interest thereon.
1.61. Creditors Committee means the Official Committee of Unsecured
Creditors appointed by the Office of the United States Trustee for the Southern
District of New York in the Reorganization Cases.
1.62. Debtors means, collectively, Barneys, Barneys America, BNY
Licensing, BNY Leasing, PFP, Basco, Preen, Madneer, Pressmad, Pressned, Preswil,
Reen Japan, Amjon, Chelsea, Cholderton, Goderich, Martinton, Prescredit, BNY
Credit, Gaddesden and 106 Seventh Corp.
1.63. Debtors in Possession means the Debtors in their respective
capacities as debtors in possession under sections 1107(a) and 1108 of the
Bankruptcy Code.
1.64. Deficiency Claim means, with reference to a Claim secured by a Lien
against Collateral, an amount equal to the difference between (a) the aggregate
amount of such Claim after giving effect to the operation of section
1111(b)(1)(A) of the Bankruptcy Code and (b) the amount of such Claim that is a
Secured Claim; provided, however, that, in the event that the Class in which
such Secured Claim is classified makes the election under section 1111(b)(2) of
the Bankruptcy Code in accordance with Rule 3014 of the Bankruptcy Rules, the
Deficiency Claim otherwise relating to such Secured Claim shall be extinguished.
1.65. Disbursing Agent means New Barneys, unless the Plan Proponents
designate an alternative party prior to the Confirmation Date.
1.66. Disclosure Statement means the Disclosure Statement relating to this
Plan, dated as of the date hereof, including the exhibits thereto, as the same
may be amended, modified or supplemented from time to time.
1.67. Disputed Administrative Claims Cash Reserve means one or more
segregated accounts in which Cash shall be held in accordance with section 30.3
hereof.
1.68. Disputed Claim means a Claim against a Debtor to the extent that (a)
the allowance of such Claim is the subject of an objection, appeal or a motion
to estimate interposed by a party in interest, which objection, appeal or motion
has not been determined by a Final Order, or (b) the Claim is scheduled as
disputed, contingent or unliquidated, or (c) any Claim is scheduled as other
than disputed, contingent or unliquidated, that portion of a Claim in excess of
the amount of the Claim scheduled by the Debtors.
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1.69. Disputed Claims Equity Reserve means the New Common Stock that shall
be issued by New Barneys and held in reserve by New Barneys for distribution to
holders of Disputed Claims that become Allowed Claims in accordance with section
30.4 hereof.
1.70. Distributable Shares means the 33.583% of the outstanding shares of
New Common Stock to be issued by New Barneys on the Effective Date to holders of
Allowed General Unsecured Claims against the Debtors.
1.71. Effective Date means the date upon which each of the conditions
precedent specified in section 32.2 hereof shall have been satisfied or waived
in accordance with section 32.3 hereof.
1.72. Entity has the meaning assigned to such term in section 101(15) of
the Bankruptcy Code.
1.73. Equipment Leases means the leases of furniture, fixtures and certain
equipment used in the operation of certain of the Debtors' businesses between
such Debtors, as lessees, and the Equipment Lessors.
1.74. Equipment Lessors means, collectively, BI-Equipment Lessors, Copelco
and Hancock.
1.75. Equipment Lessors Claim means any Claim of an Equipment Lessor
relating to the Equipment Leases.
1.76. Equipment Lessors Settlement means the settlement agreement, as
authorized pursuant to Bankruptcy Rule 9019, between the Plan Proponents, on
behalf of the Debtors' chapter 11 estates, and the Equipment Lessors, the terms
of which settlement agreement is contained in section 2.6 of this Plan.
1.77. Equity Interest means any capital stock, partnership interest,
limited liability company membership interest or other ownership interest in a
Debtor or in any Entity, whether or not transferable, and any warrant or right
to purchase, sell or subscribe for an ownership interest or other equity
security in any of the Debtors or in any Entity.
1.78. Equity Purchase Payment means the aggregate Cash payment of
$1,250,000 as authorized under this Plan to be made by New Barneys to Preen,
Martinton and Chelsea to purchase such Debtors' Equity Interests in Barneys, and
to be paid in accordance with each such Debtor's Ratable Proportion of such
Equity Interests.
1.79. Existing Leases means the existing leases for the Beverly Hills
Property, the Chicago Property and the Madison Avenue Property, respectively,
which leases shall be amended and restated as the New Leases, then be assumed by
Barneys, Madneer and Barneys America, as applicable, pursuant to section 365(a)
of the Bankruptcy Code and
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then be assigned to and assumed by Barneys (CA) Lease Corp., Barneys America
(Chicago) Lease Corp. and Barneys (NY) Lease Corp., as applicable.
1.80. Exit Facility means the post-confirmation financing facility to be
entered into on the Effective Date by Barneys and/or certain of its Affiliates
and subsidiaries and the lenders providing such financing.
1.81. Fall 1998 Stub Period means the period between August 2, 1998 and
January 30, 1999 representing the six month transition period to the new fiscal
year end date for Barneys and its subsidiaries.
1.82. Final Order means (a) an order of the Bankruptcy Court as to which
the time to appeal, petition for certiorari or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari or other
proceedings for reargument or rehearing shall then be pending, or (b) if an
appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Bankruptcy Court shall have been affirmed by the
highest court to which such order was appealed, or certiorari shall have been
denied or reargument or rehearing shall have been denied or resulted in no
modification of such order, and the time to take any further appeal, petition
for certiorari or move for reargument or rehearing shall have expired; provided,
however, that the possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy
Rules or the Local Rules, may be filed with respect to such order shall not
cause such order not to be a Final Order.
1.83. Former Employee means an employee of any Barneys Affiliate or Preen
Affiliate who terminated his or her employment with such Barneys Affiliate or
Preen Affiliate prior to the Commencement Date.
1.84. Gaddesden means Gaddesden Place Corp., a New York corporation.
1.85. General Unsecured Claim means any Unsecured Claim against any of the
Debtors that is not an Equipment Lessors Claim, Convenience Claim,
Administrative Claim, Priority Tax Claim, Priority Non-Tax Claim, Guarantee
Claim, Insured Claim, Isetan Claim, Intercompany Claim or Pressman Unsecured
Claim.
1.86. Goderich means Goderich Realty Corp., a New York corporation.
1.87. Greater New York means The Greater New York Savings Bank.
1.88. Greater New York Claims means any Claims of Greater New York
relating to the Greater New York Mortgage.
1.89. Greater New York Mortgage means that certain mortgage loan, dated as
of October 20, 1987, between Greater New York and Gaddesden, in the aggregate
principal
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amount of $5,825,000, with respect to the property commonly known as Block 766,
Lot 61, located at 230-234 West 17th Street, New York, New York.
1.90. Greater New York Settlement shall have the meaning ascribed to such
term in section 2.5 of this Plan.
1.91. Guarantee Claim shall have the meaning ascribed to such term in
section 36.5 of this Plan.
1.92. Hancock means John Hancock Leasing Corp.
1.93. Hancock Note means the 5-year bullet maturity secured subordinated
promissory note in the aggregate principal amount of $1,500,000, at an interest
rate of 11 1/2% per annum, to be issued by Barneys on the Effective Date in full
and complete satisfaction of the Claims of Hancock against the Debtors, which
promissory note shall (i) be secured by a first priority Lien on the equipment
subject to the Equipment Leases under which Hancock is the lessor and (ii) be
reduced in principal amount on a dollar-for-dollar basis to account for the
amount by which any lease payments made by the Debtors from and after June 1,
1998 to Hancock pursuant to the Equipment Leases under which Hancock is the
lessor or pursuant to any Bankruptcy Court approved stipulation between Hancock
and the Debtors exceeds the interest payable under the Hancock Note had such
note been issued on June 1, 1998. The Hancock Note shall be substantially in the
form included in the Plan Supplement.
1.94. Hancock Security Deposit means the security deposit deposited by
certain of the Debtors with Hancock as security for such Debtors' obligations
under the Equipment Leases with Hancock, plus accrued interest thereon.
1.95. Hokkaido means the Hokkaido Takushoku Bank Ltd.
1.96. Hokkaido Mortgages means (a) those certain mortgage loans, dated as
of April 21, 1988, between Hokkaido, Chelsea, Goderich, Preen and Martinton, in
the aggregate principal amount of $10,000,000, with respect to the properties
known as 130 West 17th Street, 136 West 17th Street, 224-226 West 17th Street
and the leasehold interest in 201 West 16th Street, New York, New York and (b)
that certain mortgage, dated as of August 10, 1988, between Hokkaido and 106
Seventh Corp., in the aggregate principal amount of $14,400,000.
1.97. Hotel Pierre Space shall have the meaning ascribed to such term in
section 2.2.B.(i)(a) of this Plan.
1.98. Independent Directors shall have the meaning ascribed to such term
in section 28.1.4 of this Plan.
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1.99. Insured Claim means any Claim against any of the Debtors payable, in
whole or part, by an insurance policy or policies issued by an insurance company
on behalf of any of the Debtors.
1.100. Intercompany Claim means any Claim held by a Debtor or an Affiliate
of a Debtor against a Debtor or an Affiliate of a Debtor that arose before the
Commencement Date.
1.101. IRC means the Internal Revenue Code of 1986, as amended.
1.102. Isetan means Isetan of America, Inc., a Delaware corporation, and
all of its direct and indirect parent companies, subsidiaries and Affiliates.
1.103. Isetan Board Designee shall have the meaning ascribed to such term
in section 28.1.4 of this Plan.
1.104. Isetan Claims means all the Claims of Isetan against the Debtors,
the Barneys Affiliates, Reen Japan and the Preen Affiliates, some or all of
which may have been guaranteed by members of the Pressman Family, including, but
not limited to, those claims asserted in Adversary Proceedings 96-8021A,
96-9055A, and 97-8520A and Arbitration Proceeding No. 13 T 133 0083696.
1.105. Isetan Contributed Assets means (i) Isetan's $3,204,497
Administrative Claim against Barneys, plus any applicable accrued interest
thereon, (ii) Isetan's 120,000 shares of Series A-1 Preferred Stock in Barneys
America and (iii) a portion of all other Isetan Claims against the Barneys
Debtors (other than any Claims against BNY Licensing relating to the BNY
Licensing Note), such that the aggregate value of the Isetan Contributed Assets
is equal to the total value of the Isetan Distributable Shares and the Isetan
Warrants plus $4 million.
1.106. Isetan Distributable Shares means the number of shares of New
Common Stock to be distributed to Isetan, pursuant to the Isetan Settlement,
obtained by multiplying 7.304% by the number of shares of New Common Stock to be
issued by New Barneys on the Effective Date (other than the Purchased Option
Shares to the extent purchased on the Effective Date).
1.107. Isetan Reimbursement Obligation shall have the meaning ascribed to
such term in section 2.2.B.(ii)(h) of this Plan.
1.108. Isetan Settlement means the settlement agreement, as authorized
pursuant to Bankruptcy Rule 9019, embodied in the letter agreement between the
Plan Proponents, on behalf of the Debtors' chapter 11 estates, and Isetan, dated
May 19, 1998, and as amended by the letter agreement dated November 13, 1998,
the material economic terms of which are summarized in section 2.2 of this Plan
and a copy of which is included in the Plan Supplement.
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1.109. Isetan Subordinated Note means the promissory note in the aggregate
principal amount of $22.5 million to be issued by Barneys to Isetan, pursuant to
the Isetan Settlement, under the Plan on the Effective Date.
1.110. Isetan Warrants means the three (3) year non-transferable warrants
authorized under the Plan to be issued on the Effective Date by New Barneys to
Isetan, pursuant to the Isetan Settlement, to purchase up to 2.25% of the shares
of New Common Stock to be outstanding on the Effective Date at an aggregate
exercise price of $14.68 per share.
1.111. Kilgour License shall have the meaning ascribed to such term in
section 2.3.A.(iii).
1.112. Liabilities means any and all costs, expenses, actions, causes of
action, suits, controversies, damages, claims, liabilities or demands of any
nature, whether known or unknown, foreseen or unforeseen, existing or
hereinafter arising, liquidated or unliquidated, matured or not matured,
contingent or direct, whether arising at common law, in equity, or under any
statute, based in whole or in part upon any act or omission or other occurrence
taking place on or prior to the Effective Date; provided, however, that
Liabilities shall not include any liabilities to Professionals for unpaid
professional fees and reimbursement of expenses accrued from and after the
Commencement Date.
1.113. Lien has the meaning assigned to such term in section 101(37) of
the Bankruptcy Code (a lien that has been avoided in accordance with any of
sections 544, 545, 546, 547, 548 and 549 of the Bankruptcy Code shall not
constitute a Lien).
1.114. Local Rules means the Local Bankruptcy Rules of the United States
Bankruptcy Court for the Southern District of New York, as the same may be
amended from time to time.
1.115. Madison Avenue Property means the retail condominium unit, and the
interest in the Common Elements (as defined in the Condominium Documents)
appurtenant to such unit, at 660 Madison Avenue, New York, New York.
1.116. Madneer means Madneer Corp., a New York corporation.
1.117. Martinton means Martinton Corp., a New York corporation.
1.118. Maximum Allowable Amount means, with respect to any Disputed Claim,
the least of the amounts (a) set forth in the proof(s) of claim filed by the
holder thereof, (b) determined by a Final Order of the Bankruptcy Court or any
other court of competent jurisdiction as the maximum fixed amount of such Claim
or as the estimated amount for such Claim for allowance, distribution and
reserve purposes, (c) in the case of a proof of claim filed in an unliquidated,
undetermined or contingent amount, as determined by a
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Final Order of the Bankruptcy Court or any other court of competent
jurisdiction, or (d) as agreed upon, in writing, by the Debtors and the holder
of a Disputed Claim.
1.119. Minimum Royalty shall have the meaning ascribed to such term in
section 2.2.C.(ii) of this Plan.
1.120. Minimum Royalty Assignment shall have the meaning ascribed to such
term in section 2.2.C.(ii) of this Plan.
1.121. Nanelle means Nanelle Associates, L.P., a New York limited
partnership.
1.122. New Barneys means Barneys New York, Inc., a Delaware corporation to
be formed in connection with this Plan.
1.123. New BNY Licensing Agreement means the amended and restated
trademark license agreement, as authorized under the Plan, to be executed on the
Effective Date by Barneys, as licensor, and BNY Licensing, as licensee, which
agreement shall contain the terms described in the Disclosure Statement and
shall be substantially in the form included in the Plan Supplement.
1.124. New Common Stock means all of the common stock of New Barneys to be
outstanding on the Effective Date.
1.125. Newireen means Newireen Associates, a New York partnership.
1.126. New Leases means the amended and restated Existing Leases to be
executed on the Effective Date by Isetan or its designee, as landlord, and
Barneys (CA) Lease Corp. with respect to the Beverly Hills Property, Barneys
America (Chicago) Lease Corp. with respect to the Chicago Property and Barneys
(NY) Lease Corp. with respect to the Madison Avenue Property, as tenants, which
leases shall be substantially in the form included in the Plan Supplement.
1.127. New Preferred Stock means the 20,000 shares of convertible
preferred stock of New Barneys, as authorized under the Plan, having an
aggregate liquidation preference of $2 million, to be issued in part to existing
employees of Barneys as incentive compensation in connection with future
services to be rendered to New Barneys and its subsidiaries and in part to
Whippoorwill and Bay Harbour for a payment in United States government issued
securities having a remaining maturity of not less than one (1) year and a value
equal to the liquidation preference of the stock so acquired, which stock shall
not be entitled to vote for directors of New Barneys and shall have the other
attributes and voting rights described in the Certificate of Designation
contained in the Plan Supplement.
1.128. New Trademark License Agreement means the new trademark license
agreement, as authorized under the Plan, to be executed on the Effective Date by
BNY
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Licensing, as licensor, and Barneys Japan, as licensee, in accordance with the
terms of the Isetan Settlement, the material terms of which are summarized in
the Disclosure Statement and which shall be substantially in the form included
in the Plan Supplement.
1.129. Oaktree means Oaktree Capital Management, Inc., and any affiliates
thereof (as the context requires), as successor to Hokkaido under the Hokkaido
Mortgages.
1.130. Oaktree Claims means any Claims of Oaktree relating to the Hokkaido
Mortgages, other than the Put Claim and the Oaktree Lease Rejection Claim.
1.131. Oaktree Lease Rejection Claim means the Claim asserted by Oaktree,
as successor in interest to Hokkaido under the Hokkaido Mortgages, arising out
of the rejection by Barneys of that certain Lease Agreement, dated as of January
1, 1988, between Preen, Chelsea, Goderich and Martinton, as lessors, and
Barneys, as lessee, as from time to time amended, supplemented or otherwise
modified.
1.132. Oaktree Settlement shall have the meaning ascribed to such term in
section 2.5 of this Plan.
1.133. Offered Share Price shall have the meaning ascribed to such term in
section 26.1 of this Plan.
1.134. Offered Shares means the 57.612% of the outstanding shares of New
Common Stock offered to holders of Subscription Rights for purchase at an
aggregate net Cash price of $62.5 million, pursuant to section 26 of this Plan.
1.135. Office Unit means the office condominium unit, and the interest in
the Common Elements (as defined in the Condominium Documents) appurtenant to
such unit, located at 660 Madison Avenue, New York, New York.
1.136. Person means an individual, corporation, partnership, joint
venture, limited liability company, association, joint stock company, trust,
estate, unincorporated organization, governmental unit, government (or agency or
political subdivision thereof), or other entity, including, without limitation,
the Debtors.
1.137. PFP means PFP Fashions, Inc., a New York corporation.
1.138. Plan means this Joint Plan of Reorganization, including the
exhibits and schedules hereto and the Plan Supplement, as the same may be
amended, modified or supplemented from time to time.
1.139. Plan Proponents means Whippoorwill, Bay Harbour and the Creditors
Committee, collectively.
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1.140. Plan Releasees means, collectively, (a) the Plan Proponents,
Whippoorwill, Bay Harbour, the current and former members of the Creditors
Committee in their capacity as such, determined as of the Ballot Date, and
Isetan, (b) the respective successors, predecessors, Affiliates, assignors or
assignees of any of same, in their capacity as such, (c) all current or former
stockholders, members, partners, or owners of any of the foregoing (including
current or former owners of any direct or indirect interest in any of the
foregoing), in their capacity as such, and (d) all current and former officers,
directors, trustees, agents, employees, attorneys, accountants, financial
advisors and investment bankers of or to any of the foregoing in their capacity
as such.
1.141. Plan Supplement means the forms of documents effectuating the
transactions contemplated by this Plan, which documents shall be filed with the
Clerk of the Bankruptcy Court no later than November 18, 1998. Upon its filing
with the Bankruptcy Court, the Plan Supplement may be inspected at the office of
the Clerk of the Bankruptcy Court during normal court hours. Holders of Claims
and Equity Interests may obtain a copy of the Plan Supplement upon written
request as set forth in the Disclosure Statement.
1.142. Preen means Preen Realty, Inc., a New York corporation.
1.143. Preen Affiliates means the Entities which are identified on
Schedule 1.143 hereto.
1.144. Preen Debtors means Preen, Pressmad, Pressned, Preswil, Madneer,
Amjon, Chelsea, Cholderton, Gaddesden, Goderich, Martinton, BNY Credit,
Prescredit and 106 Seventh Corp.
1.145. Preferred Return shall have the meaning ascribed to such term in
section 2.2.A.(iii) of this Plan.
1.146. Prescredit means Prescredit Corp., a Delaware corporation.
1.147. Pressmad means Pressmad Corp., a New York corporation.
1.148. Pressman Cash Payment means the Cash payment of $50,000 to be made
to certain members of the Pressman Family, in accordance with section 2.3 of
this Plan, on account of the existing common and preferred stock of Barneys held
by such members of the Pressman Family, which payment shall be allocated in
accordance with section 5.8.1(c) of this Plan.
1.149. Pressman Distributable Shares means the number of shares of New
Common Stock to be distributed to members of the Pressman Family obtained by
multiplying one and one-half percent (1.5%) by the number of shares of New
Common Stock to be issued by New Barneys on the Effective Date other than the
Purchased Option Shares to the extent issued on the Effective Date.
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1.150. Pressman Family means Phyllis Pressman, Robert Pressman, Eugene
Pressman, Holly Pressman, Bonnie Pressman, Elizabeth Pressman-Neubardt, Nancy
Pressman-Dressler, the Estate of Fred Pressman, the Pressman Family Trusts, any
Entities owned or controlled by any of the foregoing (except the Debtors) and
each of their respective successors and assigns.
1.151. Pressman Family Trusts means any trust that names one or more
members of the Pressman Family as a beneficiary.
1.152. PRESSMAN LETTERS OF CREDIT means the letters of credit listed on
Schedule 28.7 to this Plan.
1.153. Pressman Settlement means the settlement agreement, as authorized
pursuant to Bankruptcy Rule 9019, between the Plan Proponents, on behalf of the
Debtors' chapter 11 estates, and the members of the Pressman Family, embodied in
the letter agreement dated June 1, 1998 and the exhibits thereto, which
settlement agreement is described in section 2.3 of this Plan and a copy of
which is included in the Plan Supplement.
1.154. Pressman Unsecured Claim means an Unsecured Claim held by a member
or members of the Pressman Family.
1.155. Pressned means Pressned Corp., a New York corporation.
1.156. Preswil means Preswil Corp., a California corporation.
1.157. Priority Non-Tax Claim means any Claim of a kind specified in
section 507(a)(3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.
1.158. Priority Tax Claim means any Claim of a kind specified in section
507(a)(8) of the Bankruptcy Code.
1.159. Professionals means any attorneys, accountants, investment advisors
and other similar professionals employed in connection with the Reorganization
Cases by the Debtors, the Plan Proponents and the mediator appointed pursuant to
the order of the Bankruptcy Court.
1.160. Purchased Offered Shares means that number of Offered Shares
actually purchased by holders of Subscription Rights through the exercise of
same pursuant to section 26.1 of this Plan.
1.161. Purchased Option Shares means up to 576,122 shares of New Common
Stock to be outstanding on the Effective Date that may be purchased by
Whippoorwill and Bay Harbour for an aggregate Cash price of $5.0 million (or
$8.68 per share), pursuant to the option granted to them described in section
26.2 of this Plan.
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1.162. Purchased Standby Shares means the Offered Shares minus the
Purchased Offered Shares.
1.163. Put Claim means the Claim asserted by Oaktree, as successor in
interest to Hokkaido under the Hokkaido Mortgages, arising out of the rejection
by Barneys of that certain Purchase Put Agreement between 106 Seventh Corp. and
Barneys, as from time to time amended, supplemented or otherwise modified.
1.164. Ratable Proportion means, (a) with reference to any distribution on
account of any Allowed Claim in any Class other than distributions to holders of
Allowed General Unsecured Claims against any of the Debtors, the ratio
(expressed as a percentage) that the amount of such Allowed Claim bears to the
sum of all Allowed Claims and all Disputed Claims in such class, (b) with
reference to any distribution on account of an Allowed General Unsecured Claim
against any of the Debtors, the ratio (expressed as a percentage) that the
amount of such Allowed General Unsecured Claim bears to the sum of all Allowed
General Unsecured Claims and Disputed General Unsecured Claims against all of
the Debtors in the aggregate, and (c) with reference to any distribution on
account of any Allowed Equity Interest in any class, the ratio (expressed as a
percentage) that the number of units of such Equity Interest bears to the sum of
that number of units of all Allowed Equity Interests and Disputed Equity
Interests of the same class.
1.165. Record Date means the date on which the Bankruptcy Court enters an
order pursuant to section 1125 of the Bankruptcy Code approving the Disclosure
Statement.
1.166. Reen Japan means Reen Japan, Inc., a New York corporation.
1.167. Reorganization Cases means the cases commenced under chapter 11 of
the Bankruptcy Code by the Debtors.
1.168. Restructuring Transactions means the transactions described in
Schedule 28 to this Plan.
1.169. Retail Unit shall have the meaning ascribed to such term in section
2.2.B.(i)(a) of this Plan.
1.170. Retiree means any individual who retired from employment with a
Debtor before the Petition Date and was and continues to be eligible for
medical, death or insurance benefits provided in a Retiree Benefit Plan as
required by section 1114 of the Bankruptcy Code.
1.171. Retiree Benefit Plan means any plan or policy of a Debtor in full
force and effect as of the Petition Date under which medical, death or insurance
benefits are
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provided to Retirees, as any such plan or policy may have been modified during
the pendency of the Reorganization Cases.
1.172. Rush Oak means Rush Oak Limited Partnership, an Illinois limited
partnership.
1.173. Schedules means the schedules of assets and liabilities and the
statements of financial affairs filed by the Debtors under section 521 of the
Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules, as
such schedules and statements have been or may be supplemented or amended from
time to time.
1.174. Secured means, with reference to any Claim, a Claim secured by a
Lien on collateral to the extent of the value of such collateral, as determined
in accordance with section 506(a) of the Bankruptcy Code.
1.175. Secured Mechanics Lien Claim means a Claim for amounts due on
account of services rendered, labor performed and/or materials furnished in the
improvement of the Beverly Hills Property, the Chicago Property, the Madison
Avenue Property and the Office Unit (other than Claims related to any tenant
improvements made to the Office Unit or other improvements made to the Office
Unit with Isetan's consent from the time that Isetan took over management of the
Office Unit as administrative partner, for which Barneys or New Barneys shall
not be responsible), respectively, that is a Secured Claim by virtue of the
attachment of a mechanics lien to any of the foregoing properties under
applicable state law.
1.176. Stock Purchase Agreement means the stock purchase agreement to be
executed by Barneys, Whippoorwill and Bay Harbour, substantially in the form
included in the Plan Supplement.
1.177. Subscription Deadline means December 22, 1998 at 5:00 P.M. (New
York City Time), which shall be the date that is one (1) Business Day after the
scheduled date of the Confirmation Hearing.
1.178. Subscription Form means the form to be distributed to holders of
Allowed General Unsecured Claims as of the Record Date along with such holders'
Ballots which shall entitle the holder of the Subscription Form to exercise the
number of Subscription Rights indicated therein in the manner described in
section 26 of this Plan and which form shall be substantially in the form
annexed to the Disclosure Statement.
1.179. Subscription Rights means, as authorized under this Plan and
section 1145 of the Bankruptcy Code, the rights to be issued by New Barneys to
holders of Allowed General Unsecured Claims against the Debtors (including
holders of Disputed General Unsecured Claims against the Debtors solely to the
extent that such Claims have been estimated by the Bankruptcy Court, prior to
the Subscription Deadline, to be Allowed General Unsecured Claims against the
Debtors in whole or part) to purchase from New
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Barneys on the Effective Date, and in accordance with section 26 of the Plan and
the Restructuring Transactions, an aggregate of 57.612% of the shares of New
Common Stock.
1.180. Subscription Rights Offering means the aggregate set of
transactions contemplated by section 26 of this Plan pursuant to which the
Offered Shares will be sold to the holders of Allowed General Unsecured Claims
against the Debtors (including holders of Disputed General Unsecured Claims
against the Debtors solely to the extent that such Claims have been estimated by
the Bankruptcy Court, prior to the Subscription Deadline, to be Allowed General
Unsecured Claims against the Debtors in whole or part).
1.181. Tax Note means a note of a Debtor, or a successor in interest
thereto, in the full amount of an Allowed Priority Tax Claim payable over a
period of six years from the date of assessment, bearing interest at the
applicable statutory interest rate commencing on the Effective Date.
1.182. Technical Assistance Agreement means that certain technical
assistance agreement, dated September 19, 1989, between Isetan and Barneys.
1.183. Third Party Purchaser shall have the meaning ascribed to such term
in section 26.5 of this Plan.
1.184. Trademark License Agreement means the licensing agreement, dated
September 19, 1989, between Isetan and BNY Licensing and their respective
assigns.
1.185. U.C.C. means the Uniform Commercial Code, in the form enacted in
every state in the United States.
1.186. Unsecured Claim means any Claim against a Debtor that is not a
Secured Claim or an Administrative Claim.
1.187. Unsecured Creditors Warrants means, as authorized under this Plan
and section 1145 of the Bankruptcy Code, the warrants to be distributed to
holders of Allowed General Unsecured Claims against the Debtors to purchase up
to 7 1/2% of the shares of New Common Stock to be outstanding on the Effective
Date, at an exercise price of $8.68 per share, which warrants shall expire on
May 15, 2000 and shall be issued in accordance with section 26.8 hereof and the
Unsecured Creditors Warrant Agreement.
1.188. Unsecured Creditors Warrant Agreement means the warrant agreement
governing the issuance of the Unsecured Creditors Warrants, which agreement
shall be substantially in the form included in the Plan Supplement.
1.189. Voting Deadline means December 16, 1998 at 5:00 p.m. (New York City
time).
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1.190. Whippoorwill means Whippoorwill Associates, Inc., a Delaware
corporation, as agent and/or general partner for its discretionary accounts and
as investment advisor to Whippoorwill/Barney's Obligations Trust - 1996, and/or
Whippoorwill Associates, Inc., in its individual capacity, as the context
requires.
1.191. Willful Misconduct means, with respect to a director, officer or
employee, embezzlement, fraud or criminal conduct by such director, officer or
employee or other conduct by such director, officer or employee that was in bad
faith and did not meet the standard of conduct required of directors and
executive officers holding office pursuant to applicable law.
1.192. 106 Seventh Corp. means 106 Seventh Avenue Property Corp., a New
York corporation.
Interpretation; Application of
DEFINITIONS AND RULES OF CONSTRUCTION.
1.193. The words "herein," "hereof," "hereto," "hereunder," and other
words of similar import refer to this Plan as a whole (including any exhibits
and schedules hereto) and not to any particular section, subsection, or clause
contained in this Plan. A term used herein that is not defined herein shall have
the meaning assigned to that term in the Bankruptcy Code. The rules of
construction contained in section 102 of the Bankruptcy Code apply to the
construction of this Plan. The headings in this Plan are for convenience of
reference only and shall not limit or otherwise affect the provisions of this
Plan. Unless otherwise indicated herein, all references to dollars means United
States dollars.
1.194. In the event that a particular term of this Plan (including any
exhibits and schedules hereto) conflicts with a particular term of any of the
definitive documentation required to implement the terms of this Plan, the
Isetan Settlement, the Pressman Settlement and the other settlements
contemplated hereunder, the definitive documentation shall control and shall be
binding on the parties thereto despite the conflicting term contained in this
Plan (and any exhibits and schedules hereto).
II. SECTION TWO: PROVISIONS FOR THE SETTLEMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST THE DEBTORS
2.1. Settlement of Intercompany Claims. On the Effective Date, (i) all
Intercompany Claims held by a Barneys Affiliate or Reen Japan against a Debtor
that is a Barneys Affiliate or Reen Japan, or by a Preen Affiliate or Reen Japan
against a Debtor that is a Preen Affiliate or Reen Japan, shall be released and
cancelled, by means of contribution, distribution or otherwise, as the Plan
Proponents shall determine, and (ii) all other Intercompany Claims shall be
offset against any mutual Intercompany Claims and any amount remaining released
and discharged for no further consideration; PROVIDED,
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HOWEVER, that (i) the BNY Licensing Intercompany Receivable shall not be
cancelled or otherwise modified except (a) that it shall be subordinated to the
Isetan Subordinated Note, the BI-Equipment Lessors Note, the Copelco Note, the
Hancock Note and any indebtedness incurred under the Exit Facility, and (b) to
the extent determined by the Plan Proponents and agreed to by Barneys and BNY
Licensing. Holders of Intercompany Claims shall not receive any distribution
under this Plan and shall not be entitled to vote to accept or reject this Plan,
and (ii) the Put Claim and the Oaktree Lease Rejection Claim shall not be
released and cancelled, or otherwise affected, by the provisions of this section
2.1.
2.2. Settlement of the Isetan Claims. On the Effective Date, any and all
of the Isetan Claims will be resolved and compromised pursuant to the Isetan
Settlement and Isetan will, in accordance with this Plan (including the
Restructuring Transactions), exchange its Claims against, and interests in, the
Debtors, the Barneys Affiliates, Reen Japan and the Preen Affiliates for the
consideration provided in the Isetan Settlement, the principal material economic
terms of which are described below:
A. General Terms
(i) Isetan and the Debtors will enter into the New Leases for the Madison
Avenue Property, the Chicago Property and the Beverly Hills Property
(individually and collectively, as the context requires, the "Premises"), which
New Leases will provide for an annual aggregate rent during the first five years
of $15 million, $3 million of which each year will be deferred and paid at the
end of five years with interest thereon of 8% per annum (paid quarterly), and
thereafter, during the initial term of each New Lease, the annual aggregate rent
will be $15 million (none of which is deferred) plus certain rent adjustments.
(ii) Isetan will receive $23,204,497 in cash; the Isetan Subordinated
Note; the Isetan Distributable Shares; the Isetan Warrants; and Isetan shall
receive the Minimum Royalty Assignment in satisfaction of BNY Licensing's
obligations under the BNY Licensing Note. Payment of the first four semi-annual
interest payments due under the Isetan Subordinated Note may be deferred in
accordance with section 28.2.11 of this Plan.
(iii) Barneys Japan, which shall be solely owned by Isetan, will retain
the license to use the BARNEYS NEW YORK trademark in Japan and the right to
operate the existing Isetan "licensed department" in Singapore pursuant to the
terms of the New Trademark License Agreement. Isetan shall guarantee the
obligations of Barneys Japan under the New Trademark License Agreement and New
Barneys and Barneys shall guarantee the obligations of BNY Licensing under the
New Trademark License Agreement. Additionally, the exclusive rights to use the
BARNEYS NEW YORK trademark in Asia (other than in Japan and the existing Isetan
"licensed department" in Singapore) will be vested in Barneys Asia, which will
be owned 70% by BNY Licensing and 30% by Isetan or its Affiliate. Barneys Asia
will pay BNY
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Licensing a non-cumulative preferred annual return of up to $1.0 million to the
extent of Barneys Asia's profits (the "Preferred Return"), and thereafter any
distributions of profits will be allocated 70% to BNY Licensing and 30% to
Isetan or its Affiliate.
(iv) Mutual general releases will be exchanged or deemed exchanged, as the
case may be, by each of the Barneys Releasees, the Plan Releasees, Isetan, the
Pressman Family, the Debtors and the Plan Proponents, as provided in section 34
of this Plan. On the Effective Date, Whippoorwill will dismiss the Ad Hoc
Committee Adversary Proceeding as to itself and shall use its reasonable efforts
to cause the other plaintiffs in the Ad Hoc Committee Adversary Proceeding to
dismiss same with prejudice with respect to themselves or, alternatively, the
Confirmation Order shall contain provisions acceptable to Isetan in its
reasonable discretion dismissing the Ad Hoc Committee Adversary Proceeding.
B. New Leases with Isetan
Pursuant to the Isetan Settlement, affiliates of Barneys will enter
into the New Leases for the Premises.
(i) The Premises
(a) Madison Avenue Property: The New Lease for the Madison
Avenue Property will be assumed and entered into on the Effective Date by
Isetan, or another entity wholly owned and controlled by Isetan, as landlord
(the "Landlord"), and Barneys (NY) Lease Corp., as tenant, for floors 1-9 of the
condominium at 660 Madison Avenue, New York, NY (the "Retail Unit"). The
Landlord will have outright ownership of the Retail Unit and the leasehold
improvements. Barneys (NY) Lease Corp. will sublease the Premises to Barneys.
Pursuant to such sublease, Barneys shall become successor sublessor for the
portion of the Retail Unit currently occupied by the Hotel Pierre (the "Hotel
Pierre Space") and shall become the successor in interest to Madneer under the
lease with the Hotel Pierre for the Hotel Pierre Space. The lease will be for a
term of 20 years, plus 4 ten-year options to renew. The obligations of Barneys
(NY) Lease Corp. under the New Lease for the Madison Avenue Property shall be
guaranteed by New Barneys and Barneys, respectively.
(b) Beverly Hills Property: The New Lease for the Beverly
Hills Property will be assumed and entered into on the Effective Date by
Landlord and Barneys (CA) Lease Corp., as tenant, for the Premises located at
9570-9584 Wilshire Blvd., Beverly Hills, CA. Barneys (CA) Lease Corp. will then
sublease the Premises to Barneys. Landlord will hold the leasehold interest
under the existing ground lease from the fee owner (the "Beverly Hills Ground
Lease"), and shall have outright ownership of the building and the leasehold
improvements. Barneys (CA) Lease Corp. will have the right and the obligation to
comply with the ground lease. The New Lease for the Beverly Hills Property will
be for a term of 20 years, plus 3 ten-year options to renew. The
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obligations of Barneys (CA) Lease Corp. under the New Lease for the Beverly
Hills Property shall be guaranteed by New Barneys and Barneys, respectively.
(c) Chicago Property: The New Lease for the Chicago Property will be
assumed and entered into on the Effective Date by Landlord and Barneys America
(Chicago) Lease Corp., as tenant, for the Premises located at 25 East Oak
Street, in Chicago, Illinois. Barneys America (Chicago) Lease Corp. will then
sublease the Premises to Barneys America. Landlord will have outright ownership
of the Premises and the leasehold improvements. The New Lease will be for a term
of 10 years, plus 3 ten-year options to renew. The obligations of Barneys
America (Chicago) Lease Corp. under the New Lease for the Chicago Property shall
be guaranteed by New Barneys, Barneys and Barneys America, respectively.
(ii) General Lease Provisions
The three New Leases will each contain the same basic provisions,
except for any condominium issues, discussed below, which are particular to the
Madison Avenue Property. Barneys and/or Barneys America, as sublessees under the
applicable New Lease, will have all the rights and obligations under the New
Leases, which rights and obligations are summarized below.
(a) Use: The stores will remain first-class retail specialty
stores, with certain ancillary and related uses permitted.
(b) Rent: The New Leases will be triple-net leases. Annual
aggregate rent during the first five years will be $15 million, $3 million of
which shall be deferred annually and paid at the end of five years, with
interest thereon at 8% per annum (paid quarterly), and, thereafter, during the
term of each New Lease, the annual aggregate rent will be $15 million (none of
which shall be deferred) plus certain rent adjustments.
(c) Security: A security deposit equal to 6 months rent is
required under each New Lease, with interest payable to tenant, unless Barneys
and its affiliates or subsidiaries maintain a net worth of at least $250
million; PROVIDED, HOWEVER, that during the first two years of the initial term
of each New Lease, the tenants shall not be required to post any security
deposit; AND PROVIDED, FURTHER that if during the first two years of the initial
term of each New Lease, Barneys Asia pays the Preferred Return to BNY Licensing,
Barneys shall cause such funds (or a letter of credit in such amount) to be
delivered as security for the obligations of the tenants under the New Leases.
(d) Financing: The tenant under each lease may pledge or
mortgage its interest in each of the Premises in good faith to institutional
lenders.
(e) Assignment, Subleasing and Licensing: Each of the tenants
may assign each of the New Leases to their respective affiliates without the
Landlord's consent. Each tenant may assign the New Leases or sublet the Premises
to non-affiliates
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for any permitted use with Landlord's consent, which consent will not be
unreasonably withheld or delayed. Profits from any sublet or assignment to a
non-affiliate of the tenant will be allocated on a 70%/30% basis between
Landlord and tenant, respectively. Each of the tenants may license the use of
portions of their respective Premises for permitted uses, in a manner consistent
with the character of Barneys' retail operations and so long as such permitted
use appears to be a part of the BARNEYS NEW YORK store in which it is occurring.
Up to 50% of the Premises may be used for licensed departments and for
subtenants whose business is consistent with that of Barneys and appears to be
part of the BARNEYS NEW YORK store. The tenants may retain profits from leasing
to such subtenants. In addition, each of the tenants may use up to 25% of the
Premises (plus the space now occupied by any existing restaurant) for ancillary
uses which will be subject to the 70%/30% allocation in profits described above.
However, any restaurant or food operation will be exempt from the allocation of
profits.
(f) Right to Notice of Sale: Landlord will provide the tenant
with notice prior to a sale or assignment of its interest in the Premises. If
bids are sought, Landlord will invite the tenant to bid.
(g) Alterations: The tenants may make internal, non-structural
alterations to the Premises with notice to Landlord but without the consent of
Landlord. Any structural alterations may be made only with the consent of
Landlord, which consent shall not be unreasonably withheld or delayed. Landlord
must obtain the applicable tenant's consent prior to making exterior alterations
to any of the Premises, which consent shall not be unreasonably withheld or
delayed.
(h) Mechanics Liens: Barneys is responsible (and its assignees
under the New Leases will continue to be responsible) to satisfy all Secured
Mechanics Lien Claims and Construction Claims (other than Liens or Claims
relating to improvements to the Office Unit made with Isetan's consent from the
time that Isetan took over management of the Office Unit as administrative
partner). If the cost of satisfying all Secured Mechanics Lien Claims and
Construction Claims exceeds $3,000,000, then Isetan will reimburse Barneys for
50% of the excess (the "Isetan Reimbursement Obligation"), PROVIDED, HOWEVER,
that if the cost of satisfying such Claims exceeds $10 million in the aggregate
without reduction to account for the Isetan Reimbursement Obligation, the Plan
Proponents and Isetan may elect, upon two (2) business days notice, not to
proceed with confirmation of this Plan.
(i) Condominium Issues: The Retail Unit is a condominium unit
and is subject to the Condominium Declaration and By-Laws (collectively, the
"Condominium Documents"). Tenant under such lease will assign all voting rights
and the right to appoint members to the Condominium Board of Managers, which
were previously assigned to Barneys, back to Landlord. In the event of a dispute
between the terms of the Condominium Documents and the terms of the New Lease
for the Madison Avenue Property, the New Lease will govern and the Condominium
Documents will be amended to conform to the lease terms.
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C. New Licensing Agreements
Three new license agreements will be entered into under the Isetan
Settlement: the New BNY Licensing Agreement, the New Trademark License Agreement
and the Barney's Asia License Agreement.
(i) New BNY Licensing Agreement
Pursuant to the New BNY Licensing Agreement, Barneys will grant BNY
Licensing a royalty-free, exclusive right and license to grant sublicenses for
the operation of retail store locations and departments within retail stores
under the trademark and trade name "BARNEYS NEW YORK" in the countries of Japan,
Taiwan, Korea, Singapore, Thailand, Malaysia, Hong Kong, Indonesia, India, China
and the Philippines. In addition, BNY Licensing shall be granted a license to
make, sell and distribute certain products bearing the trademark "BARNEYS NEW
YORK" and to use "BARNEYS NEW YORK" as part of its corporate name. The New BNY
Licensing Agreement will be essentially identical to that certain license
agreement, dated June 1, 1989, entered into by and between Barneys and BNY
Licensing, which will be rejected by BNY Licensing and terminated pursuant to
this Plan. The New BNY Licensing Agreement will expire on December 31, 2015;
however, both parties shall have the right to renew the agreement for additional
ten year terms. Additionally, under the New BNY Licensing Agreement, Barneys
will further grant its consent to the sublicensing by BNY Licensing to Barneys
Japan and Barneys Asia under the New Trademark License Agreement and the Barneys
Asia License Agreement.
(ii) New Trademark License Agreement
Pursuant to the New Trademark License Agreement, BNY Licensing will
grant Barneys Japan a royalty-bearing, exclusive right and license to operate
retail store locations in Japan and a royalty-bearing, non-exclusive right and
license to operate a department within a retail store in Singapore, under the
trademark and trade name "BARNEYS NEW YORK." In addition, Barneys Japan shall be
granted a license to make, sell and distribute certain products bearing the
trademark "BARNEYS NEW YORK" and to use "BARNEYS NEW YORK" as part of its
corporate name. Isetan shall guarantee the obligations of Barneys Japan under
the New Trademark License Agreement and New Barneys and Barneys shall guarantee
the obligations of BNY Licensing under the New Trademark License Agreement. The
New Trademark License Agreement will be essentially identical to that certain
license agreement, dated September 19, 1989, by and between BNY Licensing and
Barneys Japan which will be rejected and terminated pursuant to this Plan. The
New Trademark License Agreement will be set to expire on December 31, 2015;
however, Barneys Japan may renew the agreement for up to three additional ten
year terms provided certain conditions are met. Under the terms of the
agreement, Barneys Japan will pay BNY Licensing or its assignee a minimum
royalty of 2.50% of a minimum net sales figure set forth in the agreement (the
"Minimum Royalty") and an additional royalty of 2.50% of net sales in excess of
the
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minimum net sales and sales generated from the expansion of Barneys Japan's
store base (beyond three stores) and business methods. In satisfaction of BNY
Licensing's obligations under the BNY Licensing Note, BNY Licensing will assign,
for the initial term of the New Trademark License Agreement, 90% of the Minimum
Royalty (the "Minimum Royalty Assignment") to Isetan.
(iii) Barneys Asia License Agreement
Pursuant to the Barneys Asia License Agreement, BNY Licensing will
grant Barneys Asia, a royalty-free, exclusive right and license to operate
retail store locations and departments with retail stores in Taiwan, Korea,
Singapore, Thailand, Malaysia, Hong Kong, Indonesia, India, China and the
Philippines, and a non-exclusive right and license for the same activities in
Singapore, under the trademark and trade name "BARNEYS NEW YORK." In addition,
Barneys Asia shall be granted a license to make, sell and distribute certain
products bearing the trademark "BARNEYS NEW YORK" and to use "BARNEYS NEW YORK"
as part of its corporate name. The Barneys Asia License Agreement will expire on
December 31, 2015; however, Barneys Asia may renew the agreement for up to three
additional ten year terms. Barneys Asia will be granted the right to sublicense
its right under the agreement provided that such sublicenses are
royalty-bearing.
D. Approval of Isetan Settlement
This Plan shall constitute a motion by the Debtors, the Pressman
Family, the Plan Proponents, on behalf of the Debtors' chapter 11 estates, and
Isetan, pursuant to Bankruptcy Rule 9019, requesting: (a) approval of the Isetan
Settlement and all of the transfers of Claims, properties, interests in property
and assets thereunder; (b) approval of the protections afforded to the Claims,
properties, interests in property and assets to be transferred pursuant to such
settlement; and (c) the releases contemplated by such settlement. The documents
effectuating the Isetan Settlement shall be substantially in the form included
in the Plan Supplement.
2.3. Settlement of the Claims and Equity Interests of the Pressman Family.
On the Effective Date, any and all Claims and Equity Interests of the Pressman
Family against the Debtors, the Barneys Affiliates, Reen Japan and the Preen
Affiliates will be resolved and compromised pursuant to the Pressman Settlement
and the Pressman Family will, in accordance with the Plan (including the
Restructuring Transactions), exchange its Claims against, and Equity Interests
in, the Debtors, the Barneys Affiliates, Reen Japan and the Preen Affiliates
(except as expressly excluded by the terms of the Pressman Settlement) for the
consideration provided in the Pressman Settlement, the material economic terms
of which are described below:
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A. General Terms
(i) The Pressman Family shall be distributed the Pressman
Distributable Shares and the Pressman Cash Payment, which shares and Cash shall
be allocated among members of the Pressman Family as follows: (a) Phyllis
Pressman - 14.232%, (b) Elizabeth Pressman-Neubardt - 30.098%, (c) Nancy
Pressman-Dressler - 30.098%, (d) Robert Pressman - 12.786% and (e) Eugene
Pressman - 12.786%. The Pressman Distributable Shares and the Pressman Cash
Payment shall be allocated to the existing common stock and preferred stock of
Barneys owned by the members of the Pressman Family in accordance with section
5.8.1. of this Plan.
(ii) Phyllis Pressman, Robert Pressman, Eugene Pressman and Holly
Pressman will each enter into consulting agreements with Barneys. Under these
consulting agreements, each agrees to make him/herself available (up to 60% of
full time for Phyllis Pressman, 80% of full time for each of Robert, Eugene and
Holly Pressman) for up to one year. The compensation payable to the members of
the Pressman Family under the consulting agreements described above shall be as
follows: (a) $400,000 for each of Phyllis and Holly Pressman and (b) $1,385,000
for each of Robert and Eugene Pressman to be paid in four equal installments
beginning on the Effective Date and on each of the six, twelve and eighteen
month anniversaries thereof. Any of the foregoing members of the Pressman Family
will forfeit any right of payment if such member terminates or obtains other
employment without prior approval of the New Barneys board of directors.
(iii) In respect of Nanelle's Claims against the Debtors, Nanelle
shall be paid $400,000 in four equal installments beginning on the Effective
Date and on each of the six, twelve and eighteen month anniversaries thereof
(subject to the adjustments described below). In exchange for such payments,
which shall be in full and complete satisfaction of Nanelle's Claims against the
Debtors, Nanelle shall assign all of its assets described in the Pressman
Settlement letter agreement dated June 1, 1998 (other than Nanelle and the
aforementioned payments due to Nanelle under this Plan), including without
limitation a certain license agreement with Kilgour, French & Stanbury (the
"Kilgour License"), to Barneys. There shall be deducted from the payments due to
Nanelle under this Plan the amount by which any royalty payments for Barneys'
use of the Kilgour License made or to be made by Barneys to Nanelle with respect
to periods commencing on or after June 1, 1998 and ending on the Effective Date,
less any portion thereof paid by Nanelle to Kilgour, French & Stanbury, exceeds
$70,000. There shall also be deducted from the payments due to Nanelle under
this Plan any payments due from Nanelle to Kilgour, French & Stanbury for use of
the Kilgour License for periods ending on or before May 31, 1998.
(iv) Martinton shall assign to certain members of the Pressman
Family its interests in Oak Associates, LLC and Fener Realty Co.
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(v) Mutual general releases will be exchanged by each of the Barneys
Releasees, the Plan Releasees, the Pressman Family, Isetan, the Debtors and the
Plan Proponents, as provided in Section 34 of this Plan.
B. Approval of the Pressman Settlement
This Plan shall constitute a motion of the Debtors, the Pressman
Family, the Plan Proponents, on behalf of the Debtors' chapter 11 estates, and
Isetan, pursuant to Bankruptcy Rule 9019, requesting: (a) approval of the
Pressman Settlement and all of the transfers of Claims, properties, interests in
property and assets thereunder; (b) approval of the protections afforded to the
Claims, properties, interests in property and assets to be transferred pursuant
to such settlement; and (c) the releases contemplated by such settlement. The
documents effectuating the Pressman Settlement shall be substantially in the
form included in the Plan Supplement.
2.4. Agreed Treatment of General Unsecured Claims Against the Debtors.
Unless otherwise provided in this Plan, and in accordance with this Plan
(including the Restructuring Transactions), each holder of an Allowed General
Unsecured Claim against any of the Debtors shall be distributed such holder's
Ratable Proportion of (i) the Distributable Shares, (ii) the Unsecured Creditors
Warrants and (iii) the Subscription Rights.
2.5. Approved Settlements of the Aetna Claims, the Oaktree Claims and the
Greater New York Claims. In contemplation and furtherance of this Plan and the
confirmation thereof, and pursuant to separate Final Orders of the Bankruptcy
Court, (i) Preen, Amjon and Cholderton have transferred the real property
subject to the Aetna Mortgage in a sale pursuant to section 363 of the
Bankruptcy Code and Aetna has received the stipulated value of its Secured Claim
in full and complete satisfaction of the Aetna Claims (the "Aetna Settlement"),
(ii) Preen, Chelsea, Goderich, Martinton and 106 Seventh Corp. have transferred
the real property subject to the Hokkaido Mortgages to Oaktree, in full and
complete satisfaction of the Oaktree Claims (the "Oaktree Settlement"), and
(iii) Gaddesden has transferred the real property subject to the Greater New
York Mortgage to Greater New York's designee in full and complete satisfaction
of the Greater New York Claims (the "Greater New York Settlement"). Pursuant to
section 1146(c) of the Bankruptcy Code, all real property transfers in
connection with each of the Aetna Settlement, the Oaktree Settlement and the
Greater New York Settlement, respectively (including any deeds, bills of sale or
assignments executed in connection with such transfers), are transfers under, in
furtherance of, and in connection with this Plan, and shall not be subject to
any stamp, real estate transfer, mortgage recording or other similar tax.
2.6. Settlement of the Claims of the Equipment Lessors. On the Effective
Date, any and all Claims of the Equipment Lessors against the Debtors will be
resolved and compromised pursuant to this Plan and the Equipment Lessors will
exchange their Claims against the Debtors for (i) the BI--Equipment Lessors
Note, the Copelco Note
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and the Hancock Note, respectively, (ii) the BI-Equipment Lessors Security
Deposit, the Copelco Security Deposit and the Hancock Security Deposit,
respectively, and (iii) an Allowed Administrative Expense Claim (plus accrued
interest thereon payable on such claims) against the Debtors of approximately
$1,982,818 in the case of BI-Equipment Lessors, approximately $24,559 in the
case of Copelco and approximately $88,372 in the case of Hancock.
On the Effective Date, the Equipment Lessors will transfer all
right, title and interest in the equipment subject to their Equipment Leases,
free of all liens, claims and encumbrances (except for liens securing the
Equipment Lessors Notes) to Barneys or its designee. The Debtors and the
Equipment Lessors shall execute security agreements with respect to the
Equipment Lessors Notes and all required U.C.C. filings to perfect the Equipment
Lessors Liens with respect to the Equipment Lessors Notes shall be executed.
Mutual general releases will be exchanged by each of the Equipment Lessors, the
Barneys Affiliates and the Plan Proponents (other than with respect to
obligations created hereunder and in the documents effectuating the Equipment
Lessors Settlement).
This Plan shall constitute a motion by the Debtors, the Pressman
Family, the Plan Proponents, on behalf of the Debtors' chapter 11 estates,
Isetan and the Equipment Lessors, pursuant to Bankruptcy Rule 9019, requesting:
(a) approval of the Equipment Lessors Settlement and all of the transfers of
Claims, properties, interests in property and assets thereunder; (b) approval of
the protections afforded to the Claims, properties, interests in property and
assets thereunder; and (c) the releases contemplated by such settlement. The
documents effectuating the Equipment Lessors Settlement shall be substantially
in the form included in the Plan Supplement.
III. SECTION THREE: PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS,
PRIORITY TAX CLAIMS AND OTHER CLAIMS
3.1. Administrative Claims. On the Effective Date, each holder of an
Allowed Administrative Claim against any of the Debtors shall be distributed on
account of such Allowed Administrative Claim an amount in Cash equal to the
amount of such Allowed Administrative Claim, except to the extent that any
Entity entitled to payment of any Allowed Administrative Claim agrees to a
different treatment of such Allowed Administrative Claim, with the consent of
the Plan Proponents. Each holder of an Allowed Administrative Claim against a
Debtor shall be paid by or on behalf of such Debtor, or the successor(s) in
interest thereto, (a) upon the later of (i) the Effective Date or as soon
thereafter as is reasonably practical and (ii) the date that is ten (10)
Business Days after an order of the Bankruptcy Court with respect to any such
Allowed Administrative Claim becomes a Final Order, or (b) upon such other terms
as may be mutually agreed upon between such holder of an Allowed Administrative
Claim and the Plan Proponents; PROVIDED, HOWEVER, that any Administrative Claims
incurred postpetition by the Debtors in Possession in the ordinary course of
their businesses or any Administrative Claims arising pursuant to postpetition
agreements or transactions entered
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into by the Debtors in Possession with Bankruptcy Court approval shall be
assumed and paid or performed by the Debtors in Possession (or, postconfirmation
of this Plan, the reorganized Debtors) in accordance with the terms and
conditions of the particular transaction(s) and any agreement(s) relating
thereto or as otherwise agreed by the Debtors in Possession and the holders of
such Administrative Claims; AND PROVIDED, FURTHER that all postconfirmation
professional fees and related expenses accrued by Professionals shall be paid by
the Debtors within ten (10) Business Days of the submission by any Professional
of an invoice to the Debtors, with a copy to the Plan Proponents. In the event
that the Debtors or any of the Plan Proponents object to the payment of a
Professional's postconfirmation invoice, in whole or part, and the parties
cannot resolve such objection after good faith negotiation, the Bankruptcy Court
shall retain jurisdiction to review the disputed invoice and make a
determination as to the extent to which the invoice shall be paid by the
Debtors.
3.2. Payment of the BankBoston DIP Facility. On the Effective Date, all
Claims against the Debtors under the BankBoston DIP Facility shall be paid in
Cash, or in a manner otherwise permitted pursuant to the terms of the BankBoston
DIP Facility, in an amount equal to the amount of such Claims.
3.3. Priority Tax Claims. On the Effective Date, with respect to each
Debtor, each holder of an Allowed Priority Tax Claim shall be distributed on
account of such Allowed Priority Tax Claim a Tax Note from such Debtor, or the
successor(s) in interest thereto, that complies with the requirements of section
1129(a)(9)(C) of the Bankruptcy Code or such other, more favorable treatment, as
the Plan Proponents in their sole discretion shall elect.
3.4. Convenience Claims.
(a) Impairment and Voting. Holders of Convenience Claims are
impaired under the Plan. Each holder of an Allowed Convenience Claim shall be
entitled to vote to accept or reject the Plan as to the Debtor against whom such
holder holds an Allowed Convenience Claim.
(b) Distributions. Each holder of an Allowed Convenience Claim
against any of the Debtors shall be paid, on the Effective Date, an amount in
Cash equal to 40% of such Allowed Convenience Claim, in full and complete
satisfaction of such holder's Claim.
IV. SECTION FOUR: CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS AGAINST THE
DEBTORS
4.1. Claims and Interests Against Barneys.
4.1.1. Priority Non-Tax Claims Against Barneys (Barneys Class 1).
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4.1.2. Insured Claims Against Barneys (Barneys Class 2).
4.1.3. Secured Mechanics Lien Claims Against Barneys (Barneys Class
3).
4.1.4. Isetan Claims Against Barneys (Barneys Class 4).
4.1.5. Equipment Lessors' Claims Against Barneys (Barneys Class 5).
4.1.5.1. BI-Equipment Lessors Claims Against Barneys
(Barneys Subclass 5A).
4.1.5.2. Copelco Claims Against Barneys (Barneys
Subclass 5B).
4.1.5.3. Hancock Claims Against Barneys (Barneys
Subclass 5C).
4.1.6. General Unsecured Claims Against Barneys (Barneys Class 6).
4.1.7. Pressman Unsecured Claims Against Barneys (Barneys Class 7).
4.1.8. Equity Interests in Barneys (Barneys Class 8).
4.1.8.1. Equity Interests of the Pressman Family in
Barneys (Barneys Subclass 8A).
4.1.8.2. Other Equity Interests in Barneys (Barneys
Subclass 8B).
4.2. Claims and Interests Against Barneys America.
4.2.1. Priority Non-Tax Claims Against Barneys America (Barneys
America Class 1).
4.2.2. Insured Claims Against Barneys America (Barneys America Class
2)
4.2.3. Isetan Claims Against Barneys America (Barneys America Class
3).
4.2.4. Equipment Lessors' Claims Against Barneys America (Barneys
America Class 4).
4.2.4.1. BI-Equipment Lessors Claims Against Barneys
America (Barneys America Subclass 4A).
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4.2.4.2. Copelco Claims Against Barneys America (Barneys
America Subclass 4B).
4.2.4.3. Hancock Claims Against Barneys America (Barneys
America Subclass 4C).
4.2.5. General Unsecured Claims Against Barneys America (Barneys
America Class 5).
4.2.6. Pressman Unsecured Claims Against Barneys America (Barneys
America Class 6).
4.2.7. Equity Interests in Barneys America (Barneys America Class
7).
4.2.7.1. Equity Interests of Barneys in Barneys America
(Barneys America Subclass 7A).
4.2.7.2. Equity Interests of Isetan in Barneys America
(Barneys America Subclass 7B).
4.2.7.3. Other Equity Interests in Barneys America
(Barneys America 7C).
4.3. Claims and Interests Against BNY Licensing.
4.3.1. Priority Non-Tax Claims Against BNY Licensing (BNY Licensing
Class 1).
4.3.2. Isetan Claims Against BNY Licensing (BNY Licensing Class 2).
4.3.3. General Unsecured Claims Against BNY Licensing (BNY Licensing
Class 3).
4.3.4. Pressman Unsecured Claims Against BNY Licensing (BNY
Licensing Class 4).
4.3.5. Equity Interests in BNY Licensing (BNY Licensing Class 5).
4.3.6. Claims and Interests Against BNY Leasing.
4.3.7. Priority Non-Tax Claims Against BNY Leasing (BNY Leasing
Class 1).
4.3.8. Equipment Lessors Claims Against BNY Leasing (BNY Leasing
Class 2).
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4.3.8.1. BI-Equipment Lessors Claims Against BNY Leasing
(BNY Leasing Subclass 2A).
4.3.8.2. Copelco Claims Against BNY Leasing (BNY Leasing
Subclass 2B).
4.3.8.3. Hancock Claims Against BNY Leasing (BNY Leasing
Subclass 2C).
4.3.9. Isetan Claims Against BNY Leasing (BNY Leasing Class 3).
4.3.10. General Unsecured Claims Against BNY Leasing (BNY Leasing
Class 4).
4.3.11. Pressman Unsecured Claims Against BNY Leasing (BNY Leasing
Class 5).
4.3.12. Equity Interests in BNY Leasing (BNY Leasing Class 6).
4.4. Claims and Interests Against Basco.
4.4.1. Priority Non-Tax Claims Against Basco (Basco Class 1).
4.4.2. Copelco Claims Against Basco (Basco Class 2).
4.4.3. Isetan Claims Against Basco (Basco Class 3).
4.4.4. General Unsecured Claims Against Basco (Basco Class 4).
4.4.5. Pressman Unsecured Claims Against Basco (Basco Class 5).
4.4.6. Equity Interests in Basco (Basco Class 6).
4.5. Claims and Interests Against PFP.
4.5.1. Priority Non-Tax Claims Against PFP (PFP Class 1).
4.5.2. Isetan Claims Against PFP (PFP Class 2).
4.5.3. General Unsecured Claims Against PFP (PFP Class 3).
4.5.4. Pressman Unsecured Claims Against PFP (PFP Class 4).
4.5.5. Equity Interests in PFP (PFP Class 5).
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4.6. Claims and Interests Against Preen.
4.6.1. Priority Non-Tax Claims Against Preen (Preen Class 1).
4.6.2. Insured Claims Against Preen (Preen Class 2).
4.6.3. Isetan Claims Against Preen (Preen Class 3).
4.6.4. Secured Aetna Claims Against Preen (Preen Class 4).
4.6.5. Secured Oaktree Claims Against Preen (Preen Class 5).
4.6.6. General Unsecured Claims Against Preen (Preen Class 6).
4.6.7. Pressman Unsecured Claims Against Preen (Preen Class 7).
4.6.8. Equity Interests in Preen (Preen Class 8).
4.7. Claims and Interests Against Pressmad.
4.7.1. Priority Non-Tax Claims Against Pressmad (Pressmad Class 1).
4.7.2. Isetan Claims Against Pressmad (Pressmad Class 2).
4.7.3. General Unsecured Claims Against Pressmad (Pressmad Class 3).
4.7.4. Pressman Unsecured Claims Against Pressmad (Pressmad Class
4).
4.7.5. Equity Interests in Pressmad (Pressmad Class 5).
4.8. Claims and Interests Against Pressned.
4.8.1. Priority Non-Tax Claims Against Pressned (Pressned Class 1).
4.8.2. Isetan Claims Against Pressned (Pressned Class 2).
4.8.3. General Unsecured Claims Against Pressned (Pressned Class 3).
4.8.4. Pressman Unsecured Claims Against Pressned (Pressned Class
4).
4.8.5. Equity Interests in Pressned (Pressned Class 5).
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4.9. Claims and Interests Against Preswil.
4.9.1. Priority Non-Tax Claims Against Preswil (Preswil Class 1).
4.9.2. Isetan Claims Against Preswil (Preswil Class 2).
4.9.3. General Unsecured Claims Against Preswil (Preswil Class 3).
4.9.4. Pressman Unsecured Claims Against Preswil (Preswil Class 4).
4.9.5. Equity Interests in Preswil (Preswil Class 5).
4.10. Claims and Interests Against Madneer.
4.10.1. Priority Non-Tax Claims Against Madneer (Madneer Class 1).
4.10.2. Isetan Claims Against Madneer (Madneer Class 2).
4.10.3. General Unsecured Claims Against Madneer (Madneer Class 3).
4.10.4. Pressman Unsecured Claims Against Madneer (Madneer Class 4).
4.10.5. Equity Interests in Madneer (Madneer Class 5).
4.11. Claims and Interests Against Reen Japan.
4.11.1. Priority Non-Tax Claims Against Reen Japan (Reen Japan Class
1).
4.11.2. Isetan Claims Against Reen Japan (Reen Japan Class 2).
4.11.3. General Unsecured Claims Against Reen Japan (Reen Japan
Class 3).
4.11.4. Equity Interests in Reen Japan (Reen Japan Class 4).
4.12. Claims and Interests Against Amjon.
4.12.1. Priority Non-Tax Claims Against Amjon (Amjon Class 1).
4.12.2. Isetan Claims Against Amjon (Amjon Class 2).
4.12.3. Secured Aetna Claims Against Amjon. (Amjon Class 3).
4.12.4. General Unsecured Claims Against Amjon (Amjon Class 4).
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4.12.5. Pressman Unsecured Claims Against Amjon (Amjon Class 5).
4.12.6. Equity Interests in Amjon (Amjon Class 6).
4.13. Claims and Interests Against Chelsea.
4.13.1. Priority Non-Tax Claims Against Chelsea (Chelsea Class 1).
4.13.2. Isetan Claims Against Chelsea (Chelsea Class 2).
4.13.3. Secured Oaktree Claims Against Chelsea (Chelsea Class 3).
4.13.4. General Unsecured Claims Against Chelsea (Chelsea Class 4).
4.13.5. Pressman Unsecured Claims Against Chelsea (Chelsea Class 5).
4.13.6. Equity Interests in Chelsea (Chelsea Class 6).
4.14. Claims and Interests Against Cholderton.
4.14.1. Priority Non-Tax Claims Against Cholderton (Cholderton Class
1).
4.14.2. Isetan Claims Against Cholderton (Cholderton Class 2).
4.14.3. Secured Aetna Claims Against Cholderton (Cholderton Class
3).
4.14.4. General Unsecured Claims Against Cholderton (Cholderton
Class 4).
4.14.5. Pressman Unsecured Claims Against Cholderton (Cholderton
Class 5).
4.14.6. Equity Interests in Cholderton (Cholderton Class 6).
4.15. Claims and Interests Against Martinton.
4.15.1. Priority Non-Tax Claims Against Martinton (Martinton Class
1).
4.15.2. Isetan Claims Against Martinton (Martinton Class 2).
4.15.3. Secured Oaktree Claims Against Martinton (Martinton Class
3).
4.15.4. General Unsecured Claims Against Martinton (Martinton Class
4).
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4.15.5. Pressman Unsecured Claims Against Martinton (Martinton Class
5).
4.15.6. Equity Interests in Martinton (Martinton Class 6).
4.16. Claims and Interests Against Goderich.
4.16.1. Priority Non-Tax Claims Against Goderich (Goderich Class 1).
4.16.2. Isetan Claims Against Goderich (Goderich Class 2).
4.16.3. Secured Oaktree Claims Against Goderich (Goderich Class 3).
4.16.4. General Unsecured Claims Against Goderich (Goderich Class
4).
4.16.5. Pressman Unsecured Claims Against Goderich (Goderich Class
5).
4.16.6. Equity Interests in Goderich (Goderich Class 6).
4.17. Claims and Interests Against 106 Seventh Corp.
4.17.1. Priority Non-Tax Claims Against 106 Seventh Corp. (106
Seventh Corp. Class 1).
4.17.2. Isetan Claims Against 106 Seventh Corp. (106 Seventh Corp.
Class 2).
4.17.3. Secured Oaktree Claims Against 106 Seventh Corp. (106
Seventh Corp. Class 3).
4.17.4. General Unsecured Claims Against 106 Seventh Corp. (106
Seventh Corp. Class 4).
4.17.5. Pressman Unsecured Claims Against 106 Seventh Corp. (106
Seventh Corp. Class 5).
4.17.6. Equity Interests in 106 Seventh Corp. (106 Seventh Corp.
Class 6).
4.18. Claims and Interests Against Gaddesden.
4.18.1. Priority Non-Tax Claims Against Gaddesden (Gaddesden Class
1).
4.18.2. Isetan Claims Against Gaddesden (Gaddesden Class 2).
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4.18.3. Secured Greater New York Claims Against Gaddesden (Gaddesden
Class 3).
4.18.4. General Unsecured Claims Against Gaddesden (Gaddesden Class
4).
4.18.5. Pressman Unsecured Claims Against Gaddesden (Gaddesden Class
5).
4.18.6. Equity Interests in Gaddesden (Gaddesden Class 6).
4.19. Claims and Interests Against BNY Credit.
4.19.1. Priority Non-Tax Claims Against BNY Credit (BNY Credit Class
1).
4.19.2. Isetan Claims Against BNY Credit (BNY Credit Class 2).
4.19.3. General Unsecured Claims Against BNY Credit (BNY Credit
Class 3).
4.19.4. Pressman Unsecured Claims Against BNY Credit (BNY Credit
Class 4).
4.19.5. Equity Interests in BNY Credit (BNY Credit Class 5).
4.20. Claims and Interests Against Prescredit.
4.20.1. Priority Non-Tax Claims Against Prescredit (Prescredit Class
1).
4.20.2. Isetan Claims Against Prescredit (Prescredit Class 2).
4.20.3. General Unsecured Claims Against Prescredit (Prescredit
Class 3).
4.20.4. Pressman Unsecured Claims Against Prescredit (Prescredit
Class 4).
4.20.5. Equity Interests in Prescredit (Prescredit Class 5).
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V. SECTION FIVE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
BARNEYS
5.1. Priority Non-Tax Claims Against Barneys (Barneys Class 1).
(a) Impairment and Voting. Barneys Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Barneys Class 1 is conclusively deemed
to have accepted the Plan as a holder of Barneys Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Barneys shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
5.2. Insured Claims Against Barneys (Barneys Class 2).
(a) Impairment and Voting. Barneys Class 2 is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Class 2 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Insured
Claim against Barneys shall only be entitled to maintain actions against and
obtain payment solely from an insurance company under an insurance policy or
policies issued by such company to, or for the benefit of, Barneys.
5.3. Secured Mechanics Lien Claims Against Barneys (Barneys Class 3).
(a) Impairment and Voting. Barneys Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Secured Mechanics Lien Claim against Barneys shall be distributed a payment in
Cash equal to the Allowed Amount of such holder's Claim.
5.4. Isetan Claims Against Barneys (Barneys Class 4).
(a) Impairment and Voting. Barneys Class 4 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
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5.5. Equipment Lessors Claims Against Barneys (Barneys Class 5).
5.5.1. BI-Equipment Lessors Claims Against Barneys (Barneys Subclass
5A).
(a) Impairment and Voting. Barneys Subclass 5A is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Subclass 5A shall be entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, BI-Equipment Lessors shall receive the treatment
provided to it in section 2.6 of this Plan.
5.5.2. Copelco Claims Against Barneys (Barneys Subclass 5B).
(a) Impairment and Voting. Barneys Subclass 5B is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Subclass 5B shall be entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Copelco will receive the treatment provided to it in
section 2.6 of this Plan.
5.5.3. Hancock Claims Against Barneys (Barneys Subclass 5C).
(a) Impairment and Voting. Barneys Subclass 5C is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Subclass 5C shall be entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Hancock will receive the treatment provided to it in
section 2.6 of this Plan.
5.6. General Unsecured Claims Against Barneys (Barneys Class 6).
(a) Impairment and Voting. Barneys Class 6 is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Class 6 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Barneys shall receive the treatment provided to such holders in section
2.4 of this Plan.
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5.7. Pressman Unsecured Claims Against Barneys (Barneys Class 7).
(a) Impairment and Voting. Barneys Class 7 is impaired under the
Plan. Each holder of an Allowed Claim in Barneys Class 7 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Barneys shall receive the treatment provided to
such holders in section 2.3 of this Plan.
5.8. Equity Interests in Barneys (Barneys Class 8).
5.8.1. Equity Interests of the Pressman Family in Barneys (Barneys
Subclass 8A).
(a) Impairment and Voting. Barneys Subclass 8A is impaired under the
Plan. Each holder of an Allowed Equity Interest in Barneys Subclass 8A shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions and subject to the allocation set forth below, the
members of the Pressman Family holding Allowed Equity Interests in Barneys shall
transfer such Equity Interests to New Barneys in exchange for such holder's
Ratable Proportion of the Pressman Distributable Shares and the Pressman Cash
Payment.
(c) Allocation of Pressman Distributable Shares and Pressman Cash
Payment. The Pressman Distributable Shares and the Pressman Cash Payment
distributed to members of the Pressman Family pursuant to section 2.3 of this
Plan shall each be allocated 33.33% to the existing common stock of Barneys held
by such members of the Pressman Family and 66.67% to the existing preferred
stock of Barneys held by such members of the Pressman Family.
5.8.2. Other Equity Interests in Barneys (Barneys Subclass 8B).
(a) Impairment and Voting. Barneys Subclass 8B is impaired under the
Plan. Each holder of an Allowed Equity Interest in Barneys Subclass 8B shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each of Preen, Chelsea and Martinton will receive
their respective Ratable Proportion of the Equity Purchase Payment in exchange
for the transfer of their respective Equity Interests in Barneys to New Barneys.
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VI. SECTION SIX: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
BARNEYS AMERICA
6.1. Priority Non-Tax Claims Against Barneys America (Barneys America
Class 1).
(a) Impairment and Voting. Barneys America Class 1 is unimpaired
under the Plan. Each holder of an Allowed Claim in Barneys America Class 1 is
conclusively deemed to have accepted the Plan as a holder of Barneys America
Class 1 Claims and is not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Barneys America shall be distributed on account
of such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
6.2. INSURED CLAIMS AGAINST BARNEYS AMERICA (BARNEYS AMERICA CLASS 2).
(a) Impairment and Voting. Barneys America Class 2 is impaired under
the Plan. Each holder of an Allowed Claim in Barneys America Class 2 shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Insured
Claim against Barneys America shall only be entitled to maintain actions against
and obtain payment solely from an insurance company under an insurance policy or
policies issued by such company to, or for the benefit of, Barneys America.
6.3. Isetan Claims Against Barneys America (Barneys America Class 3).
(a) Impairment and Voting. Barneys America Class 3 is impaired under
the Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
6.4. Equipment Lessors Claims Against Barneys America (Barneys America
Class 4).
6.4.1. BI-Equipment Lessors Claims Against Barneys America (Barneys
America Subclass 4A).
(a) Impairment and Voting. Barneys America Subclass 4A is impaired
under the Plan. Each holder of an Allowed Claim in Barneys America Subclass 4A
shall be entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, BI-Equipment Lessors shall receive the treatment
provided to it in section 2.6 of this Plan.
6.4.2. Copelco Claims Against Barneys America (Barneys America
Subclass 4B).
(a) Impairment and Voting. Barneys America Subclass 4B is impaired
under the Plan. Each holder of an Allowed Claim in Barneys America Subclass 4B
shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Copelco will receive the treatment provided to it in
section 2.6 of this Plan.
6.4.3. Hancock Claims Against Barneys America (Barneys America
Subclass 4C).
(a) Impairment and Voting. Barneys America Subclass 4C is impaired
under the Plan. Each holder of an Allowed Claim in Barneys America Subclass 4C
shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Hancock will receive the treatment provided to it in
section 2.6 of this Plan.
6.5. General Unsecured Claims Against Barneys America (Barneys America
Class 5).
(a) Impairment and Voting. Barneys America Class 5 is impaired under
the Plan. Each holder of an Allowed Claim in Barneys America Class 5 shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Barneys America shall receive the treatment provided to such holders in
section 2.4 of this Plan.
6.6. Pressman Unsecured Claims Against Barneys America (Barneys America
Class 6).
(a) Impairment and Voting. Barneys America Class 6 is impaired under
the Plan. Each holder of an Allowed Claim in Barneys America Class 6 shall be
entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Barneys America shall receive the treatment
provided to such holders in section 2.3 of this Plan.
6.7. Equity Interests in Barneys America (Barneys America Class 7).
6.7.1. Equity Interests of Barneys in Barneys America (Barneys
America Subclass 7A).
(a) Impairment and Voting. Barneys America Subclass 7A is unimpaired
under the Plan. Barneys is conclusively deemed to have accepted the Plan as a
holder of Barneys America Subclass 7A Claims and is not entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in consideration of
value provided by Barneys to Barneys America under this Plan, Barneys shall
retain its Equity Interests in Barneys America.
6.7.2. Equity Interests of Isetan in Barneys America (Barneys
America Subclass 7B).
(a) Impairment and Voting. Barneys America Subclass 7B is impaired
under the Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall retain its
Equity Interests in Barneys America, and in accordance with the Restructuring
Transactions, Isetan shall transfer its Equity Interests in Barneys America to
New Barneys, as part of the Isetan Contributed Assets, in exchange for the
Isetan Distributable Shares and the Isetan Warrants.
6.7.3. Other Equity Interests in Barneys America (Barneys America
Subclass 7C). Barneys America Subclass 7C is impaired by the Plan. The holders
of Equity Interests in Barneys America Subclass 7C shall not receive any
distributions on account of such Equity Interests and such Equity Interests
shall be extinguished on the Effective Date. Each holder of an Equity Interest
in Barneys America Subclass 7C is conclusively deemed to have rejected the Plan
as a holder of a Barneys America Subclass 7C Equity Interest and is not entitled
to vote to accept or reject the Plan.
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VII. SECTION SEVEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST BNY LICENSING
7.1. Priority Non-Tax Claims Against BNY Licensing (BNY Licensing Class
1).
(a) Impairment and Voting. BNY Licensing Class 1 is unimpaired under
the Plan. Each holder of an Allowed Claim in BNY Licensing Class 1 is
conclusively deemed to have accepted the Plan as a holder of BNY Licensing Class
1 Claims and is not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against BNY Licensing shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
7.2. Isetan Claims Against BNY Licensing (BNY Licensing Class 2).
(a) Impairment and Voting. BNY Licensing Class 2 is impaired under
the Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 2 of the Restructuring Transactions.
7.3. General Unsecured Claims Against BNY Licensing (BNY Licensing Class
3).
(a) Impairment and Voting. BNY Licensing Class 3 is impaired under
the Plan. Each holder of an Allowed Claim in BNY Licensing Class 3 shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against BNY Licensing shall receive the treatment provided to such holders in
section 2.4 of this Plan.
7.4. Pressman Unsecured Claims Against BNY Licensing (BNY Licensing Class
4).
(a) Impairment and Voting. BNY Licensing Class 4 is impaired under
the Plan. Each holder of an Allowed Claim in BNY Licensing Class 4 shall be
entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against BNY Licensing shall receive the treatment
provided to such holders in section 2.3 of this Plan.
7.5. Equity Interests in BNY Licensing (BNY Licensing Class 5).
(a) Impairment and Voting. BNY Licensing Class 5 is unimpaired under
the Plan. Barneys is conclusively deemed to have accepted the Plan as the holder
of BNY Licensing Class 5 Equity Interests and is not entitled to vote to accept
or reject the Plan.
(b) Distributions. On the Effective Date, Barneys shall retain its
Equity Interests in BNY Licensing.
VIII. SECTION EIGHT: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST BNY LEASING
8.1. Priority Non-Tax Claims Against BNY Leasing (BNY Leasing Class 1).
(a) Impairment and Voting. BNY Leasing Class 1 is unimpaired under
the Plan. Each holder of an Allowed Claim in BNY Leasing Class 1 is conclusively
deemed to have accepted the Plan as a holder of BNY Leasing Class 1 Claims and
is not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against BNY Leasing shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
8.2. Equipment Lessors Claims Against BNY Leasing (BNY Leasing Class 2).
8.2.1. BI-Equipment Lessors Claims Against BNY Leasing (BNY Leasing
2A).
(a) Impairment and Voting. BNY Leasing Subclass 2A is impaired under
the Plan. Each holder of an Allowed Claim in BNY Leasing Subclass 2A shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, BI-Equipment Lessors shall receive the treatment
provided to it in section 2.6 of this Plan.
8.2.2. Copelco Claims Against BNY Leasing (BNY Leasing Subclass 2B).
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(a) Impairment and Voting. BNY Leasing Subclass 2B is impaired under
the Plan. Each holder of an Allowed Claim in BNY Leasing Subclass 2B shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Copelco will receive the treatment provided to it in
section 2.6 of this Plan.
8.2.3. Hancock Claims Against BNY Leasing (BNY Leasing Subclass 2C).
(a) Impairment and Voting. BNY Leasing Subclass 2C is impaired under
the Plan. Each holder of an Allowed Claim in BNY Leasing Subclass 2C shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Hancock will receive the treatment provided to it in
section 2.6 of this Plan.
8.3. Isetan Claims Against BNY Leasing (BNY Leasing Class 3).
(a) Impairment and Voting. BNY Leasing Class 3 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
8.4. General Unsecured Claims Against BNY Leasing (BNY Leasing Class 4).
(a) Impairment and Voting. BNY Leasing Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in BNY Leasing Class 4 shall be entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against BNY Leasing shall receive the treatment provided to such holders in
section 2.4 of this Plan.
8.5. Pressman Unsecured Claims Against BNY Leasing (BNY Leasing Class 5).
(a) Impairment and Voting. BNY Leasing Class 5 is impaired under the
Plan. Each holder of an Allowed Claim in BNY Leasing Class 5 shall be entitled
to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against BNY Leasing shall receive the treatment
provided to such holders in section 2.3 of this Plan.
8.6. Equity Interests in BNY Leasing (BNY Leasing Class 6).
(a) IMPAIRMENT AND VOTING. BNY Leasing Class 6 is unimpaired under
the Plan. Barneys is conclusively deemed to have accepted the Plan as the holder
of BNY Leasing Class 6 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Barneys shall retain its
Equity Interests in BNY Leasing.
IX. SECTION NINE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST BASCO
9.1. Priority Non-Tax Claims Against Basco (Basco Class 1).
(a) Impairment and Voting. Basco Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Basco Class 1 is conclusively deemed to
have accepted the Plan as a holder of Basco Class 1 Claims and is not entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Basco shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
9.2. Copelco Claims Against Basco (Basco Class 2).
(a) Impairment and Voting. Basco Class 2 is impaired under the Plan.
Each holder of an Allowed Claim in Basco Class 2 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Copelco will receive the treatment provided to it in
section 2.6 of this Plan.
9.3. Isetan Claims Against Basco (Basco Class 3).
(a) Impairment and Voting. Basco Class 3 is impaired under the Plan.
Isetan shall be entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
9.4. General Unsecured Claims Against Basco (Basco Class 4).
(a) Impairment and Voting. Basco Class 4 is impaired under the Plan.
Each holder of an Allowed Claim in Basco Class 4 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Basco shall receive the treatment provided to such holders in section
2.4 of this Plan.
9.5. Pressman Unsecured Claims Against Basco (Basco Class 5).
(a) Impairment and Voting. Basco Class 5 is impaired under the Plan.
Each holder of an Allowed Claim in Basco Class 5 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Basco shall receive the treatment provided to
such holders in section 2.3 of this Plan.
9.6. Equity Interests in Basco (Basco Class 6).
(a) Impairment and Voting. Basco Class 6 is unimpaired under the
Plan. Barneys is conclusively deemed to have accepted the Plan as the holder of
Basco Class 6 Equity Interests and is not entitled to vote to accept or reject
the Plan.
(b) Distributions. On the Effective Date, Barneys shall retain its
Equity Interests in Basco.
X. SECTION TEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
PFP
10.1. Priority Non-Tax Claims Against PFP (PFP Class 1).
(a) Impairment and Voting. PFP Class 1 is unimpaired under the Plan.
Each holder of an Allowed Claim in PFP Class 1 is conclusively deemed to have
accepted the Plan as a holder of PFP Class 1 Claims and is not entitled to vote
to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against PFP shall be distributed on account of such
Allowed
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Priority Non-Tax Claim a payment in Cash equal to the amount of such holder's
Allowed Priority Non-Tax Claim.
10.2. Isetan Claims Against PFP (PFP Class 2).
(a) Impairment and Voting. PFP Class 2 is impaired under the Plan.
Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
10.3. General Unsecured Claims Against PFP (PFP Class 3).
(a) Impairment and Voting. PFP Class 3 is impaired under the Plan.
Each holder of an Allowed Claim in PFP Class 3 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against PFP shall receive the treatment provided to such holders in section 2.4
of this Plan.
10.4. Pressman Unsecured Claims Against PFP (PFP Class 4).
(a) Impairment and Voting. PFP Class 4 is impaired under the Plan.
Each holder of an Allowed Claim in PFP Class 4 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed Pressman Unsecured Claim
against PFP shall receive the treatment provided to such holders in section 2.3
of this Plan.
10.5. Equity Interests in PFP (PFP Class 5).
(a) Impairment and Voting. PFP Class 5 is unimpaired under the Plan.
Barneys is conclusively deemed to have accepted the Plan as the holder of PFP
Class 5 Equity Interests and is not entitled to vote to accept or reject the
Plan.
(b) Distributions. On the Effective Date, Barneys shall retain its
Equity Interests in PFP.
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XI. SECTION ELEVEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST PREEN
11.1. Priority Non-Tax Claims Against Preen (Preen Class 1).
(a) Impairment and Voting. Preen Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Preen Class 1 is conclusively deemed to
have accepted the Plan as a holder of Preen Class 1 Claims and is not entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Preen shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
11.2. Insured Claims Against Preen (Preen Class 2).
(a) Impairment and Voting. Preen Class 2 is impaired under the Plan.
Each holder of an Allowed Claim in Preen Class 2 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Insured
Claim against Preen shall only be entitled to maintain actions against and
obtain payment solely from an insurance company under an insurance policy or
policies issued by such company to, or for the benefit of, Preen.
11.3. Isetan Claims Against Preen (Preen Class 3).
(a) Impairment and Voting. Preen Class 3 is impaired under the Plan.
Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
11.4. Secured Aetna Claims Against Preen (Preen Class 4).
(a) Impairment and Voting. Preen Class 4 is impaired under the Plan.
Aetna shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Prior to the Effective Date, pursuant to a
stipulation and order of the Bankruptcy Court dated July 15, 1998, and in
contemplation and furtherance of this Plan, the property subject to the Aetna
Mortgage was transferred in a sale pursuant to section 363 of the Bankruptcy
Code and Aetna received the proceeds of such sale to the extent of the
stipulated value of Aetna's secured claim. Pursuant to section 1146(c) of the
Bankruptcy Code, such real property transfer (including any deeds, bills of sale
or assignments executed in connection with such transfers) are transfers
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under, in furtherance of, and in connection with this Plan, and shall not be
subject to any stamp, real estate transfer, mortgage recording or other similar
tax.
11.5. Secured Oaktree Claims Against Preen (Preen Class 5).
(a) Impairment and Voting. Preen Class 5 is impaired under the Plan.
Oaktree shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Pursuant to a stipulation and order of the
Bankruptcy Court dated December 22, 1997, and in contemplation and furtherance
of this Plan, the property subject to the Hokkaido Mortgages was transferred to
Oaktree's designee in full and complete satisfaction of its Claims under the
Hokkaido Mortgages. Pursuant to section 1146(c) of the Bankruptcy Code, such
real property transfer (including any deeds, bills of sale or assignments
executed in connection with such transfers) are transfers under, in furtherance
of, and in connection with this Plan, and shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
11.6. General Unsecured Claims Against Preen (Preen Class 6).
(a) Impairment and Voting. Preen Class 6 is impaired under the Plan.
Each holder of an Allowed Claim in Preen Class 6 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with
this Plan (including the Restructuring Transactions), each holder of an Allowed
General Unsecured Claim against Preen shall receive the treatment provided to
such holders in section 2.4 of this Plan.
11.7. Pressman Unsecured Claims Against Preen (Preen Class 7).
(a) Impairment and Voting. Preen Class 7 is impaired under the Plan.
Each holder of an Allowed Claim in Preen Class 7 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Preen shall receive the treatment provided in
section 2.3 of this Plan.
11.8. Equity Interests in Preen (Preen Class 8).
(a) Impairment and Voting. Preen Class 8 is impaired under the Plan.
Each holder of an Allowed Equity Interest in Preen Class 6 shall be entitled to
vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
section 28.4.3 of this Plan, the Equity Interests in Preen shall be extinguished
and the members of the Pressman Family holding Allowed Equity Interests in Preen
prior to the same being extinguished shall receive the treatment provided in
section 2.3 of this Plan.
XII. SECTION TWELVE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST PRESSMAD
12.1. Priority Non-Tax Claims Against Pressmad (Pressmad Class 1).
(a) Impairment and Voting. Pressmad Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Pressmad Class 1 is conclusively deemed
to have accepted the Plan as a holder of Pressmad Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Pressmad shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
12.2. Isetan Claims Against Pressmad (Pressmad Class 2).
(a) Impairment and Voting. Pressmad Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
12.3. General Unsecured Claims Against Pressmad (Pressmad Class 3).
(a) Impairment and Voting. Pressmad Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in Pressmad Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Pressmad shall receive the treatment provided to such holders in section
2.4 of this Plan.
12.4. Pressman Unsecured Claims Against Pressmad (Pressmad Class 4).
(a) Impairment and Voting. Pressmad Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Pressmad Class 4 shall be entitled to
vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Pressmad shall receive the treatment provided
to such holders in section 2.3 of this Plan.
12.5. Equity Interests in Pressmad (Pressmad Class 5).
(a) Impairment and Voting. Pressmad Class 5 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Pressmad Class 5 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Pressmad.
XIII. SECTION THIRTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST PRESSNED
13.1. Priority Non-Tax Claims Against Pressned (Pressned Class 1).
(a) Impairment and Voting. Pressned Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Pressned Class 1 is conclusively deemed
to have accepted the Plan as a holder of Pressned Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Pressned shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
13.2. Isetan Claims Against Pressned (Pressned Class 2).
(a) Impairment and Voting. Pressned Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
13.3. General Unsecured Claims Against Pressned (Pressned Class 3).
(a) Impairment and Voting. Pressned Class 3 is impaired under the Plan.
Each holder of an Allowed Claim in Pressmad Class 3 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Pressned shall receive the treatment provided to such holders in section
2.4 of this Plan.
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13.4. Pressman Unsecured Claims Against Pressned (Pressned Class 4).
(a) Impairment and Voting. Pressned Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Pressned Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Pressned shall receive the treatment provided
to such holders in section 2.3 of this Plan.
13.5. Equity Interests in Pressned (Pressned Class 5).
(a) Impairment and Voting. Pressned Class 5 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Pressned Class 5 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Pressned.
XIV. SECTION FOURTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST PRESWIL
14.1. Priority Non-Tax Claims Against Preswil (Preswil Class 1).
(a) Impairment and Voting. Preswil Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Preswil Class 1 is conclusively deemed
to have accepted the Plan as a holder of Preswil Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Preswil shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
14.2. Isetan Claims Against Preswil (Preswil Class 2).
(a) Impairment and Voting. Preswil Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided paragraph 5 of the Restructuring Transactions.
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14.3. General Unsecured Claims Against Preswil (Preswil Class 3).
(a) Impairment and Voting. Preswil Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in Preswil Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Preswil shall receive the treatment provided to such holders in section
2.4 of this Plan.
14.4. Pressman Unsecured Claims Against Preswil (Preswil Class 4).
(a) Impairment and Voting. Preswil Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Preswil Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Preswil shall receive the treatment provided to
such holders in section 2.3 of this Plan.
14.5. Equity Interests in Preswil (Preswil Class 5).
(a) Impairment and Voting. Preswil Class 5 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Preswil Class 5 Equity Interests and is not entitled to vote to accept or reject
the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Preswil.
XV. SECTION FIFTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST MADNEER
15.1. Priority Non-Tax Claims Against Madneer (Madneer Class 1).
(a) Impairment and Voting. Madneer Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Madneer Class 1 is conclusively deemed
to have accepted the Plan as a holder of Madneer Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Madneer shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
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15.2. Isetan Claims Against Madneer (Madneer Class 2).
(a) Impairment and Voting. Madneer Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
15.3. General Unsecured Claims Against Madneer (Madneer Class 3).
(a) Impairment and Voting. Madneer Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in Madneer Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Madneer shall receive the treatment provided to such holders in section
2.4 of this Plan.
15.4. Pressman Unsecured Claims Against Madneer (Madneer Class 4).
(a) Impairment and Voting. Madneer Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Madneer Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Madneer shall receive the treatment provided to
such holders in section 2.3 of this Plan.
15.5. Equity Interests in Madneer (Madneer Class 5).
(a) Impairment and Voting. Madneer Class 5 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Madneer Class 5 Equity Interests and is not entitled to vote to accept or reject
the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Madneer.
XVI. SECTION SIXTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST REEN JAPAN
16.1. Priority Non-Tax Claims Against Reen Japan (Reen Japan Class 1).
(a) Impairment and Voting. Reen Japan Class 1 is unimpaired under
the Plan. Each holder of an Allowed Claim in Reen Japan Class 1 is conclusively
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deemed to have accepted the Plan as a holder of Reen Japan Class 1 Claims and is
not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Reen Japan shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
16.2. Isetan Claims Against Reen Japan (Reen Japan Class 2).
(a) Impairment and Voting. Reen Japan Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
16.3. General Unsecured Claims Against Reen Japan (Reen Japan Class 3).
(a) Impairment and Voting. Reen Japan Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in Reen Japan Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Reen Japan shall receive the treatment provided to such holders in
section 2.4 of this Plan.
16.4. Equity Interests in Reen Japan (Reen Japan Class 4).
(a) Impairment and Voting. Reen Japan Class 4 is impaired under the
Plan. Each holder of an Allowed Equity Interest in Reen Japan Class 4 shall be
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with
section 28.5 of this Plan and the Restructuring Transactions, the Equity
Interests in Reen Japan shall be extinguished and the members of the Pressman
Family holding Allowed Equity Interests in Reen Japan prior to the same being
extinguished shall receive the treatment provided in section 2.3 of this Plan.
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XVII. SECTION SEVENTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
AGAINST AMJON
17.1. Priority Non-Tax Claims Against Amjon (Amjon Class 1).
(a) Impairment and Voting. Amjon Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Amjon Class 1 is conclusively deemed to
have accepted the Plan as a holder of Amjon Class 1 Claims and is not entitled
to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Amjon shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
17.2. Isetan Claims Against Amjon (Amjon Class 2).
(a) Impairment and Voting. Amjon Class 2 is impaired under the Plan.
Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
17.3. Secured Aetna Claims Against Amjon (Amjon Class 3).
(a) Impairment and Voting. Amjon Class 3 is impaired under the Plan.
Aetna shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Prior to the Effective Date, pursuant to a
stipulation and order of the Bankruptcy Court dated July 15, 1998, and in
contemplation and furtherance of this Plan, the property subject to the Aetna
Mortgage was transferred in a sale pursuant to section 363 of the Bankruptcy
Code and Aetna received the proceeds of such sale to the extent of the
stipulated value of Aetna's secured claim. Pursuant to section 1146(c) of the
Bankruptcy Code, such real property transfer (including any deeds, bills of sale
or assignments executed in connection with such transfers) are transfers under,
in furtherance of, and in connection with this Plan, and shall not be subject to
any stamp, real estate transfer, mortgage recording or other similar tax.
17.4. General Unsecured Claims Against Amjon (Amjon Class 4).
(a) Impairment and Voting. Amjon Class 4 is impaired under the Plan.
Each holder of an Allowed Claim in Amjon Class 4 shall be entitled to vote to
accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Amjon shall receive the treatment provided to such holders in section
2.4 of this Plan.
17.5. Pressman Unsecured Claims Against Amjon (Amjon Class 5).
(a) Impairment and Voting. Amjon Class 5 is impaired under the Plan.
Each holder of an Allowed Claim in Amjon Class 5 shall be entitled to vote to
accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Amjon shall receive the treatment provided to
such holders in section 2.3 of this Plan.
17.6. Equity Interests in Amjon (Amjon Class 6) .
(a) Impairment and Voting. Amjon Class 6 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Amjon Class 6 Equity Interests and is not entitled to vote to accept or reject
the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Amjon.
XVIII. SECTION EIGHTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST CHELSEA
18.1. Priority Non-Tax Claims Against Chelsea (Chelsea Class 1).
(a) Impairment and Voting. Chelsea Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Chelsea Class 1 is conclusively deemed
to have accepted the Plan as a holder of Chelsea Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Chelsea shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
18.2. Isetan Claims Against Chelsea (Chelsea Class 2).
(a) Impairment and Voting. Chelsea Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
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18.3. Secured Oaktree Claims Against Chelsea (Chelsea Class 3).
(a) Impairment and Voting. Chelsea Class 3 is impaired under the
Plan. Oaktree shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Pursuant to a stipulation and order of the
Bankruptcy Court dated December 22, 1997, and in contemplation and furtherance
of this Plan, the property subject to the Hokkaido Mortgages was transferred to
Oaktree's designee in full and complete satisfaction of its Claims under the
Hokkaido Mortgages. Pursuant to section 1146(c) of the Bankruptcy Code, such
real property transfer (including any deeds, bills of sale or assignments
executed in connection with such transfers) are transfers under, in furtherance
of, and in connection with this Plan, and shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
18.4. General Unsecured Claims Against Chelsea (Chelsea Class 4).
(a) Impairment and Voting. Chelsea Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Chelsea Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Chelsea shall receive the treatment provided to such holders in section
2.4 of this Plan.
18.5. Pressman Unsecured Claims Against Chelsea (Chelsea Class 5).
(a) Impairment and Voting. Chelsea Class 5 is impaired under the
Plan. Each holder of an Allowed Claim in Chelsea Class 5 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Chelsea shall receive the treatment provided to
such holders in section 2.3 of this Plan.
18.6. Equity Interests in Chelsea (Chelsea Class 6).
(a) Impairment and Voting. Chelsea Class 6 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Chelsea Class 6 Equity Interests and is not entitled to vote to accept or reject
the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Chelsea.
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XIX. SECTION NINETEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST
CHOLDERTON
19.1. Priority Non-Tax Claims Against Cholderton (Cholderton Class 1).
(a) Impairment and Voting. Cholderton Class 1 is unimpaired under
the Plan. Each holder of an Allowed Claim in Cholderton Class 1 is conclusively
deemed to have accepted the Plan as a holder of Cholderton Class 1 Claims and is
not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Cholderton shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
19.2. Isetan Claims Against Cholderton (Cholderton Class 2).
(a) Impairment and Voting. Cholderton Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
19.3. Secured Aetna Claims Against Cholderton (Cholderton Class 3).
(a) Impairment and Voting. Cholderton Class 3 is impaired under the
Plan. Aetna shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Prior to the Effective Date, pursuant to a
stipulation and order of the Bankruptcy Court dated July 15, 1998, and in
contemplation and furtherance of this Plan, the property subject to the Aetna
Mortgage was transferred in a sale pursuant to section 363 of the Bankruptcy
Code and Aetna received the proceeds of such sale to the extent of the
stipulated value of Aetna's secured claim. Pursuant to section 1146(c) of the
Bankruptcy Code, such real property transfer (including any deeds, bills of sale
or assignments executed in connection with such transfers) are transfers under,
in furtherance of, and in connection with this Plan, and shall not be subject to
any stamp, real estate transfer, mortgage recording or other similar tax.
19.4. General Unsecured Claims Against Cholderton (Cholderton Class 4).
(a) Impairment and Voting. Cholderton Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Cholderton Class 4 shall be entitled to
vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Cholderton shall receive the treatment provided to such holders in
section 2.4 of this Plan.
19.5. Pressman Unsecured Claims Against Cholderton (Cholderton Class 5).
(a) Impairment and Voting. Cholderton Class 5 is impaired under the
Plan. Each holder of an Allowed Claim in Cholderton Class 5 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Cholderton shall receive the treatment provided
to such holders in section 2.3 of this Plan.
19.6. Equity Interests in Cholderton (Cholderton Class 6).
(a) Impairment and Voting. Cholderton Class 6 is unimpaired under
the Plan. Preen is conclusively deemed to have accepted the Plan as the holder
of Cholderton Class 6 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
equity interests in Cholderton.
XX. SECTION TWENTY: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST MARTINTON
20.1. Priority Non-Tax Claims Against Martinton (Martinton Class 1).
(a) Impairment and Voting. Martinton Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Martinton Class 1 is conclusively
deemed to have accepted the Plan as a holder of Martinton Class 1 Claims and is
not entitled to vote to accept or reject the Plan.
(b) DISTRIBUTIONS. On the Effective Date, each holder of an
Allowed Priority Non-Tax Claim against Martinton shall be distributed on
account of such Allowed Priority Non-Tax Claim a payment in Cash equal to the
amount of such holder's Allowed Priority Non-Tax Claim.
20.2. Isetan Claims Against Martinton (Martinton Class 2).
(a) Impairment and Voting. Martinton Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
20.3. Secured Oaktree Claims Against Martinton (Martinton Class 3).
(a) Impairment and Voting. Martinton Class 3 is impaired under the
Plan. Oaktree shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Pursuant to a stipulation and order of the
Bankruptcy Court dated December 22, 1997, and in contemplation and furtherance
of this Plan, the property subject to the Hokkaido Mortgages was transferred to
Oaktree's designee in full and complete satisfaction of its Claims under the
Hokkaido Mortgages. Pursuant to section 1146(c) of the Bankruptcy Code, such
real property transfer (including any deeds, bills of sale or assignments
executed in connection with such transfers) are transfers under, in furtherance
of, and in connection with this Plan, and shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
20.4. General Unsecured Claims Against Martinton (Martinton Class 4).
(a) Impairment and Voting. Martinton Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Martinton Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Martinton shall receive the treatment provided to such holders in
section 2.4 of this Plan.
20.5. Pressman Unsecured Claims Against Martinton (Martinton Class 5).
(a) Impairment and Voting. Martinton Class 5 is impaired under the
Plan. Each holder of an Allowed Claim in Martinton Class 5 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Martinton shall receive the treatment provided
to such holders in section 2.3 of this Plan.
20.6. Equity Interests in Martinton (Martinton Class 6).
(a) Impairment and Voting. Martinton Class 6 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Martinton Class 6 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Martinton.
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XXI. SECTION TWENTY-ONE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
AGAINST GODERICH
21.1. Priority Non-Tax Claims Against Goderich (Goderich Class 1).
(a) Impairment and Voting. Goderich Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Goderich Class 1 is conclusively deemed
to have accepted the Plan as a holder of Goderich Class 1 Claims and is not
entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Goderich shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
21.2. Isetan Claims Against Goderich (Goderich Class 2).
(a) Impairment and Voting. Goderich Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, Isetan shall receive the
treatment provided in paragraph 5 of the Restructuring Transactions.
21.3. Secured Oaktree Claims Against Goderich (Goderich Class 3).
(a) Impairment and Voting. Goderich Class 3 is impaired under the
Plan. Oaktree shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Pursuant to a stipulation and order of the
Bankruptcy Court dated December 22, 1997, and in contemplation and furtherance
of this Plan, the property subject to the Hokkaido Mortgages was transferred to
Oaktree's designee in full and complete satisfaction of its Claims under the
Hokkaido Mortgages. Pursuant to section 1146(c) of the Bankruptcy Code, such
real property transfer (including any deeds, bills of sale or assignments
executed in connection with such transfers) are transfers under, in furtherance
of, and in connection with this Plan, and shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
21.4. General Unsecured Claims Against Goderich (Goderich Class 4).
(a) Impairment and Voting. Goderich Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Goderich Class 4 shall be entitled to
vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed General Unsecured Claim
against Goderich shall receive the treatment provided to such holders in section
2.4 of this Plan.
21.5. Pressman Unsecured Claims Against Goderich (Goderich Class 5).
(a) Impairment and Voting. Goderich Class 5 is impaired under the
Plan. Each holder of an Allowed Claim in Goderich Class 5 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Pressman Unsecured Claim against Goderich shall receive the treatment provided
to such holders in section 2.3 of this Plan.
21.6. Equity Interests in Goderich (Goderich Class 6).
(a) Impairment and Voting. Goderich Class 6 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Goderich Class 6 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Goderich.
XXII. SECTION TWENTY-TWO: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
AGAINST 106 SEVENTH CORP.
22.1. Priority Non-Tax Claims Against 106 Seventh Corp. (106 Seventh Corp.
Class 1).
(a) Impairment and Voting. 106 Seventh Corp. Class 1 is unimpaired
under the Plan. Each holder of an Allowed Claim in 106 Seventh Corp. Class 1 is
conclusively deemed to have accepted the Plan as a holder of 106 Seventh Corp.
Class 1 Claims and is not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against 106 Seventh Corp. shall be distributed on account
of such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
22.2. Isetan Claims Against 106 Seventh Corp. (106 Seventh Corp. Class 2).
(a) Impairment and Voting. 106 Seventh Corp. Class 2 is impaired
under the Plan. Isetan shall be entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
22.3. Secured Oaktree Claims Against 106 Seventh Corp. (106 Seventh Corp.
Class 3).
(a) Impairment and Voting. 106 Seventh Corp. Class 3 is impaired
under the Plan. Oaktree shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Pursuant to a stipulation and order of the
Bankruptcy Court dated December 22, 1997, and in contemplation and furtherance
of this Plan, the property subject to the Hokkaido Mortgages was transferred to
Oaktree's designee in full and complete satisfaction of its Claims under the
Hokkaido Mortgages. Pursuant to section 1146(c) of the Bankruptcy Code, such
real property transfer (including any deeds, bills of sale or assignments
executed in connection with such transfers) are transfers under, in furtherance
of, and in connection with this Plan, and shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
22.4. General Unsecured Claims Against 106 Seventh Corp. (106 Seventh
Corp. Class 4).
(a) Impairment and Voting. 106 Seventh Corp. Class 4 is impaired
under the Plan. Each holder of an Allowed Claim in 106 Seventh Corp. Class 4
shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
General Unsecured Claim against 106 Seventh Corp. shall receive the treatment
provided to such holders in section 2.4 of this Plan.
22.5. Pressman Unsecured Claims Against 106 Seventh Corp. (106 Seventh
Corp. Class 5).
(a) Impairment and Voting. 106 Seventh Corp. Class 5 is impaired
under the Plan. Each holder of an Allowed Claim in 106 Seventh Corp. Class 5
shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed Pressman Unsecured Claim
against 106 Seventh Corp. shall receive the treatment provided to such holders
in section 2.3 of this Plan.
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22.6. Equity Interests in 106 Seventh Corp. (106 Seventh Corp. Class 6).
(a) Impairment and Voting. 106 Seventh Corp. Class 6 is unimpaired
under the Plan. Preen is conclusively deemed to have accepted the Plan as the
holder of 106 Seventh Corp. Class 6 Equity Interests and is not entitled to vote
to accept or reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in 106 Seventh Corp.
XXIII. SECTION TWENTY-THREE: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
AGAINST GADDESDEN
23.1. Priority Non-Tax Claims Against Gaddesden (Gaddesden Class 1).
(a) Impairment and Voting. Gaddesden Class 1 is unimpaired under the
Plan. Each holder of an Allowed Claim in Gaddesden Class 1 is conclusively
deemed to have accepted the Plan as a holder of Gaddesden Class 1 Claims and is
not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Gaddesden shall be distributed on account of such
Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of such
holder's Allowed Priority Non-Tax Claim.
23.2. Isetan Claims Against Gaddesden (Gaddesden Class 2).
(a) Impairment and Voting. Gaddesden Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
23.3. Secured Greater New York Claims Against Gaddesden (Gaddesden Class
3).
(a) Impairment and Voting. Gaddesden Class 3 is impaired under the
Plan. Greater New York shall be entitled to vote to accept or reject the Plan.
(b) Distributions. Prior to the Effective Date, pursuant to a
stipulation and order of the Bankruptcy Court dated April 24, 1996, and in
contemplation and furtherance of this Plan, the property subject to the Greater
New York Mortgage was transferred to Greater New York's designee in full and
complete satisfaction of its Claims under the Greater New York Mortgage.
Pursuant to section 1146(c) of the Bankruptcy
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Code, such real property transfer (including any deeds, bills of sale or
assignments executed in connection with such transfers) is a transfer under, in
furtherance of, and in connection with this Plan, and shall not be subject to
any stamp, real estate transfer, mortgage recording or other similar tax.
23.4. General Unsecured Claims Against Gaddesden (Gaddesden Class 4).
(a) Impairment and Voting. Gaddesden Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Gaddesden Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
General Unsecured Claim against Gaddesden shall receive the treatment provided
to such holders in section 2.4 of this Plan.
23.5. Pressman Unsecured Claims Against Gaddesden (Gaddesden Class 5).
(a) Impairment and Voting. Gaddesden Class 5 is impaired under the
Plan. Each holder of an Allowed Claim in Gaddesden Class 5 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed Pressman Unsecured Claim
against Gaddesden shall receive the treatment provided to such holders in
section 2.3 of this Plan.
23.6. Equity Interests in Gaddesden (Gaddesden Class 6).
(a) Impairment and Voting. Gaddesden Class 6 is unimpaired under the
Plan. Preen is conclusively deemed to have accepted the Plan as the holder of
Gaddesden Class 6 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Gaddesden.
XXIV. SECTION TWENTY-FOUR: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
AGAINST BNY CREDIT
24.1. Priority Non-Tax Claims Against BNY Credit (BNY Credit Class 1).
(a) Impairment and Voting. BNY Credit Class 1 is unimpaired under
the Plan. Each holder of an Allowed Claim in BNY Credit Class 1 is conclusively
deemed to have accepted the Plan as a holder of BNY Credit Class 1 Claims and is
not entitled to vote to accept or reject the Plan.
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(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against BNY Credit shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
24.2. Isetan Claims Against BNY Credit (BNY Credit Class 2).
(a) Impairment and Voting. BNY Credit Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
24.3. General Unsecured Claims Against BNY Credit (BNY Credit Class 3).
(a) Impairment and Voting. BNY Credit Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in BNY Credit Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
General Unsecured Claim against BNY Credit shall receive the treatment provided
to such holders in section 2.4 of this Plan.
24.4. Pressman Unsecured Claims Against BNY Credit (BNY Credit Class 4).
(a) Impairment and Voting. BNY Credit Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in BNY Credit Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed Pressman Unsecured Claim
against BNY Credit shall receive the treatment provided to such holders in
section 2.3 of this Plan.
24.5. Equity Interests in BNY Credit (BNY Credit Class 5).
(a) Impairment and Voting. BNY Credit Class 5 is unimpaired under
the Plan. Preen is conclusively deemed to have accepted the Plan as the holder
of BNY Credit Class 5 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in BNY Credit.
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XXV. SECTION TWENTY-FIVE: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS
AGAINST PRESCREDIT
25.1. Priority Non-Tax Claims Against Prescredit (Prescredit Class 1).
(a) Impairment and Voting. Prescredit Class 1 is unimpaired under
the Plan. Each holder of an Allowed Claim in Prescredit Class 1 is conclusively
deemed to have accepted the Plan as a holder of Prescredit Class 1 Claims and is
not entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
Priority Non-Tax Claim against Prescredit shall be distributed on account of
such Allowed Priority Non-Tax Claim a payment in Cash equal to the amount of
such holder's Allowed Priority Non-Tax Claim.
25.2. Isetan Claims Against Prescredit (Prescredit Class 2).
(a) Impairment and Voting. Prescredit Class 2 is impaired under the
Plan. Isetan shall be entitled to vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, Isetan shall receive the treatment provided in
section 2.2 of the Plan.
25.3. General Unsecured Claims Against Prescredit (Prescredit Class 3).
(a) Impairment and Voting. Prescredit Class 3 is impaired under the
Plan. Each holder of an Allowed Claim in Prescredit Class 3 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, each holder of an Allowed
General Unsecured Claim against Prescredit shall receive the treatment provided
to such holders in section 2.4 of this Plan.
25.4. Pressman Unsecured Claims Against Prescredit (Prescredit Class 4).
(a) Impairment and Voting. Prescredit Class 4 is impaired under the
Plan. Each holder of an Allowed Claim in Prescredit Class 4 shall be entitled to
vote to accept or reject the Plan.
(b) Distributions. On the Effective Date, and in accordance with the
Restructuring Transactions, each holder of an Allowed Pressman Unsecured Claim
against Prescredit shall receive the treatment provided to such holders in
section 2.3 of this Plan.
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25.5. Equity Interests in Prescredit (Prescredit Class 5).
(a) Impairment and Voting. Prescredit Class 5 is unimpaired under
the Plan. Preen is conclusively deemed to have accepted the Plan as the holder
of Prescredit Class 5 Equity Interests and is not entitled to vote to accept or
reject the Plan.
(b) Distributions. On the Effective Date, Preen shall retain its
Equity Interests in Prescredit.
XXVI. SECTION TWENTY-SIX: PROVISIONS RELATING TO SUBSCRIPTION RIGHTS ISSUED TO
HOLDERS OF ALLOWED GENERAL UNSECURED CLAIMS AGAINST
THE DEBTORS
26.1. Sale of Offered Shares. Simultaneous with the distribution of
Ballots to holders of Allowed General Unsecured Claims (including holders of
Disputed General Unsecured Claims against the Debtors solely to the extent that
such Claims have been estimated by the Bankruptcy Court, prior to the
Subscription Deadline, to be Allowed General Unsecured Claims against the
Debtors in whole or part), such holders shall be distributed a Subscription
Form, which form shall indicate, among other things, (i) the number of
Subscription Rights that the holder of the Subscription Form is entitled to
exercise in accordance with the terms of this section, (ii) the price per
Offered Share to be paid by the holder of the Subscription Form if such holder
elects to exercise some or all of its Subscription Rights (the "Offered Share
Price") and (iii) the Subscription Deadline. On the Effective Date and in
accordance with the Restructuring Transactions, New Barneys will sell the
Offered Shares to the holders of Subscription Rights who timely exercised such
Subscription Rights. Each holder of Subscription Rights may, on or before the
Subscription Deadline, elect to exercise its Subscription Rights to purchase
that number of Offered Shares equal to its Ratable Proportion of the Offered
Shares or any lesser portion thereof. If the Subscription Rights are not
exercised for all of the Offered Shares, then, on the Effective Date,
Whippoorwill and Bay Harbour shall purchase the Purchased Standby Shares by one
or more wire transfers of Federal funds. As soon as practicable, but in no event
later than 5:00 P.M. (New York City time) on the second Business Day after the
Subscription Deadline, New Barneys shall deliver to Whippoorwill and Bay
Harbour, respectively, a notice setting forth (i) the total number of Purchased
Standby Shares, (ii) the number of Purchased Standby Shares to be purchased by
each of Whippoorwill and Bay Harbour, respectively, and (iii) the aggregate
purchase price to be paid by each of Whippoorwill and Bay Harbour, respectively
(with a copy to the Committee), for the Purchased Standby Shares to be purchased
by each of them.
26.2. Purchased Option Shares. On the Effective Date, and in accordance
with the Stock Purchase Agreement, Whippoorwill and Bay Harbour shall receive an
option, which shall expire at 5:00 p.m. on the later to occur of (i) the nine
(9) month anniversary
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of the Effective Date and (ii) November 15, 1999, to purchase the Purchased
Option Shares.
26.3. Exercise of Subscription Rights. Each election to exercise
Subscription Rights shall be made by a holder of such Subscription Rights on the
Subscription Form distributed to such holder by indicating the number of
Subscription Rights, if any, that such holder elects to exercise. For any
election to exercise Subscription Rights to be effective, each holder of
Subscription Rights electing to exercise any or all of its Subscription Rights
shall, on or before the Subscription Deadline, with its Subscription Form,
tender to New Barneys or its designee a certified or bank check in an amount
equal to the product obtained by multiplying the Offered Share Price by the
number of Subscription Rights that such holder elects to exercise. The Plan
Proponents shall, in their sole discretion, determine as to each Subscription
Form whether such Subscription Form has been completed, in whole or part, in
compliance with the terms of this Plan and, as a result, that Offered Shares
should be sold to the party submitting such Subscription Form. Any such
determination by the Plan Proponents shall be final and shall not be subject to
the approval of, or an application to overturn such determination to, the
Bankruptcy Court. Pending the sale and issuance of the Offered Shares described
in section 26.1 of this Plan, such funds shall be held by New Barneys or its
designee in a separate, interest bearing account.
26.4. Allocation of Offered Shares. The Offered Shares shall be sold to
the holders of Subscription Rights in accordance with their elections to
exercise their Subscription Rights. The Purchased Standby Shares and the
Purchased Option Shares shall be equally allocated to Whippoorwill and Bay
Harbour unless they mutually agree otherwise.
26.5. Allocation Upon Breach. In the event that either Whippoorwill or Bay
Harbour (a "Breaching Purchaser") fails to deliver, or gives notice that it will
not deliver, the purchase price for the Purchased Offered Shares, the Purchased
Standby Shares and/or the shares of the New Preferred Stock to be purchased by
such Breaching Purchaser pursuant to the Stock Purchase Agreement, the
non-Breaching Purchaser may, at its option, either (i) purchase the shares of
the New Common Stock and the shares of the New Preferred Stock that would have
been purchased by the Breaching Purchaser but for its breach of the Stock
Purchase Agreement, or (ii) arrange (subject to the next to last sentence of
this paragraph) for a third party (a "Third Party Purchaser") to purchase the
New Common Stock and the New Preferred Stock that would have been purchased by
the Breaching Purchaser but for its breach of the Stock Purchase Agreement. If
the non-Breaching Purchaser does not elect to comply with the immediately
preceding sentence, the Committee may arrange (subject to the next to last
sentence of this paragraph) for a Third Party Purchaser to purchase the New
Common Stock and the New Preferred Stock that would have been purchased by the
Breaching Purchaser but for its breach of the Stock Purchase Agreement. A
purchase by a Third Party Purchaser shall be deemed to be an assignment under
the Stock Purchase Agreement and subject to the provisions relating
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thereto in the Stock Purchase Agreement. Nothing contained in this section shall
be deemed to release a Breaching Purchaser from any liability resulting from
such breach.
26.6. Expiration of Subscription Rights. The Subscription Rights shall
expire and become void for all purposes at 5:00 p.m. (New York City time) on the
Subscription Deadline.
26.7. Distribution of Subscription Rights Not Distributed to Holders of
Allowed Convenience Claims. Holders of Allowed Convenience Claims against any of
the Debtors shall not be distributed Subscription Rights on account of their
Claims. Any Subscription Rights that would have been distributable to holders of
Allowed Convenience Claims had such Claims received the treatment provided to
Allowed General Unsecured Claims against the Debtors shall be distributed (i) in
the case of holders of Allowed Convenience Claims in an amount less than $2,300,
PRO RATA to the holders of Allowed General Unsecured Claims against the Debtors,
and (ii) in the case of holders of Allowed General Unsecured Claims in an amount
greater than $2,300 but who elect to have their Claims treated as Allowed
Convenience Claims by so indicating on their respective Ballots, PRO RATA to
Whippoorwill and Bay Harbour.
26.8. Distribution of Unsecured Creditors Warrants. On the Effective Date,
New Barneys will issue to holders of General Unsecured Claims their Ratable
Proportion of the Unsecured Creditors Warrants to purchase up to 1,013,514
shares of New Common Stock at an exercise price of $8.68 per share, representing
approximately 7 1/2% of the shares of New Common Stock to be outstanding on the
Effective Date. The Unsecured Creditors Warrants will expire on May 15, 2000.
The Unsecured Creditors Warrants, including the method for exercising same,
shall be governed by the Unsecured Creditors Warrant Agreement, which agreement
shall be substantially in the form included in the Plan Supplement. New Barneys
will agree that for so long as any of the Unsecured Creditors Warrants are
outstanding, any issuance of common stock of New Barneys to Affiliates at a
price below the then market value of such common stock must be approved by a
majority of the Independent Directors provided that at the time of such issuance
there are still Independent Directors seated on the board of directors of New
Barneys.
XXVII. SECTION TWENTY-SEVEN: ACCEPTANCE OR REJECTION OF THIS PLAN
27.1. Voting Rights. Only holders of Claims against the Debtors on the
Record Date shall be entitled to vote to accept or reject this Plan within the
class of Claims that such holder's claim is classified hereunder. In order for a
Ballot to be counted as a vote to accept or reject this Plan, such Ballot must
be received by the Ballot Agent by the Ballot Date. The holder of more than one
Claim or Equity Interest classified in a single class of Claims or Equity
Interests shall be entitled to vote each such Claim or Equity Interest
separately to accept or reject the Plan (despite the fact that such holder may
receive only one Ballot for purposes of voting) and each such vote shall be
counted
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separately in determining whether the class within which such Claim or Equity
Interest is classified has accepted or rejected the Plan.
27.2. Acceptance by a Class of Claims or Equity Interests. Consistent with
section 1126(c) of the Bankruptcy Code and except as otherwise provided in
section 1126(e) of the Bankruptcy Code, a Class of Claims shall have accepted
this Plan if it is accepted by at least two-thirds in dollar amount and one-half
in number of the holders of Allowed Claims in such Class that have timely and
properly voted to accept or reject this Plan. Consistent with section 1126(d) of
the Bankruptcy Code and except as otherwise provided in section 1126(e) of the
Bankruptcy Code, a Class of Equity Interests shall have accepted this Plan if it
is accepted by at least two-thirds in amount of the Allowed Equity Interests in
such Class that have timely and properly voted to accept or reject this Plan.
27.3. Impaired Classes to Vote. Unless otherwise indicated, each impaired
Class of Claims or Equity Interests shall be entitled to vote separately to
accept or reject this Plan.
27.4. Elimination of Classes. Any Class of Claims in which there are no
holders as of the date of the commencement of the Confirmation Hearing shall be
deemed deleted from this Plan for purposes of voting on this Plan, and for
purposes of determining acceptance or rejection of this Plan by such Class under
section 1129(a)(8) of the Bankruptcy Code.
27.5. Nonconsensual Confirmation. If any impaired Class of Claims or
Equity Interests shall not have accepted this Plan by the requisite statutory
majorities provided in sections 1126(c) or 1126(d) of the Bankruptcy Code, as
applicable, the Plan Proponents reserve the right to (a) request the Bankruptcy
Court to confirm this Plan pursuant to section 1129(b) of the Bankruptcy Code,
or (b) modify this Plan in accordance with section 35.2 hereof.
XXVIII. SECTION TWENTY-EIGHT: MEANS OF IMPLEMENTATION
Each of the transactions required to implement this Plan shall be
implemented in accordance with this section 28 and the Restructuring
Transactions described in Schedule 28 hereto. The descriptions in this section
of the organizational and ownership structures, governance and assets and
liabilities of the Entities to be organized and reorganized under the Plan
assume that the transactions required to implement this Plan have been
completed.
28.1. New Barneys.
28.1.1. Organization of New Barneys. By the Effective Date, New
Barneys will be organized as a Delaware corporation by the filing of a
Certificate of Incorporation with the Secretary of State of the State of
Delaware. The Certificate of
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Incorporation of New Barneys, together with any amendments thereto, shall
provide that (a) the issuance of non-voting equity securities shall be
prohibited, as required by section 1123(a)(6) of the Bankruptcy Code, and (b)
the New Common Stock and the New Preferred Stock shall be authorized. The
provisions of this Plan shall be effectuated by New Barneys without any further
action of or by the stockholders or directors of New Barneys or any of the other
Debtors and Debtors in Possession.
28.1.2. Issuance of Equity Securities by New Barneys. The issuance
of the following equity securities by New Barneys, which shall contain the terms
described in the Disclosure Statement and shall be in substantially the form
included in the Plan Supplement, is hereby authorized pursuant to section 1145
of the Bankruptcy Code, as applicable, without further action under applicable
law:
(a) 12,500,000 shares of New Common Stock, par value $0.01 per
share;
(b) 20,000 shares of New Preferred Stock to be issued pursuant to
paragraphs 3(e) and (f) of the Restructuring Transactions;
(c) the Subscription Rights to be issued pursuant to section 26 of
this Plan, including the common stock of New Barneys to be issued upon the
exercise thereof;
(d) the Unsecured Creditors Warrants to be issued pursuant to
section 26 of this Plan, including the common stock of New Barneys to be issued
upon the exercise thereof;
(e) the Isetan Warrants to be issued pursuant to section 2.2 of this
Plan, including the common stock of New Barneys to be issued upon the exercise
thereof; and
(f) the option to purchase the Purchased Option Shares, including
the common stock of New Barneys to be issued upon the exercise thereof.
28.1.3. Assets and Liabilities of New Barneys. On the Effective
Date, New Barneys will own, among other assets, 100% of the outstanding capital
stock of Barneys, free and clear of all Liens, Claims and encumbrances (except
any Liens granted to secure the Exit Facility and other than obligations of the
Debtors set forth in section 28.2.10 hereof which survive termination of the
BankBoston DIP Facility or as set forth in sections 33 and 34 hereof with
respect to such facility). New Barneys shall guarantee the obligations of (i)
Barneys under the Isetan Subordinated Note, (ii) Barneys under the BI-Equipment
Lessors Note, the Copelco Note and the Hancock Note, (iii) Barneys (NY) Lease
Corp., Barneys (CA) Lease Corp. and Barneys America (Chicago) Lease Corp. under
the New Leases, and (iv) BNY Licensing under the New Trademark License
Agreement. Other than these guarantees and certain potential indebtedness under
the Exit Facility, on the Effective Date, it is not anticipated that New Barneys
will have any material indebtedness.
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28.1.4. Governance of New Barneys. From and after the Effective
Date, the business and affairs of New Barneys will be managed by and under the
direction of the Board of Directors, the members of which will be designated as
follows: (i) Whippoorwill and Bay Harbour shall each have the exclusive right to
designate three (3) members of the Board of Directors (for a total of six (6)
directors) without the approval of the Committee or any other party as to the
identities of such directors, (ii) Isetan shall have the exclusive right to
designate one (1) member of the Board of Directors who shall either be an
employee of Isetan or, if not, such director shall be reasonably acceptable to
the Plan Proponents, (iii) the Chief Executive Officer of New Barneys shall be
designated a member of the Board of Directors, and (iv) the remaining three (3)
directors shall be independent, i.e., neither Affiliates of Whippoorwill, Bay
Harbour or Isetan nor employees of Barneys (the "Independent Directors") and
shall be nominated jointly by Whippoorwill and Bay Harbour after consultation
with the Committee and after considering the recommendations of the Committee.
The designation of any of the Independent Directors to the Board of Directors
shall be subject to the approval of the Committee, which approval shall not be
unreasonably withheld or delayed. Whippoorwill and Bay Harbour shall not remove,
or cause to be removed, the Independent Directors from the Board of Directors of
New Barneys for a minimum of one (1) year following the Effective Date, absent
special circumstances. The identities of all directors of New Barneys on the
Effective Date, to the extent known prior to the Confirmation Date, shall be
disclosed in the Plan Supplement. Thereafter, the composition of the Board of
Directors of New Barneys will be determined in accordance with the Certificate
of Incorporation of New Barneys and applicable state law. Whippoorwill and Bay
Harbour have agreed that for a period of five (5) years, each of them will vote
any shares of New Barneys held by them in favor of one (1) director nominated by
Isetan who shall either be an employee of Isetan or, if not, such director shall
be reasonably acceptable to Whippoorwill and Bay Harbour (the "Isetan Board
Designee"). In addition, Isetan will have the right, for a period of five (5)
years, to appoint one observer to the Board of Directors of New Barneys. On the
Effective Date, Whippoorwill, Bay Harbour and Isetan shall execute an agreement
respecting the foregoing voting arrangements, which agreement shall be
substantially in the form included in the Plan Supplement.
28.1.5. Financial Reporting. In the event that New Barneys has not
registered the New Common Stock under the Securities and Exchange Act of 1934,
as amended, within six (6) months of the Effective Date, then New Barneys shall
make publicly available its financial statements for the first six (6) months of
each fiscal year within 60 days after the end of such six (6) month period and
its financial statements for the full fiscal year within 120 days after the end
of each fiscal year.
28.2. Barneys, Barneys (CA) Lease Corp. and Barneys (NY) Lease Corp.
28.2.1. Organization of Barneys. On the Effective Date, 100% of the
outstanding capital stock of Barneys will be owned by New Barneys, free and
clear of all Liens, Claims and encumbrances (except for any Liens granted to
secure the Exit Facility).
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28.2.2. Capital Stock of Barneys. On the Effective Date, the
authorized capital stock of Barneys shall consist only of common stock in such
amount and have the par value and other rights, privileges, limitations and
restrictions as are set forth in Barneys existing Certificate of Incorporation,
except as same is amended pursuant to the terms of this Plan and the
Restructuring Transactions.
28.2.3. Organization of Barneys (CA) Lease Corp. and Barneys (NY)
Lease Corp. By the Effective Date, Barneys (CA) Lease Corp. and Barneys (NY)
Lease Corp. will be organized as Delaware corporations by the filing of
Certificates of Incorporation with the Secretary of State of the State of
Delaware. The Certificates of Incorporation of Barneys (CA) Lease Corp. and
Barneys (NY) Lease Corp., respectively, shall provide that the issuance of
non-voting equity securities shall be prohibited, as required by section
1123(a)(6) of the Bankruptcy Code. On the Effective Date, 100% of the
outstanding capital stock of both Barneys (CA) Lease Corp. and Barneys (NY)
Lease Corp. will be owned by Barneys.
28.2.4. Capital Stock of Barneys (CA) Lease Corp. and Barneys (NY)
Lease Corp. On the Effective Date, each of Barneys (CA) Lease Corp. and Barneys
(NY) Lease Corp. will issue 100 shares of common stock, which shall constitute
all of the outstanding shares of common stock of such corporations, to Barneys.
Such common stock shall have the rights, privileges, limitations and
restrictions set forth in the respective Certificates of Incorporation of
Barneys (CA) Lease Corp. and Barneys (NY) Lease Corp.
28.2.5. Subleases Between Barneys (CA) Lease Corp. and Barneys (NY)
Lease Corp. and Barneys. On the Effective Date, Barneys (CA) Lease Corp., with
respect to the Beverly Hills Property, and Barneys (NY) Lease Corp., with
respect to the Madison Avenue Property, shall each execute a sublease with
Barneys, as sublessee, granting Barneys the right to use and occupy each of the
Beverly Hills Property and the Madison Avenue Property, respectively, which
subleases shall grant Barneys all of the same use and occupancy rights for the
Beverly Hills Property and the Madison Avenue Property, respectively, as are
granted to Barneys (CA) Lease Corp. and Barneys (NY) Lease Corp. under the New
Leases with Isetan. Barneys shall continue to manage and operate all retail
operations at the Beverly Hills Property and the Madison Avenue Property.
28.2.6. Assets and Liabilities of Barneys. On the Effective Date,
Barneys will own the following assets, among others, free and clear of all
Liens, Claims and encumbrances (except for Liens granted to secure the Exit
Facility, the BI-Equipment Lessors Note, the Copelco Note, the Hancock Note and
other than obligations of the Debtors set forth in section 28.2.10 hereof which
survive termination of the BankBoston DIP Facility or as set forth in sections
33 and 34 hereof with respect to such facility):
100% of the outstanding capital stock of Barneys America
100% of the outstanding capital stock of BNY Licensing
100% of the outstanding capital stock of Barneys (CA) Lease
Corp.
100% of the outstanding capital stock of Barneys (NY) Lease
Corp.
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100% of the outstanding capital stock of Basco
100% of the outstanding capital stock of PFP
On the Effective Date, Barneys will be a borrower or an obligor, as
the case may be, under (i) the Isetan Subordinated Note, (ii) the BI-Equipment
Lessors Note, the Copelco Note and the Hancock Note, and (iii) the Exit
Facility. Barneys will also be a guarantor of the obligations of (i) Barneys
(CA) Lease Corp., Barneys America (Chicago) Lease Corp. and Barneys (NY) Lease
Corp. under the New Leases for the Beverly Hills Property, the Chicago Property
and the Madison Avenue Property, respectively, and (ii) BNY Licensing under the
New Trademark License Agreement.
28.2.7. Governance of Barneys. On the Effective Date, the business
and affairs of Barneys will be managed by and under the direction of a Board of
Directors elected by New Barneys, Barneys sole stockholder. For so long as the
Isetan Board Designee is a member of the Board of Directors of New Barneys, New
Barneys shall nominate and vote to elect the Isetan Board Designee as a member
of the Board of Directors of Barneys.
28.2.8. Governance of Barneys (CA) Lease Corp. and Barneys (NY)
Lease Corp. From and after the Effective Date, the business and affairs of each
of Barneys (CA) Lease Corp. and Barneys (NY) Lease Corp., respectively, will be
managed by and under the direction of the Board of Directors elected by Barneys,
their respective sole stockholder.
28.2.9. Existing Leases for Beverly Hills Property and Madison
Avenue Property. Pursuant to section 31.1 of this Plan, the Existing Leases for
the Beverly Hills Property and the Madison Avenue Property, respectively, shall
be amended and restated as the New Leases for such properties and then such
leases shall be assumed by Barneys and assigned to and assumed by Barneys (CA)
Lease Corp. and Barneys (NY) Lease Corp., as applicable.
28.2.10. Repayment of BankBoston DIP Facility. Except for such
obligations of the Debtors that survive the termination of the BankBoston DIP
Facility, on the Effective Date, all obligations of the Debtors under the
BankBoston DIP Facility shall be paid or otherwise satisfied in full in
accordance with the terms of the BankBoston DIP Facility.
28.2.11. Deferral of Interest Payments on Isetan Subordinated Note.
Interest payable under the Isetan Subordinated Note on each of the first four
scheduled semi-annual interest payment dates shall either be paid in cash or, if
a majority of the Independent Directors determine, with respect to any or all of
such interest payments, that it would be in the best interests of Barneys, based
on all factors deemed by the Independent Directors to be relevant (including,
without limitation, Barneys' cash flow, availability under the Exit Facility,
scheduled fixed payment obligations and business plan requirements), then such
interest payment or payments shall accrue and be deemed
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added to the principal amount of the Isetan Subordinated Note on the scheduled
interest payment date for such payment or payments.
28.2.12. BNY Licensing. Pursuant to 24.1 of the Plan, BNY Licensing
will be deemed to have rejected the Trademark License Agreement and the
Technical Assistance Agreement. Any Claim of Preen for damages resulting from
the rejection of such agreements shall be for voting and distribution purposes
conclusively assigned no value or disallowed by agreement of Preen. On the
Effective Date, and in accordance with the Restructuring Transactions, BNY
Licensing shall (i) execute the New Trademark License Agreement with Barneys
Japan, (ii) deliver the Minimum Royalty Assignment to Isetan, in full and
complete satisfaction of the obligations of BNY Licensing under the BNY
Licensing Note and (iii) grant the Barneys Asia License to Barneys Asia.
28.2.13. BNY Leasing. On the Effective Date or as soon thereafter as
is reasonably practical, following the implementation of the Restructuring
Transactions, BNY Leasing shall merge with and into Barneys in accordance with
applicable state law.
28.2.14. Exit Facility. To finance the Cash requirements to
consummate this Plan and to provide Barneys and its affiliates with working
capital on a going-forward basis, on the Effective Date, the Exit Facility,
which shall be in an amount of not less than $115 million, shall be entered into
by Barneys, which may be secured by certain assets of Barneys and/or its
Affiliates and may be guaranteed by certain Affiliates of Barneys.
28.3. Barneys America and Barneys America (Chicago) Lease Corp.
28.3.1. Organization of Barneys America. On the Effective Date, 100%
of the outstanding capital stock of Barneys America will be owned by Barneys,
free and clear of all Liens, Claims and encumbrances (except any Liens granted
to secure the Exit Facility).
28.3.2. Capital Stock of Barneys America. On the Effective Date, the
authorized capital stock of Barneys America shall consist only of common stock
in such amount and have the par value and other rights, privileges, limitations
and restrictions as are set forth in Barneys America's existing Certificate of
Incorporation, except as same is amended pursuant to the terms of this Plan and
the Restructuring Transactions.
28.3.3. Organization of Barneys America (Chicago) Lease Corp. By the
Effective Date, Barneys America (Chicago) Lease Corp. will be organized as a
Delaware corporation by the filing of a Certificate of Incorporation with the
Secretary of State of the State of Delaware. The Certificate of Incorporation of
Barneys America (Chicago) Lease Corp. shall provide that the issuance of
non-voting equity securities shall be prohibited, as required by section
1123(a)(6) of the Bankruptcy Code. On the Effective Date, 100% of the
outstanding capital stock of Barneys America (Chicago) Lease Corp. will be owned
by Barneys America.
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28.3.4. Capital Stock of Barneys America (Chicago) Lease Corp. On
the Effective Date, Barneys America (Chicago) Lease Corp. will issue 100 shares
of common stock, which shall constitute all outstanding shares, par value $0.01
per share, to Barneys America. Such common stock shall have the rights,
privileges, limitations and restrictions set forth in the Certificate of
Incorporation of Barneys America (Chicago) Lease Corp.
28.3.5. Existing Lease for Chicago Property. Pursuant to section
31.1 of this Plan, the Existing Lease for the Chicago Property shall be amended
and restated as the New Lease for such property and then such lease shall be
assumed by Barneys America and assigned to and assumed by Barneys America
(Chicago) Lease Corp.
28.3.6. Sublease Between Barneys America (Chicago) Lease Corp. and
Barneys America. On the Effective Date, Barneys America (Chicago) Lease Corp.,
with respect to the Chicago Property, shall execute a sublease with Barneys
America, as sublessee, granting Barneys America the right to use and occupy the
Chicago Property, which sublease shall grant Barneys America all of the same use
and occupancy rights for the Chicago Property as are granted to Barneys America
(Chicago) Lease Corp. under the New Lease with Isetan. Barneys America shall
continue to manage and operate all retail operations at the Chicago Property.
28.3.7. Assets and Liabilities of Barneys America. On the Effective
Date, Barneys America will own, among other assets, 100% of the outstanding
capital stock of Barneys America (Chicago) Lease Corp., free and clear of all
Liens, Claims and encumbrances (except for Liens granted to secure the Exit
Facility). Barneys America shall guarantee the obligations of Barneys America
(Chicago) Lease Corp. under the New Lease for the Chicago Property with Isetan.
28.3.8. Governance of Barneys America. On the Effective Date, the
business and affairs of Barneys America will be managed by and under the
direction of a Board of Directors elected by Barneys, Barneys America's sole
stockholder.
28.3.9. Governance of Barneys America (Chicago) Lease Corp. From and
after the Effective Date, the business and affairs of Barneys America (Chicago)
Lease Corp. will be managed by and under the direction of the Board of Directors
elected by Barneys America, its sole stockholder.
28.4. Preen Debtors.
28.4.1. BNY Credit LP. On the Effective Date, Isetan shall assign
its Equity Interests in BNY Credit LP to Prescredit. Upon such assignment, and
in accordance with the Restructuring Transactions, Prescredit and BNY Credit
shall cause BNY Credit LP to be dissolved in accordance with applicable state
law.
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28.4.2. Madneer. On the Effective Date, Madneer shall assume the
lease with the Hotel Pierre for the Hotel Pierre Space. Madneer shall assign to
Barneys all of its rights under such lease upon Barneys becoming successor
sublessor for the Hotel Pierre Space.
28.4.3. Assignment of Assets of Preen Debtors. Except as otherwise
provided in this Plan, the Preen Debtors shall assign all of their respective
assets either to Barneys or to Isetan in accordance with the Restructuring
Transactions.
28.4.4. Merger of Preen Debtors Into Preen. On the Effective Date,
following the implementation of the Restructuring Transactions, each of the
Preen Debtors, other than Preen, shall merge with and into Preen in accordance
with applicable state law.
28.4.5. Dissolution of Preen. Following the implementation of the
Restructuring Transactions and the merger described in section 28.4.2 of this
Plan, all of the outstanding capital stock of Preen will be cancelled and Preen
will be dissolved in accordance with applicable state law.
28.5. Reen Japan. On the Effective Date, the Pressman Family shall assign
their Equity Interests in Reen Japan to Preen. Preen shall then cause Reen Japan
to assign all of its assets to Barneys (other than its Equity Interests in
Barneys Japan), and assign, transfer and convey its 20% interest in Barneys
Japan to Isetan, free and clear of all Liens, Claims and encumbrances, in
accordance with the Isetan Settlement and the Restructuring Transactions.
Following the implementation of the Isetan Settlement and the Restructuring
Transactions, all of the outstanding capital stock of Reen Japan will be
cancelled and Reen Japan will be dissolved in accordance with applicable state
law.
28.6. Barneys Asia. By the Effective Date, Barneys Asia shall be organized
as a Delaware limited liability company with an operating agreement
substantially in the form included in the Plan Supplement. BNY Licensing shall
hold a 70% membership interest in Barneys Asia and Isetan or its designee shall
hold a 30% membership interest therein, with BNY Licensing having the right to a
preferred return, in accordance with the Isetan Settlement. On the Effective
Date, BNY Licensing and Isetan shall execute the Operating Agreement for Barneys
Asia, which shall be substantially in the form included in the Plan Supplement.
On the Effective Date, Barneys Asia will enter into a license agreement with BNY
Licensing, pursuant to which it will be the licensee under the Barneys Asia
License Agreement.
28.7. Pressman Letters of Credit. Barneys shall use its reasonable best
efforts to procure replacement letters of credit in the same amount and on the
same terms as the Pressman Letters of Credit on or prior to the Effective Date.
Upon obtaining such replacement letters of credit, the Debtors will cause the
Pressman Letters of Credit to be withdrawn by the issuers of same and all
guarantees of the Pressman Letters of Credit by
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members of the Pressman Family shall be released and cancelled in accordance
with the Pressman Settlement.
28.8. Transfer of Title to Equipment Subject to Equipment Leases. On the
Effective Date, in exchange for the consideration provided to the Equipment
Lessors under this Plan and pursuant to section 1142 of the Bankruptcy Code, the
Equipment Lessors shall transfer, or be directed by the Bankruptcy Court to
transfer, all right, title and interest in the equipment subject to the
Equipment Leases to Barneys or its designee, free of all Claims, Liens and
encumbrances (except for any Liens securing the BI-Equipment Lessors Note, the
Copelco Note and the Hancock Note, respectively) and shall further cancel or be
ordered by the Bankruptcy Court to cancel, or cause to be cancelled or be
ordered by the Bankruptcy Court to cause to be cancelled, all existing financing
statements filed pursuant to the U.C.C. or other applicable state law. On the
Effective Date, the Debtors and the Equipment Lessors shall execute security
agreements with respect to the Equipment Lessors Notes and all required U.C.C.
filings to perfect the Equipment Lessors Liens with respect to the Equipment
Lessors Notes shall be executed.
28.9. Isetan Reimbursement Obligation. To the extent that the cost of
satisfying all Secured Mechanics Lien Claims and Construction Claims hereunder
exceeds $3 million, Isetan shall reimburse the Debtors for 50% of such excess
amount on the terms, and subject to the conditions, contained in the Isetan
Settlement. The cost of distributions to holders of Secured Mechanics Lien
Claims and Construction Claims will be aggregated to determine the amount of the
Isetan Reimbursement obligation, if any.
28.10. Hart-Scott-Rodino Compliance. Any shares of New Common Stock to be
distributed under this Plan to any entity required to file a Premerger
Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended, shall not be distributed until the notification and
waiting periods applicable under such Act to such entity shall have expired or
been terminated.
XXIX. SECTION TWENTY-NINE: PROVISIONS GOVERNING DISTRIBUTIONS UNDER THIS PLAN
29.1. Date of Distributions. Any distributions and deliveries to be made
hereunder shall be made on the Effective Date or as soon as practicable
thereafter. If any payment or act under this Plan is required to be made or
performed on a date that is not a Business Day, then the making of such payment
or the performance of such act may be completed on the next succeeding Business
Day, but shall be deemed to have been completed as of the required date.
29.2. Delivery of Distributions. Subject to Rule 9010 of the Bankruptcy
Rules, distributions to holders of Allowed Claims and Allowed Equity Interests
(including Subscription Forms) shall be made at the address of each such holder
as set forth on the Schedules filed with the Bankruptcy Court, unless superseded
by the address set forth on proofs of claim or proofs of equity interest filed
by such holders (or at the last known
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address of such a holder if no proof of claim or proof of equity interest is
filed or if the Debtors have been notified in writing of a change of address).
If any Claim has been assigned pursuant to Bankruptcy Rule 3001(e),
distributions on account thereof shall be made at the address contained on the
notice of assignment form, provided that such form is received by the Debtors on
or prior to the Record Date. Notwithstanding the foregoing, distributions of
Offered Shares to holders of Subscription Rights shall be made at the address
provided by the holder of such Subscription Rights on the Subscription Form. If
any distribution to any holder or any Subscription Form is returned as
undeliverable, the Disbursing Agent shall use reasonable efforts to determine
the current address of such holder, but no distribution to such holder shall be
made, or Subscription Form sent, unless and until the Disbursing Agent has
determined the then current address of such holder, at which time such
distribution shall be made to such holder without interest. Amounts in respect
of any undeliverable distributions made through the Disbursing Agent shall be
returned to the Disbursing Agent until such distribution is claimed. If no
proofs of claim are filed and the Schedules filed with the Bankruptcy Court fail
to state addresses for holders of Allowed Claims, such Allowed Claims shall be
deemed unclaimed property under section 347(b) of the Bankruptcy Code at the
expiration of one year from the first date on which delivery of that
distribution was reasonably attempted pursuant hereto. After such date, all
unclaimed property shall be transferred to New Barneys and the Claim of any
holder to such property shall be discharged and forever barred.
29.3. Time Bar to Cash Payments. Checks issued by the Disbursing Agent on
account of Allowed Claims shall be null and void if not negotiated within sixty
(60) days after the date of issuance thereof. Requests for reissuance of any
check shall be made in writing directly to the Disbursing Agent by the holder of
the Allowed Claim with respect to which such check originally was issued. Any
Claim in respect of such a voided check shall be made in writing on or before
the later of the first anniversary of the Effective Date or ninety (90) days
after the date of issuance of such check. After such date, all Claims in respect
of void checks shall be discharged and forever barred.
29.4. Manner of Payment Under this Plan. At the option of the Plan
Proponents, any Cash payment to be made pursuant to this Plan, other than to
Isetan, may be made by a check or wire transfer of Federal funds or as otherwise
required or provided in applicable agreements. All Cash payments to be made to
Isetan under this Plan shall be made by certified check or wire transfer of
immediately available funds, at the option of the Plan Proponents.
29.5. Cap on Distributions. In no event shall a holder of an Allowed Claim
or an Allowed Equity Interest receive a distribution on account of such Allowed
Claim or Allowed Equity Interest of a value, as of the Confirmation Date,
greater than 100% of the Allowed amount of such Claim or Equity Interest.
29.6. Allocations of Distributions to Allowed General Unsecured Claims.
Any distributions received by a holder of an Allowed General Unsecured Claim
shall be
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allocated first to the principal portion of such Claim to the extent thereof,
and thereafter to the portion of such Claim, if any, representing accrued
interest.
29.7. Cancellation and Surrender of Existing Securities and Agreements.
Except as otherwise provided herein and in accordance with the Restructuring
Transactions, on the Effective Date, the promissory notes, share certificates
and other instruments evidencing any Claim or Equity Interest shall be deemed
cancelled and terminated without further act or action under any applicable
agreement, law, regulation, order or rule and the obligations of the Debtors
thereunder shall be discharged.
29.8. Setoffs. Except as otherwise provided in this Plan, the Debtors may,
but shall not be required to, set off against any Claim and the payments to be
made pursuant to the Plan in respect of such Claim, any Claims of any nature
whatsoever the Debtors may have against the holder of such Claim, but neither
the failure to do so nor the allowance of any Claim under the Plan shall
constitute a waiver or release by the Debtors of any right of setoff the Debtors
may have against the holder of such Claim.
29.9. Fractional Cents and Fractional Shares of New Common Stock.
Notwithstanding any other provision of the Plan to the contrary, no payment of
fractions of cents will be made. Whenever a payment of a fraction of a cent
would otherwise be required, the actual payment shall reflect a rounding up of
such fraction to the nearest whole cent. Notwithstanding any other provision of
the Plan to the contrary, no fractional shares of New Common Stock shall be
distributed. When any distribution on account of a Disputed or Allowed General
Unsecured Claim would otherwise result in the issuance of a number of shares of
New Common Stock that is not a whole number, the actual distribution of shares
of such stock will be rounded to the next higher or lower number, as follows:
(i) fractions equal to or greater than one-half will be rounded to the next
higher whole number; and (ii) fractions less than one-half will be rounded to
the next lower whole number. The total number of shares of New Common Stock to
be distributed to a Class of Claims will be adjusted as necessary to account for
this rounding. No consideration will be provided in lieu of fractional shares
that are rounded down.
29.10. Registration of New Common Stock. New Barneys, Whippoorwill, Bay
Harbour and Isetan shall execute a registration rights agreement with respect to
the distribution and issuance of New Common Stock made to Whippoorwill, Bay
Harbour, Isetan and certain eligible holders of Allowed General Unsecured Claims
(as provided in this paragraph) under or in connection with this Plan, which
agreement shall provide (i) demand and piggyback registration rights to
Whippoorwill and Bay Harbour with respect to their shares of New Common Stock,
(ii) piggyback registration rights to Isetan with respect to the Isetan
Distributable Shares and any shares of common stock of New Barneys purchased by
Isetan through the exercise of the Isetan Warrants, and (iii) piggyback
registration rights to any holder of an Allowed General Unsecured Claim or
Claims against the Debtors who receives at least 10% of the outstanding New
Common Stock issued on Effective Date on account of its Claims. The registration
rights
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agreement shall otherwise contain the terms described in the Disclosure
Statement and be substantially in the form included in the Plan Supplement.
XXX. SECTION THIRTY: PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS UNDER
THIS PLAN
30.1. Prosecution of Objections. On and after the Effective Date, New
Barneys will have the authority and exclusive right to file, settle, compromise,
withdraw or litigate to judgment objections to the allowance of Claims and
Equity Interests, whether arising before or after the Commencement Date, filed
with the Bankruptcy Court to which New Barneys, as agent for the Debtors,
disputes liability in whole or part; provided, however, that any compromise of a
Secured Mechanics Lien Claim or Construction Claim shall be subject to the
approval of Isetan in accordance with the Isetan Settlement, which approval
shall not be unreasonably withheld or delayed. Unless another date is
established by order of the Bankruptcy Court, all objections to Claims and
Equity Interests shall be filed and served on the holders of such Claims and
Equity Interests by the later of (i) the Effective Date and (ii) sixty (60) days
after proof of such Claim or Equity Interest is filed by the holder thereof.
30.2. No Distributions Pending Allowance. Notwithstanding any other
provision hereof, if any portion of a Claim is a Disputed Claim, no payment or
distribution provided hereunder shall be made on account of the portion of such
Claim that is a Disputed Claim unless and until such Disputed Claim becomes an
Allowed Claim, but the payment or distribution provided hereunder shall be made
on account of the portion of such Claim that is an Allowed Claim.
30.3. Disputed Administrative Claims Cash Reserve.
(a) Estimation. For purposes of effectuating the reserve provisions
of the Plan and the allocations and distributions to holders of Allowed
Administrative Claims and Priority Non-Tax Claims, the Bankruptcy Court will, on
or prior to the Effective Date, pursuant to section 502 of the Bankruptcy Code,
fix or liquidate the amount of any contingent or unliquidated Administrative
Claim or Priority Non-Tax Claim not otherwise treated under this Plan, in which
event the amount so fixed will be deemed the Allowed amount of such Claim for
purposes of this Plan or, in lieu thereof, the Bankruptcy Court will determine
the maximum contingent or unliquidated amount for such Claim, which amount will
be the maximum amount in which such Claim ultimately may be Allowed under this
Plan, if such Claim is Allowed in whole or part.
(b) Creation of Reserve. On the Effective Date, the Disbursing Agent
shall deposit in one or more segregated accounts as the Disputed Administrative
Claims Cash Reserve an amount of Cash required to pay in full all Disputed
Administrative Claims without interest thereon and Disputed Priority Non-Tax
Claims without interest thereon. The Cash held in the Disputed Administrative
Claims Cash Reserve shall be
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held in trust for the benefit of holders of such Disputed Claims pending
determination of their entitlement thereto. The Disbursing Agent will establish
a reserve for Disputed Priority Tax Claims only if directed by order of the
Bankruptcy Court.
30.4. Disputed Claims Equity Reserve.
(a) Estimation. For purposes of effectuating the reserve provisions
of the Plan and the allocations and distributions to holders of Allowed General
Unsecured Claims, the Bankruptcy Court will, on or prior to the Effective Date,
pursuant to section 502 of the Bankruptcy Code, fix or liquidate the amount of
any contingent or unliquidated General Unsecured Claim, in which event the
amount so fixed will be deemed the Allowed amount of such Claim for purposes of
this Plan or, in lieu thereof, the Bankruptcy Court will determine the maximum
contingent or unliquidated amount for such Claim, which amount will be the
maximum amount in which such Claim ultimately may be Allowed under this Plan, if
such Claim is Allowed in whole or part.
(b) Creation of Reserve. On the Effective Date, the Disbursing Agent
shall transfer to the Disputed Claims Equity Reserve that number of
Distributable Shares and Unsecured Creditors Warrants that would be
distributable on account of the aggregate amount of Disputed General Unsecured
Claims as if they were Allowed General Unsecured Claims against the Debtors in
their respective Maximum Allowable Amounts on the Effective Date. The
Distributable Shares and Unsecured Creditors Warrants held in the Disputed
Claims Equity Reserve, along with any dividends or other distributions accruing
with respect thereto, shall be held in trust for the holders of Disputed General
Unsecured Claims as of the Effective Date pending determination of their
entitlement thereto. Each holder of a Disputed General Unsecured Claim as of the
Effective Date entitled to be distributed New Common Stock and Unsecured
Creditors Warrants shall not have the rights of holders (including voting
rights) with respect to such interests until such time, if any, that such
interests are released to such holder. For all purposes, the Disbursing Agent
shall be deemed the holder of all Distributable Shares and Unsecured Creditors
Warrants held in the Disputed Claims Equity Reserve pending their release
therefrom; PROVIDED, HOWEVER, that the Disbursing Agent shall abstain from
exercising any and all voting rights in respect of the Distributable Shares held
in the Disputed Claims Equity Reserve unless otherwise ordered by the Bankruptcy
Court on motion of a holder of a Disputed General Unsecured Claim as of the
Effective Date.
(c) Tax Reporting. Subject to definitive guidance from the Internal
Revenue Service or the courts to the contrary (including the receipt by the
Disbursing Agent of a private letter ruling if the Disbursing Agent so requests
one or the receipt of an adverse determination by the Internal Revenue Service
upon audit, if not contested by the Disbursing Agent), the Disbursing Agent
shall treat the Disputed Claims Equity Reserve as a single trust, consisting of
separate and independent shares to be established in respect of each Disputed
Claim, in accordance with the trust provisions of the IRC (Sections 641 ET SEQ.)
and, to the extent permitted by law, shall report consistently with the
foregoing for state and local federal income tax purposes. All holders of
General
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Unsecured Claims shall report, for tax purposes, consistently with the
foregoing. In addition, the Disbursing Agent is hereby authorized, on behalf of
the Disputed Claims Equity Reserve, to request an expedited determination of
taxes under section 505(b) of the Bankruptcy Code for all taxable periods of the
Disputed Claims Equity Reserve ending after the Effective Date through the
termination of the Disputed Claims Equity Reserve in accordance with the Plan.
30.5. Distributions After Allowance. Payments and distributions to each
holder of a Disputed Claim or any other Claim that is not an Allowed Claim, to
the extent that such Claim ultimately becomes an Allowed Claim, shall be made in
accordance with the provisions of this Plan, including the provision governing
the Class of Claims in which such Claim is classified. As soon as practicable
after the date that the order or judgment of the Bankruptcy Court allowing any
Disputed Claim or any other Claim that is not an Allowed Claim becomes a Final
Order, the Disbursing Agent shall distribute to the holder of such Claim any
Distributable Shares and Unsecured Creditors Warrants that would have been
distributed to such holder if the Claim had been an Allowed Claim on the
Effective Date. In the case of a holder of a Disputed General Unsecured Claim
that becomes an Allowed General Unsecured Claim, such distribution shall include
a payment in Cash equal to any accrued dividends or other distributions with
respect to the Distributable Shares held in the Disputed Claims Equity Reserve
on account of such holder's General Unsecured Claim.
30.6. Distributions After Disallowance.
(a) Disputed Administrative Claims Cash Reserve. To the extent that,
after the Effective Date, a Disputed Administrative Claim or Disputed Priority
Non-Tax Claim is disallowed and expunged, in whole or part, then an amount equal
to the amount reserved in the Disputed Administrative Claims Cash Reserve equal
to the disallowed portion of such Claim together with any accrued net interest
with respect thereto shall be transferred by the Disbursing Agent to Barneys.
(b) Disputed Claims Equity Reserve. To the extent that, after the
Effective Date, a Disputed General Unsecured Claim against any of the Debtors is
disallowed and expunged, in whole or part, then the holders of Allowed General
Unsecured Claims against the Debtors shall each be redistributed their
respective Ratable Proportion of the Distributable Shares and Unsecured
Creditors Warrants reserved in the Disputed Claims Equity Reserve on account of
such disallowed Claim, and any dividends or other distributions accrued with
respect thereto. Any redistribution of Distributable Shares and Unsecured
Creditors Warrants from the Disputed Claims Equity Reserve shall be made three
(3) months after the Effective Date and, if necessary, every three (3) months
thereafter (provided that there are at least 500,000 shares in the Disputed
Claims Equity Reserve to distribute, except for a final distribution after all
Disputed General Unsecured Claims are either Allowed or expunged) until all
Disputed General Unsecured Claims have been Allowed or expunged, in whole or
part, and no redistribution shall be made prior thereto. Any redistribution of
Distributable Shares and Unsecured Creditors
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Warrants to the holders of Allowed General Unsecured Claims from the Disputed
Claims Equity Reserve shall be subject to the provisions of this Plan relating
to distributions of fractional shares of New Common Stock.
30.7. Estimation of Disputed General Unsecured Claims for Purposes of
Participation in the SUBSCRIPTION RIGHTS OFFERING. A holder of a Disputed
General Unsecured Claim against the Debtors that is the subject of a pending
objection pursuant to Bankruptcy Rule 3007 may participate in the Subscription
Rights Offering as specified only to the extent that the Bankruptcy Court
estimates on or before the Subscription Deadline such Disputed Claim as an
Allowed General Unsecured Claim, in whole or part. The holder of a Disputed
General Unsecured Claim shall be required to file a motion seeking estimation of
such Claim. The estimation by the Bankruptcy Court of such Disputed Claim as an
Allowed General Unsecured Claim, in whole or part, shall act as a limit on the
holder's right to participate in the Subscription Rights Offering. If after
estimation of such Disputed Claim as an Allowed General Unsecured Claim, such
claim is expunged in part or in its entirety with respect to the amount
estimated by the Bankruptcy Court to be an Allowed General Unsecured Claim, such
holder's right to participate in the Subscription Rights Offering, and its right
to exercise its Subscription Rights issued on account of the previously
estimated Claim, shall remain unaffected.
XXXI. SECTION THIRTY-ONE: PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED
LEASES UNDER THIS PLAN
31.1. General Treatment. This Plan constitutes a motion by the Debtors to
assume, as of the Confirmation Date, all executory contracts and unexpired
leases to which any of the Debtors is a party, except for the executory
contracts and unexpired leases, including the Technical Assistance Agreement,
the Trademark License Agreement and those executory contracts and unexpired
leases that are specifically listed on Schedule 31 hereto which are rejected.
The insurance policies set forth in Schedule 31 to this Plan and any agreements,
documents or instruments relating thereto, including without limitation, any
retrospective premium rating plans relating to such policies, are treated as
executory contracts hereunder and are hereby assumed pursuant to section 365(a)
of the Bankruptcy Code.
31.2. Approval of Assumption or Rejection of Leases and Contracts. Entry
of the Confirmation Order shall, pursuant to sections 365(a) and 1123 of the
Bankruptcy Code, constitute approval by the Bankruptcy Court of the assumption
or rejection of the executory contracts and unexpired leases assumed or rejected
pursuant to this Plan.
31.3. Cure of Defaults. On the Effective Date or as soon thereafter as is
reasonably practical, the Debtors shall cure any and all defaults under any
executory contract assumed pursuant to the Plan in accordance with section
365(b)(1) of the Bankruptcy Code.
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31.4. Bar Date for Filing Proofs of Claim Relating to Executory Contracts
Rejected Pursuant to the PLAN. Claims arising out of the rejection of an
executory contract pursuant to this Plan must be filed with the Bankruptcy Court
no later than thirty (30) days after the later of (i) notice of entry of an
order approving the rejection of such contract or lease and (ii) notice of entry
of the Confirmation Order. Any Claims not filed within such time will be forever
barred from assertion against the Debtors, their estates, and their property.
Unless otherwise objected to by the Creditors Committee or the Disbursing Agent
or ordered by the Bankruptcy Court, all Allowed Claims arising from the
rejection of executory contracts shall be treated as Allowed General Unsecured
Claims under the Plan and paid in accordance with the provisions of the Plan.
XXXII. SECTION THIRTY-TWO: CONDITIONS PRECEDENT TO THE CONFIRMATION DATE AND THE
EFFECTIVE DATE
32.1. Conditions Precedent to Confirmation of this Plan. The confirmation
of this Plan is subject to satisfaction of the following conditions precedent:
(a) Entry of Confirmation Order. The Clerk of the Bankruptcy Court
shall have entered the Confirmation Order, which shall, among other things:
(i) decree that the transfers contemplated hereunder shall be free
and clear of all Claims, Liens and encumbrances, except as expressly provided
herein;
(ii) decree that the Confirmation Order shall supersede any
Bankruptcy Court orders issued prior to the Confirmation Date that may be
inconsistent with the Confirmation Order;
(iii) authorize the implementation of this Plan in accordance with
its terms;
(iv) provide that pursuant to section 1146(c) of the Bankruptcy
Code, the assignment or surrender of any lease or sublease, or the delivery of
any deed or other instrument of transfer under, in furtherance of, or in
connection with this Plan, including any deeds, bills of sale or assignments
executed in connection with any disposition of assets contemplated by this Plan
shall not be subject to any stamp, real estate transfer, mortgage recording or
other similar tax (including, without limitation, the transfer of the Debtors'
interests in Newireen, Calireen, Rush Oak, Barneys Japan, Fener Realty Co., Oak
Associates, LLC, the real property subject to the Aetna Mortgage and the
Hokkaido Mortgages, respectively, Madneer's interests in the Madison Avenue
Property, and any mortgages, or other security interest filings, to be recorded
or filed in connection with the Exit Facility);
(v) approve the Isetan Settlement and each of the terms thereof in
all respects pursuant to Bankruptcy Rule 9019;
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(vi) approve the Pressman Settlement and each of the terms thereof
in all respects pursuant to Bankruptcy Rule 9019;
(vii) approve the Equipment Lessors Settlement and each of the terms
thereof in all respects pursuant to Bankruptcy Rule 9019;
(viii) approve the other settlements, transactions and agreements to
be effected pursuant to this Plan in all respects pursuant to Bankruptcy Rule
9019;
(ix) approve the Stock Purchase Agreement; and
(x) provide that if this Plan is not consummated, the Confirmation
Order and all findings of fact and conclusions of law relating thereto shall be
null and void and the Debtors, the Plan Proponents and other holders of Claims
and Equity Interests, in relation to one another, shall stand in the same
position as if this Plan had never been filed.
(b) Exit Facility. A binding commitment letter for the Exit
Facility, on terms reasonably acceptable to the Plan Proponents, shall have been
obtained and the lenders committing to provide such financing must be reasonably
acceptable to the Plan Proponents.
(c) Material Adverse Change. There shall not have occurred since
August 1, 1998 (except as disclosed in the Disclosure Statement with respect to
the Fall 1998 Stub Period), a material adverse change in the business, assets,
financial position, prospects or condition (financial or otherwise) of the
Debtors on a consolidated basis.
(d) Capital Markets. Subsequent to November 13, 1998, trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
and/or the NASDAQ National Market shall not have been suspended or materially
limited, nor shall minimum prices have been established by the Securities and
Exchange Commission or by any exchange or other regulatory body or governmental
authority having jurisdiction to establish same, nor shall a general banking
moratorium have been declared by New York State or the United States government,
nor shall there have been any outbreak or escalation of hostilities or any
change in financial or capital market conditions or any calamity or crisis that
is material and adverse, which event singly or together with any other such
event, makes it impracticable or inadvisable to proceed with confirmation of
this Plan.
(e) Subscription Rights Offering. The Subscription Rights Offering
and the issuance of the Unsecured Creditors Warrants, as well as the issuance of
all New Common Stock upon the exercise thereof, shall have been approved
pursuant to section 1145 of the Bankruptcy Code, by the Bankruptcy Court.
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(f) Ceiling on Administrative Claims. The Allowed amount of
Administrative Claims asserted against the Debtors (including Claims of
professionals for services rendered and expenses incurred, but exclusive of the
amount of outstanding obligations under the BankBoston DIP Facility and
exclusive of the amount of Allowed Administrative Claims payable by the Debtors
in Possession or the reorganized Debtors, as the case may be, in the ordinary
course of business or pursuant to any postpetition agreement or transaction
entered into by the Debtors in Possession with Bankruptcy Court approval) shall
not exceed $32 million.
(g) Ceiling on Secured Mechanics Lien and Construction Claims. The
aggregate cost of satisfying all Allowed Secured Mechanics Lien Claims and
Allowed Construction Claims asserted against the Debtors as of the Confirmation
Date shall not exceed $10 million without reduction to account for the Isetan
Reimbursement Obligation.
(h) Sale of New Preferred Stock. Whippoorwill and Bay Harbour shall
have a binding agreement to sell to a third party any New Preferred Stock to be
acquired by Whippoorwill and Bay Harbour on the Effective Date. Such agreement
shall (i) contain representations and warranties from the third party purchaser
to the effect that (a) it is not entitled to, and shall not, receive pursuant to
the Plan any common stock of New Barneys (including pursuant to the exercise of
any Subscription Rights or other rights granted under the Plan to acquire common
stock of New Barneys), (b) it will not constructively own, pursuant to section
318 of the IRC (other than paragraph (4) thereof, relating to options), any
common stock of New Barneys to be issued to any Person pursuant to the Plan
(including pursuant to the exercise of any Subscription Rights or other rights
granted under the Plan to acquire common stock of New Barneys), and (c) it will
not otherwise purchase, or agree to purchase, any common stock of New Barneys
for at least sixty (60) days after the Effective Date, and (ii) provide that New
Barneys shall be a third party beneficiary of such representations and
warranties.
(i) Composition of Board of Directors of New Barneys. The Plan
Proponents shall have agreed on the initial composition and membership of the
Board of Directors of New Barneys, except with respect to the Isetan Board
Designee, whose designation to the Board of Directors of New Barneys shall be
made in accordance with section 28.1.4 of this Plan.
(j) Entry of Order Approving Payment of Cash Fee and Reimbursable
Expenses. The Bankruptcy Court shall have entered an order authorizing the
Debtors to (i) pay a $2.5 million cash fee in the event that an alternative plan
(which does not involve a standby underwriting of a rights offering by
Whippoorwill and Bay Harbour) is confirmed and such plan provides for higher or
better treatment to unsecured creditors and subject to Whippoorwill and Bay
Harbour not having breached their obligations with respect to the Subscription
Rights Offering and their other stock purchase obligations thereunder, and (ii)
the reimbursement of Whippoorwill and Bay Harbour for out of pocket costs and
expenses (including fees of attorneys, consultants and search firms
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including amounts payable in connection with all filings under the
Hart-Scott-Rodino Act) incurred by Whippoorwill and Bay Harbour in connection
with the negotiation, formulation and consummation of the Plan, subject to the
Bankruptcy Court finding such costs and expenses to be reasonable pursuant to
sections 503, 507(a) and 1129(a)(4) of the Bankruptcy Code and such order shall
have become a Final Order.
32.2. Conditions Precedent to the Effective Date of this Plan. The
occurrence of the Effective Date of this Plan is subject to satisfaction of the
following conditions precedent:
(a) Conditions to Confirmation Date Satisfied. All conditions
precedent to the Confirmation Date have been satisfied and continue to be
satisfied.
(b) Closing of the Exit Facility. The Exit Facility shall have
closed, or shall be closed concurrently with the Effective Date of this Plan, on
terms reasonably acceptable to the Plan Proponents and the lenders providing
such financing must be reasonably acceptable to the Plan Proponents.
(c) Finality of the Confirmation Order. The Clerk of the Bankruptcy
Court shall have entered the Confirmation Order and the Confirmation Order shall
have become a Final Order.
(d) DIP Facility. All financing provided to the Debtors pursuant to
section 364 of the Bankruptcy Code, including the BankBoston DIP Facility, shall
have been paid or replaced, or other arrangements satisfactory to the lenders
providing such financing and the Plan Proponents, in their respective
discretion, regarding the repayment and termination of such financing shall have
been made.
(e) Consummation of the Isetan Settlement. The Isetan Settlement
shall have been fully consummated on the Effective Date.
(f) Consummation of the Pressman Settlement. The Pressman Settlement
shall have been fully consummated on the Effective Date.
(g) Consummation of Equipment Lessors Settlement. The Equipment
Lessors Settlement shall have been fully consummated.
(h) Ceiling on General Unsecured Claims. The aggregate amount of
General Unsecured Claims against the Debtors shall not exceed $325 million.
(i) Issuance of New Preferred Stock. The issuance of the New
Preferred Stock contemplated by this Plan and in paragraphs 3(e) and (f) of the
Restructuring Transactions shall have occurred.
(j) Property Transfers. The Bankruptcy Court shall have entered a
Final Order decreeing that all transfers of property by any Debtor (i) are or
will be legal,
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valid and effective transfers of property; (ii) vest or will vest in the
transferee thereof good title to such property free and clear of all liens,
charges, claims, encumbrances or interests, except as expressly provided in such
Plan; (iii) do not and will not constitute avoidable transfers under Bankruptcy
Code or under applicable nonbankruptcy law; and (iv) do not and will not subject
the applicable transferee to any liability by reason of such transfer under the
Bankruptcy Code or under applicable nonbankruptcy law, including, without
limitation, any laws affecting successor or transferee liability.
(k) Discharge of Debtors. Except with respect to obligations
specifically contemplated by this Plan, the order approving the BankBoston DIP
Facility and any Administrative Claims incurred postpetition by the Debtors in
Possession in the ordinary course of their businesses or any Administrative
Claims arising pursuant to postpetition agreements or transactions entered into
by the Debtors in Possession with Bankruptcy Court approval, the Bankruptcy
Court shall have entered a Final Order decreeing that the Debtors are discharged
effective on the Effective Date (in accordance with this Plan) from any Claims
and any "debts" (as that term is defined in section 101(12) the Bankruptcy
Code), and the Debtors' liability in respect thereof is extinguished completely,
whether reduced to judgment or noncontingent, asserted or unasserted, fixed or
not, matured or unmatured, disputed or undisputed, legal or equitable or known
or unknown that arose from any agreement of the Debtors entered into or
obligation of such Debtor incurred before the Effective Date, or from any
conduct of either of the Debtors prior to the Effective Date, or whether such
interest accrued before or after the Commencement Date, except for the Debtors
that are to be dissolved on or after the Effective Date.
(l) Execution of Documents. All actions and documents necessary to
implement the provisions of this Plan to be effectuated on or prior to the
Effective Date shall be reasonably satisfactory to the Plan Proponents, and the
documents necessary to implement the Isetan Settlement shall be reasonably
satisfactory to Isetan, and such actions and documents shall have been effected
or executed and delivered.
(m) Effective Date. The Effective Date must occur by no later than
January 29, 1999.
(n) Delivery of Releases. All releases to be exchanged pursuant to
the terms of this Plan shall have been exchanged and delivered.
(o) Dismissal of the Ad Hoc Committee Adversary Proceeding. The Ad
Hoc Committee Adversary Proceeding shall have been dismissed with prejudice as
to all plaintiffs.
32.3. Waiver of Conditions Precedent. Each of the conditions precedent in
sections 32.1 and 32.2 hereof may be waived, in whole or in part, or modified by
written agreement among the Plan Proponents; PROVIDED, HOWEVER, that Isetan must
consent to any waiver by the Plan Proponents of the conditions precedent
contained in sections
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32.1(a)(i) through (vi) and (x), 32.2 (a) (to the extent of the conditions
contained in sections 32.1(a)(i) through (vi) and (x)), 32.2(e), (f), (j), (l),
(m), (n) and (o), which consent shall not be unreasonably withheld or delayed;
and provided further that the condition contained in section 32.2(d), solely as
such condition relates to the BankBoston DIP Facility, may only be waived at the
discretion of and with the written consent of BankBoston, N.A. Any such waiver
or modification of a condition precedent in sections 32.1 and 32.2 hereof may be
effected at any time, without notice, without leave or order of the Bankruptcy
Court and without any formal action.
XXXIII. SECTION THIRTY-THREE: EFFECT OF CONFIRMATION OF THIS PLAN
33.1. Reorganized Debtors' Authority. Until the Effective Date, the
Bankruptcy Court shall retain custody and jurisdiction of the Debtors, their
properties and interests in property and their operations. On the Effective
Date, the Debtors, their properties and interests in property and their
operations shall be released from the custody and jurisdiction of the Bankruptcy
Court, except as provided in section 35 hereof.
33.2. Vesting and Liens. On the Effective Date, all Liens against any
property of the Debtors, except to the extent provided in this Plan or any
schedule or exhibit hereto or in the Confirmation Order, shall be deemed
extinguished and discharged. On the Effective Date, Barneys or its designee will
be revested with the assets, if any, of the Debtors not distributed or otherwise
transferred under this Plan free and clear of all Liabilities, except to the
extent provided in this Plan.
33.3. Discharge of the Debtors. The rights afforded by this Plan and the
treatment herein of Claims or Equity Interests against a Debtor shall be in
exchange for and in complete satisfaction, discharge and release of all Claims
or Equity Interests against a Debtor of any nature whatsoever, including any
interest accrued or expenses incurred against such Debtor in respect thereof
from and after the Petition Date of such Debtor, and its estate, properties and
interests in property; PROVIDED, HOWEVER, that nothing herein shall discharge
any Administrative Claims incurred postpetition by the Debtors in the ordinary
course of their businesses or any Administrative Claims arising pursuant to
postpetition agreements or transactions entered into by the Debtors with
Bankruptcy Court approval. Except as otherwise provided herein or in the order
approving the BankBoston DIP Facility, on the Effective Date, all Claims against
and Equity Interests in the Debtors will be fully satisfied, discharged and
released in exchange for the consideration provided hereunder. Except as
otherwise provided herein or in the order approving the BankBoston DIP Facility,
all Entities shall be enjoined and precluded from asserting against any Debtor,
such Debtor's successor(s), assets, properties or interests in property any
other Claims based upon any act or omission, transaction or other activity of
any kind or nature that occurred prior to the Effective Date.
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33.4. Term of Injunctions or Stays. Unless otherwise provided, all
injunctions or stays provided for in the Reorganization Cases pursuant to
section 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective
Date.
XXXIV. SECTION THIRTY-FOUR: RELEASES, INJUNCTION AND WAIVER OF CLAIMS
Nothing in this section shall be construed to operate to release the
Barneys Releasees or any other Entity from the obligations expressly
contemplated by this Plan.
34.1. Release and Discharge of the Debtors and Debtors in Possession.
Except as otherwise provided herein or in the order approving the BankBoston DIP
Facility, and without limiting the provisions of section 33.3 of this Plan, from
and after the Effective Date, the Debtors and Debtors in Possession are released
and discharged from all Liabilities from the beginning of time.
34.2. Limited Release of Barneys Releasees. Without limiting the release
provided in section 34.1, from and after the Effective Date, the Barneys
Releasees are released from all Liabilities in any way relating to, but solely
to the extent relating to, the Debtors, the Debtors in Possession, the
Reorganization Cases, the Barneys Affiliates, Reen Japan, the Preen Affiliates,
the conduct of the business and affairs of any of the Debtors, the Debtors in
Possession, the Barneys Affiliates, Reen Japan or the Preen Affiliates, this
Plan or the properties or other assets of any of the Debtors, the Debtors in
Possession, the Barneys Affiliates, Reen Japan or the Preen Affiliates;
provided, however, that nothing contained in this section shall release, or be
construed to release, (a) any Preen Affiliate that is not a debtor in a pending
chapter 11 case as of the Confirmation Date from any Liability arising out of
the ownership, management or operation of the properties or other assets of such
non-Debtor Affiliate or out of any other aspect of the conduct by such
non-Debtor Affiliate of its business, including any Liability arising under any
notes, mortgages and other loan documents relating to any financing of any
property owned by any such non-Debtor Affiliate, (b) any current or former
director, officer or employee of any Debtor, Debtor in Possession, Barneys
Affiliate or Preen Affiliate from any Liability arising primarily from his or
her Willful Misconduct, (c) any current or former director, officer or employee
of any Debtor, Debtor in Possession, Barneys Affiliate or Preen Affiliate (other
than members of the Pressman Family) from any Liability for repayment of any
loan (both unpaid principal and any accrued interest and charges) made to such
director, officer or employee by a Debtor, Debtor in Possession, Barneys
Affiliate or Preen Affiliate prior to the Effective Date and recorded in the
ordinary course of business on the books and records of such Debtor, Debtor in
Possession, Barneys Affiliate or Preen Affiliate and that remains outstanding on
the Effective Date, (d) any rights, obligations or liabilities between and among
any members of the Pressman Family arising out of, or related to, agreements to
which they are or were parties, trustees or beneficiaries, including without
limitation, trust, partnership, escrow and settlement agreements, or (e) any
Administrative Claims incurred postpetition by the
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Debtors in the ordinary course of their businesses or any Administrative Claims
arising pursuant to postpetition agreements or transactions entered into by the
Debtors with Bankruptcy Court approval.
34.3. Release of the Plan Releasees. From and after the Effective Date,
the Plan Releasees are released from all Liabilities in any way relating to, but
solely to the extent relating to, the Debtors, the Debtors in Possession, the
Barneys Affiliates, the Preen Affiliates, the conduct of the business and
affairs of any of the Debtors, the Debtors in Possession, the Barneys Affiliates
and the Preen Affiliates, the Reorganization Cases, this Plan and the Disclosure
Statement or the properties or other assets of the Debtors, the Debtors in
Possession, the Barneys Affiliates and the Preen Affiliates.
34.4. Other Releases. On the Effective Date, each of the Barneys
Affiliates, the Preen Affiliates, Isetan, the Barneys Releasees, the Plan
Releasees and the members of the Pressman Family are each mutually released by
one another from all Liabilities in any way relating to, but solely to the
extent relating to, the Debtors, the Debtors in Possession, the Barneys
Affiliates, the Preen Affiliates, the conduct of the business and affairs of any
of the Debtors, the Debtors in Possession, the Barneys Affiliates and the Preen
Affiliates, the Reorganization Cases, the Isetan Claims, and any judgments held
by Isetan against members of the Pressman Family related to guarantees of
indebtedness of any of the Barneys Affiliates, Reen Japan and Preen Affiliates
by members of the Pressman Family, this Plan and the Disclosure Statement or the
properties or other assets of the Debtors, the Debtors in Possession, the
Barneys Affiliates and the Preen Affiliates, provided, however, that any
releases exchanged pursuant to this section shall not release, or be construed
to release, (a) any Preen Affiliate that is not a debtor in a pending chapter 11
case as of the Confirmation Date from any Liability arising out of the
ownership, management or operation of the properties or other assets of such
non-Debtor Affiliate or out of any other aspect of the conduct by such
non-Debtor Affiliate of its business, including any Liability arising under any
notes, mortgages and other loan documents relating to any financing of any
property owned by any such non-Debtor Affiliate, (b) any current or former
director, officer or employee of any Debtor, Debtor in Possession, Barneys
Affiliate or Preen Affiliate from any Liability arising primarily from his or
her Willful Misconduct, (c) any current or former director, officer or employee
of any Debtor, Debtor in Possession, Barneys Affiliate or Preen Affiliate (other
than members of the Pressman Family) from any Liability for repayment of any
loan (both unpaid principal and any accrued interest and charges) made to such
director, officer or employee by a Debtor, Debtor in Possession, Barneys
Affiliate or Preen Affiliate prior to the Effective Date and recorded in the
ordinary course of business on the books and records of such Debtor, Debtor in
Possession, Barneys Affiliate or Preen Affiliate and that remains outstanding on
the Effective Date, (d) any rights, obligations or liabilities between and among
any members of the Pressman Family arising out of, or related to, agreements to
which they are or were parties, trustees or beneficiaries, including without
limitation, trust, partnership, escrow and settlement agreements, or (e) any
Administrative Claims incurred postpetition by the Debtors in the ordinary
course of their businesses or
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any Administrative Claims arising pursuant to postpetition agreements or
transactions entered into by the Debtors with Bankruptcy Court approval.
34.5. General Injunction. Except for actions to assert and vindicate
Claims against the Debtors in the Bankruptcy Court and to enforce the terms of
this Plan against the Debtors in the Bankruptcy Court, the Confirmation Order
shall include an injunction to permanently enjoin and restrain all Entities from
asserting against the Debtors, the Debtors in Possession, the Barneys Releasees
and/or the Plan Releasees, or their respective assets, any Liabilities that the
Debtors, the Debtors in Possession, the Barneys Releasees and/or the Plan
Releasees are released from pursuant to sections 34.1, 34.2, 34.3 and 34.4
hereof, or from taking any of the following actions against such Entities in
respect of any Claim respecting any Liability so released: (i) the commencement
or continuation of any action or proceeding; (ii) the enforcement, attachment,
collection or recovery by any manner or means of any judgment, award, decree or
order; (iii) the creation, perfection or enforcement of any encumbrance of any
kind; and/or (iv) the assertion of any right of setoff, counterclaim,
subrogation or recoupment of any kind against any obligation due from any such
Entity.
34.6. Avoidance and Recovery Actions. As of the Effective Date, the
Debtors waive the right to prosecute and release, on behalf of themselves and
their respective estates, any avoidance or recovery actions under any of
sections 542, 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code
or any other Causes of Action, or rights to payment of Claims, except for
actions against holders of Secured Mechanics Lien Claims, holders of
Construction Claims, Eisner & Lubin, Goldman Sachs & Co., Hokkaido, Oaktree, as
successor in interest to Hokkaido under the Hokkaido Mortgages, John Brincko,
Brincko Associates, Thomas Paccioretti and Paccioretti Associates, provided,
however, that the Debtors reserve the right to assert avoidance or recovery
actions under sections 542, 544, 545, 547, 548, 549, 550, 551 and 553 of the
Bankruptcy Code or any other Causes of Action defensively, including by way of
setoff, recoupment or counterclaim, in any post-Commencement Date litigation
commenced by the parties against whom such Claims and Causes of Action could
have been asserted absent the waiver contained in this paragraph.
XXXV. SECTION THIRTY-FIVE: RETENTION OF JURISDICTION
35.1. Retention of Jurisdiction. The Bankruptcy Court may retain
jurisdiction, and if the Bankruptcy Court exercises its retained jurisdiction,
shall have exclusive jurisdiction, of all matters arising out of, and relating
to, the Reorganization Cases and this Plan pursuant to, and for the purposes of,
sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the
following purposes:
(a) to hear and determine pending applications for the assumption or
rejection of executory contracts or unexpired leases, if any are pending, and
the allowance of Claims resulting therefrom or to resolve disputes with respect
to the
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enforceability of any executory contracts or unexpired leases assumed pursuant
to this Plan;
(b) to determine any and all adversary proceedings, applications and
contested matters including, without limitation, all claims, counterclaims and
causes of action brought by and against holders of Secured Mechanics Lien Claims
and/or Construction Claims;
(c) to ensure that distributions to holders of Allowed Claims are
accomplished as provided herein;
(d) to hear and determine any timely objections to applications for
payment of Administrative Claims or to proofs of claim and equity interests
filed, both before and after the Confirmation Date, including any objections to
the classification of any Claim or Equity Interest, and to allow or disallow any
Disputed Claim, in whole or in part;
(e) to enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified or
vacated;
(f) to issue such orders in aid of execution of this Plan, to the
extent authorized by section 1142 of the Bankruptcy Code;
(g) to consider any modifications of this Plan, to cure any defect
or omission, or reconcile any inconsistency in any order of the Bankruptcy
Court, including the Confirmation Order;
(h) to hear and determine all applications for awards of
compensation for services rendered by Professionals and reimbursement of such
Professional's expenses relating to such services rendered and to resolve
disputes relating to the payment by the Debtors of compensation for services
rendered by Professionals and reimbursement of such Professional's expenses for
post-Confirmation Date periods;
(i) to hear and determine any disputes arising in connection with
the interpretation, implementation or enforcement of this Plan;
(j) to hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy
Code (including in respect of any request for a prompt determination of taxes
pursuant to section 36.11 of this Plan);
(k) to hear and determine any disputes relating to the Isetan
Settlement and the Pressman Settlement;
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(l) to recover all assets of the Debtors and property of their
estates, wherever located, including any action to enforce coverage under
insurance policies issued to the Debtors prior to the Commencement Date;
(m) to hear and determine any other matter not inconsistent with the
Bankruptcy Code; and
(n) to enter a final decree closing the Reorganization Cases.
35.2. Modification of Plan. Modifications of this Plan may be proposed in
writing by the Plan Proponents at any time before the Confirmation Date;
provided, however, that this Plan, as modified, satisfies the requirements of
sections 1122 and 1123 of the Bankruptcy Code and the Plan Proponents shall have
complied with section 1125 of the Bankruptcy Code; and, provided, further, that
any such modification that relates to the Isetan Settlement and/or the Pressman
Settlement and the implementation thereof shall have been approved by Isetan or
the Pressman Family, as applicable, which approval shall not be unreasonably
withheld or delayed. This Plan may be modified at any time after confirmation
hereof and before substantial consummation hereof; provided, however, that this
Plan, as modified, satisfies the requirements of sections 1122 and 1123 of the
Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms
this Plan as modified under section 1129 of the Bankruptcy Code; and, provided,
further, that any such modification that relates to the Isetan Settlement and/or
the Pressman Settlement and the implementation thereof shall have been approved
by Isetan or the Pressman Family, as applicable, which approval shall not be
unreasonably withheld or delayed. Except as provided above, a holder of a Claim
or Equity Interest that has accepted this Plan shall be deemed to have accepted
the Plan as modified if the proposed modification does not materially and
adversely change the treatment of the Claim or Equity Interest of such holder.
XXXVI. SECTION THIRTY-SIX: MISCELLANEOUS PROVISIONS
36.1. Payment of Statutory Fees. All fees payable pursuant to section
1930, title 28, United States Code, shall be paid on the Effective Date.
36.2. Retiree Benefits. On and after the Effective Date, pursuant to
section 1129(a)(13) of the Bankruptcy Code, New Barneys or its designee shall
continue to pay all retiree benefits (within the meaning of section 1114 of the
Bankruptcy Code), at the level established in accordance with subsection
(e)(1)(B) or (g) of section 1114 of the Bankruptcy Code, at any time prior to
the Confirmation Date for the duration of the period that any of the Debtors has
obligated itself to provide such benefits to any Retiree under any Retiree
Benefit Plan.
36.3. Employee Severance Plan. For a period of two (2) years following the
Effective Date, Barneys' existing employee severance plan will not be terminated
or
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amended by the reorganized Debtors in a manner that is adverse to the employees
covered by such plan.
36.4. Ad Hoc Committee Adversary Proceeding. On the Effective Date,
Whippoorwill will dismiss the Ad Hoc Committee Adversary Proceeding as to itself
and shall use its reasonable efforts to cause the other plaintiffs in the Ad Hoc
Committee Adversary Proceeding to dismiss same with prejudice with respect to
themselves or, alternatively, the Confirmation Order shall contain provisions
acceptable to Isetan in its reasonable discretion dismissing the Ad Hoc
Committee Adversary Proceeding
36.5. Exemption from Transfer Taxes. Pursuant to section 1146(c) of the
Bankruptcy Code, the assignment or surrender of any lease or sublease, or the
delivery of any deed or other instrument of transfer under, in furtherance of,
or in connection with this Plan, including any deeds, bills of sale or
assignments executed in connection with any disposition of assets contemplated
by this Plan shall not be subject to any stamp, real estate transfer, mortgage
recording or other similar tax (including, without limitation, the transfer of
the Debtors' interests in Newireen, Calireen, Rush Oak, Barneys Japan, Fener
Realty Corp., Oak Associates, LLC, the real property subject to the Aetna
Mortgage and the Hokkaido Mortgages, respectively, Madneer's interests in the
Madison Avenue Property, and any mortgages to be recorded, or other security
interest filings, in connection with the Exit Facility and the Isetan
Subordinated Note).
36.6. Dissolution of Creditors Committee. The Creditors Committee shall be
dissolved thirty (30) days after the Effective Date subject to (i) any existing
fiduciary duties as determined by the Bankruptcy Court, and (ii) its ability to
file motions and objections with respect to, and to participate in hearings on,
applications of Professionals for compensation for services rendered and
reimbursement of related expenses and disputes relating to the payment by the
Debtors of a Professional's postconfirmation invoice.
36.7. Elimination of Guarantee Claims. The classification of and manner of
satisfying all Claims under this Plan take into consideration (a) the fact that
certain of the Debtors may have guaranteed the obligations of other Debtors and
(b) the fact that certain of the Debtors may be a joint obligor with other
Debtors, with respect to an obligation. All Claims against any one or more of
the Debtors based upon any such guarantees or joint obligations (each a
"Guarantee Claim") shall be deemed disallowed and expunged and the holder of a
Guarantee Claim will receive no distribution under this Plan on account of such
Guarantee Claim (except as provided in the immediately succeeding sentence).
Holders of Guarantee Claims shall only be entitled to treatment as a holder of a
Claim against the Debtor or Debtors that is/are the primary obligor(s) with
respect to such Claim. Holders of Guarantee Claims shall not be entitled to vote
to accept or reject the Plan with respect to such Guarantee Claims.
36.8. Elimination of Turnover Claims. The classification of and manner of
satisfying all Claims under this Plan take into consideration the fact that
certain of the
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Debtors may be obligated, under documentation giving rise to a particular Claim,
to turn over certain of their respective assets, including, but not limited to,
promissory notes and amounts accrued and payable thereunder, to the holder of
such Claim. Pursuant to this Plan, all such turn over obligations shall be
extinguished. All Claims against any one or more of the Debtors based upon any
turn over obligation (a "Turnover Claim") shall be deemed disallowed and
expunged and the holder of a Turnover Claim will receive no distribution under
this Plan on account of such Turnover Claim. Holders of Turnover Claims shall
not be entitled to vote to accept or reject the Plan with respect to such
Turnover Claims.
36.9. Elimination of Subordination Claims. The classification of and
manner of satisfying all Claims under this Plan take into consideration the fact
that certain of such Claims may be based upon a subordination provision in a
particular loan agreement under which one or more of the Debtors is the obligor.
Pursuant to this Plan, all obligations under such a subordination provision
shall be extinguished. All Claims against any one or more of the Debtors based
upon any subordination provision (a "Subordination Claim") shall be deemed
disallowed and expunged and the holder of a senior Claim based on such
provisions will receive no distribution under this Plan on account of such
Subordination Claim. Holders of Subordination Claims shall not be entitled to
vote to accept or reject the Plan with respect to such Subordination Claims.
36.10. Severability of Entire Plans. If any Plan comprising this "Joint
Plan of Reorganization," other than the Plans for Barneys and Barneys America,
respectively, shall be deemed non-confirmable by reason of the insufficiency of
Cash of a particular Debtor available on the Effective Date to pay in full all
Administrative Claims, Allowed Priority Tax Claims and Allowed Priority Non-Tax
Claims, the Bankruptcy Court shall, upon the request of the Plan Proponents,
have the authority to delete such Plan and confirm this Joint Plan of
Reorganization as if such Plan were not included in this Joint Plan of
Reorganization. In the event that the Bankruptcy Court deems either or both of
the Plans for Barneys and Barneys America non-confirmable by reason of the
insufficiency of Cash of either Barneys or Barneys America available on the
Effective Date to pay in full all Administrative Claims, Allowed Priority Tax
Claims and Allowed Priority Non-Tax Claims, no part of this "Joint Plan of
Reorganization" may be confirmed by the Bankruptcy Court; provided, however,
that Isetan shall not be required to consummate the Isetan Settlement except in
accordance with its terms.
36.11. Severability of Plan Provisions. If, prior to the Confirmation
Date, any term or provision of this Plan is held by the Bankruptcy Court to be
invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of
the Plan Proponents and, if such provision relates to the Isetan Settlement with
the consent of Isetan, which consent shall not be unreasonably withheld, have
the power to interpret, modify or delete such term or provision (or portions
thereof) to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be
invalid, void or unenforceable, and such term or provision shall then be
applicable as interpreted, modified or deleted. Notwithstanding any such
interpretation,
102
<PAGE>
modification or deletion, the remainder of the terms and provisions of this Plan
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated by such interpretation, modification or deletion. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of this Plan, as it may have been interpreted,
modified or deleted in accordance with the foregoing, is valid and enforceable
pursuant to its terms.
36.12. Binding Effect. This Plan shall be binding upon and inure to the
benefit of the Debtors, the holders of Claims and Equity Interests against the
Debtors and their respective successors and assignS.
36.13. Governing Law. Except to the extent that the Bankruptcy Code or
other federal law is applicable, or to the extent a schedule or exhibit hereto
provides otherwise, the rights, duties and obligations arising under this Plan
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York, without regard to principles thereof related to conflicts
of law.
36.14. Tax Reporting and Compliance. In connection with the Plan and all
instruments issued in connection therewith and distributions thereon, the
Debtors and New Barneys, as the case may be, shall comply with all withholding
and reporting requirements imposed by any federal, state, local or foreign
taxing authority and all distributions hereunder shall be subject to any such
withholding and reporting requirements. No holder of an Allowed Claim against
the Debtors shall effectuate any withholding with respect to the cancellation or
satisfaction of such Allowed Claim under this Plan. New Barneys is hereby
authorized, on behalf of each of the Debtors, to request an expedited
determination of taxes under section 505(b) of the Bankruptcy Code for all
taxable periods of the Debtors ending after the Commencement Date through, and
including, the Effective Date of the Plan and, in the case of the Preen Debtors
through the dissolution or merger of such Debtors pursuant to this Plan.
36.15. Notices. All notices, requests, and demands to be effective shall
be in writing (including by facsimile transmission) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
actually delivered or, in the case of notice by facsimile transmission, when
received and telephonically confirmed, addressed as follows:
103
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To Whippoorwill and Bay Harbour:
Whippoorwill Associates, Inc.
11 Martine Avenue, 8th Floor
White Plains, New York 10606
Attn.: David Strumwasser
Telephone: (914) 683-1002
Telecopier: (914) 683-1242
-- and --
Bay Harbour Management L.C.
885 Third Avenue, 34th Floor
New York, New York 10022
Attn.: Douglas Teitelbaum
Telephone: (212) 371-2211
Telecopier: (212) 371-7497
104
<PAGE>
-- with a copy to --
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn.: John J. Rapisardi, Esq.
Telephone: (212) 310-8000
Telecopier: (212) 310-8007
To the Creditors Committee:
The Chase Manhattan Bank
380 Madison Avenue
New York, New York 10017
Attn.: Craig T. Moore
Telephone: (212) 622-4874
Telecopier: (212) 622-4834
-- with a copy to --
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn.: Lawrence M. Handelsman, Esq.
Telephone: (212) 806-5400
Telecopier: (212) 806-6006
To the Debtors:
Barney's, Inc.
575 Fifth Avenue, 11th Floor
New York, New York 10017
Attn.: Marc H. Perlowitz, Esq.
Telephone: (212) 450-8606
Telecopier: (212) 450-8480
-- with a copy to --
LeBoeuf, Lamb, Greene & MacRae L.L.P.
125 West 55th Street
New York, New York 10019
Attn.: John P. Campo, Esq.
Telephone: (212) 424-8000
Telecopier: (212) 424-8500
105
<PAGE>
Dated: New York, New York
November 13, 1998
Respectfully submitted,
WHIPPOORWILL ASSOCIATES,
INC., as agent and/or
general partner for its
discretionary accounts and
as investment advisor to
Whippoorwill/Barney's
Obligations Trust - 1996
By: /s/ DAVID STRUMWASSER
Name: David Strumwasser
Title: Managing Director
BAY HARBOUR MANAGEMENT L.C.,
for its managed accounts
By: /s/ DOUGLAS TEITELBAUM
Name: Douglas Teitelbaum
Title: Principal and Portfolio Manager
106
<PAGE>
THE OFFICIAL COMMITTEE OF
UNSECURED CREDITORS
THE CHASE MANHATTAN BANK
By: /s/ AGNES LEVY
Name: Agnes Levy
Title: Managing Director, The Chase
Manhattan Bank and Chair of the
Official Committee of Unsecured
Creditors
COUNSEL:
John J. Rapisardi, Esq. (JR 7781)
(A Member of the Firm)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attorneys for Whippoorwill and
Bay Harbour
Lawrence M. Handelsman, Esq. (LH 6957)
(A Member of the Firm)
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
(212) 806-5400
Attorneys for the Creditors
Committee
107
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TABLE OF CONTENTS
<TABLE>
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Page
<S> <C> <C>
I. SECTION ONE: DEFINITIONS AND INTERPRETATION...................................................2
II. SECTION TWO: PROVISIONS FOR THE SETTLEMENT OF CLAIMS AND EQUITY INTERESTS AGAINST THE
DEBTORS.......................................................................................21
2.1. Settlement of Intercompany Claims....................................................21
2.2. Settlement of the Isetan Claims......................................................21
2.3. Settlement of the Claims and Equity Interests of the Pressman Family.................26
2.4. Agreed Treatment of General Unsecured Claims Against the Debtors.....................28
2.5. Approved Settlements of the Aetna Claims, the Oaktree Claims and the Greater
New York Claims......................................................................28
2.6. Settlement of the Claims of the Equipment Lessors....................................29
III. SECTION THREE: PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS, PRIORITY TAX
CLAIMS AND OTHER CLAIMS.......................................................................29
3.1. Administrative Claims................................................................29
3.2. Payment of the BankBoston DIP Facility...............................................30
3.3. Priority Tax Claims..................................................................30
3.4. Convenience Claims...................................................................30
IV. SECTION FOUR: CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS AGAINST THE DEBTORS..............30
4.1. Claims and Interests Against Barneys.................................................30
4.2. Claims and Interests Against Barneys America.........................................31
4.4. Claims and Interests Against BNY Licensing...........................................32
4.5. Claims and Interests Against Basco...................................................33
4.6. Claims and Interests Against PFP.....................................................33
4.7. Claims and Interests Against Preen...................................................33
4.8. Claims and Interests Against Pressmad................................................34
4.9. Claims and Interests Against Pressned................................................34
4.10. Claims and Interests Against Preswil.................................................34
4.11. Claims and Interests Against Madneer.................................................34
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4.12. Claims and Interests Against Reen Japan..............................................35
4.13. Claims and Interests Against Amjon...................................................35
4.14. Claims and Interests Against Chelsea.................................................35
4.15. Claims and Interests Against Cholderton..............................................36
4.16. Claims and Interests Against Martinton...............................................36
4.17. Claims and Interests Against Goderich................................................36
4.18. Claims and Interests Against 106 Seventh Corp........................................37
4.19. Claims and Interests Against Gaddesden...............................................37
4.20. Claims and Interests Against BNY Credit..............................................37
4.21. Claims and Interests Against Prescredit..............................................38
V. SECTION FIVE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST BARNEYS........38
5.1. Priority Non-Tax Claims Against Barneys (Barneys Class 1)............................38
5.2. Insured Claims Against Barneys (Barneys Class 2).....................................38
5.3. Secured Mechanics Lien Claims Against Barneys (Barneys Class 3)......................39
5.4. Isetan Claims Against Barneys (Barneys Class 4)......................................39
5.5. Equipment Lessors Claims Against Barneys (Barneys Class 5)...........................39
5.6. General Unsecured Claims Against Barneys (Barneys Class 6)...........................40
5.7. Pressman Unsecured Claims Against Barneys (Barneys Class 7)..........................40
5.8. Equity Interests in Barneys (Barneys Class 8)........................................40
VI. SECTION SIX: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST BARNEYS
AMERICA.......................................................................................41
6.1. Priority Non-Tax Claims Against Barneys America (Barneys America Class 1)............41
6.2. Insured Claims Against Barneys America (Barneys America Class 2).....................41
6.3. Isetan Claims Against Barneys America (Barneys America Class 3)......................42
6.4. Equipment Lessors Claims Against Barneys America (Barneys America Class 4)...........42
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6.5. General Unsecured Claims Against Barneys America (Barneys America Class 5)...........43
6.6. Pressman Unsecured Claims Against Barneys America (Barneys America Class 6)..........43
6.7. Equity Interests in Barneys America (Barneys America Class 7)........................43
VII. SECTION SEVEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST BNY
LICENSING.....................................................................................44
7.1. Priority Non-Tax Claims Against BNY Licensing (BNY Licensing Class 1)................44
7.2. Isetan Claims Against BNY Licensing (BNY Licensing Class 2)..........................44
7.3. General Unsecured Claims Against BNY Licensing (BNY Licensing Class3)................44
7.4. Pressman Unsecured Claims Against BNY Licensing (BNY Licensing Class 4)..............45
7.5. Equity Interests in BNY Licensing (BNY Licensing Class 5)............................45
VIII. SECTION EIGHT: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST BNY
LEASING.......................................................................................45
8.1. Priority Non-Tax Claims Against BNY Leasing (BNY Leasing Class 1)....................45
8.2. Equipment Lessors Claims Against BNY Leasing (BNY Leasing Class 2)...................46
8.3. Isetan Claims Against BNY Leasing (BNY Leasing Class 3)..............................46
8.4. General Unsecured Claims Against BNY Leasing (BNY Leasing Class 4)...................47
8.5. Pressman Unsecured Claims Against BNY Leasing (BNY Leasing Class5)...................47
8.6. Equity Interests in BNY Leasing (BNY Leasing Class 6)................................47
IX. SECTION NINE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST BASCO..........47
9.1. Priority Non-Tax Claims Against Basco (Basco Class 1)................................47
9.2. Copelco Claims Against Basco (Basco Class 2).........................................48
9.3. Isetan Claims Against Basco (Basco Class 3)..........................................48
9.4. General Unsecured Claims Against Basco (Basco Class 4)...............................48
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(CONTINUED)
Page
9.5. Pressman Unsecured Claims Against Basco (Basco Class 5)..............................48
9.6. Equity Interests in Basco (Basco Class 6)............................................48
X. SECTION TEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST PFP.............49
10.1. Priority Non-Tax Claims Against PFP (PFP Class 1)....................................49
10.2. Isetan Claims Against PFP (PFP Class 2)..............................................49
10.3. General Unsecured Claims Against PFP (PFP Class 3)...................................49
10.4. Pressman Unsecured Claims Against PFP (PFP Class 4)..................................49
10.5. Equity Interests in PFP (PFP Class 5)................................................50
XI. SECTION ELEVEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST PREEN........50
11.1. Priority Non-Tax Claims Against Preen (Preen Class 1)................................50
11.2. Insured Claims Against Preen (Preen Class 2).........................................50
11.3. Isetan Claims Against Preen (Preen Class 3)..........................................50
11.4. Secured Aetna Claims Against Preen (Preen Class 4)...................................51
11.5. Secured Oaktree Claims Against Preen (Preen Class 5).................................51
11.6. General Unsecured Claims Against Preen (Preen Class 6)...............................51
11.7. Pressman Unsecured Claims Against Preen (Preen Class 7)..............................52
11.8. Equity Interests in Preen (Preen Class 8)............................................52
XII. SECTION TWELVE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
PRESSMAD......................................................................................52
12.1. Priority Non-Tax Claims Against Pressmad (Pressmad Class 1)..........................52
12.2. Isetan Claims Against Pressmad (Pressmad Class 2)....................................52
12.3. General Unsecured Claims Against Pressmad (Pressmad Class 3).........................53
12.4. Pressman Unsecured Claims Against Pressmad (Pressmad Class 4)........................53
12.5. Equity Interests in Pressmad (Pressmad Class 5)......................................53
XIII. SECTION THIRTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
PRESSNED......................................................................................53
13.1. Priority Non-Tax Claims Against Pressned (Pressned Class 1)..........................53
13.2. Isetan Claims Against Pressned (Pressned Class 2)....................................54
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(CONTINUED)
Page
13.3. General Unsecured Claims Against Pressned (Pressned Class 3).........................54
13.4. Pressman Unsecured Claims Against Pressned (Pressned Class 4)........................54
13.5. Equity Interests in Pressned (Pressned Class 5)......................................54
XIV. SECTION FOURTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
PRESWIL.......................................................................................54
14.1. Priority Non-Tax Claims Against Preswil (Preswil Class 1)............................54
14.2. Isetan Claims Against Preswil (Preswil Class 2)......................................55
14.3. General Unsecured Claims Against Preswil (Preswil Class 3)...........................55
14.4. Pressman Unsecured Claims Against Preswil (Preswil Class 4)..........................55
14.5. Equity Interests in Preswil (Preswil Class 5)........................................55
XV. SECTION FIFTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
MADNEER.......................................................................................56
15.1. Priority Non-Tax Claims Against Madneer (Madneer Class 1)............................56
15.2. Isetan Claims Against Madneer (Madneer Class 2)......................................56
15.3. General Unsecured Claims Against Madneer (Madneer Class 3)...........................56
15.4. Pressman Unsecured Claims Against Madneer (Madneer Class 4)..........................56
15.5. Equity Interests in Madneer (Madneer Class 5)........................................57
XVI. SECTION SIXTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST REEN
JAPAN.........................................................................................57
16.1. Priority Non-Tax Claims Against Reen Japan (Reen Japan Class 1)......................57
16.2. Isetan Claims Against Reen Japan (Reen Japan Class 2)................................57
16.3. General Unsecured Claims Against Reen Japan (Reen Japan Class 3).....................57
16.4. Equity Interests in Reen Japan (Reen Japan Class 4)..................................58
XVII. SECTION SEVENTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST AMJON............58
17.1. Priority Non-Tax Claims Against Amjon (Amjon Class 1)................................58
17.2. Isetan Claims Against Amjon (Amjon Class 2)..........................................58
17.3. Secured Aetna Claims Against Amjon (Amjon Class 3)...................................58
17.4. General Unsecured Claims Against Amjon (Amjon Class 4)...............................59
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(CONTINUED)
Page
17.5. Pressman Unsecured Claims Against Amjon (Amjon Class 5)..............................59
17.6. Equity Interests in Amjon (Amjon Class 6)............................................59
XVIII. SECTION EIGHTEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
CHELSEA.......................................................................................59
18.1. Priority Non-Tax Claims Against Chelsea (Chelsea Class 1)............................59
18.2. Isetan Claims Against Chelsea (Chelsea Class 2)......................................60
18.3. Secured Oaktree Claims Against Chelsea (Chelsea Class 3).............................60
18.4. General Unsecured Claims Against Chelsea (Chelsea Class 4)...........................60
18.5. Pressman Unsecured Claims Against Chelsea (Chelsea Class 5)..........................60
18.6. Equity Interests in Chelsea (Chelsea Class 6)........................................61
XIX. SECTION NINETEEN: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST CHOLDERTON........61
19.1. Priority Non-Tax Claims Against Cholderton (Cholderton Class 1)......................61
19.2. Isetan Claims Against Cholderton (Cholderton Class 2)................................61
19.3. Secured Aetna Claims Against Cholderton (Cholderton Class 3).........................61
19.4. General Unsecured Claims Against Cholderton (Cholderton Class 4).....................62
19.5. Pressman Unsecured Claims Against Cholderton (Cholderton Class 5)....................62
19.6. Equity Interests in Cholderton (Cholderton Class 6)..................................62
XX. SECTION TWENTY: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
MARTINTON.....................................................................................62
20.1. Priority Non-Tax Claims Against Martinton (Martinton Class 1)........................62
20.2. Isetan Claims Against Martinton (Martinton Class 2)..................................63
20.3. Secured Oaktree Claims Against Martinton (Martinton Class 3).........................63
20.4. General Unsecured Claims Against Martinton (Martinton Class 4).......................63
20.5. Pressman Unsecured Claims Against Martinton (Martinton Class 5)......................63
20.6. Equity Interests in Martinton (Martinton Class 6)....................................64
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(CONTINUED)
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XXI. SECTION TWENTY-ONE: PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS AGAINST
GODERICH......................................................................................64
21.1. Priority Non-Tax Claims Against Goderich (Goderich Class 1)..........................64
21.2. Isetan Claims Against Goderich (Goderich Class 2)....................................64
21.3. Secured Oaktree Claims Against Goderich (Goderich Class 3)...........................64
21.4. General Unsecured Claims Against Goderich (Goderich Class 4).........................65
21.5. Pressman Unsecured Claims Against Goderich (Goderich Class 5)........................65
21.6. Equity Interests in Goderich (Goderich Class 6)......................................65
XXII. SECTION TWENTY-TWO: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST 106
SEVENTH CORP..................................................................................65
22.1. Priority Non-Tax Claims Against 106 Seventh Corp. (106 Seventh Corp. Class 1)........65
22.2. Isetan Claims Against 106 Seventh Corp. (106 Seventh Corp. Class 2)..................66
22.3. Secured Oaktree Claims Against 106 Seventh Corp. (106 Seventh Corp. Class 3).........66
22.4. General Unsecured Claims Against 106 Seventh Corp. (106 Seventh Corp. Class 4).......66
22.5. Pressman Unsecured Claims Against 106 Seventh Corp. (106 Seventh Corp. Class 5)......67
22.6. Equity Interests in 106 Seventh Corp. (106 Seventh Corp. Class 6)....................67
XXIII. SECTION TWENTY-THREE: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST
GADDESDEN.....................................................................................67
23.1. Priority Non-Tax Claims Against Gaddesden (Gaddesden Class 1)........................67
23.2. Isetan Claims Against Gaddesden (Gaddesden Class 2)..................................67
23.3. Secured Greater New York Claims Against Gaddesden (Gaddesden Class3).................68
23.4. General Unsecured Claims Against Gaddesden (Gaddesden Class 4).......................68
23.5. Pressman Unsecured Claims Against Gaddesden (Gaddesden Class 5)......................68
23.6. Equity Interests in Gaddesden (Gaddesden Class 6)....................................68
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XXIV. SECTION TWENTY-FOUR: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST BNY
CREDIT........................................................................................69
24.1. Priority Non-Tax Claims Against BNY Credit (BNY Credit Class 1)......................69
24.2. Isetan Claims Against BNY Credit (BNY Credit Class 2)................................69
24.3. General Unsecured Claims Against BNY Credit (BNY Credit Class 3).....................69
24.4. Pressman Unsecured Claims Against BNY Credit (BNY Credit Class 4)....................69
24.5. Equity Interests in BNY Credit (BNY Credit Class 5)..................................70
XXV. SECTION TWENTY-FIVE: PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS AGAINST
PRESCREDIT....................................................................................70
25.1. Priority Non-Tax Claims Against Prescredit (Prescredit Class 1)......................70
25.2. Isetan Claims Against Prescredit (Prescredit Class 2)................................70
25.3. General Unsecured Claims Against Prescredit (Prescredit Class 3).....................70
25.4. Pressman Unsecured Claims Against Prescredit (Prescredit Class 4)....................71
25.5. Equity Interests in Prescredit (Prescredit Class 5)..................................71
XXVI. SECTION TWENTY-SIX: PROVISIONS RELATING TO SUBSCRIPTION RIGHTS ISSUED TO HOLDERS OF
ALLOWED GENERAL UNSECURED CLAIMS AGAINST THE DEBTORS..........................................71
26.1. Sale of Offered Shares...............................................................71
26.2. Purchased Option Shares..............................................................72
26.3. Exercise of Subscription Rights......................................................72
26.4. Allocation of Offered Shares.........................................................72
26.5. Allocation Upon Breach...............................................................72
26.6. Expiration of Subscription Rights....................................................73
26.7. Distribution of Subscription Rights Not Distributed to Holders of Allowed
Convenience Claims...................................................................73
26.8. Distribution of Unsecured Creditors Warrants.........................................73
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XXVII. SECTION TWENTY-SEVEN: ACCEPTANCE OR REJECTION
OF THIS PLAN.................................................................................74
27.1. Voting Rights........................................................................74
27.2. Acceptance by a Class of Claims or Equity Interests..................................74
27.3. Impaired Classes to Vote.............................................................74
27.4. Elimination of Classes...............................................................74
27.5. Nonconsensual Confirmation...........................................................74
XXVIII. SECTION TWENTY-EIGHT: MEANS OF IMPLEMENTATION.................................................74
28.1. New Barneys..........................................................................75
28.2. Barneys, Barneys (CA) Lease Corp. and Barneys (NY) Lease Corp........................77
28.3. Barneys America and Barneys America (Chicago) Lease Corp.............................79
28.4. Preen Debtors........................................................................81
28.5. Reen Japan...........................................................................81
28.6. Barneys Asia.........................................................................81
28.7. Pressman Letters of Credit...........................................................82
28.8. Transfer of Title to Equipment Subject to Equipment Leases...........................82
28.9. Isetan Reimbursement Obligation......................................................82
28.10. Hart-Scott-Rodino Compliance.........................................................82
XXIX. SECTION TWENTY-NINE: PROVISIONS GOVERNING DISTRIBUTIONS UNDER THIS PLAN...................82
29.1. Date of Distributions................................................................82
29.2. Delivery of Distributions............................................................83
29.3. Time Bar to Cash Payments............................................................83
29.4. Manner of Payment Under this Plan....................................................83
29.5. Cap on Distributions.................................................................83
29.6. Allocations of Distributions to Allowed General Unsecured
Claims...............................................................................84
29.7. Cancellation and Surrender of Existing Securities and Agreements.....................84
29.8. Setoffs..............................................................................84
29.9. Fractional Cents and Fractional Shares of New Common Stock...........................84
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29.10. Registration of New Common Stock.....................................................84
XXX. SECTION THIRTY: PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS UNDER THIS PLAN........85
30.1. Prosecution of Objections............................................................85
30.2. No Distributions Pending Allowance...................................................85
30.3. Disputed Administrative Claims Cash Reserve..........................................85
30.4. Disputed Claims Equity Reserve.......................................................86
30.5. Distributions After Allowance........................................................87
30.6. Distributions After Disallowance.....................................................87
30.7. Estimation of Disputed General Unsecured Claims for Purposes of Participation
in the Subscription Rights Offering..................................................88
XXXI. SECTION THIRTY-ONE: PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED LEASES
UNDER THIS PLAN...............................................................................88
31.1. General Treatment....................................................................88
31.2. Approval of Assumption or Rejection of Leases and Contracts..........................88
31.3. Cure of Defaults.....................................................................89
31.4. Bar Date for Filing Proofs of Claim Relating to Executory Contracts Rejected
Pursuant to the Plan.................................................................89
XXXII. SECTION THIRTY-TWO: CONDITIONS PRECEDENT TO THE
CONFIRMATION DATE AND THE EFFECTIVE DATE......................................................89
32.1. Conditions Precedent to Confirmation of this Plan....................................89
32.2. Conditions Precedent to the Effective Date of this Plan..............................92
32.3. Waiver of Conditions Precedent.......................................................94
XXXIII. SECTION THIRTY-THREE: EFFECT OF CONFIRMATION
OF THIS PLAN..................................................................................94
33.1. Reorganized Debtors' Authority.......................................................94
33.2. Vesting and Liens....................................................................94
33.3. Discharge of the Debtors.............................................................94
33.4. Term of Injunctions or Stays.........................................................95
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XXXIV. SECTION THIRTY-FOUR: RELEASES, INJUNCTION AND
WAIVER OF CLAIMS..............................................................................95
34.1. Release and Discharge of the Debtors and Debtors in Possession.......................95
34.2. Limited Release of Barneys Releasees.................................................95
34.3. Release of the Plan Releasees........................................................96
34.4. Other Releases.......................................................................96
34.5. Release of Former Employees..........................................................97
34.6. General Injunction...................................................................97
34.7. Avoidance and Recovery Actions.......................................................97
XXXV. SECTION THIRTY-FIVE: RETENTION OF JURISDICTION...............................................98
35.1. Retention of Jurisdiction............................................................98
35.2. Modification of Plan.................................................................99
XXXVI. SECTION THIRTY-SIX: MISCELLANEOUS PROVISIONS.................................................99
36.1. Payment of Statutory Fees............................................................99
36.2. Retiree Benefits....................................................................100
36.3. Exemption from Transfer Taxes.......................................................100
36.4. Dissolution of Creditors Committee..................................................100
36.5. Elimination of Guarantee Claims.....................................................100
36.6. Elimination of Turnover Claims......................................................100
36.7. Elimination of Subordination Claims.................................................101
36.8. Severability of Entire Plans........................................................101
36.9. Severability of Plan Provisions.....................................................101
36.10. Binding Effect......................................................................102
36.11. Governing Law.......................................................................102
36.12. Tax Reporting and Compliance........................................................102
36.13. Notices.............................................................................102
</TABLE>
<PAGE>
Exhibit 2.2
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ----------------------------------------X
In re : Chapter 11 Case Nos.
96 B 40113 (JLG)
BARNEY'S, INC., ET AL. :
(Jointly Administered)
Debtors. :
- ----------------------------------------X
SUPPLEMENT TO SECOND AMENDED JOINT
PLAN OF REORGANIZATION FOR THE DEBTORS PROPOSED BY
WHIPPOORWILL ASSOCIATES, INC., BAY HARBOUR MANAGEMENT
L.C. AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
Whippoorwill Associates, Inc., Bay Harbour Management L.C. and
the Official Committee of Unsecured Creditors (collectively, the "Plan
Proponents") hereby supplement the Second Amended Joint Plan of Reorganization
for the Debtors in the above-captioned chapter 11 cases (the "Debtors"), dated
November 13, 1998 (the "Plan") and the related disclosure statement (the
"Disclosure Statement"), the supplement to which is joined in by the Debtors, to
incorporate certain non-material modifications and to correct typographical
errors. Page references herein to the Plan and the Disclosure Statement refer to
the versions of such documents that were mailed to all creditors and parties in
interest in the above-captioned chapter 11 cases on November 20, 1998.
SUPPLEMENT TO THE PLAN
1. PAGE 6: In the first line of section 1.105, the number $3,204,497
should be replaced with the number $3,256,497.
2. PAGE 12: In the first line of section 2.2.A(ii), the number
$23,204,497 should be replaced with the number $23,256,497.
<PAGE>
3. PAGE 18: After Section 3.4 add the following:
3.5. PAYMENT OF ADMINISTRATIVE CLAIMS ARISING UNDER CASH
COLLATERAL STIPULATIONS. On the Effective Date, in full and complete
satisfaction of the Administrative Claims of (i) The Chase Manhattan Bank
pursuant to that certain Stipulation for Use of Cash Collateral and Providing
Adequate Protection Therefor, dated February 8, 1996, between the Debtors and
The Chase Manhattan Bank and (ii) The Bank of Tokyo-Mitsubishi Trust Company, or
its assignee(s) or designee(s), pursuant to that certain Stipulation for Use of
Cash Collateral and Providing Adequate Protection Therefor, dated August 20,
1996, between the Debtors and The Bank of Tokyo-Mitsubishi Trust Company, The
Chase Manhattan Bank shall receive a payment in Cash of $955,356.41 and The Bank
of Tokyo-Mitsubishi Trust Company, or its assignee(s) or designee(s) shall
receive a payment in Cash of $100,662.53. To the extent that the foregoing
stipulations also give rise to Secured Claims in favor of The Chase Manhattan
Bank and/or The Bank of Tokyo-Mitsubishi Trust Company, or its assignee(s) or
designee(s), such Secured Claims shall be deemed satisfied in full and
unimpaired for purposes of this Plan by the payment of the aforementioned
Administrative Claims and the holders of such Secured Claims shall be deemed to
have accepted this Plan.
4. PAGE 43: In section 28.1.2(b), the reference in the first line to
paragraphs 3(e) and (f) of the Restructuring Transactions should be modified to
refer to paragraphs 4(e) and (f) of the Restructuring Transactions.
5. PAGE 54: In section 32.2(i), the reference in the second line to
paragraphs 3(e) and (f) of the Restructuring Transactions should be modified to
refer to paragraphs 4(e) and (f) of the Restructuring Transactions. Also, in the
last two lines of section 32.2(k), the comma after the words "Commencement Date"
should be deleted and replaced with a period and the succeeding phrase "except
for the Debtors that are to be dissolved on or after the Effective Date" should
be deleted. In the third line from the bottom of that same section , the word
"either" should be deleted and replaced with the word "any."
6. PAGE 55: In section 34.1, after the words "from the beginning of
time" on the last line, the following should be inserted: ", except with respect
to any Administrative Claims incurred postpetition by the Debtors in Possession
in the ordinary course of their businesses or any Administrative Claims arising
pursuant to postpetition agreements or transactions entered into by the Debtors
in Possession with Bankruptcy Court approval."
7. PAGE 63: To the list of Barneys Affiliates contained in Schedule
1.18, the entity "Walnut Corporation" should be added.
8. PAGE 64: To the list of Preen Affiliates contained in Schedule
1.143, the entity "Walnut Corporation" should be added.
<PAGE>
9. PAGE 66: In the first sentence of section 7(a) of Schedule 28, the
number $19,204,497 should be replaced with the number $19,256,497.
SUPPLEMENT TO THE DISCLOSURE STATEMENT
10. PAGE 9: In the sixth line of the last paragraph of section II.A.5,
the percentage 25.9% should be replaced with the percentage 26.5%. The same
amendment should be made to each of the footnotes on the bottom of pages 12, 14,
16, 18,23,24,25 and 26.
11. PAGE 11: On the top of the page, the first entry under the column
"Estimated Amount of Allowed Claims" the number $71,000,000 should be replaced
with $1,000,000.
12. PAGE 45: In the first line of section V.A.2(c), the number
$23,204,497 should be replaced with $23,256,497.
13. PAGE 53: After section VI.B.1(d) a new section should be added
as follows:
(e) PAYMENT OF ADMINISTRATIVE CLAIMS ARISING UNDER CASH COLLATERAL
STIPULATIONS. On the Effective Date, in full and complete satisfaction of the
Administrative Claims of (i) The Chase Manhattan Bank pursuant to that certain
Stipulation for Use of Cash Collateral and Providing Adequate Protection
Therefor, dated February 8, 1996, between the Debtors and The Chase Manhattan
Bank and (ii) The Bank of Tokyo-Mitsubishi Trust Company, or its assignee(s) or
designee(s), pursuant to that certain Stipulation for Use of Cash Collateral and
Providing Adequate Protection Therefor, dated August 20, 1996, between the
Debtors and The Bank of Tokyo-Mitsubishi Trust Company, The Chase Manhattan Bank
shall receive a payment in Cash of $955,356.41 and The Bank of Tokyo-Mitsubishi
Trust Company, or its assignee(s) or designee(s) shall receive a payment in Cash
of $100,662.53. To the extent that the foregoing stipulations also give rise to
Secured Claims in favor of The Chase Manhattan Bank and/or The Bank of
Tokyo-Mitsubishi Trust Company, or its assignee(s) or designee(s), such Secured
Claims shall be deemed satisfied in full and unimpaired for purposes of the Plan
by the payment of the aforementioned Administrative Claims and the holders of
such Secured Claims shall be deemed to have accepted the Plan.
14. PAGE 56: In the second line of the last full paragraph section
VI.E.2, the percentage 1% should be replaced with 1.3%.
15. PAGE 57: In the first line of section VI.F.1(b)(ii), the reference
to sections 3(e) and (f) of the Restructuring Transactions should be replaced
with a reference to section 4(e) and (f) of the Restructuring Transactions.
16. PAGE 63: In the first line of section VI.F.11(g)(i), the number
$19,204,497 should be replaced with the number $19,256,497.
<PAGE>
17. PAGE 70: In the last line of section VI.K.1, after the words "from
the beginning of time," the following should be inserted: ", except with respect
to any Administrative Claims incurred postpetition by the Debtors in Possession
in the ordinary course of their businesses or any Administrative Claims arising
pursuant to postpetition agreements or transactions entered into by the Debtors
in Possession with Bankruptcy Court approval."
18. PAGE 72: On the third line of the first paragraph of section VI.L,
a period should be placed after the word "party," and the phrase "for actions
taken in these chapter 11 cases" should be deleted. Also, in the fourth line of
the third paragraph of the same section, the phrase "affiliates of the Debtors
which are" should be deleted.
19. PAGE 77: Section VII.G.1(k) is amended to read as follows:
(k) DISCHARGE OF DEBTORS. Except with respect to obligations
specifically contemplated by this Plan, the order approving the BankBoston DIP
Facility and any Administrative Claims incurred postpetition by the Debtors in
Possession in the ordinary course of their businesses or any Administrative
Claims arising pursuant to postpetition agreements or transactions entered into
by the Debtors in Possession with Bankruptcy Court approval, the Bankruptcy
Court shall have entered a Final Order decreeing that the Debtors are discharged
effective on the Effective Date (in accordance with this Plan) from any Claims
and any "debts" (as that term is defined in section 101(12) the Bankruptcy
Code), and the Debtors' liability in respect thereof is extinguished completely,
whether reduced to judgment or noncontingent, asserted or unasserted, fixed or
not, matured or unmatured, disputed or undisputed, legal or equitable or known
or unknown that arose from any agreement of the Debtors entered into or
obligation of such Debtor incurred before the Effective Date, or from any
conduct of any of the Debtors prior to the Effective Date, or whether such
interest accrued before or after the Commencement Date.
<PAGE>
SUPPLEMENT TO THE PLAN SUPPLEMENT
20. In item II of Schedule A to the "Pressman Family Settlement
Agreement," the document under tab 2, the entity "Walnut Corporation" should be
inserted.
Dated: New York, New York
December 8, 1998
Respectfully submitted,
WHIPPOORWILL ASSOCIATES, INC.,
as agent and/or general partner for its discretionary
accounts and as investment advisor to
Whippoorwill/Barney's Obligations Trust -1996
By: /s/ DAVID STRUMWASSER
----------------------------------
Name: David Strumwasser
Title: Managing Director
BAY HARBOUR MANAGEMENT L.C.,
for its managed accounts
By: /s/ DOUGLAS TEITELBAUM
----------------------------------
Name: Douglas Teitelbaum
Title: Principal and Portfolio Manager
THE OFFICIAL COMMITTEE OF
UNSECURED CREDITORS
The Chase Manhattan Bank
By: /s/ AGNES LEVY
----------------------------------
Name: Agnes Levy
Title: Managing Director, The Chase
Manhattan Bank and Chair of the
Official Committee of Unsecured
Creditors
<PAGE>
AS TO THE SUPPLEMENT TO THE DISCLOSURE STATEMENT
BARNEY'S, INC.
By: /s/ THOMAS C. SHULL
----------------------------------
Name: Thomas C. Shull
Title: President and Chief Executive Officer
COUNSEL:
John J. Rapisardi, Esq. (JR 7781)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attorneys for Whippoorwill and Bay Harbour
Lawrence M. Handelsman, Esq. (LH 6957)
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
(212) 806-5400
Attorneys for the Official Committee
of Unsecured Creditors
John P. Campo, Esq. (JC 5241)
LEBOEUF, LAMB, GREENE & MACRAE L.L.P.
125 West 55th Street
New York, New York 10019
(212) 424-8000
Attorneys for the Debtors
<PAGE>
Exhibit 2.3
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ---------------------------------------x
In re : Chapter 11 Case Nos.
96 B 40113 (JLG)
BARNEY'S, INC., ET AL. :
(Jointly Administered)
Debtors. :
- ---------------------------------------x
SECOND SUPPLEMENT TO THE SECOND AMENDED
JOINT PLAN OF REORGANIZATION FOR THE DEBTORS
PROPOSED BY WHIPPOORWILL ASSOCIATES, INC., BAY
HARBOUR MANAGEMENT L.C. AND THE OFFICIAL COMMITTEE OF
UNSECURED CREDITORS, DATED NOVEMBER 13, 1998, AS SUPPLEMENTED
Whippoorwill Associates, Inc., Bay Harbour Management L.C. and the
Official Committee of Unsecured Creditors (collectively, the "Plan Proponents")
hereby supplement the Second Amended Joint Plan of Reorganization Proposed by
the Plan Proponents, dated November 13, 1998, as supplemented, as follows:
1. SECTION 1.112: At the end of the last line, after the word "Date"
add the following: "; AND PROVIDED FURTHER that with respect to sections 34.1,
34.2 and 34.3 of this Plan, the term "Liabilities" shall not include any
liabilities arising after the Confirmation Date.
2. SECTION 31.1: In the first line, delete the word "Confirmation"
and replace it with "Effective". In the fourth line, after the word rejected,
insert "as of the Effective Date."
3. SECTION 31.4: In the third line, delete the words "thirty (30)"
and replace them with "twenty (20)".
<PAGE>
4. SECTION 34.2: In the seventh line, in subsection (a) immediately
following the word "any" insert "Barneys Affiliate or". In the thirteenth line,
in subsection (b) delete the word "primarily." In the third to last line of this
section, delete the word "or" before subsection (e) and add the following after
the word "approval" in the last line ", (f) the members of the Pressman Family,
the members of the Committee and the officers and directors of any of the
Debtors who were officers and directors at any time prior to the Confirmation
Date from any Liability to the United States, state or local governments under
the IRC or applicable state or local tax laws, the environmental laws or any
criminal laws of the United States, state or local governments, or (g) any
non-Debtor entity, other than those entities specified in (f) above from any
Liabilities to the United States, state or local governments; PROVIDED, HOWEVER,
that nothing in subsections (f) and (g) hereof shall affect or limit the
discharge granted to the Debtors and Debtors in Possession under the Bankruptcy
Code or section 34.1 hereof."
5. SECTION 34.3: At the very end of this section, add the
following"; PROVIDED, HOWEVER, that nothing in this section shall release, or be
construed to release, (a) any Plan Releasee from any Liability arising out of
the ownership, management or operation of the properties or other assets of any
non-Debtor or (b) any of the Plan Releasees from any Liability to the United
States, state or local governments
<PAGE>
under the IRC or applicable state or local tax laws, the environmental laws or
any criminal laws of the United States, state or local governments solely to the
extent relating to the Debtors, the Debtors in Possession, the Barneys
Affiliates, the Preen Affiliates, Reen Japan, the conduct of the business and
affairs of any of the Debtors, the Debtors in Possession, the Debtors' chapter
11 cases, the Plan, the Disclosure Statement, or the properties or other assets
of the Debtors, the Debtors in Possession, the Barneys Affiliates, Reen Japan or
the Preen Affiliates."
Dated: New York, New York
December 16, 1998
Respectfully submitted,
WHIPPOORWILL ASSOCIATES, INC.,
as agent and/or general partner for its discretionary
accounts and as investment advisor to
Whippoorwill/Barney's Obligations Trust -1996
By: /s/ DAVID STRUMWASSER
----------------------------------------
Name: David Strumwasser
Title: Managing Director
BAY HARBOUR MANAGEMENT L.C.,
for its managed accounts
By: /s/ DOUGLAS TEITELBAUM
----------------------------------------
Name: Douglas Teitelbaum
Title: Principal and Portfolio Manager
<PAGE>
THE OFFICIAL COMMITTEE OF
UNSECURED CREDITORS
The Chase Manhattan Bank
By: /s/ CRAIG T. MOORE
----------------------------------------
Name: Craig T. Moore
Title: Managing Director, The Chase
Manhattan Bank and Chair of the
Official Committee of Unsecured
Creditors
COUNSEL:
John J. Rapisardi, Esq. (JR 7781)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Attorneys for Whippoorwill and Bay Harbour
Lawrence M. Handelsman, Esq. (LH 6957)
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
(212) 806-5400
Attorneys for the Official Committee
of Unsecured Creditors
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
BARNEYS NEW YORK, INC.
THE UNDERSIGNED, being a natural person for the purpose of
organizing a corporation under the General Corporation Law of the State of
Delaware, hereby certifies that:
FIRST: The name of the Corporation is Barneys New York, Inc.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the Corporation in the State of Delaware at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware, as from time to time amended.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 35,000,000 shares, of which
25,000,000 shall be Common Stock, par value $.01, and 10,000,000 shares shall be
Preferred Stock, par value $.01, with such voting powers, if any, preferences
and relative, participating, optional and other special rights of each such
series and the qualifications, limitations and restrictions thereof, if any, as
the Board of Directors shall, in the exercise of its business judgment, deem
advisable.
FIFTH: The Corporation shall not create, designate, authorize or
cause to be issued any class or series of nonvoting stock. For purposes of this
Article FIFTH, any class or series of stock, including any series of Preferred
Stock, that has such voting rights as are mandated by the General Corporation
Law of the State of Delaware, shall be deemed to be nonvoting stock subject to
the restrictions of this article FIFTH.
<PAGE>
SIXTH: The name and mailing address of the incorporator are Mark N.
Klein, c/o Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York
10153.
SEVENTH: In furtherance and not in limitation of the powers
conferred by law, subject to any limitations contained elsewhere in this
Certificate of Incorporation, by-laws of the Corporation may be adopted, amended
or repealed by the board of directors of the Corporation, but any by-laws
adopted by the board of directors may be amended or repealed by the stockholders
entitled to vote thereon. Election of directors need not be by written ballot.
EIGHTH: (a) A director of the Corporation shall not be personally
liable either to the Corporation or to any stockholder for monetary damages for
breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, or (ii) for
acts or omissions which are not in good faith or which involve intentional
misconduct or knowing violation of the law, or (iii) for any matter in respect
of which such director shall be liable under Section 174 of Title 8 of the
General Corporation Law of the State of Delaware or any amendment thereto or
successor provision thereto, or (iv) for any transaction from which the director
shall have derived an improper personal benefit. Neither amendment nor repeal of
this paragraph (a) nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this paragraph (a) shall eliminate or reduce the
effect of this paragraph (a) in respect of any matter occurring, or any cause of
action, suit or claim that, but for this paragraph (a) of this Article, would
accrue or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
(b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to, or testifies in, any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative in nature, by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit
2
<PAGE>
or proceeding to the full extent permitted by law, and the Corporation may adopt
By-laws or enter into agreements with any such person for the purpose of
providing for such indemnification.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Incorporation on this 16th day of November 16, 1998.
/s/ Mark N. Klein
----------------------------
Mark N. Klein
Sole Incorporator
3
<PAGE>
Exhibit 3.2
BARNEYS NEW YORK, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
---------------------
Pursuant to Sections 151 and 303 of the
General Corporation Law of
Delaware
---------------------
BARNEYS NEW YORK, INC. (the "Company"), a corporation organized and
existing under the laws of the State of Delaware, hereby certifies that this
Certificate of Designation, Preferences and Relative, Participating, Optional
and other Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions thereof (this "Certificate of Designation") has been deemed
approved without the need for Board of Directors or Stockholder approval
pursuant to Section 303 of the Delaware General Corporation Law because it is
adopted pursuant to the Second Amended Joint Plan of Reorganization Pursuant to
Chapter 11 of the Bankruptcy Code of the Company and certain of its affiliates,
dated November 13, 1998, as confirmed on December 21, 1998 by the United States
Bankruptcy Court for the Southern District of New York.
The text of the Certificate of Designation is set forth as follows:
TERMS, PREFERENCES, RIGHTS AND LIMITATIONS
of
SERIES A PREFERRED STOCK
of
BARNEYS NEW YORK, INC.
The relative rights, preferences, powers, qualifications,
limitations and restrictions granted to or
<PAGE>
imposed upon the Series A Preferred Stock or the holders thereof are as follows:
1. DEFINITIONS. For purposes of this Designation, the following
definitions shall apply:
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock, $.01 par value per
share, of the Company.
"Company" shall mean Barneys New York, Inc., a Delaware corporation.
"Conversion Ratio" shall mean 8.125, as such number may be adjusted
as provided for herein.
"Current Market Price," when used with reference to shares of Common
Stock or other securities on any date, shall mean the average of the daily
market prices for 30 consecutive Business Days commencing 45 days before such
date. The daily market price for each such Business Day shall be (i) the last
sale price on such day on the principal stock exchange or the Nasdaq National
Market or Small Cap Market on which such Common Stock is then listed or admitted
to trading, (ii) if no sale takes place on such day on any such exchange or
market, the average of the last reported closing bid and asked prices on such
day as officially quoted on any such exchange or market, (iii) if the Common
Stock is not then listed or admitted to trading on any stock exchange or such
market, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by Nasdaq or the National
Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged
in the business of reporting such prices, as furnished by any similar firm then
engaged in such business, (v) if there is no such firm, as furnished by any
member of the National Association of Securities Dealers ("NASD") selected by
the Company, or (vi) if there are no such publicly available quotes, as
determined in good faith by the Board.
2
<PAGE>
"Dividend Rate" shall mean 1% per annum, calculated on a 360 day per
year basis, based on the actual number of days elapsed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time. Reference to a particular section of the Securities Exchange
Act of 1934, as amended, shall include reference to the comparable section, if
any, of any such similar Federal statute.
"Liquidation Preference" shall mean $100.
"Organic Change" shall mean (A) any sale, lease, exchange or other
transfer of all or substantially all of the property and assets of the Company,
(B) any liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary, or (C) any merger or consolidation to which the Company is a
party in which the stockholders thereof immediately prior thereto own less than
50% of the outstanding voting stock immediately after such transaction.
"Original Issue Date" shall mean the date of the original issuance
of shares of Preferred Stock.
"Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall refer to shares of Series A Preferred Stock,
$0.01 par value per share, of the Company.
"Redemption" has the meaning set forth in Section 6(a)(i) of this
Certificate of Designation.
"Redemption Date" shall mean the date on which any shares of
Preferred Stock are redeemed by the Company.
"Redemption Price" has the meaning set forth in Section 6(a)(i) of
this Certificate of Designation.
2. DESIGNATION: NUMBER OF SHARES. The designation of the preferred
stock authorized by this resolution shall be "Series A Preferred Stock" and the
3
<PAGE>
number of shares of Preferred Stock authorized hereby shall be 20,000 shares.
3. DIVIDENDS.
(a) So long as any shares of Preferred Stock shall be outstanding,
dividends shall accrue thereon, whether or not declared by the Board of
Directors of the Company, at the Dividend Rate on the Liquidation Preference
hereunder, compounded annually on each anniversary of the Original Issue Date,
and payable when and as declared by the Board. Such dividends shall be
cumulative and begin to accrue from the Original Issue Date, whether or not
declared and whether or not there shall be net profits or net assets of the
Company legally available for the payment of those dividends.
(b) So long as any shares of Preferred Stock shall be outstanding,
no dividend whatsoever shall be paid or declared, and no distribution shall be
made, on account of any Common Stock or on account of any class or series of the
Company's preferred or other capital stock ranking junior to the Preferred Stock
until all accrued and unpaid dividends on the Preferred Stock shall have been
paid.
4. LIQUIDATION RIGHTS OF PREFERRED STOCK.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, the holders of Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, whether such assets are capital,
surplus or earnings, before any payment or declaration and setting apart for
payment of any amount shall be made in respect of any shares of Common Stock or
any share of any other class or series of the Company's preferred stock ranking
junior to the Preferred Stock with respect to the payment of dividends or
distribution of assets on liquidation, dissolution or winding up of the Company,
an amount equal to the Liquidation Preference plus all accrued and unpaid
dividends in respect of any liquidation, dissolution or winding up consummated.
(b) If upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the assets to be distributed among
the holders of Preferred Stock shall be insufficient to permit the payment to
such
4
<PAGE>
stockholders of the full preferential amounts aforesaid, then the entire assets
of the Company to be distributed shall be distributed ratably among the holders
of Preferred Stock, based on the full preferential amounts for the number of
shares of Preferred Stock held by each holder.
(c) After payment to the holders of Preferred Stock of the amounts
set forth in Section 4(a) hereof, the entire remaining assets and funds of the
Company legally available for distribution, if any, shall be distributed first
among the holders of securities senior to the Common Stock, pro rata based on
the number of shares of such securities held by them and second among the
holders of Common Stock pro rata based on the number of shares of Common Stock
then held by each.
5. VOTING RIGHTS. In addition to any voting rights provided by law,
so long as any of the Preferred Stock is outstanding, each share of Preferred
Stock shall entitle the holder thereof to vote on all matters (other than the
election of directors of the Company) voted on by the holders of Common Stock,
voting together as a single class with other shares entitled to vote at all
meetings of the stockholders of the Company. With respect to any such vote, each
share of Preferred Stock shall entitle the holder thereof to cast the number of
votes equal to the number of votes which could be cast in such vote by a holder
of the number of shares of Common Stock of the Company into which such share of
Preferred Stock is convertible on the record date for such vote.
6. REDEMPTION OF PREFERRED STOCK.
(a) (i) OPTIONAL REDEMPTION. (A) At any time on or after the earlier
to occur of (1) an Organic Change, and (2) the sixth anniversary of the Original
Issue Date, the Company may redeem (a "Redemption) pursuant to subparagraph (B)
below), at the redemption price equal to the sum of the Liquidation Preference
per share plus an amount equal to all accrued and unpaid dividends per share
(the "Redemption Price"), all or any portion of the outstanding shares of
Preferred Stock, subject, in the case of an Organic Change, to the Conversion
rights of the holders of Preferred Stock set forth in Section 7 hereof.
(B) The Company will give written notice (the "Notice") of a
proposed Redemption stating the number of shares of Preferred Stock to be
redeemed and the intended
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date of consummation thereof, not less than twenty (20) Business Days prior to
the date of consummation thereof, to each holder of Preferred Stock.
(C) On or before the Redemption Date, each holder of Preferred
Stock shall surrender the certificate or certificates representing such holder's
pro rata portion of the shares of Preferred Stock to be redeemed to the Company,
in the manner and at the place designated in the Notice, and thereupon the
Redemption Price for such shares shall be payable in cash on the Redemption Date
to the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be cancelled and retired.
In the event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(ii) MANDATORY REDEMPTION. (A) The Company shall redeem, and
the holders of the outstanding Preferred Stock shall sell to the Company, at the
Redemption Price, all of the outstanding Preferred Stock on the tenth
anniversary of the Original Issue Date.
(B) At least twenty (20) Business Days and not more than sixty
(60) Business Days prior to the date fixed for the mandatory redemption of the
Preferred Stock, written notice (the "Redemption Notice") shall be mailed,
postage prepaid, to each holder of record of the Preferred Stock at its post
office address last shown on the records of the Company. The Redemption Notice
shall state:
(1) the number of shares of Preferred Stock held by the holder
that the Company intends to redeem;
(2) the date fixed for redemption and the Redemption Price;
and
(3) that the holder is to surrender to the Company, in the
manner and at the place designated, its certificate or certificates
representing the shares of Preferred Stock to be redeemed.
(C) On or before the Redemption Date, each holder of Preferred
Stock shall surrender the certificate or certificates representing such shares
of Preferred Stock to the Company, in the manner and at the place designated in
the Redemption Notice, and thereupon the Redemption Price
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for such shares shall be payable in cash on the Redemption Date to the person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be cancelled and retired.
(b) Unless the Company defaults in the payment in full of the
Redemption Price, dividends on the Preferred Stock called for redemption shall
cease to accumulate on the Redemption Date, and the holders of such shares
redeemed shall cease to have any further rights with respect thereto on the
Redemption Date, other than to receive the Redemption Price without interest.
(c) If, at the time of any redemption pursuant to this Section 6,
the funds of the Company legally available for redemption of Preferred Stock are
insufficient to redeem the number of shares required to be redeemed, those funds
which are legally available shall be used to redeem the maximum possible number
of such shares, pro rata based upon the number of shares to be redeemed. At any
time thereafter when additional funds of the Company become legally available
for the redemption of Preferred Stock, such funds shall immediately be used to
redeem the balance of the shares of Preferred Stock which the Company has become
obligated to redeem pursuant to this subparagraph, but which it has not
redeemed; or, in the case of a redemption following an Organic Change pursuant
to Section 6(a)(i) if a person other than the Company is the surviving or
resulting corporation in such Organic Change, such person shall, at the
consummation of such Organic Change, redeem such balance of the shares of
Preferred Stock (and the Company shall so provide in its agreements with such
person relating to such Organic Change).
7. CONVERSION. (a) Subject to the provisions for adjustment
hereinafter set forth, each share of Preferred Stock shall be convertible at any
time on or after the earliest to occur of (A) an Organic Change, (B) the fifth
anniversary of the Original Issue Date, and (C) not earlier than the first
anniversary of the Original Issue Date, the distribution by the Company of
rights to subscribe pro rata to the holders of its Common Stock for additional
shares of stock of any class or any other right ("Rights"), for an aggregate
offering price of not less than $20,000,000 (a "Rights Offering"), at the option
of the holders thereof (a "Conversion") into fully paid and nonassessable shares
of Common Stock. The number of shares of Common Stock deliverable upon
conversion of a share of Preferred Stock,
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adjusted as hereinafter provided, shall be one multiplied by the Conversion
Ratio. The Conversion Ratio shall initially be 8.125, subject to adjustment from
time to time pursuant to paragraph (f) of this Section. Upon the distribution of
Rights in a Rights Offering, each holder of shares of Preferred Stock shall
receive that number of Rights which such holder would have been entitled to
receive had such shares of Preferred Stock been surrendered for conversion
immediately prior to the record date for such distribution, whether or not the
holder elects to convert any of its shares of Preferred Stock into shares of
Common Stock.
No fractional shares shall be issued upon the conversion of any shares of
Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of more than one share of Preferred Stock by a holder
thereof shall be aggregated for purposes of determining whether conversion would
result in the issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of a fraction of a
share of Common Stock, the Company shall, in lieu of issuing any fractional
share, pay the holder otherwise entitled to such fraction a sum in cash equal to
the Current Market Price of such fraction on the date of conversion.
(b) (i) A Conversion of the Preferred Stock may be effected by any
such holder upon the surrender to the Company at the principal office of the
Company of the certificate for such Preferred Stock to be converted accompanied
by a written notice stating that such holder elects to convert all or a
specified number of such shares in accordance with the provisions of this
Section 7 and specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. Upon any
conversion of any shares of Preferred Stock, all accrued and unpaid dividends
shall be cancelled without payment.
(ii) In case the written notice specifying the name or names
in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued shall specify a name or names other than that of such holder,
such notice shall be accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock in such name or names. Other than such
taxes, the Company will pay any and all issue and other taxes (other than taxes
based on income) that may be payable in respect
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of any issue or delivery of shares of Common Stock on conversion of Preferred
Stock pursuant hereto. As promptly as practicable, and in any event within five
Business Days after the surrender of such certificate or certificates and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Company that
such taxes have been paid), the Company shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the holder of shares of
Preferred Stock being converted shall be entitled and (ii) if less than the full
number of shares of Preferred Stock evidenced by the surrendered certificate or
certificates is being converted, a new certificate or certificates, of like
tenor, for the number of shares evidenced by such surrendered certificate or
certificates less the number of shares being converted.
(iii) A conversion shall be deemed to have been made at the
close of business on the date of giving the written notice referred to in the
first sentence of clause (b)(i) above and of such surrender of the certificate
or certificates representing the shares of Preferred Stock to be converted so
that the rights of the holder thereof as to the shares being converted shall
cease except for the right to receive shares of Common Stock in accordance
herewith, and the person entitled to receive the shares of Common Stock shall be
treated for all purposes as having become the record holder of such shares of
Common Stock at such time.
(c) In case any shares of Preferred Stock are to be redeemed
pursuant to Section 6, all rights of conversion shall cease and terminate as to
the shares of Preferred Stock to be redeemed at the close of business on the
Business Day next preceding the date fixed for redemption unless the Company
shall default in the payment of the Redemption Price.
(d) The Conversion Ratio shall be subject to adjustment from time to
time in certain instances as hereinafter provided.
(e) The Company shall at all times reserve, and keep available for
issuance upon the conversion of the Preferred Stock, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding
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shares of Preferred Stock, and shall take all action required to increase the
authorized number of shares of Common Stock if necessary to permit the
conversion of all outstanding shares of Preferred Stock.
(f) The Conversion Ratio will be subject to adjustment from time to
time as follows:
(i) In case the Company shall at any time or from time to time
after the Original Issue Date (A) pay a dividend, or make a distribution, on the
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide the
outstanding shares of Common Stock, (C) combine the outstanding shares of Common
Stock into a smaller number of shares, or (D) issue by reclassification of the
shares of Common Stock any shares of capital stock of the Company, then, and in
each such case, the Conversion Ratio in effect immediately prior to such event
or the record date therefor, whichever is earlier, shall be adjusted so that the
holder of any shares of Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock or other
securities of the Company which such holder would have owned or have been
entitled to receive after the happening of any of the events described above,
had such shares of Preferred Stock been surrendered for conversion immediately
prior to the happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this clause (i) shall become effective
(x) in the case of any such dividend or distribution, immediately after the
close of business on the record date for the determination of holders of shares
of Common Stock entitled to receive such dividend or distribution, or (y) in the
case of such subdivision, reclassification or combination, at the close of
business on the day upon which such corporate action becomes effective. No
adjustment shall be made pursuant to this clause (i) in connection with any
transaction to which paragraph (g) applies.
(ii) For purposes of this paragraph (f), the number of shares
of Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Company or any of its
subsidiaries.
(iii) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall
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thereafter and before the distribution to stockholders thereof legally abandon
its plan to pay or deliver such dividend or distribution, then thereafter no
adjustment in the number of shares of Common Stock issuable upon exercise of the
right of conversion granted by this paragraph (f) or in the Conversion Ratio
then in effect shall be required by reason of the taking of such record.
(iv) Anything in this paragraph (f) to the contrary
notwithstanding, the Company shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one-tenth of one share of Common Stock, and when the cumulative net effect of
more than one adjustment so determined shall be to change the Conversion Ratio
by at least one-tenth of one share of Common Stock, such change in Conversion
Ratio shall thereupon be given effect.
(g) In case of any Organic Change, each share of Preferred Stock
then outstanding, other than those shares to be redeemed pursuant to Section 6
hereof, shall thereafter be convertible into, in lieu of the Common Stock
issuable upon such conversion prior to consummation of such Organic Change, the
kind and amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such Organic Change by a holder of
that number of shares of Common Stock into which one share of Preferred Stock
was convertible immediately prior to such Organic Change (including, on a pro
rata basis, the cash, securities or property received by holders of Common Stock
in any tender or exchange offer that is a step in such Organic Change). In case
securities or property other than Common Stock shall be issuable or deliverable
upon conversion as aforesaid, then all references in this Section 7 shall be
deemed to apply, so far as appropriate and nearly as may be, to such other
securities or property.
(h) In case at any time or from time to time the Company shall pay
any stock dividend or make any other non-cash distribution to the holders of its
Common Stock, or shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or any other right, or
there shall be any capital reorganization or reclassification of the Common
Stock of the Company or consolidation or merger of the Company with
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or into another corporation, or any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety, or
there shall be a voluntary or involuntary dissolution, liquidation or winding up
of the Company, then, in any one or more of said cases, the Company shall give
at least 20 days' prior written notice to the registered holders of the
Preferred Stock at the addresses of each as shown on the books of the Company as
of the date on which (i) the books of the Company shall close or a record shall
be taken for such stock dividend, distribution or subscription rights or (ii)
such reorganization, reclassification, consolidation, merger, sale or
conveyance, dissolution, liquidation or winding up shall take place, as the case
may be. Such notice shall also specify the date as of which the holders of the
Common Stock of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance or participate in
such dissolution, liquidation or winding up, as the case may be. Failure to give
such notice shall not invalidate any action so taken.
8. REPORTS AS TO ADJUSTMENTS. Upon any adjustment of the Conversion
Ratio then in effect and any increase or decrease in the number of shares of
Common Stock issuable upon the operation of the conversion set forth in Section
7, then, and in each such case, the Company shall promptly deliver to each
holder of the Preferred Stock, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the Conversion Ratio then in effect following such adjustment and
the increased or decreased number of shares issuable upon the conversion granted
by Section 7, and shall set forth in reasonable detail the method of calculation
of each and a brief statement of the facts requiring such adjustment. Where
appropriate, such notice to holders of the Preferred Stock may be given in
advance and included as part of the notice required under the provisions of
Section 11.
9. CERTAIN COVENANTS. Any registered holder of Preferred Stock may
proceed to protect and enforce its rights and the rights of such holders by any
available
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remedy by proceeding at law or in equity to protect and enforce any such rights,
whether for the specific enforcement of any provision in this Certificate of
Designation or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
10. NO REISSUANCE OF PREFERRED STOCK. No Preferred Stock acquired by
the Company by reason of redemption, purchase, or otherwise shall be reissued,
and all such shares shall be cancelled, retired and eliminated from the shares
which the Company shall be authorized to issue.
11. NOTICES. All notices to the Company permitted hereunder shall be
personally delivered or sent by first class mail, postage prepaid, addressed to
its principal office located at 575 Fifth Avenue, New York, New York 10017, or
to such other address at which its principal office is located and as to which
notice thereof is similarly given to the holders of the Preferred Stock at their
addresses appearing on the books of the Company.
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IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Incorporation on this 22nd day of December, 1998.
/s/ Mark N. Klein
------------------------
Mark N. Klein
Sole Incorporator
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Exhibit 3.3
BY-LAWS
OF
BARNEYS NEW YORK, INC.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year at such date and time,
within or without the State of Delaware, as the Board of Directors shall
determine.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders for
the transaction of such business as may properly come before the meeting may be
called by order of the Board of Directors or by stockholders holding together at
least a majority of all the shares of the Corporation entitled to vote at the
meeting, and shall be held at such date and time, within or without the State of
Delaware, as may be specified by such order. Whenever the directors shall fail
to fix such place, the meeting shall be held at the principal executive office
of the Corporation.
SECTION 3. NOTICE OF MEETINGS. Written notice of all meetings of the
stockholders shall be mailed or delivered to each stockholder not less than 10
nor more than 60 days prior to the meeting. Notice of any special meeting shall
state in general terms the purpose or purposes for which the meeting is to be
held.
SECTION 4. STOCKHOLDER LISTS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, either at a place within the city where the
meeting is to be held, which place
<PAGE>
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the Corporation, or to vote in person or by proxy at any
meeting of stockholders.
SECTION 5. QUORUM. Except as otherwise provided by law or the
Corporation's Certificate of Incorporation, a quorum for the transaction of
business at any meeting of stockholders shall consist of the holders of record
of a majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at the meeting, present in person or by proxy. At
all meetings of the stockholders at which a quorum is present, all matters,
except as otherwise provided by law or the Certificate of Incorporation, shall
be decided by the vote of the holders of a majority of the shares entitled to
vote thereat present in person or by proxy. If there be no such quorum, the
holders of a majority of such shares so present or represented may adjourn the
meeting from time to time, without further notice, until a quorum shall have
been obtained. When a quorum is once present it is not broken by the subsequent
withdrawal of any stockholder.
SECTION 6. ORGANIZATION. Meetings of stockholders shall be presided
over by the Chairman, if any, or if none or in the Chairman's absence the
Vice-Chairman, if any, or if none or in the Vice-Chairman's absence the
President, if any, or if none or in the President's absence a Vice-President,
or, if none of the foregoing is present, by a chairman to be chosen by the
stockholders entitled to vote who are present in person or by proxy at the
meeting. The Secretary of the Corporation, or in the Secretary's absence an
Assistant Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the presiding officer of the
meeting shall appoint any person present to act as secretary of the meeting.
SECTION 7. VOTING; PROXIES; REQUIRED VOTE. (a) At each meeting of
stockholders, every stockholder shall be entitled to vote in person or by proxy
appointed by
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instrument in writing, subscribed by such stockholder or by such stockholder's
duly authorized attorney-in-fact (but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period),
and, unless the Certificate of Incorporation provides otherwise, shall have one
vote for each share of stock entitled to vote registered in the name of such
stockholder on the books of the Corporation on the applicable record date fixed
pursuant to these By-laws. At all elections of directors the voting may but need
not be by ballot and a plurality of the votes cast there shall elect. Except as
otherwise required by law or the Certificate of Incorporation, any other action
shall be authorized by a majority of the votes cast.
(b) Any action required or permitted to be taken at any meeting of
stockholders may, except as otherwise required by law or the Certificate of
Incorporation, be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of record of the issued and outstanding capital stock of
the Corporation having a majority of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted, and the writing or writings are filed with the permanent
records of the Corporation. Prompt notice of the taking of corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
(c) Where a separate vote by a class or classes, present in person
or represented by proxy, shall constitute a quorum entitled to vote on that
matter, the affirmative vote of the majority of shares of such class or classes
present in person or represented by proxy at the meeting shall be the act of
such class, unless otherwise provided in the Corporation's Certificate of
Incorporation.
SECTION 8. INSPECTORS. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election to act at
the meeting or any adjournment thereof. If an inspector or inspectors are not so
appointed, the person presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the
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person presiding thereat. Each inspector, if any, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall determine
the number of shares of stock outstanding and the voting power of each, the
shares of stock represented at the meeting, the existence of a quorum, and the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the meeting,
the inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by such inspector or inspectors and
execute a certificate of any fact found by such inspector or inspectors.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business, property and affairs of the
Corporation shall be managed by, or under the direction of, the Board of
Directors.
SECTION 2. QUALIFICATION; NUMBER; TERM; REMUNERATION. (a) Each
director shall be at least 18 years of age. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The number of directors constituting the entire Board shall be 11, or
such other number as may be fixed from time to time by action of the
stockholders or Board of Directors, one of whom may be selected by the Board of
Directors to be its Chairman. The use of the phrase "entire Board" herein refers
to the total number of directors which the Corporation would have if there were
no vacancies.
(b) Directors who are elected at an annual meeting of stockholders,
and directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are
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elected and qualified or until their earlier resignation or removal.
(c) Directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 3. QUORUM AND MANNER OF VOTING. Except as otherwise provided
by law, a majority of the entire Board shall constitute a quorum. A majority of
the directors present, whether or not a quorum is present, may adjourn a meeting
from time to time to another time and place without notice. The vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 4. PLACES OF MEETINGS. Meetings of the Board of Directors
may be held at any place within or without the State of Delaware, as may from
time to time be fixed by resolution of the Board of Directors, or as may be
specified in the notice of meeting.
SECTION 5. ANNUAL MEETING. Following the annual meeting of
stockholders, the newly elected Board of Directors shall meet for the purpose of
the election of officers and the transaction of such other business as may
properly come before the meeting. Such meeting may be held without notice
immediately after the annual meeting of stockholders at the same place at which
such stockholders' meeting is held.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places as the Board of Directors shall
from time to time by resolution determine. Notice need not be given of regular
meetings of the Board of Directors held at times and places fixed by resolution
of the Board of Directors.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, President
or by a majority of the directors then in office.
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SECTION 8. NOTICE OF MEETINGS. A notice of the place, date and time
and the purpose or purposes of each meeting of the Board of Directors shall be
given to each director by mailing the same at least two days before the special
meeting, or by telegraphing or telephoning the same or by delivering the same
personally not later than the day before the day of the meeting.
SECTION 9. ORGANIZATION. At all meetings of the Board of Directors,
the Chairman, if any, or if none or in the Chairman's absence or inability to
act the President, or in the President's absence or inability to act any
Vice-President who is a member of the Board of Directors, or in such
Vice-President's absence or inability to act a chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as secretary.
SECTION 10. RESIGNATION. Any director may resign at any time upon
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the President or Secretary, unless otherwise specified in the
resignation. Any or all of the directors may be removed, with or without cause,
by the holders of a majority of the shares of stock outstanding and entitled to
vote for the election of directors.
SECTION 11. VACANCIES. Unless otherwise provided in these By-laws,
vacancies on the Board of Directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors or
otherwise, may be filled by the affirmative vote of a majority of the remaining
directors, although less than a quorum, or by a sole remaining director, or at a
special meeting of the stockholders, by the holders of shares entitled to vote
for the election of directors.
SECTION 12. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all the directors consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
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ARTICLE III
COMMITTEES
SECTION 1. APPOINTMENT. From time to time the Board of Directors by
a resolution adopted by a majority of the entire Board may appoint any committee
or committees for any purpose or purposes, to the extent lawful, which shall
have powers as shall be determined and specified by the Board of Directors in
the resolution of appointment.
SECTION 2. PROCEDURES, QUORUM AND MANNER OF ACTING. Each committee
shall fix its own rules of procedure, and shall meet where and as provided by
such rules or by resolution of the Board of Directors. Except as otherwise
provided by law, the presence of a majority of the then appointed members of a
committee shall constitute a quorum for the transaction of business by that
committee, and in every case where a quorum is present the affirmative vote of a
majority of the members of the committee present shall be the act of the
committee. Each committee shall keep minutes of its proceedings, and actions
taken by a committee shall be reported to the Board of Directors.
SECTION 3. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of any committee of the Board of Directors
may be taken without a meeting if all the members of the committee consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the committee.
SECTION 4. TERM; TERMINATION. In the event any person shall cease to
be a director of the Corporation, such person shall simultaneously therewith
cease to be a member of any committee appointed by the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. ELECTION AND QUALIFICATIONS. The Board of Directors shall
elect the officers of the Corporation, which shall include a President and a
Secretary, and may include, by election or appointment, one or more
Vice-Presidents (any one or more of whom may be given an additional designation
of rank or function), a Treasurer and such assistant secretaries, such Assistant
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<PAGE>
Treasurers and such other officers as the Board may from time to time deem
proper. Each officer shall have such powers and duties as may be prescribed by
these By-laws and as may be assigned by the Board of Directors or the President.
SECTION 2. TERM OF OFFICE AND REMUNERATION. The term of office of
all officers shall be one year and until their respective successors have been
elected and qualified, but any officer may be removed from office, either with
or without cause, at any time by the Board of Directors. Any vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
SECTION 3. RESIGNATION; REMOVAL. Any officer may resign at any time
upon written notice to the Corporation and such resignation shall take effect
upon receipt thereof by the President or Secretary, unless otherwise specified
in the resignation. Any officer shall be subject to removal, with or without
cause, at any time by vote of a majority of the entire Board.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the Board of
Directors and shall have such other powers and duties as may from time to time
be assigned by the Board of Directors.
SECTION 5. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President
shall be the chief executive officer of the Corporation, and shall have such
duties as customarily pertain to that office. The President shall have general
management and supervision of the property, business and affairs of the
Corporation and over its other officers; may appoint and remove assistant
officers and other agents and employees; and may execute and deliver in the name
of the Corporation powers of attorney, contracts, bonds and other obligations
and instruments.
SECTION 6. VICE-PRESIDENT. A Vice-President may execute and deliver
in the name of the Corporation contracts and other obligations and instruments
pertaining to the regular course of the duties of said office, and shall have
such other authority as from time to time may be assigned by the Board of
Directors or the President.
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SECTION 7. TREASURER. The Treasurer shall in general have all duties
incident to the position of Treasurer and such other duties as may be assigned
by the Board of Directors or the President.
SECTION 8. SECRETARY. The Secretary shall in general have all the
duties incident to the office of Secretary and such other duties as may be
assigned by the Board of Directors or the President.
SECTION 9. ASSISTANT OFFICERS. Any assistant officer shall have such
powers and duties of the officer such assistant officer assists as such officer
or the Board of Directors shall from time to time prescribe.
ARTICLE V
BOOKS AND RECORDS
SECTION 1. LOCATION. The books and records of the Corporation may be
kept at such place or places within or outside the State of Delaware as the
Board of Directors or the respective officers in charge thereof may from time to
time determine. The record books containing the names and addresses of all
stockholders, the number and class of shares of stock held by each and the dates
when they respectively became the owners of record thereof shall be kept by the
Secretary as prescribed in the By-laws and by such officer or agent as shall be
designated by the Board of Directors.
SECTION 2. ADDRESSES OF STOCKHOLDERS. Notices of meetings and all
other corporate notices may be delivered personally or mailed to each
stockholder at the stockholder's address as it appears on the records of the
Corporation.
SECTION 3. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
(a) In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date is fixed by the Board of Directors,
the record date for determining stockholders entitled to notice of or to vote at
a meeting of
9
<PAGE>
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in this State, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
this chapter, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date is fixed, the record date
for determining stockholders for any such purpose shall be at the close of
business on the day on
10
<PAGE>
which the Board of Directors adopts the resolution relating thereto.
ARTICLE VI
CERTIFICATES REPRESENTING STOCK
SECTION 1. CERTIFICATES; SIGNATURES. The shares of the Corporation
shall be represented by certificates, provided that the Board of Directors of
the Corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate, signed by or in the name of the Corporation by
the Chairman or Vice-Chairman of the Board of Directors, or the President or
Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, representing the number of shares
registered in certificate form. Any and all signatures on any such certificate
may be facsimiles. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
The name of the holder of record of the shares represented thereby, with the
number of such shares and the date of issue, shall be entered on the books of
the Corporation.
SECTION 2. TRANSFERS OF STOCK. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if any,
shares of capital stock shall be transferable on the books of the Corporation
only by the holder of record thereof in person, or by duly authorized attorney,
upon surrender and cancellation of certificates for a like number of shares,
properly endorsed, and the payment of all taxes due thereon.
SECTION 3. FRACTIONAL SHARES. The Corporation may, but shall not be
required to, issue certificates for
11
<PAGE>
fractions of a share where necessary to effect authorized transactions, or the
Corporation may pay in cash the fair value of fractions of a share as of the
time when those entitled to receive such fractions are determined, or it may
issue scrip in registered or bearer form over the manual or facsimile signature
of an officer of the Corporation or of its agent, exchangeable as therein
provided for full shares, but such scrip shall not entitle the holder to any
rights of a stockholder except as therein provided.
The Board of Directors shall have power and authority to make all
such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation
may issue a new certificate of stock in place of any certificate, theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the Board of
Directors may require the owner of any lost, stolen or destroyed certificate, or
his legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate.
ARTICLE VII
DIVIDENDS
Subject always to the provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine whether
any, and, if any, what part of any, funds legally available for the payment of
dividends shall be declared as dividends and paid to stockholders; the division
of the whole or any part of such funds of the Corporation shall rest wholly
within the lawful discretion of the Board of Directors, and it shall not be
required at any time, against such discretion, to divide or pay any part of such
funds among or to the stockholders as dividends or otherwise; and before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, thinks proper as a reserve or reserves to meet
12
<PAGE>
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board of Directors
shall think conducive to the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE VIII
RATIFICATION
Any transaction, questioned in any law suit on the ground of lack of
authority, defective or irregular execution, adverse interest of director,
officer or stockholder, non-disclosure, miscomputation, or the application of
improper principles or practices of accounting, may be ratified before or after
judgment, by the Board of Directors or by the stockholders, and if so ratified
shall have the same force and effect as if the questioned transaction had been
originally duly authorized. Such ratification shall be binding upon the
Corporation and its stockholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.
ARTICLE IX
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation and the year of its incorporation, and shall be in such form and
contain such other words and/or figures as the Board of Directors shall
determine. The corporate seal may be used by printing, engraving, lithographing,
stamping or otherwise making, placing or affixing, or causing to be printed,
engraved, lithographed, stamped or otherwise made, placed or affixed, upon any
paper or document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
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ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be
subject to change, by the Board of Directors. Unless otherwise fixed by the
Board of Directors, the fiscal year of the Corporation shall be the calendar
year.
ARTICLE XI
WAIVER OF NOTICE
Whenever notice is required to be given by these By-laws or by the
Certificate of Incorporation or by law, a written waiver thereof, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XII
BANK ACCOUNTS, DRAFTS, CONTRACTS, ETC.
SECTION 1. BANK ACCOUNTS AND DRAFTS. In addition to such bank
accounts as may be authorized by the Board of Directors, the primary financial
officer or any person designated by said primary financial officer, whether or
not an employee of the Corporation, may authorize such bank accounts to be
opened or maintained in the name and on behalf of the Corporation as he may deem
necessary or appropriate, payments from such bank accounts to be made upon and
according to the check of the Corporation in accordance with the written
instructions of said primary financial officer, or other person so designated by
the Treasurer.
SECTION 2. CONTRACTS. The Board of Directors may authorize any
person or persons, in the name and on behalf of the Corporation, to enter into
or execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
SECTION 3. PROXIES; POWERS OF ATTORNEY; OTHER INSTRUMENTS. The
Chairman, the President or any other person designated by either of them shall
have the power and
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<PAGE>
authority to execute and deliver proxies, powers of attorney and other
instruments on behalf of the Corporation in connection with the rights and
powers incident to the ownership of stock by the Corporation. The Chairman, the
President or any other person authorized by proxy or power of attorney executed
and delivered by either of them on behalf of the Corporation may attend and vote
at any meeting of stockholders of any company in which the Corporation may hold
stock, and may exercise on behalf of the Corporation any and all of the rights
and powers incident to the ownership of such stock at any such meeting, or
otherwise as specified in the proxy or power of attorney so authorizing any such
person. The Board of Directors, from time to time, may confer like powers upon
any other person.
SECTION 4. FINANCIAL REPORTS. The Board of Directors may appoint the
primary financial officer or other fiscal officer and/or the Secretary or any
other officer to cause to be prepared and furnished to stockholders entitled
thereto any special financial notice and/or financial statement, as the case may
be, which may be required by any provision of law.
ARTICLE XIII
AMENDMENTS
The Board of Directors shall have power to adopt, amend or repeal
By-laws. By-laws adopted by the Board of Directors may be repealed or changed,
and new By-laws made, by the stockholders, and the stockholders may prescribe
that any By-law made by them shall not be altered, amended or repealed by the
Board of Directors.
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Exhibit 4.1
================================================================================
WARRANT AGREEMENT
by and between
BARNEYS NEW YORK, INC.
and
AMERICAN STOCK
TRANSFER & TRUST COMPANY
as Warrant Agent
1,013,514 Warrants
Dated as of January 28, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS................................................. 1
ARTICLE 2 ISSUANCE OF WARRANTS........................................ 5
2.1 Initial Issuance............................................ 5
2.2 Initial Share Amount........................................ 5
2.3 Form of Warrant Certificates................................ 5
2.4 Execution of Warrant Certificates........................... 5
2.5 Countersignature of Warrant Certificates.................... 6
ARTICLE 3 EXERCISE PERIOD............................................. 6
3.1 Exercise Period............................................. 6
ARTICLE 4 EXERCISE PRICE.............................................. 6
ARTICLE 5 EXERCISE OF WARRANTS........................................ 7
5.1 Manner of Exercise.......................................... 7
5.2 When Exercise Effective..................................... 7
5.3 Delivery of Certificates, Etc............................... 7
5.4 Fractional Shares........................................... 8
ARTICLE 6 ADJUSTMENT OF THE AMOUNT OF COMMON STOCK
ISSUABLE AND THE EXERCISE PRICES UPON EXERCISE.............. 8
6.1 Stock Dividends, Split-ups and Combinations of
Shares...................................................... 8
6.2 Distributions............................................... 9
6.3 Exercise Price Adjustment................................... 9
6.4 Adjustments for Mergers and Consolidations.................. 10
6.5 Calculation to Nearest Cent and One-hundredth of
Share....................................................... 10
6.6 Notice of Adjustment in Exercise Price...................... 10
6.7 Other Notices............................................... 11
6.8 No Change in Warrant Terms on Adjustment.................... 11
6.9 Treasury Shares............................................. 11
ARTICLE 7 CONSOLIDATION, MERGER, ETC.................................. 11
ARTICLE 8 NO DILUTION OR IMPAIRMENT................................... 12
ARTICLE 9 REPORTS..................................................... 13
ARTICLE 10 NOTIFICATION OF CERTAIN EVENTS.............................. 13
10.1 Corporate Action............................................ 13
10.2 Available Information....................................... 14
ARTICLE 11 RESERVATION OF STOCK........................................ 15
11.1 Reservation; Due Authorization, Etc......................... 15
11.2 Compliance with Law......................................... 15
<PAGE>
Page
----
ARTICLE 12 PAYMENT OF TAXES............................................ 15
ARTICLE 13 LOSS OR MUTILATION.......................................... 16
ARTICLE 14 WARRANT REGISTRATION........................................ 16
14.1 Registration................................................ 16
14.2 Transfer or Exchange........................................ 17
14.3 Valid and Enforceable....................................... 17
14.4 Endorsement................................................. 17
14.5 No Service Charge........................................... 17
14.6 Cancellation................................................ 17
ARTICLE 15 WARRANT AGENT............................................... 18
15.1 Obligations Binding......................................... 18
15.2 No Liability................................................ 18
15.3 Instructions................................................ 19
15.4 Agents...................................................... 19
15.5 Cooperation................................................. 19
15.6 Agent Only.................................................. 19
15.7 Right to Counsel............................................ 19
15.8 Compensation................................................ 19
15.9 Accounting.................................................. 20
15.10 No Conflict................................................. 20
15.11 Resignation; Termination.................................... 20
15.12 Change of Warrant Agent..................................... 21
15.13 Successor Warrant Agent..................................... 21
ARTICLE 16 REMEDIES, ETC............................................... 22
16.1 Remedies.................................................... 22
16.2 Warrant Holder Not Deemed a Stockholder..................... 22
16.3 Right of Action............................................. 22
ARTICLE 17 MISCELLANEOUS............................................... 23
17.1 Notices..................................................... 23
17.2 Governing Law and Consent to Forum.......................... 23
17.3 Benefits of this Agreement.................................. 24
17.4 Agreement of Holders of Warrant Certificates................ 24
17.5 Counterparts................................................ 24
17.6 Amendments.................................................. 24
17.7 Consent to Jurisdiction..................................... 25
17.8 Certain Covenants of the Company............................ 25
17.9 Headings.................................................... 25
EXHIBITS
Exhibit A: Form of Warrant Certificate
<PAGE>
WARRANT AGREEMENT
THIS WARRANT AGREEMENT, is made and entered into as of January 28, 1999
(the "Agreement"), by and between BARNEYS NEW YORK, INC., a Delaware corporation
(the "Company"), and American Stock Transfer & Trust Company, as Warrant Agent
(the "Warrant Agent").
WITNESSETH:
WHEREAS, in connection with the financial restructuring of Barney's, Inc.,
a New York corporation ("Barneys") and a subsidiary of the Company and certain
of its subsidiaries pursuant to Barneys' plan of reorganization (the "Plan") and
pursuant to its Chapter 11 Case (as defined herein), the Company proposes to
issue warrants which are exercisable to purchase up to 1,013,514 shares of
Common Stock (as defined herein), subject to adjustment as provided herein (the
"Warrants"), to the holders of certain allowed unsecured claims (the "Claims")
in partial exchange for such Claims and in accordance with the Plan; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to act, in connection with the
issuance, transfer, exchange, replacement and exercise of the Warrant
Certificates and other matters as provided herein; and
WHEREAS, the Company desires to enter into this Agreement to set forth the
terms and conditions of the Warrants and the rights of the holders thereof;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual agreements set forth herein, the Company and the Warrant Agent hereby
agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms have the following respective
meanings:
"AFFILIATE" means with respect to any Person, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, (a) "control" when
used with respect to any
<PAGE>
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting Common Stock (or
equivalent equity interests), by contract or otherwise, and the terms
"controlling" or "controlled" have meanings correlative to the foregoing, and
(b) a subsidiary of a Person is an Affiliate of such Person and of each other
subsidiary of that Person.
"AGREEMENT" means this Warrant Agreement, as the same may be amended or
modified from time to time hereafter.
"BANKRUPTCY CODE" means title 11, United States Code.
"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the Southern District of New York.
"BARNEYS" has the meaning set forth in the recitals hereto.
"BUSINESS DAY" means any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in New York City, New York are authorized
or required by law to be closed; PROVIDED THAT, in determining the period within
which certificates or Warrants are to be issued and delivered at a time when
shares of Common Stock (or Other Securities) are listed or admitted to trading
on any national securities exchange or in the over-the-counter market and in
determining the Fair Value of any securities listed or admitted to trading on
any national securities exchange or in the over-the-counter market, "Business
Day" shall mean any day when the principal exchange on which such securities are
then listed or admitted to trading is open for trading or, if such securities
are traded in the over-the-counter market in the United States, such market is
open for trading; AND PROVIDED, FURTHER, that any reference in this Agreement to
"days" (unless Business Days are specified) shall mean calendar days.
"CHAPTER 11 CASE" means the case under Chapter 11 of the Bankruptcy Code
concerning Barneys which was commenced on January 10, 1996 before the Bankruptcy
Court.
"CLAIMS" has the meaning set forth in the recitals hereto.
"COMMON STOCK" means the Company's Common Stock, par value $0.01 per
share, as authorized from and after the Effective Date.
"COMMISSION" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
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<PAGE>
"COMPANY" has the meaning set forth in the preamble hereof.
"EFFECTIVE DATE" has the meaning specified in the Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be amended and in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934 shall include a
reference to the comparable section, if any, of any such successor Federal
statute.
"EXERCISE PERIOD" has the meaning specified in Article 3.
"EXERCISE PRICE" has the meaning specified in Article 4.
"FAIR VALUE" means (i) with respect to Common Stock or any Other Security,
in each case if such security is listed on one or more stock exchanges or quoted
on the National Market System or Small Cap Market of NASDAQ (the "NASDAQ
Market"), the average of the closing sales prices of a share of such Common
Stock or, if an Other Security in the minimum denomination in which such
security is traded, on the primary national or regional stock exchange on which
such security is listed or on the NASDAQ Market if quoted thereon or (ii) if the
Common Stock or Other Security, as the case may be, is not so listed or quoted
but is traded in the over-the-counter market (other than the NASDAQ Market), the
average of the closing bid and asked prices of a share of such Common Stock or
Other Security, in each case for the 30 Business Days (or such lesser number of
Business Days as such Common Stock or other security shall have been so listed,
quoted or traded) next preceding the date of measurement; PROVIDED, HOWEVER,
that if no such sales price or bid and asked prices have been quoted during the
preceding 30-day period or there is otherwise no established trading market for
such security, then "Fair Value" means the value of such Common Stock or Other
Security as determined reasonably and in good faith by the Board of Directors of
the Company; AND PROVIDED, FURTHER, HOWEVER, that in the event the current
market price of a share of such Common Stock or of the minimum traded
denomination of such Other Security is determined during a period following the
announcement by the Company of (i) a dividend or distribution on the Common
Stock or Other Security payable in shares of Common Stock or in such Other
Security, or (ii) any subdivision, combination or reclassification of the Common
Stock or Other Security, and prior to the expiration of 30 Business Days after
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each
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<PAGE>
such case, the "Fair Value" shall be appropriately adjusted to take into account
ex-dividend trading. Anything herein to the contrary notwithstanding, in case
the Company shall issue any shares of Common Stock, rights, options, or Other
Securities in connection with the acquisition by the Company of the stock or
assets of any other Person or the merger of any other Person into the Company,
the Fair Value of the Common Stock or Other Securities so issued shall be
determined as of the date the number of shares of Common Stock, rights, options
or Other Securities was determined (as set forth in a written agreement between
the Company and the other party to the transaction) rather than on the date of
issuance of such shares of Common Stock, rights, options or Other Securities.
"ORIGINAL ISSUE DATE" has the meaning specified in Section
2.1.
"OTHER SECURITIES" means any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) that the
holders of the Warrants at any time shall be entitled to receive or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or that at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
"PERSON" means any individual, partnership, association, joint venture,
corporation, business trust, unincorporated organization, government or
department, agency or subdivision thereof, or other person or entity.
"PLAN" means the Second Amended Joint Plan of Reorganization of Barneys,
as confirmed by order of the Bankruptcy Court entered on December 21, 1998.
"PUBLIC OFFERING" means any offering of Common Stock (or Other Securities)
to the public pursuant to an effective registration statement under the
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be amended and in effect at the time. Reference to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such successor Federal statute.
4
<PAGE>
"WARRANT AGENT" has the meaning set forth in the preamble
hereof.
"WARRANT CERTIFICATES" has the meaning specified in Section
2.3.
"WARRANTS" has the meaning set forth in the recitals hereto.
ARTICLE 2
ISSUANCE OF WARRANTS
2.1 INITIAL ISSUANCE. On the date hereof (the "Original Issue Date"),
which is also the Effective Date, the Company shall, pursuant to the Plan,
deliver to the Company's disbursing agent under the Plan for re-distribution to
the holders of the Claims a global certificate for an aggregate of 1,013,514
Warrants.
2.2 INITIAL SHARE AMOUNT. The number of shares of Common Stock purchasable
upon exercise of the Warrants shall be one (1) Warrant to one (1) share of
Common stock, subject to adjustments from and after the Original Issue Date as
provided in Article 6 of this Agreement.
2.3 FORM OF WARRANT CERTIFICATES. The Warrants shall be evidenced by
certificates substantially in the form attached hereto as EXHIBIT A (the
"Warrant Certificates"). Each Warrant Certificate shall be dated as of the date
on which it is countersigned by the Warrant Agent, which shall be on the
Original Issue Date or, in the event of a division, exchange, substitution or
transfer of any of the Warrants, on the date of such event. The Warrant
Certificate may have such further legends and endorsements stamped, printed,
lithographed or engraved thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation pursuant thereto or with any
rule or regulation of any securities exchange on which the Warrants may be
listed.
2.4 EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates shall be
executed on behalf of the Company by its Chairman of the Board, Vice Chairman of
the Board, President, any Vice President, Treasurer or Secretary, either
manually or by facsimile signature printed thereon. In case any such officer of
the Company whose signature shall have been placed upon any Warrant Certificate
shall cease to be such officer of the Company before countersignature by the
Warrant Agent or issuance and
5
<PAGE>
delivery thereof, such Warrant Certificate nevertheless may be countersigned by
the Warrant Agent and issued and delivered with the same force and effect as
though such person had not ceased to be such officer of the Company.
2.5 COUNTERSIGNATURE OF WARRANT CERTIFICATES. Warrant Certificates shall
be manually countersigned by an authorized signatory of the Warrant Agent and
shall not be valid for any purpose unless so countersigned. Such manual
countersignature shall constitute conclusive evidence of such authorization. The
Warrant Agent is hereby authorized to countersign, in accordance with the
provisions of this Section 2.5, and deliver any new Warrant Certificates, as
directed by the Company pursuant to Section 2.1 and as and when required
pursuant to the provisions of Articles 13 and 14. Each Warrant Certificate
shall, when manually countersigned by an authorized signatory of the Warrant
Agent, entitle the registered holder thereof to exercise the rights as the
holder of the number of Warrants set forth thereon, subject to the provisions of
this Agreement.
ARTICLE 3
EXERCISE PERIOD
3.1 EXERCISE PERIOD. Each Warrant shall entitle the holder thereof to
purchase from the Company one (1) share of Common Stock (subject to the
adjustments provided herein), at any time during the period that commences on
the first Business Day that is one (1) day after the Original Issue Date, and
that terminates at 5:00 p.m., New York City time on May 15, 2000 (the "Exercise
Period").
ARTICLE 4
EXERCISE PRICE
4.1 The Exercise Price for the Warrants shall be $8.68 per share (in each
case subject to adjustment pursuant to Article 6 hereof).
6
<PAGE>
ARTICLE 5
EXERCISE OF WARRANTS
5.1 MANNER OF EXERCISE. All or any of the Warrants represented by a
Warrant Certificate may be exercised by the registered holder thereof during
normal business hours on any Business Day, by surrendering such Warrant
Certificate, with the subscription form set forth therein duly executed by such
holder, by hand or by mail to the Warrant Agent at its office addressed to Herb
Lemmer, or, if such exercise shall be in connection with an underwritten Public
Offering, at the location designated by the Company. Such Warrant Certificate
shall be accompanied by payment in respect of each Warrant that is exercised,
which shall be made by certified or official bank or bank cashier's check
payable to the order of the Company, except as otherwise provided herein. Such
payment shall be in an amount equal to the product of the number of shares of
Common Stock (without giving effect to any adjustment therein) designated in
such subscription form multiplied by the original Exercise Price for the
Warrants being exercised (plus such additional consideration as may be provided
herein). Upon such surrender and payment, such holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) determined as
provided in Articles 2 and 3, and as and if adjusted pursuant to Article 6.
5.2 WHEN EXERCISE EFFECTIVE. Each exercise of any Warrant pursuant to
Section 5.1 shall be deemed to have been effected immediately prior to the close
of business on the Business Day on which the Warrant Certificate representing
such Warrant, duly executed, with accompanying payment shall have been delivered
as provided in Section 5.1, and at such time the Person or Persons in whose name
or names the certificate or certificates for Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 5.3 shall be deemed
to have become the holder or holders of record thereof.
5.3 DELIVERY OF CERTIFICATES, ETC. (a) As promptly as practicable after
the exercise of any Warrant, and in any event within five (5) Business Days
thereafter (or, if such exercise is in connection with an underwritten Public
Offering, concurrently with such exercise), the Company at its expense (other
than as to payment of transfer taxes which will be paid by the holder) will
cause to be issued and delivered to such holder, or as such holder may otherwise
direct in writing (subject to Article 13),
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(i) a certificate or certificates for the number of shares of Common
Stock (or Other Securities) to which such holder is entitled, and
(ii) if less than all the Warrants represented by a Warrant
Certificate are exercised, a new Warrant Certificate or Certificates of
the same tenor and for the aggregate number of Warrants that were not
exercised, executed and countersigned in accordance with Sections 2.4 and
2.5.
(b) The Warrant Agent shall countersign any new Warrant Certificate,
register it in such name or names as may be directed in writing by such holder,
and shall deliver it to the person entitled to receive the same in accordance
with this Section 5.3. The Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrant Certificates executed on behalf of the
Company for such purpose.
5.4 FRACTIONAL SHARES. No fractional shares of Common Stock (or Other
Securities) shall be issued upon any exercise of Warrants. If more than one
Warrant Certificate shall be delivered for exercise at one time by the same
holder, the number of full shares or securities that shall be issuable upon
exercise shall be computed on the basis of the aggregate number of Warrants
exercised. As to any fraction of a share of Common Stock (or Other Securities),
the Company shall pay a cash adjustment in respect thereto in an amount equal to
the product of the Fair Value per share of Common Stock (or Other Securities) as
of the Business Day next preceding the date of such exercise multiplied by such
fraction of a share.
ARTICLE 6
ADJUSTMENT OF THE AMOUNT OF COMMON STOCK
ISSUABLE AND THE EXERCISE PRICES UPON EXERCISE
6.1 STOCK DIVIDENDS, SPLIT-UPS AND COMBINATIONS OF SHARES. If after the
date hereof the number of outstanding shares of Common Stock is increased by a
dividend or share distribution, in each case payable in shares of Common Stock,
or by a split-up or other reclassification of shares of Common Stock, then, in
the case of such events, the amount of Common Stock issuable for each Warrant
and the Exercise Price will be adjusted as follows: on the day following the
date fixed for the determination of holders of shares of Common Stock entitled
to receive such dividend or share distribution, and in the cases of split-ups,
combinations and other reclassifications, on the day following the effective
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date thereof: (a) the Exercise Price in effect immediately prior to such action
shall be adjusted to a new Exercise Price that bears the same relationship to
the Exercise Price in effect immediately prior to such event as the total number
of shares of Common Stock outstanding immediately prior to such action bears to
the total number of shares of Common Stock outstanding immediately after such
event, and (b) the number of shares of Common Stock purchasable upon the
exercise of any Warrant after such event shall be the number of Shares of Common
Stock obtained by multiplying the number of shares of Common Stock purchasable
immediately prior to such adjustment upon the exercise of such Warrant by the
Exercise Price in effect immediately prior to such adjustment and dividing the
product so obtained by the Exercise Price in effect after such adjustment.
6.2 DISTRIBUTIONS. If after the date hereof the Company shall distribute
to all holders of its shares of Common Stock evidences of its indebtedness or
assets (excluding cash distributions made as a dividend payable out of earnings
or out of surplus legally available for dividends under the laws of the
jurisdiction of incorporation of the Company) or rights to subscribe to shares
of Common Stock expiring more than 45 days after the issuance thereof, then in
each such case the Exercise Price in effect immediately prior to such
distribution shall be decreased to an amount determined by multiplying such
Exercise Price by a fraction, the numerator of which is the Fair Value of a
share of the Common Stock at the date of such distribution less the Fair Value
per share of Common Stock outstanding at such date of the assets or evidences of
indebtedness so distributed or of such subscription rights (as determined by the
board of directors of the Company, whose determination shall be conclusive, and
described in a statement filed with the Warrant Agent) and the denominator of
which is the Fair Value of a share of Common Stock at such date. Such adjustment
shall be made whenever any such distribution is made, and shall become effective
retroactively on the date immediately after the record date for the
determination of stockholders entitled to receive such distribution.
6.3 EXERCISE PRICE ADJUSTMENT. Except in the case of increases of shares
covered by Section 6.1 (as to which the adjustment provisions of such Section
shall apply), whenever the number of shares of Common Stock (or Other
Securities) into which a Warrant is exercisable is adjusted as provided in this
Article 6, then the Exercise Price payable upon exercise of the Warrant shall
simultaneously be adjusted by multiplying such Exercise Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
shares of Common Stock (or Other Securities) into which such Warrant was
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exercisable immediately prior to such adjustment, and the denominator of which
shall be the number of shares of Common Stock (or Other Securities) into which
such Warrant was exercisable immediately thereafter.
6.4 ADJUSTMENTS FOR MERGERS AND CONSOLIDATIONS. In case the Company, after
the date hereof, shall merge or consolidate with another Person, then, in the
case of any such transaction, proper provision shall be made so that, upon the
basis and terms and in the manner provided in this Warrant Agreement, the
holders of the Warrants, upon the exercise thereof at any time after the
consummation of such transaction (subject to the Exercise Period), shall be
entitled to receive (at the aggregate Exercise Price in effect at the time of
the transaction for all Common Stock or Other Securities issuable upon such
exercise immediately prior to such consummation), in lieu of the Common Stock or
Other Securities issuable upon such exercise prior to such consummation, the
greatest amount of securities, cash or other property to which such holder would
have been entitled as a holder of Common Stock (or Other Securities) upon such
consummation if such holder had exercised the rights represented by the Warrants
held by such holder immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in Sections 6.1 and 6.2 hereof.
6.5 CALCULATION TO NEAREST CENT AND ONE-HUNDREDTH OF SHARE. All
calculations under this Article 6 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
6.6 NOTICE OF ADJUSTMENT IN EXERCISE PRICE. Whenever the Exercise Price
and securities issuable shall be adjusted as provided in this Article 6, the
Company shall forthwith file with the Warrant Agent a statement, signed by the
Chairman of the Board, Vice Chairman of the Board, the President or any Vice
President of the Company and by its Treasurer or an Assistant Treasurer or its
Secretary or an Assistant Secretary, stating in detail the facts requiring such
adjustment, the Exercise Price that will be effective after such adjustment and
the impact of such adjustment on the number and kind of securities issuable upon
exercise of the Warrants. The Company shall also cause a notice setting forth
any such adjustments to be sent by mail, first class, postage prepaid, to each
registered holder of Warrants at its address appearing on the Warrant register.
The Warrant Agent shall have no duty with respect to any statement filed with it
except to keep the same on file and available for inspection by registered
holders of Warrants during reasonable
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business hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist
which may require any adjustment to the Exercise Price or securities issuable,
or with respect to the nature or extent of any adjustment of the Exercise Price
or securities issuable when made or with respect to the method employed in
making such adjustment.
6.7 OTHER NOTICES. In case the Company after the date hereof shall propose
to take any action of the type described in Sections 6.1, 6.2 or 6.3 of this
Article 6, the Company shall give notice to the Warrant Agent and to each
registered holder of a Warrant in the manner set forth in subsection 6.6 of this
Article 6, which notice shall specify, in the case of action of the type
specified in subsection 6.2 or 6.3, the date on which a record shall be taken
with respect to any such action. Such notice shall be given, in the case of any
action of the type specified in subsection 6.2 or 6.3, at least ten (10) days
prior to the record date with respect thereto. Failure to give such notice, or
any defect therein, shall not affect the legality or validity of any such
action. Where appropriate, such notice may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
subsection 6.6 of this Article 6.
6.8 NO CHANGE IN WARRANT TERMS ON ADJUSTMENT. Irrespective of any
adjustments in the Exercise Price or the number of shares of Common Stock (or
any inclusion of Other Securities) issuable upon exercise, Warrants theretofore
or thereafter issued may continue to express the same prices and number of
shares as are stated in the similar Warrants issuable initially, or at some
subsequent time, pursuant to this Agreement, and the Exercise Price and such
number of shares issuable upon exercise specified thereon shall be deemed to
have been so adjusted.
6.9 TREASURY SHARES. Shares of Common Stock at any time owned by the
Company shall not be deemed to be outstanding for the purposes of any
computation under this Article 6.
ARTICLE 7
CONSOLIDATION, MERGER, ETC.
Notwithstanding anything contained herein to the contrary, the Company
will not effect a merger or consolidation unless, prior to the consummation of
such transaction, each Person (other than the Company) which may be required to
deliver any Common
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Stock, Other Securities, securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written instrument delivered to the
Warrant Agent, the obligations of the Company under this Warrant Agreement and
under each of the Warrants, including, without limitation, the obligation to
deliver such shares of Common Stock, Other Securities, cash or property as may
be required pursuant to Article 6 hereof.
ARTICLE 8
NO DILUTION OR IMPAIRMENT
The Company will not, by amendment of its certificate of incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issuance or sale of securities or any other voluntary action or
omission, avoid or seek to avoid the observance or performance of any of the
terms of this Agreement or any of the Warrants issued hereunder, but will at all
times in good faith observe and perform all such terms and take all such action
as may be necessary or appropriate in order to protect the rights of each holder
of a Warrant against dilution or other impairment of the kind specified herein
PROVIDED, HOWEVER, that, subject to compliance with the applicable provisions of
this Agreement, the Company shall not be prohibited by this Article 8 or by any
provision of this Agreement from making decisions providing for, INTER ALIA, the
merger or consolidation of the Company or the sale of its assets which
transactions, in the judgment of the Company's board of directors, are in the
best interests of the Company and stockholders. Without limiting the generality
of the foregoing, the Company (a) will not permit the par value of any shares of
stock receivable upon the exercise of any Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock upon the exercise of all of the Warrants
from time to time outstanding and (c) will not take any action that results in
any adjustment of the shares issuable upon exercise of the Warrants (or which
entitles the holders of the Warrants to receive Other Securities upon such
exercise) if the total number of shares of Common Stock (or Other Securities)
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock (or Other Securities) then authorized
by the Company's certificate of incorporation and available for the purpose of
issuance upon such exercise.
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ARTICLE 9
REPORTS
In each case of any adjustment or readjustment in the shares of Common
Stock (or Other Securities) issuable upon the exercise of the Warrants, the
Company at its expense will promptly compute such adjustment or readjustment
after giving effect to such in accordance with the terms of this Agreement and
shall prepare a report setting forth such adjustment or readjustment and showing
in reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based. The Company will forthwith mail a copy
of each such report to the Warrant Agent, which shall promptly mail a copy to
each holder of a Warrant. The Warrant Agent will cause the same to be available
for inspection at its principal office during normal business hours by any
holder of a Warrant or any prospective purchaser of a Warrant designated by the
holder thereof.
ARTICLE 10
NOTIFICATION OF CERTAIN EVENTS
10.1 CORPORATE ACTION. In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a regular periodic dividend payable in cash
out of earned surplus) or other distribution of any kind, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right or interest of
any kind; or
(b) (i) any capital reorganization of the Company, (ii) any
reclassification of the capital shares of the Company (other than a change in
par value or from par value to no par value or from no par value to par value or
as a result of a split-up or combination), (iii) the consolidation or merger of
the Company with or into any other corporation (other than a consolidation or
merger in which the Company is the continuing corporation and which does not
result in any change in the shares of Common Stock), (iv) the sale of the
properties and assets of the Company as, or substantially as, an entirety to
another Person, or (v) an exchange offer for Common Stock (or Other Securities);
or
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(c) the voluntary or involuntary dissolution, liquidation, or winding up
of the Company, the Company shall cause to be filed with the Warrant Agent and
mailed to each holder of a Warrant a notice specifying (x) the date or expected
date on which any such record is to be taken for the purpose of such dividend,
distribution, rights, event, transaction or amendment (or vote thereon) and the
amount and character of any such dividend, distribution, exchange, rights, or
vote, or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution, exchange
or rights are to be determined, and the amount and character of such dividend,
distribution or rights, or (y) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger, sale,
transfer, exchange offer, dissolution, liquidation or winding up is expected to
become effective, and the time, if any such time is to be fixed, as of which
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, sale, transfer, exchange offer,
dissolution, liquidation or winding up. Such notice shall be delivered not less
than twenty (20) days prior to such date therein specified, in the case of any
such date referred to in clause (x) of the preceding sentence, and not less than
thirty (30) days prior to such date therein specified, in the case of any such
date referred to in clause (y) of the preceding sentence. Failure to give such
notice within the time provided or any defect therein shall not affect the
legality or validity of any such action.
10.2 AVAILABLE INFORMATION. The Company shall promptly file with the
Warrant Agent copies of its annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not required to make such filings, the Company shall promptly
deliver to the Warrant Agent copies of any annual, quarterly or other reports
and financial statements that are generally provided to holders of equity or
debt securities of the Company (other than bank or similar institutional debt)
in their capacity as holders of such securities.
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ARTICLE 11
RESERVATION OF STOCK
11.1 RESERVATION; DUE AUTHORIZATION, ETC. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock (or out of authorized Other Securities), solely for
issuance and delivery upon exercise of Warrants, the full number of shares of
Common Stock (and Other Securities) from time to time issuable upon the exercise
of all Warrants and any other outstanding warrants, options or similar rights,
from time to time outstanding. All shares of Common Stock (and Other Securities)
shall be duly authorized and, when issued upon such exercise, shall be duly and
validly issued, and (in the case of shares) fully paid and nonassessable, and
free from all taxes, liens, charges, security interests, encumbrances and other
restrictions created by or through the Company.
11.2 COMPLIANCE WITH LAW. The Company will use its best efforts, at its
expense and on a continual basis, to assure that all shares of Common Stock (and
Other Securities) that may be issued upon exercise of Warrants may be so issued
and delivered without violation of any Federal or state securities law or
regulation, or any other law or regulation applicable to the Company or any of
its subsidiaries, PROVIDED THAT with respect to any such exercise involving a
sale or transfer of Warrants or any such securities issuable upon such exercise,
the Company shall have no obligation to register such Warrants or securities
under any such securities law.
ARTICLE 12
PAYMENT OF TAXES
The Company will pay any and all documentary stamp or similar issue taxes
payable to the United States of America or any State, or any political
subdivision or taxing authority thereof or therein, in respect of the issuance
or delivery of shares of Common Stock (or Other Securities) on exercise of
Warrants, PROVIDED, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer of a Warrant or any transfer involved
in the issuance and delivery of Common Stock (or Other Securities) in a name
other than that of the registered holder of the Warrants to be exercised, and no
such issuance or delivery shall be made unless and until the person requesting
such issuance has paid to the Company the
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amount of any such tax or has established, to the reasonable satisfaction of the
Company, that such tax has been paid.
ARTICLE 13
LOSS OR MUTILATION
Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and of an indemnity bond reasonably
satisfactory to them in form or amount, and (in the case of mutilation) upon
surrender and cancellation thereof, then, in the absence of notice to the
Company or the Warrant Agent that the Warrants represented thereby have been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Warrant Agent and, upon the Company's request, an authorized signatory of the
Warrant Agent shall manually countersign and deliver, to the registered holder
of the lost, stolen, destroyed or mutilated Warrant Certificate, in exchange for
or in lieu thereof, a new Warrant Certificate of the same tenor and for a like
aggregate number of Warrants. Upon the issuance of any new Warrant Certificate
under this Article 13, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the reasonable fees and expenses of
the Warrant Agent) in connection therewith. Every new Warrant Certificate
executed and delivered pursuant to this Article 13 in lieu of any lost, stolen
or destroyed Warrant Certificate shall be entitled to the same benefits of this
Agreement equally and proportionately with any and all other Warrant
Certificates, whether or not the allegedly lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone. The provisions of this
Article 13 are exclusive and shall preclude (to the extent lawful) all other
rights or remedies with respect to the replacement of mutilated, lost, stolen or
destroyed Warrant Certificates.
ARTICLE 14
WARRANT REGISTRATION
14.1 REGISTRATION. The Warrant Certificates shall be issued in registered
form only and shall be registered in the names of the record holders of the
Warrant Certificates to whom they are to be delivered. The Company shall
maintain or cause to be
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maintained a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Warrants and of
transfers or exchanges of Warrant Certificates as provided in this Agreement.
Such register shall be maintained at the office of the Company or the Warrant
Agent located at the respective address therefor as provided in Section 17.1.
Such register shall be open for inspection upon notice at all reasonable times
by the Warrant Agent and each holder of a Warrant.
14.2 TRANSFER OR EXCHANGE. Subject to Section 2.1 hereof, at the option of
the holder, Warrant Certificates may be exchanged or transferred for other
Warrant Certificates for a like aggregate number of Warrants, upon surrender of
the Warrant Certificates to be exchanged at the office of the Company or the
Warrant Agent maintained for such purpose at the respective address therefor as
provided in Section 17.1, and upon payment of the charges herein provided.
Whenever any Warrant Certificates are so surrendered for exchange or transfer,
the Company shall execute, and an authorized signatory of the Warrant Agent
shall manually countersign and deliver, the Warrant Certificates that the holder
making the exchange is entitled to receive.
14.3 VALID AND ENFORCEABLE. All Warrant Certificates issued upon any
registration of transfer or exchange of Warrant Certificates shall be the valid
obligations of the Company, evidencing the same obligations, and entitled to the
same benefits under this Agreement, as the Warrant Certificates surrendered for
such registration of transfer or exchange.
14.4 ENDORSEMENT. Every Warrant Certificate surrendered for registration
of transfer or exchange shall (if so required by the Company or the Warrant
Agent) be duly endorsed, or be accompanied by an instrument of transfer in form
reasonably satisfactory to the Company and the Warrant Agent and duly executed
by the registered holder thereof or such holder's officer or representative duly
authorized in writing.
14.5 NO SERVICE CHARGE. No service charge shall be made for any
registration of transfer or exchange of Warrant Certificates.
14.6 CANCELLATION. Any Warrant Certificate surrendered for registration of
transfer, exchange or the exercise of the Warrants represented thereby shall, if
surrendered to the Company, be delivered to the Warrant Agent, and all Warrant
Certificates surrendered or so delivered to the Warrant Agent shall be promptly
cancelled by the Warrant Agent. Any such Warrant Certificate shall not be
reissued by the Company and,
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except as provided in this Article 14 in case of an exchange or transfer, in
Article 13 in case of a mutilated Warrant Certificate and in Article 3 in case
of the exercise of less than all the Warrants represented thereby, no Warrant
Certificate shall be issued hereunder in lieu thereof. The Warrant Agent shall
deliver to the Company from time to time or otherwise dispose of such cancelled
Warrant Certificates in a manner reasonably satisfactory to the Company.
ARTICLE 15
WARRANT AGENT
15.1 OBLIGATIONS BINDING. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the terms and conditions set forth in
this Article 15. The Company, and the holders of Warrants by their acceptance
thereof, shall be bound by all of such terms and conditions.
15.2 NO LIABILITY. The Warrant Agent shall not by countersigning Warrant
Certificates or by any other act hereunder be accountable with respect to or be
deemed to make any representations as to the validity or authorization of the
Warrants or the Warrant Certificates (except as to its countersignature
thereon), as to the validity, authorization or value (or kind or amount) of any
Common Stock or of any Other Securities or other property delivered or
deliverable upon exercise of any Warrant, or as to the purchase price of such
Common Stock, securities or other property. The Warrant Agent shall not (i) be
liable for any recital or statement of fact contained herein or in the Warrant
Certificates or for any action taken, suffered or omitted by the Warrant Agent
in good faith in the belief that any Warrant Certificate or any other document
or any signature is genuine or properly authorized, (ii) be responsible for
determining whether any facts exist that may require any adjustment of the
purchase price and the number of shares of Common Stock purchasable upon
exercise of Warrants, or with respect to the nature or extent of any such
adjustments when made, or with respect to the method of adjustment employed,
(iii) be responsible for any failure on the part of the Company to issue,
transfer or deliver any Common Stock or Other Securities or property upon the
surrender of any Warrant for the purpose of exercise or to comply with any other
of the Company's covenants and obligations contained in this Agreement or in the
Warrant Certificates or (iv) be liable for any act or omission in connection
with this Agreement except for its own bad faith, negligence or willful
misconduct.
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15.3 INSTRUCTIONS. The Warrant Agent is hereby authorized to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, Vice Chairman of the Board, President, any Vice
President, Treasurer or any Assistant Treasurer of the Company and to apply to
any such officer for advice or instructions. The Warrant Agent shall not be
liable for any action taken, suffered or omitted by it in good faith in
accordance with the instructions of any such officer.
15.4 AGENTS. The Warrant Agent may execute and exercise any of the rights
and powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys, agents or employees, provided reasonable care has been
exercised in the selection and in the continued employment of any such attorney,
agent or employee. The Warrant Agent shall not be under any obligation or duty
to institute, appear in, or defend any action, suit or legal proceeding in
respect hereof, but this provision shall not affect the power of the Warrant
Agent to take such action as the Warrant Agent may consider proper. The Warrant
Agent shall promptly notify the Company in writing of any claim made or action,
suit or proceeding instituted against the Warrant Agent arising out of or in
connection with this Agreement.
15.5 COOPERATION. The Company will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by the
Warrant Agent in order to enable the Warrant Agent to carry out or perform its
duties under this Agreement.
15.6 AGENT ONLY. The Warrant Agent shall act solely as agent. The Warrant
Agent shall not be liable except for the performance of such duties as are
specifically set forth herein, and no implied covenants or obligations shall be
read into this Agreement against the Warrant Agent, whose duties and obligations
shall be determined solely by the express provisions hereof.
15.7 RIGHT TO COUNSEL. The Warrant Agent may at any time consult with
legal counsel satisfactory to it (who may be legal counsel for the Company) and
the Warrant Agent shall incur no liability or responsibility to the Company or
to any Warrant holder for any action taken, suffered or omitted by the Warrant
Agent in good faith in accordance with the opinion or advice of such counsel.
15.8 COMPENSATION. The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse the Warrant Agent for
its reasonable expenses
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hereunder; and further agrees to indemnify the Warrant Agent and hold it
harmless against any and all liabilities, including, but not limited to,
judgments, costs and reasonable counsel fees, for anything done, suffered or
omitted by the Warrant Agent in the execution of its duties and powers
hereunder, except for any such liabilities that arise as a result of the Warrant
Agent's bad faith, negligence or willful misconduct.
15.9 ACCOUNTING. The Warrant Agent shall account promptly to the Company
with respect to Warrants exercised and concurrently pay to the Company all
moneys received by the Warrant Agent on behalf of the Company on the purchase of
shares of Common Stock (or Other Securities) through the exercise of Warrants.
15.10 NO CONFLICT. The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
15.11 RESIGNATION; TERMINATION. The Warrant Agent may resign its duties
and be discharged from all further duties and liabilities hereunder (except
liabilities arising as a result of the Warrant Agent's bad faith, negligence or
willful misconduct), after giving thirty (30) days' prior written notice to the
Company. The Company may remove the Warrant Agent upon thirty (30) days' written
notice, and the Warrant Agent shall thereupon in like manner be discharged from
all further duties and liabilities hereunder, except as to liabilities arising
as a result of the Warrant Agent's bad faith, negligence or willful misconduct.
The Company shall cause to be mailed (by first class mail, postage prepaid) to
each registered holder of a Warrant at such holder's last address as shown on
the register of the Company, at the Company's expense, a copy of such notice of
resignation or notice of removal, as the case may be. Upon such resignation or
removal the Company shall promptly appoint in writing a new warrant agent. If
the Company shall fail to make such appointment within a period of thirty (30)
days after it has been notified in writing of such resignation by the resigning
Warrant Agent or after such removal, then the holder of any Warrant may apply to
any court of competent jurisdiction for the appointment of a new warrant agent.
Pending appointment of a successor to the Warrant Agent, either by the Company
or by such
20
<PAGE>
a court, the duties of the Warrant Agent shall be carried out by the Company.
Any successor warrant agent, whether appointed by the Company or by such a
court, shall be a corporation, incorporated under the laws of the United States
or of any state thereof and authorized under such laws to exercise corporate
trust powers, be subject to supervision and examination by Federal or state
authority, and have a combined capital and surplus of not less than $100,000,000
as set forth in its most recent published annual report of condition. After
acceptance in writing of such appointment by the new warrant agent it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning or removed Warrant Agent.
Not later than the effective date of any such appointment the Company shall file
notice thereof with the resigning or removed Warrant Agent and shall forthwith
cause a copy of such notice to be mailed (by first class, postage prepaid) to
each registered holder of a Warrant at such holder's last address as shown on
the register of the Company. Failure to give any notice provided for in this
Section 15.11, or any defect in any such notice, shall not affect the legality
or validity of the resignation of the Warrant Agent or the appointment of a new
warrant agent, as the case may be.
15.12 CHANGE OF WARRANT AGENT. If at any time the name of the Warrant
Agent shall be changed and at such time any of the Warrant Certificates shall
have been countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and if at that time any of the Warrant Certificates shall not
have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force and effect provided in
the Warrant Certificates and this Agreement.
15.13 SUCCESSOR WARRANT AGENT. Any corporation into which the Warrant
Agent or any new warrant agent may be merged or any corporation resulting from
any consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to all or substantially all the agency
business of the Warrant Agent or any new warrant agent shall be a successor
Warrant Agent under this Agreement without any further act, PROVIDED, that such
corporation would be eligible for
21
<PAGE>
appointment as a new warrant agent under the provisions of Section 15.11 of this
Article 15. The Company shall promptly cause notice of the succession as Warrant
Agent of any such successor Warrant Agent to be mailed (by first class mail,
postage prepaid) to each registered holder of a Warrant at its last address as
shown on the register of the Company.
ARTICLE 16
REMEDIES, ETC.
16.1 REMEDIES. The Company stipulates that the remedies at law of each
holder of a Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant Agreement are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a decree for
the specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16.2 WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Prior to the exercise of the
Warrants represented thereby no holder of a Warrant Certificate, as such, shall
be entitled to any rights of a stockholder of the Company, including, but not
limited to, the right to vote, to receive dividends or other distributions, to
exercise any preemptive right or, except as otherwise provided herein, to
receive any notice of meetings of stockholders, and no such holder shall be
entitled to receive notice of any proceedings of the Company except as provided
in this Agreement. Nothing contained in this Agreement shall be construed as
imposing any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.
16.3 RIGHT OF ACTION. All rights of action in respect of this Agreement
are vested in the registered holders of the Warrants. Any registered holder of
any Warrant, without the consent of the Warrant Agent or the registered holder
of any other Warrant, may in such holder's own behalf and for such holder's own
benefit enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, such
holder's right to exercise such holder's Warrants in the manner provided in the
Warrant Certificate representing such Warrants and the Company's obligations
under this Agreement and the Warrants.
22
<PAGE>
ARTICLE 17
MISCELLANEOUS
17.1 NOTICES. Any notice, demand or delivery authorized by this Agreement
shall be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to any registered holder of a Warrant at such holder's last
known address appearing on the register of the Company, and to the Company or
the Warrant Agent as follows:
If to the Company:
Barneys New York, Inc.
575 Fifth Avenue
New York, New York 10017
Attn: General Counsel
Telephone: (212) 450-8606
Facsimile: (212) 450-8480
If to the Warrant Agent:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Attn: Herb Lemmer
Telephone: (718) 921-8209
Facsimile: (718) 921-8336
or such other address as shall have been furnished in writing, in accordance
with this Section 17.1, to the party giving or making such notice, demand or
delivery.
17.2 GOVERNING LAW AND CONSENT TO FORUM. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE COMPANY AND THE WARRANT AGENT EACH
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE PROCESS IN
ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
23
<PAGE>
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
17.3 BENEFITS OF THIS AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent and their respective
successors and assigns, and the registered and beneficial holders from time to
time of the Warrants and of holders of the Common Stock, where applicable.
Nothing in this Agreement is intended or shall be construed to confer upon any
other person, any right, remedy or claim under or by reason of this Agreement or
any part hereof.
17.4 AGREEMENT OF HOLDERS OF WARRANT CERTIFICATES. Every holder of a
Warrant Certificate, by accepting the same, covenants and agrees with the
Company, the Warrant Agent and with every other holder of a Warrant Certificate
that the Warrant Certificates are transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in this Agreement,
and the Company and the Warrant Agent may deem and treat the person in whose
name the Warrant Certificate is registered as the absolute owner for all
purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
17.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each such counterpart shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
17.6 AMENDMENTS. The Warrant Agent may, without the consent or concurrence
of the holders of the Warrants, by supplemental agreement or other writing, join
with the Company in making any amendments or modifications of this Agreement
that they shall have been advised by counsel (a) are required to cure any
ambiguity or to correct any defective or inconsistent provision or clerical
omission or mistake or manifest error herein contained and which do not
accurately reflect the understanding of the parties hereto, (b) add to the
covenants and agreements of the Company in this Agreement further covenants and
agreements of the Company thereafter to be observed, or surrender any rights or
power reserved to or conferred upon the Company in this Agreement or (c) do not
and will not adversely affect, alter or change the rights, privileges or
immunities of the registered holders of Warrants or of any person entitled to
the benefits of this Agreement who has not assented to such change, in writing.
This Agreement may otherwise be amended by the Company and the Warrant Agent
only with the consent of the holders of a majority of the then outstanding
Warrants. Notwithstanding the foregoing,
24
<PAGE>
the consent of each holder of a Warrant affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of shares of Common Stock (or Other Securities) purchasable upon exercise of
Warrants would be decreased (other than pursuant to adjustments provided
herein). The Warrant Agent shall join with the Company in the execution and
delivery of any such amendment unless such amendment affects the Warrant Agent's
own rights, duties or immunities hereunder, in which case the Warrant Agent may,
but shall not be required to, join in such execution and delivery. Upon
execution and delivery of any amendment pursuant to this Section 17.6, such
amendment shall be considered a part of this Agreement for all purposes and
every holder of a Warrant Certificate theretofore or thereafter countersigned
and delivered hereunder shall be bound thereby.
17.7 CONSENT TO JURISDICTION. The parties hereby expressly acknowledge and
agree that, to the extent permitted by applicable law, the Bankruptcy Court
shall have exclusive jurisdiction to hear and determine any and all disputes
concerning the distribution of Warrants hereunder to holders of Claims pursuant
to the Plan. The Warrant Agent hereby consents to the jurisdiction of the
Bankruptcy Court with respect to any such disputes and waives any argument of
lack of such jurisdiction.
17.8 CERTAIN COVENANTS OF THE COMPANY. The Company covenants and agrees
that, for so long as any of the Warrants shall remain outstanding, the Company
will not, without the approval of a majority of the Company's independent
directors (i.e., those directors who are not Affiliates of Bay Harbour
Management L.C., Whippoorwill Associates, Inc., Isetan Company Ltd. or any other
Affiliate of the Company, nor employees of the Company), issue shares of Common
Stock to any Affiliate of the Company at a purchase price less than the Fair
Value thereof; PROVIDED, HOWEVER, that the foregoing approval shall not be
required at any time that the Company has no independent directors.
17.9 HEADINGS. The table of contents hereto and the descriptive headings
of the several sections hereof are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
BARNEYS NEW YORK, INC.
By: /s/ Edward Lambert
-------------------------------
Edward Lambert
Executive Vice President and
Chief Financial Officer
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By: /s/ Herbert J. Lemmer
-------------------------------
Name: Herbert J. Lemmer
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
<PAGE>
[FORM OF FACE OF WARRANT CERTIFICATE]
Warrant Number of Warrant(s):
No. ______ ______
Exercisable During the Period Commencing _________
and Terminating at 5:00 p.m. _________
except as provided below
WARRANT TO PURCHASE
COMMON STOCK
OF
BARNEYS NEW YORK, INC.
This Certifies that __________ or registered assigns, is the owner of the
number of WARRANTS set forth above, each of which represents the right, at any
time after ________ (the "Original Issue Date") and on or before 5:00 p.m., New
York City time, on May 15, 2000 (the "Exercise Period"), to purchase from
Barneys New York, Inc., a Delaware corporation (the "Company"), at the price of
$ _____ per share (the "Exercise Price"), one share of Common Stock, $0.01 par
value, of the Company as such stock was constituted as of the Original Issue
Date, subject to adjustment as provided in the Warrant Agreement hereinafter
referred to, upon surrender hereof, with the subscription form on the reverse
hereof duly executed, by hand or by mail to [INSERT NAME AND ADDRESS OF WARRANT
AGENT], or to any successor thereto, as the warrant agent under the Warrant
Agreement, at the office of such successor maintained for such purpose (any such
warrant agent being herein called the "Warrant Agent") (or, if such exercise
shall be in connection with an underwritten Public Offering of shares of such
Common Stock (or Other securities) (as such term and other capitalized terms
used herein are defined in the Warrant Agreement) subject to the Warrant
Agreement, at the location at which the Company shall have agreed to deliver
such securities), and simultaneous payment in full (by certified or official
bank or bank cashier's check payable to the order of the Company) of the
Exercise Price in respect of each Warrant represented by this Warrant
Certificate that is so exercised, all subject to the terms and conditions hereof
and of the Warrant Agreement.
A-1
<PAGE>
Upon any partial exercise of the Warrants represented by this Warrant
Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.
No fractional shares may be issued upon the exercise of rights to purchase
hereunder, and as to any fraction of a share otherwise issuable, the Company
will make a cash adjustment in lieu of such issuance, as provided in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement, dated as of __________, 199_ (the "Warrant Agreement"), between the
Company and __________, as Warrant Agent, and is subject to the terms and
provisions contained therein, all of which terms and provisions the holder of
this Warrant Certificate consents to by acceptance hereof. Copies of the Warrant
Agreement are on file at the above-mentioned office of the Warrant Agent and may
be obtained by writing to the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Dated: BARNEYS NEW YORK, INC.
By:
-----------------------------------
Title:
Countersigned:
- --------------------------------
as Warrant Agent
By:
----------------------------
Authorized Signatory
A-2
<PAGE>
[FORM OF REVERSE OF WARRANT CERTIFICATE]
BARNEYS NEW YORK, INC.
The transfer of this Warrant Certificate and all rights hereunder is
registrable by the registered holder hereof, in whole or in part, on the
register of the Company upon surrender of this Warrant Certificate at the office
or agency of the Company or the office of the Warrant Agent maintained for such
purpose at [INSERT NAME AND ADDRESS OF WARRANT AGENT], attention:
____________________, duly endorsed or accompanied by a written instrument of
transfer duly executed and in form satisfactory to the Company and the Warrant
Agent, by the registered holder hereof or his attorney duly authorized in
writing and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer or registration thereof. Upon any partial
transfer the Company will cause to be delivered to such holder a new Warrant
Certificate or Certificates with respect to any portion not so transferred.
This Warrant Certificate may be exchanged at the office or agency of the
Company or the office of the Warrant Agent maintained for such purpose at
[INSERT NAME AND ADDRESS OF WARRANT AGENT], attention: ____________________, for
Warrant Certificates representing the same aggregate number of Warrants, each
new Warrant Certificate to represent such number of Warrants as the holder
hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the holder of
this Warrant Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company, including, but not limited to, the right to vote, to
receive dividends or other distributions, to exercise any preemptive right or,
except as provided in the Warrant Agreement, to receive any notice of meetings
of stockholders, and shall not be entitled to receive notice of any proceedings
of the Company except as provided in the Warrant Agreement. Nothing contained
herein shall be construed as imposing any liabilities upon the holder of this
Warrant Certificate to purchase any securities or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors or
stockholders of the Company or otherwise.
This Warrant Certificate shall he void and all rights represented hereby
shall cease unless exercised on or before the close of business on
______________, 200_.
A-3
<PAGE>
This Warrant Certificate shall not be valid for any purpose until it shall
have been manually countersigned by an authorized signatory of the Warrant
Agent.
Witness the facsimile seal of the Company and the signature of its duly
authorized officer.
A-4
<PAGE>
SUBSCRIPTION FORM
(TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT)
TO BARNEYS NEW YORK, INC.
______________________________, as Warrant Agent
Attention: ____________________
The undersigned (i) irrevocably exercises the Warrants represented by the
within Warrant Certificate, (ii) purchases one share of Common Stock of Barneys
New York, Inc. (before giving effect to the adjustments provided in the Warrant
Agreement referred to in the within Warrant Certificate) for each Warrant so
exercised and herewith makes payment in full of the purchase price of $_____ per
share, in respect of each Warrant so exercised as provided in the Warrant
Agreement (such payment being by certified or official bank or bank cashier's
check payable to the order of Barneys New York, Inc.), all on the terms and
conditions specified in the within Warrant Certificate and the Warrant
Agreement, (iii) surrenders this Warrant Certificate and all right, title and
interest therein to Barneys New York, Inc. and (iv) directs that the securities
or other property deliverable upon the exercise of such Warrants be registered
or placed in the name and at the address specified below and delivered thereto.
Dated: ____________, ____
-----------------------------------
(Owner)*
-----------------------------------
(Signature of Authorized
Representative)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
A-5
<PAGE>
Securities or property to be
issued and delivered to:
-----------------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
-----------
Name ___________________________________________________________________________
Street Address _________________________________________________________________
City, State and Zip Code _______________________________________________________
A-6
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the within
Warrant Certificate hereby sells, assigns and transfers unto the Assignee named
below all of the rights of the undersigned under the within Warrant Certificate,
with respect to the number of warrants set forth below:
Name of No. of
Assignee Address Warrants
-------- ------- --------
Please insert social
security or other
identifying number
of Assignee
-----------
and does hereby irrevocably constitute and appoint __________ attorney to make
such transfer on the books of Barneys New York, Inc. maintained for the purpose,
with full power of substitution in the premises.
Dated: ____________, ____
Name ___________________________*
Signature of Authorized
Representative __________________
Signature Guaranteed __________**
* The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every
A-7
<PAGE>
particular, without alteration or enlargement or any change whatsoever.
** The signature must be guaranteed by a securities transfer agents
medallion program ("stamp") participant or an institution receiving prior
approval from the Warrant Agent.
A-8
<PAGE>
Exhibit 4.2
PAR VALUE $.01 COMMON STOCK
NUMBER SHARES
B
Barneys New York, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 06808T 10 7
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE $.01 EACH OF
- --------------------------------------------------------------------------------
- -----------------------------BARNEYS NEW YORK, INC.-----------------------------
- --------------------------------------------------------------------------------
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
This Certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
Witness the signatures of the duly authorized officers of the Corporation.
Dated:
[BARNEYS NEW YORK, INC. CORPORATE SEAL 1998 DELAWARE]
/s/ Marc H. Perlowitz /s/ Thomas C. Shull
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK) TRANSFER AGENT
AND REGISTRAR
BY /s/
AUTHORIZED OFFICER
(-c-) SECURITY COLUMBIAN UNITED STATES BANKNOTE COMPANY 1960
<PAGE>
BARNEYS NEW YORK, INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -_______ Custodian ___________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _______________
in common (State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, _________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING SIP CODE OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated _______________
________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
SIGNATURE(S) GUARANTEED:________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM)
PURSUANT TO S.E.C. RULE 17Ad-15
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST,
STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL
REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.
<PAGE>
Exhibit 10.1
CREDIT AGREEMENT
Dated as of January 28, 1999
among
BARNEY'S, INC.
BARNEYS AMERICA, INC.
PFP FASHIONS INC.
BARNEYS (CA) LEASE CORP.
BARNEYS (NY) LEASE CORP.
BASCO ALL-AMERICAN SPORTSWEAR CORP.
BNY LICENSING CORP.
BARNEYS AMERICA (CHICAGO) LEASE CORP.,
as Borrowers
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
CITICORP USA, INC.,
as Administrative Agent
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent
<PAGE>
CREDIT AGREEMENT
This Credit Agreement dated as of January 28, 1999 (as
amended, supplemented or otherwise modified from time to time, this "Agreement")
is entered into among BARNEY'S, INC., a New York corporation ("Barneys"),
BARNEYS AMERICA, INC., a Delaware corporation ("BAI"), PFP FASHIONS INC., a New
York corporation ("PFP"), BARNEYS (CA) LEASE CORP., a Delaware corporation ("CA
Lease"), BARNEYS (NY) LEASE CORP., a Delaware corporation ("NY Lease"), BASCO
ALL-AMERICAN SPORTSWEAR CORP., a New York corporation ("Basco"), BNY LICENSING
CORP., a Delaware corporation ("BNY"), and BARNEYS AMERICA (CHICAGO) LEASE
CORP., a Delaware corporation ("Chicago Lease;" and together with Barney's, BAI,
PFP, CA Lease, NY Lease, Basco and BNY collectively the "Borrowers" and
individually a "Borrower"), the institutions from time to time party hereto as
lenders, whether by execution of this Agreement or an Assignment and Acceptance
(the "Lenders"), the institutions from time to time party hereto as issuing
banks, whether by execution of this Agreement or an Assignment and Acceptance
(the "Issuing Banks"), CITICORP USA, INC. ("CUSA"), in its capacity as agent for
the Lenders and the Issuing Banks (with its successors in such capacity, the
"Administrative Agent"), and GENERAL ELECTRIC CAPITAL CORPORATION, in its
capacity as documentation agent (in such capacity, the "Documentation Agent").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. In addition to the terms defined
above, the following terms used herein shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation,
contingent or otherwise, of one Person with respect to any Indebtedness,
obligation or liability of another, if the primary purpose or intent thereof by
the Person incurring the Accommodation Obligation is to provide assurance to the
obligee of such Indebtedness, obligation or liability of another that such
Indebtedness, obligation or liability shall be paid or discharged, or that any
agreements relating thereto shall be complied with, or that the holders thereof
shall be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase security therefor (other than such agreements
to purchase in the ordinary course of business) or to provide funds for the
payment or discharge thereof, agreements to maintain solvency, assets, level of
income, or other financial condition, and
2
<PAGE>
agreements to make payment other than for value received.
"Administrative Agent" has the meaning ascribed to such term
in the preamble hereto and shall include any successor Administrative Agent
appointed pursuant to Section 12.07.
"Administrative Agent's Account" means the account of the
Administrative Agent bearing account number 36852248 (re: Barney's, Inc.)
maintained at the office of Citibank at 399 Park Avenue, New York, New York
10043, or such other deposit account as the Administrative Agent may from time
to time specify in writing to the Borrowers and the Lenders.
"Affiliate" of any specified Person means any other Person (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person, (ii)
which beneficially owns or holds 10% or more of any class of the Voting Stock or
other equity interest of such specified Person or (iii) of which 10% or more of
the Voting Stock or other equity interest is beneficially owned or held by such
specified Person or a Subsidiary of such specified Person; provided, however, if
Barneys Japan would otherwise become an Affiliate of Holdings or any member of
the Barneys Group as a result of the exercise of the Barneys Japan Option,
Barneys Japan will not be deemed to be such an Affiliate hereunder as a result
of such exercise. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person directly or indirectly, whether through the ownership of
Voting Stock, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agents" means the collective reference to the Administrative
Agent and the Documentation Agent.
"Applicable Commercial Letter of Credit Percentage" means a
rate equal to 1.25% per annum.
"Applicable Fixed Rate Margin" means initially a rate equal to
2.25% per annum until the last day of the fourth fiscal quarter of 1999.
Thereafter, such rate will reset quarterly on the first day of each fiscal
quarter, commencing with the first fiscal quarter of 2000, based upon the
Leverage Ratio for the immediately preceding fiscal quarter, calculated as of
the last day of such immediately preceding fiscal quarter for the twelve-month
period then ended, as set forth below:
<TABLE>
<CAPTION>
If the Leverage Applicable Fixed
Ratio is: Rate Margin
--------------- ----------------
<S> <C>
Greater than 5.00 2.500%
3
<PAGE>
Greater than 4.00 but less
than or equal to 5.00 2.350%
Greater than 3.00 but less
than or equal to 4.00 2.250%.
Greater than 2.00 but less
than or equal to 3.00 2.125%
Less than or equal to 2.00 2.000%
</TABLE>
"Applicable Floating Rate Margin" means initially a rate equal
to 1.25% per annum until the last day of the fourth fiscal quarter of 1999.
Thereafter, such rate will reset quarterly on the first day of each fiscal
quarter, commencing with the first fiscal quarter of 2000, based upon the
Leverage Ratio for the immediately preceding fiscal quarter, calculated as of
the last day of such immediately preceding fiscal quarter for the twelve-month
period then ended, as set forth below:
<TABLE>
<CAPTION>
If the Leverage Applicable Floating
Ratio is: Rate Margin
--------------- -------------------
<S> <C>
Greater than 5.00 1.500%
Greater than 4.00 but less
than or equal to 5.00 1.350%
Greater than 3.00 but less
than or equal to 4.00 1.250%.
Greater than 2.00 but less
than or equal to 3.00 1.125%
Less than or equal to 2.00 1.000%
</TABLE>
"Applicable Standby Letter of Credit Percentage" means
initially a rate equal to 2.00% per annum until the last day of the fourth
fiscal quarter of 1999. Thereafter, such rate will reset quarterly on the first
day of each fiscal quarter, commencing with the first fiscal quarter of 2000,
based upon the Leverage Ratio for the immediately preceding fiscal quarter,
calculated as of the last day of such immediately preceding fiscal quarter for
the twelve-month period then ended, as set forth below:
<TABLE>
<CAPTION>
If the Leverage Applicable Standby
Ratio is: Letter of Credit Percentage
--------------- ---------------------------
<S> <C>
4
<PAGE>
Greater than 5.00 2.25%
Greater than 4.00 but less
than or equal to 5.00 2.10%
Greater than 3.00 but less
than or equal to 4.00 2.00%
Greater than 2.00 but less
than or equal to 3.00 1.875%
Less than or equal to 2.00 1.75%
</TABLE>
"Applicable Lending Office" means, with respect to a
particular Lender, its Fixed Rate Lending Office in respect of provisions
relating to Fixed Rate Loans and its Domestic Lending Office in respect of
provisions relating to Floating Rate Loans.
"Applicable Usance Letter of Credit Percentage" means a rate
equal to 1.75% per annum.
"Assignment and Acceptance" means an Assignment and Acceptance
in substantially the form of Exhibit A attached hereto and made a part hereof
(with blanks appropriately completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest hereunder in accordance
with the provisions of Section 13.01.
"Availability" means, at any particular time, the amount by
which the Maximum Revolving Credit Amount exceeds the Revolving Credit
Obligations outstanding at such time.
"BAI" has the meaning ascribed to such term in the preamble to
this Agreement.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C.ss.ss.101 et seq.), as amended from time to time, and any successor
statute.
"Barneys" has the meaning ascribed to such term in the
preamble to this Agreement.
"Barneys Group" means Barneys and each of its Subsidiaries.
"Barneys Japan" means Barneys Japan Company Limited, a
Japanese corporation.
"Barneys Japan Option" means the option granted to Barneys by
Isetan to purchase up to 10% of each class of Capital Stock of Barneys Japan
pursuant to the Option to
5
<PAGE>
Purchase Capital Stock of Barneys Japan Company Limited, dated as of the date
hereof.
"Basco" has the meaning ascribed to such term in the preamble
to this Agreement.
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time (but at
least annually), as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of one
percent or, if there is no nearest 1/4 of one percent, to the
next higher 1/4 of one percent) of (i) 1/2 of one percent per
annum, plus (ii) the rate per annum obtained by dividing (A)
the latest three-week moving average of secondary market
morning offering rates in the United States for three-month
certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly
on each Monday (or, if any such date is not a Business Day, on
the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New
York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% minus
the average of the daily percentages specified during such
three-week period by the Federal Reserve Board (or any
successor) for determining the maximum reserve requirement
(including, but not limited to, any emergency, supplemental or
other marginal reserve requirement) for Citibank in respect of
liabilities consisting of or including (among other
liabilities) three-month U.S. dollar nonpersonal time deposits
in the United States, plus (iii) the average during such
three-week period of the annual assessment rates estimated by
Citibank for determining the then current annual assessment
payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring U.S. dollar
deposits of Citibank in the United States; and
(c) for any day, 1/2 of one percent per annum above
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such
transactions received by Citibank from three Federal funds
brokers of recognized standing selected by it.
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which any
Borrower or any ERISA Affiliate is, or within the immediately preceding three
(3) years was, an "employer" as defined in Section
6
<PAGE>
3(5) of ERISA.
"Blocked Account Agreement" means a blocked account agreement
among each Blocked Account Bank, the Borrowers and the Administrative Agent, in
form and substance satisfactory to the Administrative Agent, as such agreement
may be amended, supplemented or otherwise modified from time to time.
"Blocked Account Bank" means each bank identified as such on
Schedule 3.05.
"Blocked Accounts" means, collectively, the blocked accounts
established at the Blocked Account Banks; and "Blocked Account" means any one of
the Blocked Accounts.
"BNY" has the meaning ascribed to such term in the preamble to
this Agreement.
"Board of Directors" means the Board of Directors of Holdings.
"Borrowers" and "Borrower" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowers' Account" means the account of the Borrowers
bearing account number 40786482 (re: Barneys Group) maintained at the office of
Citibank at 399 Park Avenue, New York, New York 10043.
"Borrowing" means a borrowing consisting of Loans of the same
type made on the same day.
"Borrowing Base" means, as of any date of determination, an
amount equal to the sum of (i) up to ninety percent (90%) of the face amount of
Eligible Receivables less such reserves as the Administrative Agent, in its
reasonable credit judgment, deems appropriate, plus (ii) up to thirty-seven
percent (37%) of Eligible Retail Inventory less such reserves as the
Administrative Agent, in its reasonable credit judgment, deems appropriate, plus
(iii) up to thirty-seven percent (37%) of the Inventory being purchased by a
Borrower in the ordinary course of its business for which a Commercial Letter of
Credit is outstanding and has not been drawn upon less such reserves as the
Administrative Agent, in its reasonable credit judgment, deems appropriate, plus
(iv) up to thirty-seven percent (37%) of the Inventory being purchased by a
Borrower in the ordinary course of its business for which a Usance Letter of
Credit is outstanding and has not been drawn upon less such reserves as the
Administrative Agent, in its reasonable credit judgment, deems appropriate, plus
(v) up to twenty percent (20%) of Eligible Aged Inventory less such reserves as
the Administrative Agent, in its reasonable credit judgment, deems appropriate,
plus (vi) the Trademark Available Amount less a reserve in the amount of
$1,318,000 during the period from the date hereof until the date the Borrowers
deliver their financial statements pursuant to Section 7.01(a) showing
Consolidated EBITDA (without giving effect to the Pension Liability Payment) for
the twelve month period ending January 30, 1999,
7
<PAGE>
plus (vii) 100% of the funds constituting Net Cash Proceeds in the Cash
Collateral Account, plus (viii) 100% of the market value of the Treasury Notes
credited to the Control Account in an amount not to exceed $500,000 but only
after appropriate documentation and opinions, in form and substance reasonably
satisfactory to the Administrative Agent, have been delivered to the
Administrative Agent relating to the Administrative Agent's first priority Lien
in such Treasury Notes less such reserves as the Administrative Agent, in its
reasonable credit judgment, deems appropriate, minus (ix) the Rent Reserve, if
any, in effect at such time, minus (x) the amount of Pre-Settlement Exposure at
such time. The Administrative Agent, based on such reasonable credit and
collateral considerations as the Administrative Agent may deem appropriate, may
change from time to time the advance rates in clauses (i), (ii), (iii) and (iv)
above, provided that such advance rates do not at any time exceed the respective
percentages set forth above. The Administrative Agent agrees to give the
Borrowers prior written notice of any such change.
"Borrowing Base Certificate" means a certificate in
substantially the form of Exhibit B attached hereto and made a part hereof.
"Business Day" means a day, in the applicable local time,
which is not a Saturday or Sunday or a legal holiday and on which banks are not
required or permitted by law or other governmental action to close (i) in New
York, New York or (ii) in the case of Fixed Rate Loans, in London, England or
(iii) in the case of Letter of Credit transactions for a particular Issuing
Bank, in the place where its office for issuance or administration of the
pertinent Letter of Credit is located.
"CA Lease" has the meaning ascribed to such term in the
preamble to this Agreement.
"Capital Expenditures" means, for any period, the aggregate of
all expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be included in or reflected by the fixed asset accounts of
any member of the Barneys Group as reflected in any of their respective balance
sheets; provided, however, (i) Capital Expenditures shall include that portion
of Capital Leases which is incurred and capitalized during such period; (ii)
Capital Expenditures shall include the purchase price paid to exercise the
Barneys Japan Option if the Fixed Charge Coverage Ratio set forth in Section
9.04(v) is not met at the time of such exercise; and (iii) Capital Expenditures
shall exclude, whether or not such a designation would be in conformity with
GAAP, expenditures made in connection with the replacement or restoration of
Property, to the extent reimbursed or financed from insurance or condemnation
proceeds and permitted pursuant to Section 8.07.
"Capital Lease", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
8
<PAGE>
"Capital Stock", with respect to any Person, means any capital
stock of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
"Cash Collateral" means cash or Cash Equivalents held in the
Cash Collateral Account as security for the Obligations.
"Cash Collateral Account" means the account of the Borrowers
bearing account number 40787258 at Citibank, N.A., 399 Park Avenue, New York,
New York, under the sole dominion and control of the Administrative Agent.
"Cash Collateral Account Agreement" means the Cash Collateral
Pledge and Assignment Agreement dated the date hereof between the Borrowers and
the Administrative Agent regarding the Cash Collateral Account, as such Cash
Collateral Pledge and Assignment Agreement may be amended, supplemented or
otherwise modified from time to time.
"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States government and backed
by the full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (reasonably protected
against currency fluctuations), which, at the time of acquisition, are rated A-1
(or better) by Standard & Poor's Corporation or P-1 (or better) by Moody's
Investors Service, Inc.; (iii) commercial paper of United States and foreign
banks and bank holding companies and their subsidiaries and United States and
foreign finance, commercial industrial or utility companies which, at the time
of acquisition, are rated A-1 (or better) by Standard & Poor's Corporation or
P-1 (or better) by Moody's Investors Service, Inc.; (iv) marketable direct
obligations of any State of the United States of America or any political
subdivision of any such State given on the date of such investment the highest
credit rating by Moody's Investors Service, Inc. and Standard & Poor's
Corporation; and (v) reverse purchase agreements covering obligations of the
type specified in clause (i); provided, that the maturities of any such Cash
Equivalents referred to in clauses (i) through (v) shall not exceed three
hundred sixty (360) days.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., any
amendments thereto, any successor statutes, and any regulations or legally
enforceable guidance promulgated thereunder.
"CERCLIS" has the meaning ascribed to such term in Section
6.01(o).
"Change of Control" means the occurrence of one or more of the
following events:
9
<PAGE>
(a) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act), other than one or more Permitted Holders, is
or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act), directly or indirectly, of more
than 25% of the total voting power of the Voting Stock of Holdings; and
(b) the Permitted Holders "beneficially own" (as defined in
Rules 13d-3 and 13d- 5 under the Securities Exchange Act), directly or
indirectly, in the aggregate less than 40% of the total voting power of
the Voting Stock of Holdings for any period of thirty (30) days or
more.
"Citibank" means Citibank, N.A., a national banking
association, and its successors.
"Claim" means any written claim or demand, by any Person, of
whatsoever kind or nature for any alleged Liabilities and Costs, whether based
in contract, tort, implied or express warranty, strict liability, criminal or
civil statute, Permit, ordinance or regulation, common law or otherwise.
"Closing Date" means the date on which the conditions set
forth in Sections 5.01 and 5.02 have been satisfied or waived.
"Collateral" means all Property and interests in Property now
owned or hereafter acquired by any Borrower upon which a Lien is granted under
any of the Loan Documents.
"Commercial Letter of Credit" means any documentary letter of
credit issued by an Issuing Bank pursuant to Section 2.04 for the account of the
Borrowers, which is drawable upon presentation of documents evidencing the sale
or shipment of goods purchased by any Borrower in the ordinary course of its
business.
"Commitment" means, with respect to any Lender, the obligation
of such Lender to make Revolving Loans and to participate in Letters of Credit,
and which shall not exceed the principal amount set forth under such Lender's
name on the signature pages hereof or the signature page of the Assignment and
Acceptance by which it became a Lender, as modified from time to time pursuant
to the terms hereof or to give effect to any applicable Assignment and
Acceptance, and "Commitments" means the aggregate principal amount of the
Commitments of all the Lenders, the maximum amount of which shall not exceed a
principal amount of $120,000,000, as reduced from time to time pursuant to the
terms hereof.
"Commitment Termination Date" means the earlier to occur of
(i) the date of termination of the Commitments pursuant to the terms hereof and
(ii) January 28, 2003.
10
<PAGE>
"Compliance Certificate" has the meaning ascribed to such term
in Section 7.01(c).
"Concentration Account" means an account at Citibank, N.A. in
New York, New York, or such other account as is acceptable to the Administrative
Agent as a concentration account.
"Consolidated Interest Expense" means, for any period on a
consolidated basis for any Person and its Subsidiaries, as determined in
conformity with GAAP, total interest expense, whether paid or accrued (without
duplication), including the interest component of Capital Lease obligations.
"Consolidated EBITDA" means, for any twelve-month period on a
consolidated basis for any Person and its Subsidiaries, (i) the sum of (A)
Consolidated Net Income, (B) depreciation and amortization expense, (C)
Consolidated Interest Expense, (D) federal, state, local and foreign income
taxes and (E) other non-cash charges, minus (ii) extraordinary gains not already
excluded from the determination of Consolidated Net Income.
"Consolidated Net Income" means, for any period on a
consolidated basis for any Person and its Subsidiaries, the net earnings (or
loss) after taxes for such period taken as a single accounting period determined
in conformity with GAAP.
"Consolidated Net Worth" means, on a consolidated basis for
any Person and its Subsidiaries, (i) total consolidated assets of such Person
minus (ii) total consolidated liabilities of such Person. Assets and liabilities
shall be determined in accordance with GAAP, except that investments in and
moneys due from Affiliates of Barneys shall be excluded from total consolidated
assets.
"Constituent Document" means, with respect to any entity, (i)
the articles/certificate of incorporation (or the equivalent organizational
documents) of such entity, (ii) the by-laws (or the equivalent governing
documents) of such entity and (iii) any document setting forth the designation,
amount and/or relative rights, limitations and preferences of any class or
series of such entity's Capital Stock.
"Contaminant" means any pollutant, hazardous substance,
radioactive substance, toxic substance, hazardous waste, radioactive waste,
special waste, petroleum or petroleum-derived substance or waste, asbestos,
polychlorinated biphenyls (PCBs), or any hazardous or toxic constituent thereof
and includes, but is not limited to, these terms as defined in Environmental,
Health or Safety Requirements of Law.
"Contractual Obligation" means, as applied to any Person, any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person
11
<PAGE>
is a party or by which it or any of its properties is bound, or to which it or
any of its properties is subject.
"Control Account" means the control account that is subject to
a control account agreement which is in form and substance reasonably
satisfactory to the Administrative Agent.
"CUSA" has the meaning ascribed to such term in the preamble
hereto.
"Customary Permitted Liens" means Liens (other than
Environmental Liens and Liens in favor of the PBGC)
(i) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP;
(ii) of landlords arising by statute and Liens of suppliers,
mechanics, carriers, materialmen, repairmen, warehousemen or workmen
and other Liens imposed by law created in the ordinary course of
business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves, bonds or other appropriate provisions are being maintained in
accordance with GAAP;
(iii) incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment
insurance or other types of social security benefits or to secure the
performance of bids, tenders, sales, contracts (other than for the
repayment of borrowed money), surety, appeal, customs and performance
bonds; or
(iv) arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the
use of Real Property which do not materially interfere with the
ordinary conduct of the business of any Borrower.
"Debt" means, as applied to any Person at any time, all
indebtedness, obligations or other liabilities of such Person (i) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, and any accrued interest, fees and charges relating
thereto, (ii) under profit payment agreements or in respect of obligations to
redeem, repurchase or exchange any Securities of such Person, (iii)
reimbursement obligations with respect to letters of credit issued for such
Person's account, (iv) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in the ordinary
course of business, or (v) in respect of Capital Leases.
"Debtors" means the members of the Barneys Group as debtors in
the Chapter 11
12
<PAGE>
proceeding filed in the United States Bankruptcy Court for the Southern District
of New York, Case Numbers 96 B 40113 through 40133 (JLG).
"Default" means an event which, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.
"Disclosure Statement" means the Disclosure Statement for the
Debtors dated November 13, 1998 and filed with the United States Bankruptcy
Court for the Southern District of New York along with the Plan of
Reorganization.
"Documentation Agent" has the meaning ascribed to such term in
the preamble hereto.
"DOL" means the United States Department of Labor and any
successor department or agency.
"Dollars" and "$" means the lawful money of the United States.
"Domestic Lending Office" means, with respect to any Lender,
such Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrowers and the Administrative Agent.
"Eligible Aged Inventory" means, with respect to any date of
determination, Eligible Inventory that was acquired by a Borrower fifteen months
or more prior to such date.
"Eligible Assignee" means (i) a Lender or any Affiliate
thereof or (ii) a commercial bank, finance company, insurance company, other
financial institution or fund, reasonably acceptable to the Administrative Agent
and, so long as no Event of Default has occurred and is continuing at the time,
the Borrowers (which approval shall not be unreasonably withheld).
"Eligible Inventory" means Inventory (i) with respect to which
the Administrative Agent has a valid and perfected first priority Lien, (ii)
with respect to which no warranty contained in any of the Loan Documents has
been breached, (iii) which is not, in the reasonable opinion of the
Administrative Agent, obsolete or unmerchantable and (iv) which the
Administrative Agent, in its reasonable credit judgment, deems to be Eligible
Inventory, based on such credit and collateral considerations as the
Administrative Agent may deem appropriate. Eligible Inventory shall be valued at
retail, using the retail inventory method. No Inventory shall be Eligible
Inventory if a Commercial Letter of Credit or Usance Letter of Credit is
outstanding with respect to such Inventory and such Letter of Credit has not
been drawn upon. No Inventory of any Borrower shall be Eligible Inventory if
such Inventory is located, stored, used or held at
13
<PAGE>
the premises of a third party unless (A) the Administrative Agent shall have
received a landlord, bailee or similar letter from such third party, in form and
substance reasonably satisfactory to the Administrative Agent, and an
appropriate UCC-1 financing statement shall have been executed with respect to
such location or (B) Rent Reserve with respect to the premises of a third party
(other than the premises subject to an Isetan Lease) shall have been deducted
from the calculation of Borrowing Base. The Administrative Agent reserves the
right, in its reasonable discretion, to create, from time to time, additional
categories of ineligible Inventory. Eligible Inventory will be reduced by the
amount of "Additional Shrink Reserve", "Prepaid Gift Card", "Your Cut
Promotional Card", "Consignment" and "Ineligible Stock Ledger Locations", as
such items are reflected on the Borrowing Base Certificate. Notwithstanding the
foregoing, the Borrowers hereby acknowledge that the items referred to in the
immediately preceding sentence are not the only deductions being made from
Eligible Inventory in calculating the Borrowing Base pursuant to the Borrowing
Base Certificate.
"Eligible Retail Inventory" means, with respect to any date of
determination, Eligible Inventory that was acquired by a Borrower less than
fifteen months prior to such date.
"Eligible Receivables" means those Receivables (i) with
respect to which the Administrative Agent has a valid and perfected first
priority Lien, (ii) with respect to which no warranty contained in any of the
Loan Documents has been breached, and (iii) which the Administrative Agent, in
its reasonable credit judgment, deems to be Eligible Receivables, based on such
credit and collateral considerations as the Administrative Agent may deem
appropriate. No Receivable of a Borrower shall be an Eligible Receivable if:
(a) it is due or unpaid more than 60 days after the date of
the original invoice issued by a Borrower in connection with the sale
giving rise thereto; or
(b) the account debtor has filed a petition for bankruptcy or
any other petition for relief under the Bankruptcy Code or any similar
statute, made an assignment for the benefit of creditors, or if any
petition or other application for relief under the Bankruptcy Code or
any similar statute has been filed against the account debtor, or if
the account debtor has failed, suspended its business operations,
become insolvent, suffered a receiver or a trustee to be appointed for
any of its assets or affairs, or is generally failing to pay its debts
as they become due.
Eligible Receivables will be reduced by the amount of "Accounts 90 + days Past
Due", "Disputed Amounts/Claims", "Account Settlement", "Deceased", "Bankruptcy",
"Employee Accounts", "Payment Plan (Workout Accounts 24 to 36 months Payout)",
"Foreign Residence Cardholders", "NSF Checks", "Late Fees", "Return Reserve" and
"Finance Charge Reserve", as such items are reflected on the Borrowing Base
Certificate. Notwithstanding the foregoing, the Borrowers hereby acknowledge
that the items referred to in the immediately preceding sentence are not the
only deductions being made from Eligible Receivables in calculating the
Borrowing
14
<PAGE>
Base pursuant to the Borrowing Base Certificate.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental Requirements of Law,
or (ii) damages arising from, or costs incurred by such Governmental Authority
in response to, a Release or threatened Release of a Contaminant into the
environment.
"Environmental Requirements of Law" means all applicable
Requirements of Law derived from or relating to federal, state and local laws or
regulations relating to or addressing the indoor or outdoor environment,
including but not limited to any applicable law, regulation, or order relating
to the use, handling, or disposal of any Contaminant, any applicable law,
regulation, or order relating to Remedial Action and any law, regulation, or
order relating to workplace or worker safety and health (but only to the extent
relating to occupational exposure to Contaminants), and such Requirements as are
promulgated by the specifically authorized agent responsible for administering
such Requirements.
"Equipment" means all present and future (i) equipment,
including, without limitation, machinery, manufacturing, distribution, selling,
data processing and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft,
aircraft engines, and trade fixtures, (ii) other tangible personal Property
(other than Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means any (i) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as any Borrower, (ii) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with such Borrower, and
(iii) member of the same affiliated service group (within the meaning of section
414(m) of the Internal Revenue Code) as such Borrower, any corporation described
in clause (i) above or any partnership or trade or business described in clause
(ii) above.
"Eurodollar Rate" means, with respect to any Interest Period
applicable to a Borrowing of Fixed Rate Loans denominated in Dollars, the
interest rate per annum obtained by dividing (i) an interest rate per annum
determined by the Administrative Agent to be the average (rounded upward to the
nearest whole multiple of one-sixteenth of one percent (0.0625%) per annum if
such average is not such a multiple) of the rates per annum at which deposits in
Dollars are offered by the principal office of Citibank in London, England to
major banks in the London interbank market at approximately 11:00 a.m. (London
time) on the Fixed Rate Determination Date for such Interest Period for a period
equal to such Interest Period and in an amount
15
<PAGE>
substantially equal to the amount of the Fixed Rate Loan to be made by CUSA for
such Interest Period, by (ii) a percentage equal to 100% minus the Eurodollar
Reserve Percentage in effect on the relevant Fixed Rate Determination Date. The
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Eurodollar Reserve Percentage" means, for any day, that
percentage which is in effect on such day, as prescribed by the Federal Reserve
Board for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York, New York with
deposits exceeding five billion Dollars in respect of "Eurocurrency Liabilities"
(or in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Fixed Rate Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any bank to United States residents).
"Event of Default" means any of the occurrences set forth in
Section 11.01 after the expiration of any applicable grace period and the giving
of any applicable notice, in each case as expressly provided in Section 11.01.
"Excluded Proceeds" means (a) Net Cash Proceeds from sales or
other dispositions of assets in an aggregate amount not to exceed $2,000,000
during the period from the date hereof to the Commitment Termination Date and
(b) Net Cash Proceeds (in addition to the Net Cash Proceeds referred to in
clause (a)) from sales or other dispositions of assets in an aggregate amount
not to exceed the lesser of (i) $8,000,000 during the period from the date
hereof to the Commitment Termination Date and (ii) the amount of the Trademark
Available Amount at such time.
"Fair Market Value" means, with respect to any asset or group
of assets, the value of the consideration obtainable in a sale of such asset in
the open market, assuming a sale by a willing seller to a willing purchaser
dealing at arm's length and arranged in an orderly manner over a reasonable
period of time, each having reasonable knowledge of the nature and
characteristics of such asset, neither being under any compulsion to act,
determined (a) in good faith by the Board of Directors of Holdings or (b) in an
appraisal of such asset, provided that such appraisal was performed relatively
contemporaneously with such determination of the fair market value by an
independent third party appraiser and the basic assumptions underlying such
appraisal have not materially changed since the date thereof.
"Fall 1998 Stub Period" has the meaning ascribed to such term
in the Plan of Reorganization.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds
16
<PAGE>
brokers, as published for such day (or, if such day is not a Business Day in New
York, New York, for the next preceding Business Day) in New York, New York by
the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day in New York, New York, the average of the
quotations for such day on such transactions received by Citibank from three
federal funds brokers of recognized standing selected by the Administrative
Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any Governmental Authority succeeding to its
functions.
"Fiscal Year" means the fiscal year of the Borrowers, which
shall be the 52- or 53-week period ending on the Saturday in January of each
calendar year closest to January 31 in the succeeding calendar year as set forth
below:
<TABLE>
<CAPTION>
Fiscal Period Name Dates
------------------ -----
<S> <C>
Fall 1998 Stub Period 8/2/98 -- 1/30/99
Fiscal Year 1999 1/31/99 -- 1/29/00
Fiscal Year 2000 1/30/00 -- 1/27/01
Fiscal Year 2001 1/28/01 -- 2/2/02
Fiscal Year 2002 2/3/02 -- 2/1/03
</TABLE>
"Fixed Charge Coverage Ratio" means, for any twelve-month
period on a consolidated basis for any Person and its Subsidiaries, the ratio of
(i) Consolidated EBITDA minus Capital Expenditures made during such period minus
cash payments of income and franchise taxes made during such period, to (ii)
Consolidated Interest Expense for such period plus any principal payment of
Funded Debt (other than the payments on the Revolving Loans) made during such
period plus the aggregate amount of security deposits or face amount of Letters
of Credit given in connection with the Isetan Leases.
"Fixed Rate" means, with respect to any Interest Period
applicable to a Borrowing of Fixed Rate Loans, an interest rate per annum equal
to the Eurodollar Rate in effect on the relevant Fixed Rate Determination Date.
"Fixed Rate Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "Fixed Rate Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the Borrowers
and the Administrative Agent.
"Fixed Rate Determination Date" means, with respect to a
Borrowing of Fixed Rate Loans, the second Business Day prior to the first day of
the Interest Period for such Borrowing.
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<PAGE>
"Fixed Rate Interest Payment Date" means (i) with respect to
any Fixed Rate Loan having an Interest Period of three (3) calendar months or
less, the last day of such Interest Period applicable to such Fixed Rate Loan
and (ii) with respect to any Fixed Rate Loan having an Interest Period in excess
of three (3) calendar months, the last day of each three (3) calendar month
interval during such Interest Period applicable to such Fixed Rate Loan and the
last day of such Interest Period.
"Fixed Rate Lending Office" means, with respect to any Lender,
the office or offices of such Lender (if any) set forth below such Lender's name
under the heading "Fixed Rate Lending Office" on the signature pages hereof or
on the Assignment and Acceptance by which it became a Lender or such office or
offices of such Lender as it may from time to time specify by written notice to
the Borrowers and the Administrative Agent.
"Fixed Rate Loans" means all Loans which bear interest at a
rate determined by reference to the Fixed Rate as provided in Section 4.01(a).
"Floating Rate" means, for any period applicable to any
Floating Rate Loan denominated in Dollars, an interest rate per annum equal to
the Base Rate in effect from time to time with respect to Floating Rate Loans.
"Floating Rate Loans" means all Loans which bear interest at a
rate determined by reference to the Floating Rate as provided in Section
4.01(a).
"Foreign Employee Benefit Plan" means any employee benefit
plan as defined in Section 3(3) of ERISA which is maintained or contributed to
for the benefit of the employees of any Borrower, any of its Subsidiaries or any
of its ERISA Affiliates, but which is not covered by ERISA pursuant to ERISA
Section 4(b)(4).
"Foreign Exchange Contract" means a foreign exchange contract
between any member of the Barneys Group and Citibank or an Affiliate of
Citibank.
"Foreign Pension Plan" means any employee pension benefit plan
as defined in Section 3(2) of ERISA which (i) is maintained or contributed to
for the benefit of employees of any Borrower, any of its Subsidiaries or any of
its ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4)
of ERISA, and (iii) under applicable local law, is required to be funded through
a trust or other funding vehicle.
"Funded Debt" means Debt which matures more than one year from
the date of its creation or matures within one year from such date but is
renewable or extendible, at the option of the debtor, to a date more than one
year from such date or arises under a revolving credit or similar agreement
which obligates the lender or lenders to extend credit during a period of more
than one year from such date including, without limitation, all amounts of
Funded Debt required to be paid or prepaid within one year from the date of
determination and excluding the Loans.
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<PAGE>
"Funding Date" means, with respect to any Loan, the date of
the funding of such Loan.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board, the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board or in such other statements by such other entity as may be in
general use by significant segments of the accounting profession as in effect on
the date hereof (unless otherwise specified pursuant to Section 13.04).
"Governmental Authority" means any nation or government, any
federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Holder" means any Person entitled to enforce any of the
Obligations, whether or not such Person holds any evidence of Indebtedness,
including, without limitation, the Administrative Agent, each Lender and each
Issuing Bank.
"Holdings" means Barneys New York, Inc., a Delaware
corporation.
"Holdings Guaranty" means the Guaranty by Holdings dated as of
the date hereof in favor of the Administrative Agent for the benefit of the
Administrative Agent, the Lenders, the Issuing Banks and the other Holders, as
such agreement may be amended, supplemented or otherwise modified from time to
time.
"Indebtedness" means, as applied to any Person, at any time,
(a) all indebtedness, obligations or other liabilities of such Person (i) for
borrowed money or evidenced by debt securities, debentures, acceptances, notes
or other similar instruments, and any accrued interest, fees and charges
relating thereto, (ii) under profit payment agreements or in respect of
obligations to redeem, repurchase or exchange any Securities of such Person or
to pay dividends in respect of any stock, (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase price
of property or services, except accounts payable and accrued expenses arising in
the ordinary course of business, (v) in respect of Capital Leases, or (vi) which
are Accommodation Obligations (other than obligations pursuant to the Tax
Sharing Agreement to pay taxes, assessments, fees and other governmental charges
with respect to any member of the Barneys Group or Holdings); (b) all
indebtedness, obligations or other liabilities of others secured by a Lien on
any property of such Person, whether or not such indebtedness, obligations or
liabilities are assumed by such Person, all as of such time; (c) all
indebtedness, obligations or other liabilities of such Person in respect of
Interest Rate Contracts and foreign exchange agreements, net of liabilities owed
to such Person by the counterparties thereon; and (d) all contingent Contractual
Obligations with respect to any of the foregoing.
"Indemnified Matter" has the meaning ascribed to such term in
Section 13.03.
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<PAGE>
"Indemnitee" has the meaning ascribed to such term in Section
13.03.
"Intellectual Property" has the meaning ascribed to such term
in Section 6.01 (u).
"Interest Period" has the meaning ascribed to such term in
Section 4.02(b).
"Interest Rate Contracts" means interest rate exchange, swap,
collar or cap or similar agreements providing interest rate protection.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, any
successor statute and any regulations or guidance promulgated thereunder.
"Inventory" means all present and future (i) inventory, (ii)
goods, merchandise and other personal Property furnished or to be furnished
under any contract of service or intended for sale or lease, and all goods
consigned by a Borrower and all other items which have previously constituted
Equipment but are then currently being held for sale or lease in the ordinary
course of such Borrower's business, (iii) raw materials, work-in-process and
finished goods, (iv) materials, components and supplies of any kind, nature or
description used or consumed in such Borrower's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in clauses (i) through (iii) above, (v) goods
in which such Borrower has a joint or other interest to the extent of such
Borrower's interest therein or right of any kind (including, without limitation,
goods in which such Borrower has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by such Borrower; in each case
whether in the possession of such Borrower, a bailee, a consignee, or any other
Person for sale, storage, transit, processing, use or otherwise, and any and all
documents for or relating to any of the foregoing.
"Investment" means, with respect to any Person, (i) any
purchase or other acquisition by that Person of Securities, or of a beneficial
interest in Securities issued by or other equity ownership interest in any other
Person, (ii) any purchase by that Person of all or a significant part of the
assets of a business conducted by another Person, and (iii) any loan, advance
(other than deposits with financial institutions available for withdrawal on
demand, prepaid expenses, accounts receivable, advances to employees and similar
items made or incurred in the ordinary course of business as presently
conducted), or capital contribution by that Person to any other Person,
including all Indebtedness to such Person arising from a sale of property by
such Person other than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person
succeeding to the functions thereof.
"Isetan" means Isetan of America Inc., a Delaware corporation.
20
<PAGE>
"Isetan Leases" means (i) the Amended and Restated Lease
Agreement dated as of the Closing Date between Isetan, as lessor, and Barneys,
as lessee, in respect of the premises known as 9584 Wilshire Boulevard, Beverly
Hills, California, as assigned to CA Lease, as assignee, pursuant to an
Assignment and Assumption of Lease between Barneys, as assignor and CA Lease, as
assignee, (ii) the Amended and Restated Lease Agreement dated as of the Closing
Date between Isetan, as lessor, and BAI, as lessee, in respect of the premises
known as Rush and Oak Streets, Chicago, Illinois, as assigned to Chicago Lease,
as lessee, pursuant to an Assignment and Assumption of Lease between BAI, as
assignor and Chicago Lease, as assignee, and (iii) the Amended and Restated
Lease Agreement between Isetan, as successor in interest to Newireen Associates,
as lessor, and Barneys and Madneer Corp., as lessee, as assigned to NY Lease
pursuant to an Assignment and Assumption of Lease between Barneys and Madneer
Corp., as assignor and NY Lease, as assignee, in respect of premises known as
660 Madison Avenue, New York, New York.
"Issue" means, with respect to any Letter of Credit, either
issue, or extend the expiry of, or renew, or increase the amount of, such Letter
of Credit, and the term "Issued" or "Issuance" shall have a corresponding
meaning.
"Issuing Bank" means Citibank and any successor or assignee
thereof.
"Letter Agreement" means the fee letter dated December 11,
1998 from Citicorp Securities, Inc. and accepted and agreed to by Barneys.
"Letter of Credit" means any Commercial Letter of Credit,
Usance Letter of Credit or Standby Letter of Credit.
"Letter of Credit Fee" has the meaning ascribed to such term
in Section 4.03(a).
"Letter of Credit Obligations" means, at any particular time,
the sum of (i) all outstanding Reimbursement Obligations, plus (ii) the
aggregate amount of all outstanding time drafts issued under any Usance Letter
of Credit, plus (iii) the aggregate undrawn face amount of all outstanding
Letters of Credit, plus (iv) the aggregate face amount of all Letters of Credit
requested by any Borrower but not yet issued (unless the request for an unissued
Letter of Credit has been denied pursuant to Section 2.04(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect
to a Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several documents,
taken together) as the Issuing Bank from which the Letter of Credit is requested
may employ in the ordinary course of business for its own account, with such
modifications thereto as may be agreed upon by the Issuing Bank and any Borrower
and as are not materially adverse (in the reasonable judgment of the Issuing
Bank) to the interests of the Lenders; provided, however, in the event of any
conflict between the terms hereof and of any Letter of Credit Reimbursement
Agreement, the terms hereof shall control.
21
<PAGE>
"Leverage Ratio" means, for any twelve-month period on a
consolidated basis for the Borrowers, the ratio of (a) the sum of (i) the
average of the outstanding Revolving Loans as of the last day of each week
during such period plus (ii) the outstanding Debt (other than the Revolving
Loans) as of the last day of such twelve-month period, to (b) Consolidated
EBITDA for such period.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses and damages with respect to or arising out of any of
the following: personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton injury,
damage or threat to the environment or public health or welfare, costs and
expenses (including, without limitation, attorney, expert and consulting fees
and costs of investigation, feasibility or Remedial Action studies), fines,
penalties and monetary sanctions, voluntary disclosures made to, or settlements
with, the United States Government, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, conditional sale agreement, deposit arrangement,
security interest, encumbrance, lien (statutory or other), preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever in respect of any property of a Person, whether granted voluntarily
or imposed by law, and includes the interest of a lessor under a Capital Lease
or under any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement or similar notice
(other than a financing statement filed by a "true" lessor pursuant to ss. 9-408
of the Uniform Commercial Code), naming the owner of such property as debtor,
under the Uniform Commercial Code or other comparable law of any jurisdiction.
"List of Closing Documents" means a list of closing documents,
in substantially the form of Exhibit F attached hereto and made a part hereof.
"Loan Account" has the meaning ascribed to such term in
Section 2.05(b).
"Loan Documents" means this Agreement, the Notes, the Letter
Agreement, the Letter of Credit Reimbursement Agreements, the Blocked Account
Agreements, the Cash Collateral Account Agreement, the Security Agreements, the
Pledge Agreements, the Holdings Guaranty, the documents executed or delivered
pursuant to Sections 5.01(a) and (b) by Holdings or any member of the Barneys
Group, any Interest Rate Contracts to which any Lender or any Affiliate of a
Lender is a party, and all other instruments, agreements and written Contractual
Obligations between Holdings or any member of the Barneys Group, on the one
hand, and the Administrative Agent, any Lenders or the Issuing Bank, on the
other hand, in each case delivered to the Administrative Agent, such Lender or
the Issuing Bank pursuant to or in connection with the transactions contemplated
hereby.
"Loans" means collectively the Revolving Loans and the Swing
Loans.
22
<PAGE>
"Lock Box" means the lock box located at P.O. Box 970006,
Boston MA 02297 and accessed by the Servicer.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, condition (financial or otherwise), operations, performance,
assets or prospects of the Barneys Group, taken as a whole, (ii) the ability of
Holdings or the members of the Barneys Group, taken as a whole, to perform any
of their material obligations under the Loan Documents or (iii) the ability of
the Lenders, the Issuing Bank or the Administrative Agent to enforce the Loan
Documents.
"Maximum Revolving Credit Amount" means, at any particular
time, an amount equal to the lesser of (A) the Commitments at such time and (B)
the Borrowing Base at such time.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is, or within the immediately preceding
three (3) years was, contributed to by either any Borrower or any ERISA
Affiliate.
"Net Cash Proceeds" means (i) proceeds received by any
Borrower in cash or Cash Equivalents from the sale (including, without
limitation, any Sale and Leaseback Transaction), assignment or other disposition
of any Property or assets (other than the sales or dispositions permitted under
Section 9.02(i), (ii) or (iv)), net of (A) the reasonable cash costs of sale,
assignment or other disposition and (B) taxes paid or payable as a result
thereof; provided that evidence of each of (A) and (B) are provided to the
Administrative Agent; (ii) proceeds of insurance on account of the loss of or
damage to any Collateral; and (iii) proceeds received by any Borrower in cash or
Cash Equivalents from (A) the issuance of any Capital Stock by such Borrower
(other than Capital Stock that is issued by a Borrower to Holdings or another
Borrower provided that the Administrative Agent has a first priority Lien with
respect to such Capital Stock) or (B) issuance of any Indebtedness by such
Borrower (other than the Indebtedness permitted under Section 9.01), in each
case net of reasonable costs incurred in connection with such transaction;
provided that evidence of such costs is provided to the Administrative Agent.
"Notes" means collectively the Revolving Loan Notes and the
Swing Loan Notes.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit D attached hereto and made a part hereof.
"Notice of Continuation/Conversion" means a notice
substantially in the form of Exhibit E attached hereto and made a part hereof.
23
<PAGE>
"NY Lease" has the meaning ascribed to such term in the
preamble to this Agreement.
"Obligations" means all Loans, advances, debts, liabilities,
obligations, Reimbursement Obligations, covenants and duties owing by Holdings
or any member of the Barneys Group to the Administrative Agent, any Lender, the
Issuing Bank, any Affiliate of the Administrative Agent, any Lender or the
Issuing Bank, or any Person entitled to indemnification pursuant to Section
13.03, of any kind or nature, present or future, pursuant to or in connection
with the Loan Documents, whether or not evidenced by any note, guaranty or other
instrument, whether or not for the payment of money, whether arising by reason
of an extension of credit, opening or amendment of a Letter of Credit or payment
of any draft drawn thereunder, Interest Rate Contract, foreign exchange contract
with any Lender or with any Affiliate of a Lender, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, reasonable attorneys' fees
and disbursements and any other sum chargeable to any Borrower hereunder or
under any other Loan Document. The term also includes the obligations of
Holdings and each member of the Barneys Group to Citibank or its Affiliates in
respect of any liabilities Holdings or such member has in respect of cash
management functions (including Automated Clearing House (ACH) functions) and
other related services (including corporate credit cards) performed by Citibank
or its Affiliates on behalf of Holdings or any member of the Barneys Group.
"Officer's Certificate" means, as to a corporation, a
certificate executed on behalf of such corporation by an officer or director of
such corporation.
"Operating Lease" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee which
is not a Capital Lease.
"PBGC" means the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Pension Liability Payment" means the payment made by the
Borrowers for existing withdrawal liability resulting from any Borrower's
withdrawal from the Amalgamated Insurance Fund in an amount not to exceed
$850,000.
"Permits" means any permit, approval, authorization license,
variance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Existing Accommodation Obligations" means those
Accommodation Obligations of the members of the Barneys Group and Holdings
identified as such on Schedule 1.01.1.
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<PAGE>
"Permitted Existing Indebtedness" means the Indebtedness of
the members of the Barneys Group and Holdings identified as such on Schedule
1.01.2.
"Permitted Existing Investments" means those Investments of
the members of the Barneys Group and Holdings identified as such on Schedule
1.01.3.
"Permitted Existing Liens" means the Liens on assets of the
members of the Barneys Group and Holdings identified as such on Schedule 1.01.4.
"Permitted Holders" means Whippoorwill Associates, Inc. and
Bay Harbour Management L.C. and any other Person which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, either Whippoorwill Associates, Inc. or Bay Harbour
Management L. C. or as to which any such Person has power to vote the Voting
Stock of Holdings. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person directly or indirectly, whether through the ownership of
Voting Stock, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Permitted Subordinated Indebtedness" means indebtedness,
fully subordinated and junior in right of payment to the prior payment in full
of the Obligations, containing the subordination terms set forth on Schedule
1.01.5 and otherwise (including any modifications to the subordination terms) on
terms and conditions (including tenor beyond the Commitment Termination Date,
interest, covenants and events of default) reasonably satisfactory to the
Administrative Agent and the Requisite Lenders in an aggregate amount not to
exceed $30,000,000.
"Person" means any natural person, corporation, limited
partnership, limited liability company, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any Governmental Authority.
"PFP" has the meaning ascribed to such term in the preamble to
this Agreement.
"Plan" means an employee benefit plan (other than a Foreign
Employee Benefit Plan) defined in Section 3(3) of ERISA in respect of which any
Borrower or any ERISA Affiliate is, or within the immediately preceding three
years was, an "employer" as defined in Section 3(5) of ERISA.
"Plan of Reorganization" means the Second Amended Joint Plan
of Reorganization for the Debtors Proposed by Whippoorwill Associates, Inc., Bay
Harbour Management L.C. and the Official Committee of Unsecured Creditors dated
November 13, 1998.
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<PAGE>
"Pledge Agreements" means, collectively, the Pledge Agreements
identified on the List of Closing Documents, as each such agreement may be
amended, supplemented or otherwise modified from time to time.
"Preferred Stock" means the shares of Series A Preferred
Stock, $.01 par value per share, of Holdings.
"Pre-Settlement Exposure" means on any day, and with respect
to all Foreign Exchange Contracts, the sum of (a) an amount of Dollars that
Citibank or an Affiliate of Citibank would be required to pay (with regard to
Foreign Exchange Contracts confirmed under an ISDA or IFEMA Master Agreement,
such amount to be calculated for each such Agreement on a net basis with any
such amounts that Citibank or such Affiliate would receive) to replace each of
the Foreign Exchange Contracts, determined on the basis of quotations from four
leading dealers in the relevant market selected by Citibank or an Affiliate of
Citibank in good faith (i) from among dealers of the highest credit standing
which satisfy all the criteria that Citibank or such Affiliate applies generally
at the time in deciding whether to offer or to make an extension of credit and
(ii) to the extent practicable, from among such dealers having an office in the
same city and (b) an amount of Dollars that is determined by Citibank or such
Affiliate to be equal to the aggregate of the amounts used by Citibank or such
Affiliate to monitor the financial risk associated with potential changes in
market value of each such Foreign Exchange Contract to and including the
settlement date of each such Foreign Exchange Contract.
"Property" means any Real Property or personal property,
plant, building, facility, structure, underground storage tank or unit,
Equipment, inventory, general intangible, Receivable, or other asset owned,
leased or operated by any Borrower or any other member of the Barneys Group, as
applicable (including any surface water thereon or adjacent thereto, and soil
and groundwater thereunder).
"Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing such Lender's Commitment at such time by the
aggregate amount of all Commitments at such time; provided, however, if all of
the Commitments are terminated pursuant to the terms hereof, then "Pro Rata
Share" means the percentage obtained by dividing such Lender's Obligations by
the aggregate amount of all Obligations.
"Real Property" means all of each Borrower's present and
future right, title and interest (including, without limitation, any leasehold
estate) in (i) any plots, pieces or parcels of land, (ii) any improvements,
buildings, structures and fixtures now or hereafter located or erected thereon
or attached thereto of every nature whatsoever (the rights and interests
described in clauses (i) and (ii) above being the "Premises"), (iii) all
easements, rights of way, gores of land or any lands occupied by streets, ways,
alleys, passages, sewer rights, water courses, water rights and powers, and
public places adjoining such land, and any other interests in property
constituting appurtenances to the Premises, or which hereafter shall in any way
belong, relate or be appurtenant thereto, (iv) all hereditaments, gas, oil,
minerals (with the right to extract, sever
26
<PAGE>
and remove such gas, oil and minerals), and easements, of every nature
whatsoever, located in or on the Premises and (v) all other rights and
privileges thereunto belonging or appertaining and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to or of any
of the rights and interests described in clauses (iii) and (iv) above.
"Receivables" means all present and future (i) accounts, (ii)
accounts receivable, (iii) rights to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel paper),
whether or not earned by performance, (iv) all rights in any merchandise or
goods which any of the same may represent, and (v) all rights, title, security
and guaranties with respect to each of the foregoing, including, without
limitation, any right of stoppage in transit.
"Register" has the meaning ascribed to such term in Section
13.01(c).
"Regulation U" means Regulation U of the Federal Reserve Board
as in effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board
as in effect from time to time.
"Reimbursement Date" has the meaning ascribed to such term in
Section 2.04(d)(i)(A).
"Reimbursement Obligations" means the aggregate reimbursement
or repayment obligations of the Borrowers with respect to amounts drawn under
Letters of Credit.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any Property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or Property.
"Remedial Action" means actions required to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants; or (iii) investigate and determine if a
remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"Rent Reserve" means an aggregate amount equal to the total
rental payments payable for a period equal to the greater of two months and the
period set forth on Schedule 1.01.6 for the applicable jurisdiction for each
real estate lease covering the premises of a third party where Inventory of a
Borrower is located, stored, used or held where the Administrative Agent has not
received (i) a landlord, bailee or similar letter from such third party, in form
and substance satisfactory to the Administrative Agent, and (ii) an appropriate
UCC-1 financing
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statement executed by such third party with respect to such premises.
"Replaced Lender" has the meaning ascribed to such term in
Section 3.06.
"Replacement Lender" has the meaning ascribed to such term in
Section 3.06.
"Reportable Event" means an event described in Section 4043(c)
of ERISA with respect to a Benefit Plan other than those events as to which the
thirty day notice period is waived under the PBGC regulations issued under
Section 4043 of ERISA.
"Requirements of Law" means, as to any Person, the charter and
by-laws or other organizational or governing documents of such Person, and any
law, rule or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations U and X, ERISA, the Fair Labor Standards Act and any certificate of
occupancy, zoning ordinance, building, or land use requirement or Permit or
labor or employment rule or regulation, including Environmental Requirements of
Law.
"Requisite Lenders" means, at any time, Lenders holding, in
the aggregate, more than fifty percent (50%) of the Commitments in effect at
such time; provided, however, that, in the event that the Commitments have been
terminated pursuant to the terms hereof, "Requisite Lenders" means Lenders whose
aggregate ratable shares (stated as a percentage) of the aggregate outstanding
principal balance of all Loans are greater than fifty percent (50%).
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Borrower now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of any
member of the Barneys Group now or hereafter outstanding, (iii) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Permitted Subordinated Indebtedness and (iv) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of any member of the Barneys Group now or hereafter outstanding.
"Revolving Credit Obligations" means, at any particular time,
the sum of (i) the outstanding principal amount of the Swing Loans at such time,
plus (ii) the outstanding principal amount of the Revolving Loans at such time,
plus (iii) the Letter of Credit Obligations outstanding at such time.
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"Revolving Loan" has the meaning ascribed to such term in
Section 2.01(a).
"Revolving Note" has the meaning ascribed to such term in
Section 2.05(a).
"Sale and Leaseback Transaction" means, with respect to any
Person, any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person or a Subsidiary of such Person and is thereafter
leased back from the purchaser thereof by such Person or one of its
Subsidiaries.
"Section 338 Election" means the election under Section 338 of
the Internal Revenue Code, and any election under any comparable state or local
laws, contemplated to be made by Holdings with respect to the acquisition of
Barneys and its Subsidiaries pursuant to the Plan of Reorganization.
"Securities" means any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or any
certificates of interest, shares, or participation in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Security Agreements" means, collectively, the Security
Agreements identified on the List of Closing Documents, as each such agreement
may be amended, supplemented or otherwise modified from time to time.
"Servicer" means Cash Management Services, Inc., 25 Fordham
Road, Boston, MA 02134 or any other servicer reasonably satisfactory to the
Administrative Agent.
"Solvent", when used with respect to any Person, means that at
the time of determination:
(i) the fair market value of its assets is in excess of the
total amount of its liabilities (including, without limitation,
contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
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(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Standby Letter of Credit" means any letter of credit issued
by the Issuing Bank pursuant to Section 2.04 for the account of the Borrowers,
which is not a Commercial Letter of Credit or Usance Letter of Credit.
"Subordinated Notes" means the subordinated notes referred to
as items on Schedule 1.01.2 as of the Closing Date.
"Subsidiary" of a Person means any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person, one or more of the other subsidiaries of such Person or any combination
thereof.
"Swing Loan" has the meaning ascribed to such term in Section
2.02(a).
"Swing Loan Lender" means CUSA, in its individual capacity or,
in the event CUSA is not the Administrative Agent, the Administrative Agent (or
any Affiliate of the Administrative Agent designated by the Administrative
Agent), in its individual capacity.
"Swing Loan Note" has the meaning ascribed to such term in
Section 2.05(a).
"Tax Sharing Agreement" means the written agreement among
Holdings and the members of the Barneys Group, in form and substance reasonably
satisfactory to the Administrative Agent, for the allocation and payment of tax
liabilities and the payment for tax benefits with respect to a consolidated,
combined or unitary tax return which tax return includes Holdings and any
Subsidiary.
"Taxes" has the meaning ascribed to such term in Section
3.03(a).
"Termination Event" means (i) a Reportable Event with respect
to any Benefit Plan; (ii) the withdrawal of any Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which such Borrower or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or the cessation of operations which results in the
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termination of employment of 20% of Benefit Plan participants who are employees
of such Borrower or any ERISA Affiliate; (iii) the imposition of an obligation
on any Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide
affected parties written notice of intent to terminate a Benefit Plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the institution
by the PBGC or any similar foreign governmental authority of proceedings to
terminate a Benefit Plan; (v) any event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Benefit Plan; (vi) a foreign governmental
authority shall appoint or institute proceedings to appoint a trustee to
administer any Foreign Pension Plan; or (vii) the partial or complete withdrawal
of any Borrower or any ERISA Affiliate from a Multiemployer Plan other than with
respect to the Amalgamated Insurance Fund.
"Trademark Available Amount" means initially an amount equal
to $20,000,000, which amount shall be permanently reduced as follows: (i)
$1,250,000 on the first day of each fiscal quarter commencing with the first day
of the first fiscal quarter of Fiscal Year 2000; (ii) if the Borrowers'
Consolidated EBITDA (without giving effect to the Pension Liability Payment) for
the twelve month period ending January 31, 1999 is less than $16,000,000, an
amount equal to such deficiency on a dollar for dollar basis up to $1,318,000;
and (iii) an amount equal to the Net Cash Proceeds from sales or other
dispositions of assets in an aggregate amount not to exceed the lesser of
$10,000,000 and the amount of the Trademark Available Amount at such time prior
to giving effect to such reduction.
"Treasury Notes" means marketable direct debt obligations
issued by the United States government and backed by the full faith and credit
of the United States government which are intermediate securities with remaining
maturities of two years or less issued at a discount from face value.
"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to time.
"Unused Commitment Fee" has the meaning ascribed to such term
in Section 4.03(b).
"Usance Letter of Credit" means any letter of credit issued by
an Issuing Bank pursuant to Section 2.04 for the account of the Borrowers, which
is drawable upon presentation of documents evidencing the sale or shipment of
goods purchased by any Borrower in the ordinary course of its business and
honored by the Issuing Bank's delivery of time drafts payable no more than sixty
days from the date of delivery thereof.
"Voting Stock" means, with respect to any Person, securities
with respect to any class or classes of Capital Stock of such Person entitling
the holders thereof (whether at all times or only so long as no senior class of
stock has voting power by reason of any contingency) to vote in the election of
members of the board of directors of such Person.
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1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to (a) a month or months, quarter or
quarters or year or years shall end on the day in the relevant calendar month,
calendar quarter or calendar year, if applicable, immediately preceding the date
numerically corresponding to the first day of such period and (b) a fiscal month
or months, a fiscal quarter or quarters or a fiscal year or years shall end on
the day in the relevant fiscal month, fiscal quarter or fiscal year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period. 1.03. Accounting Terms. Subject to Section 13.04, for
purposes of this Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with GAAP.
1.04. Other Definitional Provisions. References to "Articles",
"Sections", "subsections", "Schedules" and "Exhibits" shall be to Articles,
Sections, subsections, Schedules and Exhibits, respectively, of this Agreement
unless otherwise specifically provided. The words "hereof", "herein", and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
1.05. Other Terms. All other terms contained herein shall,
unless the context indicates otherwise, have the meanings assigned to such terms
by the Uniform Commercial Code to the extent the same are defined therein.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01 Revolving Credit Facility. (a) Revolving Loans. Subject
to the terms and conditions set forth herein, each Lender hereby severally and
not jointly agrees to make revolving loans, in Dollars (each individually, a
"Revolving Loan" and, collectively, the "Revolving Loans") to the Borrowers from
time to time on any Business Day during the period from the Closing Date to the
Business Day immediately preceding the Commitment Termination Date, in an amount
not to exceed at any time outstanding such Lender's Pro Rata Share of the
Availability at such time. All Revolving Loans comprising the same Borrowing
hereunder shall be made by such Lenders simultaneously and proportionately to
their then respective Commitments. Subject to the provisions hereof, the
Borrowers may repay the outstanding Revolving Loans on any day which is a
Business Day and any amounts so repaid may be reborrowed, up to the amount
available under this Section 2.01(a) at the time of such Borrowing in accordance
with the provisions hereof.
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(b) Notice of Borrowing. When the Borrowers desire to borrow
under this Section 2.01, an irrevocable Notice of Borrowing shall be delivered
to the Administrative Agent no later than 11:00 a.m. (New York time) on the
proposed Funding Date, in the case of a Borrowing of Floating Rate Loans, and at
least three (3) Business Days in advance of the proposed Funding Date, in the
case of a Borrowing of Fixed Rate Loans. Such Notice of Borrowing shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
of the proposed Borrowing, (iii) the Availability as of the date of such Notice
of Borrowing, (iv) whether the proposed Borrowing will be of Floating Rate Loans
or Fixed Rate Loans and (v) in the case of Fixed Rate Loans, the requested
Interest Period. Any Notice of Borrowing delivered pursuant to this Section
2.01(b) shall be deemed to constitute a Notice of Borrowing under Section 2.02.
In lieu of delivering such a Notice of Borrowing (except with respect to a
Borrowing on the Closing Date), the Borrowers may give the Administrative Agent
irrevocable telephonic notice of any proposed Borrowing by 11:00 a.m. (New York
time) on the day of the proposed Borrowing, in the case of a Borrowing of
Floating Rate Loans, and at least three (3) Business Days in advance of the day
of the proposed Borrowing, in the case of a Borrowing of Fixed Rate Loans, and
shall confirm such notice by delivery of the Notice of Borrowing by telecopy to
the Administrative Agent promptly, but in no event later than 3:00 p.m. (New
York time) on the same day.
(c) Making of Revolving Loans. (i) Promptly after receipt of a
Notice of Borrowing under Section 2.01(b) (or telephonic notice in lieu thereof)
and in the event that the Swing Loan Lender is not making the principal amount
requested under such Notice of Borrowing available to the Borrowers as a Swing
Loan, the Administrative Agent shall notify each Lender by telex or telecopy, or
other similar form of transmission, of the proposed Borrowing. Each Lender shall
deposit an amount equal to its Pro Rata Share of the amount requested by the
Borrowers with the Administrative Agent at its office in New York, New York, in
immediately available funds, (A) on the Closing Date specified in the initial
Notice of Borrowing and (B) not later than 2:00 p.m. (New York time) on any
other Funding Date applicable thereto. The Administrative Agent shall make the
proceeds of such amounts received by it available to the Borrowers at the
Administrative Agent's office in New York, New York on such Funding Date (or on
the date received if later than such Funding Date) and shall disburse such
proceeds to the Borrowers by transferring such proceeds to the Borrowers'
Account. The failure of any Lender to deposit the amount described above with
the Administrative Agent on the applicable Funding Date shall not relieve any
other Lender of its obligations hereunder to make its Revolving Loan on such
Funding Date. No Lender shall be responsible for any failure by any other Lender
to perform its obligation to make a Revolving Loan hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of any such
failure.
(ii) Unless the Administrative Agent shall have been notified
by any Lender on the Business Day immediately preceding the applicable Funding
Date in respect of any Borrowing of Revolving Loans that such Lender does not
intend to fund its Revolving Loan requested to be made on such Funding Date, the
Administrative Agent may assume that such
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Lender has funded its Revolving Loan and is depositing the proceeds thereof with
the Administrative Agent on the Funding Date, and the Administrative Agent in
its sole discretion may, but shall not be obligated to, disburse a corresponding
amount to the Borrowers on the Funding Date. If the Revolving Loan proceeds
corresponding to that amount are advanced to the Borrowers by the Administrative
Agent but are not in fact deposited with the Administrative Agent by such Lender
on or prior to the applicable Funding Date, such Lender agrees to pay, and in
addition the Borrowers agree to repay, to the Administrative Agent forthwith on
demand such corresponding amount, together with interest thereon, for each day
from the date such amount is disbursed to or for the benefit of the Borrowers
until the date such amount is paid or repaid to the Administrative Agent, (A) in
the case of the Borrowers, at the interest rate applicable to such Borrowing and
(B) in the case of such Lender, at the Federal Funds Rate for the first Business
Day, and thereafter at the interest rate applicable to such Borrowing. If such
Lender shall pay to the Administrative Agent the corresponding amount, the
amount so paid shall constitute such Lender's Revolving Loan, and if both such
Lender and the Borrowers shall pay and repay such corresponding amount, the
Administrative Agent shall promptly pay to the Borrowers such corresponding
amount. This Section 2.01(c)(ii) does not relieve any Lender of its obligation
to make its Revolving Loan on any Funding Date.
(d) Repayment of Revolving Loans. All outstanding Revolving
Loans shall be paid in full on the Commitment Termination Date. Each Lender's
obligation to make Revolving Loans shall terminate at the close of business on
the Business Day immediately preceding the Commitment Termination Date.
2.02. Swing Loans. (a) Swing Loans. Subject to the terms and
conditions set forth herein, the Swing Loan Lender may, in its sole discretion,
make loans (the "Swing Loans") in Dollars to the Borrowers, from time to time
after the Closing Date and prior to the Commitment Termination Date, up to an
aggregate principal amount at any one time outstanding which shall not exceed an
amount equal to $7,000,000. The Swing Loan Lender shall have no duty to make or
to continue to make Swing Loans. All Swing Loans shall be payable on demand with
accrued interest thereon and shall otherwise be subject to all the terms and
conditions applicable to Revolving Loans, except that all Swing Loans shall be
Floating Rate Loans and all interest on the Swing Loans shall be payable to the
Swing Loan Lender solely for its own account.
(b) Making of Swing Loans. The Swing Loan Lender shall deposit
the amount it intends to fund, if any, in respect of the Swing Loans requested
by the Borrowers with the Administrative Agent at its office in New York, New
York in immediately available funds on the date of the proposed Borrowing
applicable thereto. The Swing Loan Lender shall not make any Swing Loan in the
period commencing on the first Business Day after it receives written notice
from any Lender that one or more of the conditions precedent contained in
Section 5.02 shall not on such date be satisfied, and ending when such
conditions are satisfied, and the Swing Loan Lender shall not otherwise be
required to determine that, or take notice whether, the conditions precedent set
forth in Section 5.02 hereof have been satisfied in connection with the
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making of any Swing Loan. Subject to the preceding sentence, the Administrative
Agent shall make such proceeds available to the Borrowers at the Administrative
Agent's office in New York, New York on the date of the proposed Borrowing and
shall disburse such proceeds to the Borrowers by transferring such proceeds to
the Borrowers' Account.
(c) Repayment of Swing Loans. The Borrowers shall repay the
outstanding Swing Loans owing to the Swing Loan Lender (i) in accordance with
Section 3.01(b)(ii), on a daily basis, to the extent funds are on deposit in the
Concentration Account, (ii) upon demand by the Swing Loan Lender and (iii) on
the Commitment Termination Date. In connection with the repayment of Swing Loans
set forth in the preceding clause (i), the Borrowers hereby irrevocably
authorize the Administrative Agent to apply the withdrawn funds in accordance
therewith. In the event that the Borrowers fail to repay any Swing Loans,
together with interest thereon, as set forth in clauses (i), (ii) and (iii) of
the first sentence of this paragraph, then, upon the request of the Swing Loan
Lender, each Lender shall make Revolving Loans to the Borrowers (irrespective of
the satisfaction of the conditions in Section 5.02 or the requirement to deliver
a Notice of Borrowing in Section 2.01(b), which conditions and requirement such
Lenders irrevocably waive) in an amount equal to such Lender's Pro Rata Share of
the aggregate amount of the Swing Loans then outstanding after giving effect to
any repayments made by the Borrowers, and the Borrowers hereby authorize the
Administrative Agent to apply the proceeds of such Revolving Loans to the
repayment of such Swing Loans. To the extent the Administrative Agent receives
any amounts in prepayment or repayment of outstanding Revolving Loans prior to
such request, the Administrative Agent shall apply such amounts when received to
the repayment of the Swing Loans then outstanding. The failure of any Lender to
make available to the Administrative Agent its Pro Rata Share of such Revolving
Loans shall not relieve such Lender or any other Lender of its obligation
hereunder to make available to the Administrative Agent such other Lender's Pro
Rata Share of such Revolving Loans on the date of such request. The
Administrative Agent shall settle with the Lenders in respect of Swing Loans at
least weekly.
2.03. Use of Proceeds. The proceeds of the Loans may be used
to refinance the debtor-in-possession financing, to pay certain claims pursuant
to the Plan of Reorganization, to pay professional fees and to fund working
capital in the ordinary course of the business of the Borrowers and for other
lawful general corporate purposes not prohibited hereunder.
2.04. Letters of Credit. Subject to the terms and conditions
set forth herein, the Issuing Bank hereby agrees to Issue for the account of the
Borrowers one or more Letters of Credit during the period from the Closing Date
to the date which is the thirtieth day prior to the Commitment Termination Date
(except as otherwise set forth in the proviso in Section 2.04(a)(iii)), subject
to the following provisions:
(a) Types and Amounts. The Issuing Bank shall not have any
obligation to Issue, and shall not Issue any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect
to the
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Issuing Bank, after giving effect to the Issuance of the Letter of
Credit requested hereunder, shall exceed $40,000,000 or any limit
imposed by law or regulation upon the Issuing Bank;
(ii) if the Issuing Bank receives written notice (A) from the
Administrative Agent or the Borrowers at or before 2:00 p.m. (New York
time) on the Business Day immediately preceding the date of the
proposed Issuance of such Letter of Credit that immediately after
giving effect to the Issuance of such Letter of Credit, (1) the Letter
of Credit Obligations at such time would exceed $40,000,000 or (2) the
Revolving Credit Obligations at such time would exceed the Maximum
Revolving Credit Amount at such time, or (B) from any of the Lenders at
or before 11:00 a.m. (New York time) on the date of the proposed
Issuance of such Letter of Credit that one or more of the conditions
precedent contained in Section 5.01 or 5.02, as applicable, would not
on such date be satisfied (or waived pursuant to Section 13.07), unless
such conditions are thereafter satisfied or waived and written notice
of such satisfaction or waiver is given to the Issuing Bank by the
Administrative Agent (and the Issuing Bank shall not otherwise be
required to determine that, or take notice whether, the conditions
precedent set forth in Section 5.01 or 5.02, as applicable, have been
satisfied or waived); or
(iii) which has an expiration date later than the earlier of
(A) the date which occurs 210 days following the date of Issuance with
respect to a Commercial Letter of Credit or a Usance Letter of Credit
or the date which occurs 364 days following the date of Issuance with
respect to a Standby Letter of Credit or (B) the date which is the
thirtieth day immediately preceding the Commitment Termination Date
with respect to a Commercial Letter of Credit, the date which is the
sixtieth day immediately preceding the Commitment Termination Date with
respect to a Usance Letter of Credit or the date which is the fifth
Business Day immediately preceding the Commitment Termination Date with
respect to a Standby Letter of Credit; provided, however, any Letter of
Credit may expire on a date which is no later than the thirtieth day
immediately following the Commitment Termination Date if the Borrowers
give the Administrative Agent at the time such Letter of Credit is
issued or its expiration date is extended Cash Collateral, on terms and
conditions satisfactory to the Administrative Agent, in an amount equal
to the sum of (1) the maximum amount available to be drawn under such
Letter of Credit and (2) the amount of Letter of Credit Fees applicable
thereto.
(b) Conditions. In addition to being subject to the
satisfaction of the conditions precedent contained in Sections 5.01 and 5.02, as
applicable, the obligation of the Issuing Bank to Issue any Letter of Credit is
subject to the satisfaction in full of the following conditions:
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(i) if the Issuing Bank so requests, the Borrowers shall have
executed and delivered to such Issuing Bank and the Administrative
Agent a Letter of Credit Reimbursement Agreement and such other
documents and materials as may be required pursuant to the terms
thereof;
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its reasonable credit judgment; and
(iii) no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain
the Issuing Bank from Issuing the Letter of Credit and no law, rule or
regulation applicable to the Issuing Bank and no request or directive
(whether or not having the force of law and whether or not the failure
to comply therewith would be unlawful) from a Governmental Authority
with jurisdiction over the Issuing Bank shall prohibit or request that
the Issuing Bank refrain from the Issuance of letters of credit
generally or the Issuance of such Letter of Credit.
(c) Issuance of Letters of Credit. (i) The Borrowers shall
give the Issuing Bank written notice that it is requesting that the Issuing Bank
Issue a Letter of Credit not later than 2:00 p.m. (New York time) on the
Business Day immediately preceding the requested date for Issuance thereof, or
such shorter notice as may be acceptable to the Issuing Bank. Such notice shall
be irrevocable unless and until such request is denied by the Issuing Bank and
shall specify (A) that the requested Letter of Credit is either a Commercial
Letter of Credit, Usance Letter of Credit or Standby Letter of Credit, (B) the
stated amount of the Letter of Credit requested, (C) the effective date (which
shall be a Business Day) of Issuance of such Letter of Credit, (D) the date on
which such Letter of Credit is to expire, (E) the Person for whose benefit such
Letter of Credit is to be Issued, (F) other relevant terms of such Letter of
Credit and (G) the amount of the then outstanding Letter of Credit Obligations.
The Issuing Bank shall notify the Administrative Agent immediately upon receipt
of a written notice from the Borrowers requesting that a Letter of Credit be
Issued and, upon the Administrative Agent's request therefor, send a copy of
such notice to the Administrative Agent.
(ii) The Issuing Bank shall give the Administrative Agent
written notice, or telephonic notice confirmed promptly thereafter in writing,
of the Issuance of a Letter of Credit (which notice the Administrative Agent
shall promptly transmit by telegram, telex, telecopy, telephone or similar
transmission to each Lender).
(d) Reimbursement Obligations; Duties of Issuing Bank. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) the Borrowers shall reimburse the Issuing Bank for amounts
drawn under such Letter of Credit pursuant to subsection (d)(ii) below,
in Dollars, no later than the date (the "Reimbursement Date") which is
one (1) Business Day
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after the Borrowers receive written notice from the Issuing Bank that a
draft has been presented under such Letter of Credit by the beneficiary
thereof; and
(B) all Reimbursement Obligations with respect to any Letter
of Credit shall bear interest at the rate applicable to Floating Rate
Loans in accordance with Section 4.01(a) from the date of the relevant
drawing under such Letter of Credit until the Reimbursement Date and
thereafter at the rate applicable in accordance with Section 4.01(c).
(ii) The Issuing Bank shall give the Administrative Agent
written notice, or telephonic notice confirmed promptly thereafter in writing,
of all drawings under a Letter of Credit and the payment (or the failure to pay
when due) by the Borrowers on account of a Reimbursement Obligation (which
notice the Administrative Agent shall promptly transmit by telegram, telex,
telecopy or similar transmission to each Lender).
(iii) No action taken or omitted, in good faith and without
gross negligence, by the Issuing Bank under or in connection with any Letter of
Credit shall put the Issuing Bank under any resulting liability to any Lender,
any Borrower or, so long as such Letter of Credit is not Issued in violation of
Section 2.04(a), relieve any Lender of its obligations hereunder to the Issuing
Bank. Solely as between the Issuing Bank and the Lenders, in determining whether
to pay under any Letter of Credit, the Issuing Bank shall have no obligation to
the Lenders other than to confirm that any documents required to be delivered
under a respective Letter of Credit appear to have been delivered and that they
appear on their face to comply with the requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon Issuance by the
Issuing Bank of any Letter of Credit in accordance with the procedures set forth
in this Section 2.04, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse
or warranty, an undivided interest and participation in such Letter of Credit to
the extent of such Lender's Pro Rata Share, including, without limitation, all
obligations of the Borrowers with respect thereto (other than amounts owing to
the Issuing Bank under Section 2.04(g)) and any security therefor and guaranty
pertaining thereto.
(ii) If the Issuing Bank makes any payment under any Letter of
Credit and the Borrowers do not repay such amount to the Issuing Bank on the
Reimbursement Date, the Issuing Bank shall promptly notify the Administrative
Agent, which shall promptly notify each Lender, and each Lender shall promptly
and unconditionally pay to the Administrative Agent for the account of the
Issuing Bank, in immediately available funds, the amount of such Lender's Pro
Rata Share of such payment, and the Administrative Agent shall promptly pay to
the Issuing Bank such amounts received by it, and any other amounts received by
the Administrative Agent for the Issuing Bank's account, pursuant to this
Section 2.04(e). All such payments shall constitute Revolving Loans made to the
Borrowers pursuant to Section 2.01 (irrespective of the satisfaction of the
conditions in Section 5.02 or the requirement in Section 2.01(b) to deliver a
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Notice of Borrowing which conditions and requirement, for the purpose of
refunding any Reimbursement Obligation owing to the Issuing Bank, the Lenders
irrevocably waive). If a Lender does not make its Pro Rata Share of the amount
of such payment available to the Administrative Agent, such Lender agrees to pay
to the Administrative Agent for the account of the Issuing Bank, forthwith on
demand, such amount together with interest thereon, for the first Business Day
after the date such payment was first due at the Federal Funds Rate, and
thereafter at the interest rate then applicable in accordance with Section
4.01(a). The failure of any such Lender to make available to the Administrative
Agent for the account of an Issuing Bank its Pro Rata Share of any such payment
shall neither relieve such Lender nor any other Lender of its obligation
hereunder to make available to the Administrative Agent for the account of the
Issuing Bank such Lender's Pro Rata Share of any payment on the date such
payment is to be made nor increase the obligation of any other Lender to make
such payment to the Administrative Agent. This Section does not relieve the
Borrowers of their obligation to pay or repay any Lender funding its Pro Rata
Share of such payment pursuant to this Section interest on the amount of such
payment from such date such payment is to be made until the date on which
payment is repaid in full.
(iii) Whenever the Issuing Bank receives a payment from the
Borrowers on account of a Reimbursement Obligation, including any interest
thereon, as to which any Lender has made a Revolving Loan pursuant to clause
(ii) of this Section, the Issuing Bank shall promptly pay to the Administrative
Agent such payment in accordance with Section 3.02. Each such payment shall be
made by the Issuing Bank or the Administrative Agent, as the case may be, on the
Business Day on which such Person receives the funds paid to such Person
pursuant to the preceding sentence, if received prior to 11:00 a.m. (New York
time) on such Business Day, and otherwise on the next succeeding Business Day.
(iv) Upon the request of any Lender, the Issuing Bank shall
furnish such Lender copies of any Letter of Credit or Letter of Credit
Reimbursement Agreement to which the Issuing Bank is party and such other
documentation as reasonably may be requested by such Lender.
(v) The obligations of a Lender to make payments to the
Administrative Agent for the account of the Issuing Bank with respect to a
Letter of Credit shall be irrevocable, shall not be subject to any qualification
or exception whatsoever except willful misconduct or gross negligence of the
Issuing Bank, and shall be honored in accordance with this Article II
(irrespective of the satisfaction of the conditions described in Sections 5.01
and 5.02, as applicable, which conditions, for the purposes of refunding any
Reimbursement Obligation owed to the Issuing Bank, such Lenders irrevocably
waive) under all circumstances, including, without limitation, any of the
following circumstances:
(A) any lack of validity or enforceability hereof or of any of
the other Loan Documents;
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(B) the existence of any claim, setoff, defense or other right
which the Borrowers may have at any time against a beneficiary named in
a Letter of Credit or any transferee of a beneficiary named in a Letter
of Credit (or any Person for whom any such transferee may be acting),
the Administrative Agent, the Issuing Bank, any Lender, or any other
Person, whether in connection herewith, with any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the account party and
beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented
under the Letter of Credit having been determined to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(E) any failure by the Issuing Bank to make any reports
required pursuant to Section 2.04(h) or the inaccuracy of any such
report; or
(F) the occurrence of any Event of Default or Default.
(f) Payment of Reimbursement Obligations. (i) The Borrowers
unconditionally agree to pay to the Issuing Bank, in Dollars, the amount of all
Reimbursement Obligations, interest and other amounts payable to the Issuing
Bank under or in connection with the Letters of Credit when such amounts are due
and payable, irrespective of any claim, setoff, defense or other right which the
Borrowers may have at any time against the Issuing Bank or any other Person.
(ii) In the event any payment by the Borrowers received by the
Issuing Bank with respect to a Letter of Credit and distributed by the
Administrative Agent to the Lenders on account of their participation is
thereafter set aside, avoided or recovered from the Issuing Bank in connection
with any receivership, liquidation or bankruptcy proceeding, each such Lender
which received such distribution shall, upon demand by the Issuing Bank,
contribute such Lender's Pro Rata Share of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by the Issuing
Bank upon the amount required to be repaid by it.
(g) Issuing Bank Charges. The Borrowers shall pay to the
Issuing Bank, solely for its own account, the standard charges assessed by the
Issuing Bank in connection with the issuance, administration, amendment and
payment or cancellation of Letters of Credit and set forth in a letter sent to
the Borrowers by the Issuing Bank, and such compensation in respect of such
Letters of Credit for the Borrowers' account as may be agreed upon by the
Borrowers and the Issuing Bank from time to time.
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(h) Issuing Bank Reporting Requirements. The Issuing Bank
shall make available on a daily basis to the Administrative Agent and the
Borrowers separate schedules for Commercial Letters of Credit, Usance Letters of
Credit and Standby Letters of Credit issued by it, in form and substance
reasonably satisfactory to the Administrative Agent, setting forth the aggregate
Letter of Credit Obligations outstanding to it at the end of each month and any
information requested by the Administrative Agent or the Borrowers relating to
the date of issue, account party, amount, expiration date and reference number
of each Letter of Credit issued by it.
(i) Indemnification; Exoneration. (i) In addition to all other
amounts payable to an Issuing Bank, the Borrowers hereby agree to defend,
indemnify, and save the Administrative Agent, the Issuing Bank and each Lender
harmless from and against any and all claims, demands, liabilities, penalties,
damages, losses (other than loss of profits), costs, charges and expenses
(including reasonable attorneys' fees but excluding taxes) which the
Administrative Agent, the Issuing Bank or such Lender may incur or be subject to
as a consequence, direct or indirect, of (A) the Issuance of any Letter of
Credit other than as a result of the gross negligence or willful misconduct of
the Issuing Bank, as determined by a court of competent jurisdiction, or (B) the
failure of the Issuing Bank issuing a Letter of Credit to honor a drawing under
such Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority.
(ii) As between the Borrowers on the one hand and the
Administrative Agent, the Lenders and the Issuing Bank on the other hand, the
Borrowers assume all risks of the acts and omissions of, or misuse of Letters of
Credit by, the respective beneficiaries of the Letters of Credit. In furtherance
and not in limitation of the foregoing, subject to the provisions of the Letter
of Credit Reimbursement Agreements, the Administrative Agent, the Issuing Bank
and the Lenders shall not be responsible for, except to the extent of their
gross negligence or wilful misconduct: (A) the form, validity, legality,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and Issuance of the Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity, legality or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of a Letter of Credit
to comply duly with conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof;
(G) the misapplication by the beneficiary of a Letter of Credit of the proceeds
of any drawing under such Letter of Credit; (H) any litigation, proceeding or
charges with respect to such Letter of Credit; and (I) any consequences arising
from causes beyond the control of the Administrative Agent, the Issuing Bank or
the Lenders.
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2.05. Promise to Repay; Evidence of Indebtedness.
(a) Promise to Repay. (i) The Borrowers jointly and severally
agree to pay on the Commitment Termination Date the principal amount of each
Revolving Loan, and further agree to pay all unpaid interest accrued thereon, in
accordance with the terms of this Agreement and the promissory notes evidencing
the Revolving Loans owing to the Lenders. The Borrowers shall execute and
deliver to each Lender such promissory notes as are necessary to evidence the
Revolving Loans owing to the Lenders after giving effect to any assignment
thereof pursuant to Section 13.01, each substantially in the form of Exhibit C-1
attached hereto and made a part hereof (all such promissory notes and all
amendments thereto, replacements thereof and substitutions therefor being
collectively referred to as the "Revolving Loan Notes"; and "Revolving Loan
Note" means any one of the Revolving Loan Notes).
(ii) The Borrowers jointly and severally agree to pay on
demand the principal amount of such Swing Loan, and further agree to pay all
unpaid interest accrued thereon, in accordance with Section 4.01 and the terms
of this Agreement and the promissory note evidencing the Swing Loans owing to
the Swing Loan Lender. The Borrowers shall execute and deliver to the Swing Loan
Lender such promissory note as is necessary to evidence the Swing Loans owing to
the Swing Loan Lender, substantially in the form of Exhibit C-2 (all such
promissory notes and all amendments thereto, replacements thereof and
substitutions therefor being collectively referred to as the "Swing Loan Notes";
and "Swing Loan Note" means any one of the Notes).
(b) Loan Accounts. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the Indebtedness of
the Borrowers to such Lender resulting from each Loan owing to such Lender from
time to time, including the amount of principal and interest payable and paid to
such Lender from time to time hereunder and under each of the Notes. The
Administrative Agent shall maintain in accordance with its usual practice a
composite account or accounts evidencing the outstanding Revolving Loans, Swing
Loans and Letter of Credit Obligations including the amount of principal and
interest payable and paid to the Lenders from time to time hereunder.
2.06. Authorized Officers and Agents. On the Closing Date and
from time to time thereafter, the Borrowers shall deliver to the Administrative
Agent an Officer's Certificate setting forth (i) the names of the officers,
employees and agents authorized on behalf of all Borrowers to request Swing
Loans, Revolving Loans and Letters of Credit and (ii) a specimen signature of
each such officer, employee or agent. The officers, employees and agents so
authorized shall also be authorized to act for the Borrowers in respect of all
other matters relating to the Loan Documents. The Administrative Agent shall be
entitled to rely conclusively on such officer's or employee's or agent's
authority to request such Loans or Letters of Credit until the Administrative
Agent receives written notice to the contrary. The Administrative Agent shall
have no duty to verify the authenticity of the signature appearing on any
written Notice of
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Borrowing or any other document, and, with respect to an oral request for such
Loans or Letters of Credit, the Administrative Agent shall have no duty to
verify the identity of any person representing himself or herself as one of the
officers, employees or agents authorized to make such request or otherwise to
act on behalf of the Borrowers. None of the Administrative Agent, any Lender or
the Issuing Bank shall incur any liability to the Borrowers or any other Person
in acting upon any telephonic notice referred to above which the Administrative
Agent reasonably believes to have been given by a duly authorized officer or
other person authorized to borrow on behalf of the Borrowers.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Commitments.
(a) Voluntary Prepayments/Reductions. (i) Loans. The Borrowers
may prepay Floating Rate Loans on any Business Day, in whole or in part, upon
written notice no later than 1:00 p.m. on such day with respect to Revolving
Loans (and 4:00 p.m. on such day with respect to Swing Loans) to the
Administrative Agent (which the Administrative Agent shall promptly transmit to
each Lender as applicable), provided that the Borrowers shall not be required to
give notice to the Administrative Agent for any prepayments made pursuant to
Section 3.05. Fixed Rate Loans may be prepaid (A) in whole or in part on the
expiration date of the then applicable Interest Period upon written notice no
later than 1:00 p.m. on such day to the Administrative Agent (which the
Administrative Agent shall promptly transmit to each Lender as applicable) and
(B) on any other Business Day upon at least three (3) Business Days' prior
written notice to the Administrative Agent (which the Administrative Agent shall
promptly transmit to each Lender as applicable) and only upon payment of the
amounts described in Section 4.02(f).
(ii) Commitment. The Borrowers, upon at least five (5)
Business Days' prior written notice to the Administrative Agent (which the
Administrative Agent shall promptly transmit to each Lender), shall have the
right, from time to time, to terminate in whole or permanently reduce in part
the Commitments, provided that, after giving effect to such reduction of the
Commitments, the Borrowers are in compliance with the provisions of Section
3.01(b)(i). Any partial reduction of the Commitments shall be in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
that amount, and shall reduce the Commitment of each Lender proportionately in
accordance with such Lender's Pro Rata Share. Any notice of termination or
reduction given to the Administrative Agent under this Section 3.01(a)(ii) shall
specify the date (which shall be a Business Day) of such termination or
reduction and, with respect to a partial reduction, the aggregate principal
amount thereof. When notice of termination or reduction is delivered as provided
herein, such notice shall be irrevocable and such Commitments shall not be
reinstated.
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(iii) The prepayments and payments in respect of reductions
and terminations described in clauses (i) and (ii) of this Section 3.01(a) may
be made without premium or penalty (except as provided in Section 4.02(f)).
(b) Mandatory Prepayments of Loans. (i) Immediately, if the
Revolving Credit Obligations are greater than the Maximum Revolving Credit
Amount, the Borrowers shall make a mandatory repayment of the Revolving Loans,
the Swing Loans and the Letter of Credit Obligations in an amount equal to such
excess. In addition, to the extent the Maximum Revolving Credit Amount is at any
time less than the amount of contingent Letter of Credit Obligations outstanding
at any time, the Borrowers shall deposit Cash Collateral in the Cash Collateral
Account in an amount equal to the amount by which such Letter of Credit
Obligations exceed such Maximum Revolving Credit Amount.
(ii) On a daily basis from funds on deposit in the
Concentration Account at the close of business on any Business Day, the
Administrative Agent shall apply such funds to the outstanding Swing Loans,
Revolving Loans and Reimbursement Obligations and thereby cause the Borrowers to
make a mandatory repayment of such Swing Loans, Revolving Loans and
Reimbursement Obligations on such Business Day.
(iii) Immediately after any Borrower's receipt of any Net Cash
Proceeds, the Borrowers shall make or cause to be made a mandatory prepayment of
the Revolving Credit Obligations in the amount of such Net Cash Proceeds;
provided, however, that in the event that all or a portion of such prepayment
would cause Fixed Rate Loans to be prepaid prior to the end of their respective
Interest Periods and no Event of Default has occurred and is continuing at such
time, the Borrowers may deposit that portion of the prepayment that would have
caused Fixed Rate Loans to be prepaid prior to the end of their respective
Interest Periods into the Cash Collateral Account. On the last day of each such
Interest Period, the Administrative Agent shall withdraw funds on deposit in the
Cash Collateral Account in an amount equal to the aggregate amount of Fixed Rate
Loans having Interest Periods ending on such day and apply such funds to the
repayment of the outstanding Revolving Credit Obligations. In addition, the
Commitments shall be permanently reduced on the date of such Borrower's receipt
of Net Cash Proceeds by the amount of such Net Cash Proceeds less the Excluded
Proceeds and the amount of Net Cash Proceeds that constitute proceeds of
insurance on account of the loss of or damage to any Collateral.
(iv) Nothing in this Section 3.01(b) shall be construed to
constitute the Lenders' consent to any transaction which is not expressly
permitted by Article IX.
3.02. Payments. (a) Manner and Time of Payment. All payments
of principal of and interest on the Loans and Reimbursement Obligations and
other Obligations (including, without limitation, fees and expenses) which are
payable to the Administrative Agent, the Lenders or the Issuing Bank shall be
made without condition or reservation of right, in immediately available funds,
delivered to the Administrative Agent (or, in the case of
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Reimbursement Obligations, to the Issuing Bank) not later than 2:00 p.m. (New
York time) with respect to Revolving Loans and all other Obligations (other than
Swing Loans), and not later than 4:00 p.m. (New York time) with respect to Swing
Loans, on the date and at the place due, to the Administrative Agent's Account
(or such account of the Issuing Bank, as it may designate). Payments received by
the Administrative Agent in respect of Swing Loans shall be distributed to the
Swing Loan Lender, payments received by the Administrative Agent in respect of
Revolving Loans shall be distributed to each Lender in accordance with its Pro
Rata Share in accordance with the provisions of Section 3.02(b), if received
prior to 2:00 p.m., and on the next succeeding Business Day, if received
thereafter, by the Administrative Agent.
(b) Apportionment of Payments. (i) Subject to the provisions
of Section 3.02(b)(ii) and (v), except as otherwise provided herein (A) all
payments of principal and interest (I) in respect of outstanding Swing Loans
shall be allocated to the Swing Loan Lender and (II) in respect of outstanding
Revolving Loans shall be allocated among all the Lenders in proportion to their
respective Pro Rata Shares and (B) all payments of fees and all other payments
in respect of any other Obligations shall be allocated among such of the Holders
as are entitled thereto, on a pro rata basis. All principal payments in respect
of Loans shall be applied first, to repay outstanding Floating Rate Loans and
then, to repay outstanding Fixed Rate Loans with those Fixed Rate Loans which
have earlier expiring Interest Periods being repaid prior to those which have
later expiring Interest Periods.
(ii) After the occurrence and during the continuance of an
Event of Default, the Administrative Agent may, and shall upon the acceleration
of the Obligations pursuant to Section 11.02(a), apply all payments in respect
of any Obligations and all proceeds of Collateral in the following order:
(A) first, to pay interest on and then principal of any
portion of the Revolving Loans which the Administrative Agent may have
advanced on behalf of any Lender for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrowers;
(B) second, to pay interest on and then principal of any Swing
Loan;
(C) third, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Administrative Agent;
(D) fourth, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuing
Bank;
(E) fifth, to pay Obligations in respect of any fees then due
to the Administrative Agent, the Lenders and the Issuing Bank;
(F) sixth, to pay interest due in respect of the Loans and
Reimbursement Obligations;
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(G) seventh, to pay principal outstanding on the Loans and
outstanding Letter of Credit Obligations;
(H) eighth, to provide, to the extent any Obligations are
contingent, Cash Collateral pursuant to Section 11.02(b); and
(I) ninth, to the ratable payment of all other Obligations;
provided, however, if sufficient funds are not available to fund all payments to
be made in respect of any of the Obligations described in any of the foregoing
clauses (A) through (H), the available funds being applied with respect to any
such Obligation (unless otherwise specified in such clause) shall be allocated
to the payment of such Obligations ratably, based on the proportion of the
Administrative Agent's and each Lender's or Issuing Bank's interest in the
aggregate outstanding Obligations described in such clauses.
The order of priority set forth in this Section 3.02(b) and the related
provisions hereof are set forth solely to determine the rights and priorities of
the Administrative Agent, the Lenders, the Issuing Bank and other Holders as
among themselves. The order of priority set forth in clauses (A) through (H) of
this Section 3.02(b)(ii) may at any time and from time to time be changed by the
agreement of the Requisite Lenders without necessity of notice to or consent of
or approval by the Borrowers, any Holder which is not a Lender or Issuing Bank,
or any other Person; provided, however, the order of priority set forth in
clauses (A) through (E) of this Section 3.02(b)(ii) may not be changed without
the prior written consent of the Administrative Agent.
(iii) All payments of principal on the Swing Loans,
Reimbursement Obligations, interest, fees and other sums payable in respect of
the Loans may, at the option of the Administrative Agent, be paid from the
proceeds of the Revolving Loans. The Borrowers hereby authorize the Swing Loan
Lender to make pursuant to Section 2.02(a) and the Lenders to make pursuant to
Section 2.01(a), from time to time in such Swing Loan Lender's or Lenders'
discretion, Loans which are in the amounts of any and all principal on the Swing
Loans, Reimbursement Obligations, interest, fees and other sums payable in
respect of the Loans. The Borrowers agree that all such Loans so made shall be
deemed to have been requested by it and directs that all proceeds thereof shall
be used to pay such amounts.
(iv) The Administrative Agent shall promptly distribute to
each Lender and Issuing Bank at its primary address set forth on the appropriate
signature page hereof or the signature page to the Assignment and Acceptance by
which it became a Lender or Issuing Bank, or at such other address as a Lender,
an Issuing Bank or other Holder may request in writing, such funds as such
Person may be entitled to receive pursuant to the terms hereof; provided that,
as between the Holders and the Administrative Agent, the Administrative Agent
shall under no circumstances be bound to inquire into or determine the validity,
scope or priority of any interest or entitlement of any Holder and may suspend
all payments or seek appropriate relief (including, without limitation,
instructions from the Requisite Lenders or an action in the nature of
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interpleader) in the event of any doubt or dispute as to any apportionment or
distribution contemplated hereby.
(v) If any Lender fails to fund its Pro Rata Share of any
Borrowing (the funded portion of such Borrowing being hereinafter referred to as
a "Non Pro Rata Loan") which such Lender is obligated to fund under the terms
hereof (excluding any such Lender who has delivered to the Administrative Agent
written notice that one or more of the conditions precedent contained in Section
5.02 shall not on the date of such request be satisfied and until such
conditions are satisfied), then until the earlier of such Lender's cure of such
failure and the termination of the Commitments, the proceeds of all amounts
thereafter repaid to the Administrative Agent by the Borrowers and otherwise
required to be applied to such Lender's share of all other Obligations pursuant
to the terms hereof shall be advanced to the Borrowers by the Administrative
Agent on behalf of such Lender to cure, in full or in part, such failure by such
Lender, but shall nevertheless be deemed to have been paid to such Lender in
satisfaction of such other Obligations. Notwithstanding anything contained
herein to the contrary:
(A) the foregoing provisions of this Section
3.02(b)(v) shall apply only with respect to the proceeds of
payments of Obligations;
(B) a Lender shall be deemed to have cured its
failure to fund its Pro Rata Share of any Revolving Loan at
such time as an amount equal to such Lender's original Pro
Rata Share of the requested principal portion of such
Revolving Loan is fully funded to the Borrowers, whether made
by such Lender itself or by operation of the terms of this
Section 3.02(b)(v), and whether or not the Non Pro Rata Loan
with respect thereto has been repaid;
(C) amounts advanced to the Borrowers to cure, in
full or in part, any such Lender's failure to fund its Pro
Rata Share of any Borrowing ("Cure Loans") shall bear interest
at the rate applicable to the other Revolving Loans comprising
such Borrowing and shall be treated as Revolving Loans
comprising such Borrowing for all purposes herein;
(D) regardless of whether or not an Event of Default
has occurred or is continuing, and notwithstanding the
instructions of the Borrowers as to its desired application,
all repayments of principal which, in accordance with the
other terms of this Section 3.02, would be applied to the
outstanding Revolving Loans shall be applied first, ratably to
all Revolving Loans constituting Non Pro Rata Loans, second,
ratably to Revolving Loans other than those constituting Non
Pro Rata Loans or Cure Loans and, third, ratably to Revolving
Loans constituting Cure Loans; and
(E) no Lender shall be relieved of any obligation
such Lender may have to the Borrowers under the terms of this
Agreement as a result of the provisions of this Section
3.02(b)(v).
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(c) Payments on Non-Business Days. Whenever any payment to be
made by the Borrowers hereunder or under the Notes is stated to be due on a day
which is not a Business Day, the payment shall instead be due on the next
succeeding Business Day (or, as set forth in Section 4.02(b)(iii), the next
preceding Business Day), and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
3.03. Taxes. (a) Payments Free and Clear of Taxes. Any and all
payments by the Borrowers hereunder or under any Note or other document
evidencing any Obligations shall be made free and clear of and without reduction
for any and all present or future taxes, levies, imposts, deductions, charges,
withholdings, and all stamp or documentary taxes, excise taxes, ad valorem taxes
and other taxes imposed on the value of the Property, charges or levies which
arise from the execution, delivery or registration, or from payment or
performance under, or otherwise with respect to, any of the Loan Documents or
the Commitments and all other liabilities with respect thereto excluding, in the
case of each Lender and the Administrative Agent, taxes imposed on or measured
by net income or overall gross receipts and capital and franchise taxes imposed
on it by (i) the United States, except withholding taxes contemplated pursuant
to Section 3.03(d)(ii)(C), (ii) the Governmental Authority of the jurisdiction
in which such Lender's Lending Office is located or any political subdivision
thereof or (iii) the Governmental Authority in which such Person is organized,
managed and controlled or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges and withholdings being
hereinafter referred to as "Taxes"). Subject to the limitations in Section
3.03(e), if the Borrowers shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable hereunder or under any such Note or
document to any Lender or the Administrative Agent, (x) the sum payable to such
Lender or the Administrative Agent shall be increased as may be necessary so
that after making all required withholding or deductions (including withholding
or deductions applicable to additional sums payable under this Section 3.03)
such Lender or the Administrative Agent, as applicable, receives an amount equal
to the sum it would have received had no such withholding or deductions been
made, (y) the Borrowers shall make such withholding or deductions and (z) the
Borrowers shall pay the full amount withheld or deducted to the relevant
taxation authority or other authority in accordance with applicable law. If any
Taxes shall be applicable after the date hereof, to such payments by Borrowers
made to the Applicable Lending Office of any Lender, such Lender shall use its
best efforts to make, fund and maintain its Loans, and to make, fund and
maintain its obligations in connection with the Letters of Credit, through
another Applicable Lending Office of such Lender in another jurisdiction so as
to reduce the Borrowers' liability hereunder, if the making, funding or
maintenance of such Loans or obligations in connection with the Letters of
Credit through such other Applicable Lending Office of such Lender does not, in
the reasonable judgment of such Lender, otherwise materially adversely affect
such Loans, obligations under the Letters of Credit or such Lender.
(b) Indemnification. The Borrowers shall indemnify each Lender
and the Administrative Agent against, and reimburse each on demand for, the full
amount of all Taxes
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payable by the Borrowers pursuant to Section 3.03(a) (including, without
limitation, any Taxes imposed by any Governmental Authority on amounts payable
under this Section 3.03 and any additional income or franchise taxes resulting
therefrom) incurred or paid by such Lender or the Administrative Agent or any of
their respective Affiliates and any liability (including penalties, interest,
and out-of-pocket expenses paid to third parties but excluding any penalties
paid to a taxing Governmental Authority for late payment of Taxes, which penalty
resulted solely from the action or inaction of such Person seeking
indemnification under this Section 3.03) arising therefrom or with respect
thereto, whether or not such Taxes were lawfully payable. A certificate as to
any additional amount payable to any Person under this Section 3.03 submitted by
it to the Borrowers shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. In determining such additional amount, the
applicable Person shall take into account and reduce the amount otherwise
payable by the Borrowers pursuant to this subsection (b), by an amount equal to
the tax credits and other tax benefits actually utilized (as determined by such
Person in its reasonable discretion). Each of the Lenders and the Administrative
Agent agrees, within a reasonable time after receiving a written request from
the Borrowers, to provide the Borrowers and each Lender, and each Lender agrees
to so provide the Administrative Agent with such certificates as are reasonably
required, and take such other actions as are reasonably necessary to claim such
exemptions as such Lender or the Administrative Agent may be entitled to claim
in respect of all or a portion of any Taxes which are otherwise required to be
paid or deducted or withheld pursuant to this Section 3.03 in respect of any
payments hereunder or under the Notes.
(c) Receipts. If requested by the Administrative Agent, in its
sole discretion, within thirty (30) days after such request, the Borrowers shall
furnish to the Administrative Agent, at its address referred to in Section
13.08, the original or a certified copy of any receipt or other documentation
received by the Borrowers, evidencing payment of any Taxes by the Borrowers.
(d) Foreign Bank Certifications. (i) Each Lender and the
Administrative Agent that is not created or organized under the laws of the
United States or a political subdivision thereof or that is a foreign trust or
estate within the meaning of Section 7701(a)(31) of the Internal Revenue Code,
shall deliver to the Borrowers and the Administrative Agent on the Closing Date
or the date on which such Lender becomes a Lender pursuant to Section 13.01
hereof (or the date on which the Administrative Agent becomes an Administrative
Agent hereafter), (x) a true and accurate certificate executed in duplicate by a
duly authorized officer of such Person to the effect that such Person is
eligible to receive payments hereunder and under the Notes without deduction or
withholding of United States federal income tax (A) under the provisions of an
applicable tax treaty concluded by the United States (in which case the
certificate shall be accompanied by two duly completed copies of IRS Form 1001
(or any successor or substitute form or forms)), or (B) under Sections
1442(c)(1) and 1442(a) of the Internal Revenue Code (in which case the
certificate shall be accompanied by two duly completed copies of IRS Form 4224
(or any successor or substitute form or forms)).
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(ii) Each Lender and the Administrative Agent further agrees
to deliver to the Borrowers and the Administrative Agent from time to time, a
true and accurate certificate executed in duplicate by a duly authorized officer
of such Person before or promptly upon the occurrence of any event requiring a
change in the most recent certificate previously delivered by it to the
Borrowers and the Administrative Agent pursuant to this Section 3.03(d). Each
certificate required to be delivered pursuant to this Section 3.03(d)(ii) shall
certify as to one of the following:
(A) that such Person can continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax;
(B) that such Person cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein but does not
require additional payments pursuant to Section 3.03(a) because it is
entitled to recover the full amount of any such deduction or
withholding from a source other than the Borrowers;
(C) that such Person is no longer capable of receiving
payments hereunder and under the Notes without deduction or withholding
of United States federal income tax as specified therein by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of the Closing Date or the date on which such
Person became a Lender or Administrative Agent, as the case may be,
pursuant to Section 13.01 (or any other relevant provision hereof) and
that it is not capable of recovering the full amount of the same from a
source other than the Borrowers; or
(D) that such Person is no longer capable of receiving
payments hereunder without deduction or withholding of United States
federal income tax as specified therein other than by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of the Closing Date or the date on which such
Person became a Lender or the Administrative Agent, as the case may be,
pursuant to Section 13.01 (or any other relevant provision hereof).
(e) Limitations. Notwithstanding anything to the contrary in
this Section 3.03, the Borrowers may withhold or deduct (as required by law),
and shall not be required to increase any amounts payable to any Lender or the
Administrative Agent for, any Taxes (i) that are directly attributable to such
Person's failure to comply with paragraphs (b) and (d) of this Section 3.03 with
respect to the certificates such Person is required to provide or with respect
to other actions such Person is required to take pursuant to such paragraphs or
(ii) that are contemplated by Section 3.03(d)(ii)(D).
(f) Refunds. Upon the written request of the Borrowers made to
a Lender, and at
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the Borrowers' expense, such Lender shall apply for a refund with respect to any
Tax for which such Lender has been indemnified by the Borrowers pursuant to this
Section 3.03 and for which such Lender believes it is entitled to receive. If
the Lender receives such refund and determines that such refund is of Taxes for
which it has been indemnified by the Borrowers pursuant to Section 3.03, such
Lender shall promptly remit such refund to the Borrowers without interest (other
than interest, if any, included in such refund), net of all costs and expenses
of such Lender and any taxes payable with respect to the receipt of such refund
and interest. In the event that such Lender is required to repay such refund to
the relevant taxing authority requiring repayment of such refund, the Borrowers
agree upon demand to promptly return such refund (together with any interest
included in such refund).
(g) Survival. Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements and obligations of the
Borrowers contained in Section 3.03 shall survive the payment in full of the
Obligations and the termination of this Agreement.
3.04. Increased Capital. If after the date hereof any Lender
or the Issuing Bank determines that (i) the adoption or implementation of or any
change in or in the interpretation or administration of any law or regulation or
any guideline or request from any central bank or other Governmental Authority
or quasi-governmental authority exercising jurisdiction, power or control over
any Lender, the Issuing Bank or banks or financial institutions generally
(whether or not having the force of law), compliance with which affects or would
affect the amount of capital required or expected to be maintained by such
Lender or the Issuing Bank or any corporation controlling such Lender or the
Issuing Bank and (ii) the amount of such capital is increased by or based upon
(A) the making or maintenance by any Lender of its Loans, any Lender's
participation in or obligation to participate in the Loans, Letters of Credit or
other advances made hereunder or the existence of any Lender's obligation to
make Loans or (B) the issuance or maintenance by the Issuing Bank of, or the
existence of the Issuing Bank's obligation to issue, Letters of Credit, then, in
any such case, upon written demand by such Lender or the Issuing Bank (with a
copy of such demand to the Administrative Agent), the Borrowers shall
immediately pay to the Administrative Agent for the account of such Lender or
the Issuing Bank, from time to time as specified by such Lender or the Issuing
Bank, additional amounts sufficient to compensate such Lender or the Issuing
Bank or such corporation therefor. Such demand shall be accompanied by a
statement as to the amount of such compensation and include a summary of the
basis for such demand with detailed calculations. Such statement shall be
conclusive and binding for all purposes, absent manifest error.
3.05. Cash Management. The Borrowers have established the Lock
Boxes and Blocked Accounts listed on Schedule 3.05. The Borrowers have directed
(i) all account debtors of the Borrowers' private label credit cards to remit
all payments in respect of those Receivables directly to the Lock Boxes and have
directed the Servicer to remit all payments in respect of those Receivables to a
Blocked Account and (ii) all other account debtors of the Borrowers to remit all
payments in respect of those Receivables directly to the Blocked Accounts. Each
Borrower acknowledges that the Administrative Agent shall have at all times
dominion and
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control of the Blocked Account or Blocked Accounts established with each Blocked
Account Bank. The Borrowers agree to cause all collections of Receivables, all
proceeds of Collateral and all Net Cash Proceeds now or hereafter received
directly or indirectly by any of the Borrowers or in the possession of any of
the Borrowers to be held in trust for the Administrative Agent for the benefit
of the Lenders and the Issuing Bank and, promptly upon receipt thereof, to be
deposited into a Blocked Account, except for the balances that are permitted to
be maintained pursuant to Section 9.16. The Administrative Agent alone shall
have power of withdrawal from each Blocked Account and each Borrower
acknowledges that such Borrower shall not have any right, title or interest in
the Blocked Accounts or the amounts at any time appearing to the credit of such
Blocked Accounts. All of the funds in the Blocked Accounts shall be transferred
into the Concentration Account pursuant to the terms of the respective Blocked
Account Agreements. The Administrative Agent alone shall have power of
withdrawal from the Concentration Account and each Borrower acknowledges that
the Administrative Agent shall have at all times dominion and control of the
Concentration Account and the amounts appearing to the credit of the
Concentration Account.
3.06. Replacement of Lenders. (a) Upon the occurrence of any
event giving rise to the operation of Section 3.03(d)(ii)(C) or (D), Section
3.04, or Section 4.01(f) with respect to any Lender which results in such Lender
charging to the Borrowers increased costs in excess of those being charged
generally by the Lenders, (b) if a Lender becomes in default of its obligations
under this Agreement and/or (c) if a Lender delivers a notice under Section
4.02(e), the Borrowers shall have the right, if no Event of Default then exists,
to replace such Lender (the "Replaced Lender") with one or more other Lenders,
Eligible Assignee or Eligible Assignees, none of whom shall be in default of its
obligations under this Agreement at the time of such replacement (collectively,
the "Replacement Lender"), reasonably acceptable to the Administrative Agent,
provided that at the time of any replacement pursuant to this Section 3.06, the
Replacement Lender shall enter into one or more Assignment and Acceptances
pursuant to Section 13.01 (and with all fees payable pursuant to said Section
13.01(d) to be paid by the Replacement Lender) pursuant to which the Replacement
Lender shall acquire all of the Commitments and outstanding Loans and
participations in outstanding Letters of Credit of the Replaced Lender and, in
connection therewith, shall pay to the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Lender, (B) an amount
equal to all accrued, but theretofore unpaid, fees owing to the Replaced Lender
under this Agreement and (C) an amount equal to all other outstanding
Obligations (including, without limitation, amounts owing under Section
3.03(d)(ii)(C) or (D), Section 3.04 or Section 4.01(f)) owing to the Replaced
Lender. Upon the execution of the respective Assignment and Acceptance, the
payment of amounts referred to above and, if so requested by the Replacement
Lender, delivery to the Replacement Lender of the appropriate instruments
otherwise required by this Agreement executed by the Borrowers, the Replacement
Lender shall become a Lender hereunder and the Replaced Lender shall cease to be
a Lender hereunder, except with respect to indemnification provisions applicable
to the Replaced Lender under this Agreement, which shall survive as to such
Replaced Lender.
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ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and Other Obligations. (a) Rate of
Interest. All Loans and the outstanding amount of all other Obligations shall
bear interest on the unpaid principal amount thereof from the date such Loans
are made and such other Obligations are due and payable until paid in full,
except as otherwise provided in Section 4.01(d), as follows:
(i) If a Floating Rate Loan or such other Obligation, at a
rate per annum equal to the sum of (A) the Floating Rate in effect from
time to time, plus (B) the Applicable Floating Rate Margin in effect
from time to time; and
(ii) If a Fixed Rate Loan, at a rate per annum equal to the
sum of (A) the Fixed Rate determined for the applicable Interest
Period, plus (B) the Applicable Fixed Rate Margin in effect from time
to time.
The applicable basis for determining the rate of interest on the Loans shall be
selected by the Borrowers at the time a Notice of Borrowing or a Notice of
Conversion/Continuation is delivered by the Borrowers to the Administrative
Agent; provided, however, the Borrowers may not select the Fixed Rate as the
applicable basis for determining the rate of interest on such a Loan if (x) such
Loan is to be made on the Closing Date or (y) at the time of such selection an
Event of Default has occurred and is continuing. If on any day any Loan is
outstanding with respect to which notice has not been timely delivered to the
Administrative Agent in accordance with the terms hereof specifying the basis
for determining the rate of interest on that day, then for that day interest on
that Loan shall be determined by reference to the Floating Rate plus the
Applicable Floating Rate Margin with respect to Floating Rate Loans.
(b) Interest Payments. (i) Interest accrued on each Floating
Rate Loan shall be payable in arrears (A) on the first Business Day of each
calendar month, commencing on the first such day following the making of such
Floating Rate Loan and (B) on the Commitment Termination Date.
(ii) Interest accrued on each Fixed Rate Loan shall be payable
in arrears (A) on each Fixed Rate Interest Payment Date applicable to such Fixed
Rate Loan, (B) upon the payment or prepayment thereof in full or in part, and
(C) if not theretofore paid in full, on the Commitment Termination Date.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on the first Business Day of each
calendar month, commencing on the first such day following the incurrence of
such Obligation, (B) upon repayment thereof in full or in part, and (C) if not
theretofore paid in full, on the Commitment Termination Date.
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(c) Conversion or Continuation. (i) The Borrowers shall have
the option (A) to convert at any time all or any part of outstanding Floating
Rate Loans (other than Swing Loans) to Fixed Rate Loans; (B) to convert all or
any part of outstanding Fixed Rate Loans having Interest Periods which expire on
the same date to Floating Rate Loans on such expiration date; or (C) to continue
all or any part of outstanding Fixed Rate Loans having Interest Periods which
expire on the same date as Fixed Rate Loans, and the succeeding Interest Period
of such continued Fixed Rate Loans shall commence on such expiration date;
provided, however, no outstanding Loan may be continued as, or be converted
into, a Fixed Rate Loan (i) if the continuation of, or the conversion into, such
a Fixed Rate Loan would violate any of the provisions of Section 4.02 or (ii) if
an Event of Default would occur or has occurred and is continuing. Any
conversion into or continuation of Fixed Rate Loans under this Section 4.01(c)
shall be in a minimum amount of $5,000,000 and in integral multiples of $250,000
in excess of that amount.
(ii) To convert or continue a Loan under Section 4.01(c)(i),
the Borrowers shall deliver a Notice of Conversion/Continuation to the
Administrative Agent no later than 11:00 a.m. (New York time) at least three (3)
Business Days in advance of the proposed conversion/continuation date. A Notice
of Conversion/Continuation shall specify (A) the proposed
conversion/continuation date (which shall be a Business Day), (B) the principal
amount of the Loan to be converted/continued, (C) whether such Loan shall be
converted and/or continued, and (D) in the case of a conversion to, or
continuation of, a Fixed Rate Loan, the requested Interest Period. In lieu of
delivering a Notice of Conversion/Continuation, the Borrowers may give the
Administrative Agent telephonic notice of any proposed conversion/continuation
by the time required under this Section 4.01(c)(ii), and such notice shall be
confirmed in writing delivered to the Administrative Agent promptly (but in no
event later than 5:00 p.m. (New York time) on the same day). Promptly after
receipt of a Notice of Conversion/Continuation under this Section 4.01(c)(ii)
(or telephonic notice in lieu thereof), the Administrative Agent shall notify
each Lender by telex or telecopy, or other similar form of transmission, of the
proposed conversion/continuation. Any Notice of Conversion/Continuation for
conversion to, or continuation of, a Loan (or telephonic notice in lieu thereof)
shall be irrevocable, and the Borrowers shall be bound to convert or continue in
accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 4.01(a) or elsewhere herein, effective immediately upon the
occurrence of any Event of Default, and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Loans and of all other
Obligations, shall bear interest at a rate which is two percent (2.0%) per annum
in excess of the rate of interest otherwise applicable to such Obligations from
time to time.
(e) Computation of Interest. Interest on all Obligations shall
be computed on the basis of the actual number of days elapsed in the period
during which interest accrues and a year of 360 days. In computing interest on
any Loan, the date of the making of the Loan shall be
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included and the date of payment shall be excluded; provided, however, if a Loan
is repaid on the same day on which it is made, one (1) day's interest shall be
paid on such Loan.
(f) Changes; Legal Restrictions. If after the date hereof any
Lender or the Issuing Bank determines that the adoption or implementation of or
any change in or in the interpretation or administration of any law or
regulation or any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority exercising jurisdiction,
power or control over any Lender, the Issuing Bank or over banks or financial
institutions generally (whether or not having the force of law), compliance with
which, in each case after the date hereof:
(i) subjects a Lender or the Issuing Bank (or its Applicable
Lending Office) to charges (other than Taxes and taxes measured by or imposed
upon the net income of such Lender or Issuing Bank (or its Applicable Lending
Office) or franchise tax imposed in lieu of such net income tax) of any kind
which are applicable to the Commitments of the Lenders and/or the Issuing Bank
to make Fixed Rate Loans or to issue and/or participate in Letters of Credit or
changes the basis of taxation of payments to that Lender or the Issuing Bank of
principal, fees, interest or any other amount payable hereunder with respect to
Fixed Rate Loans or Letters of Credit; or
(ii) imposes, modifies, or holds applicable, any reserve
(other than reserves taken into account in calculating the Fixed Rate), special
deposit, compulsory loan, FDIC insurance or similar requirement against assets
held by, or deposits or other liabilities (including those pertaining to Letters
of Credit) in or for the account of, advances or loans by, commitments made, or
other credit extended by, or any other acquisition of funds by, a Lender or the
Issuing Bank or any Applicable Lending Office or Fixed Rate Affiliate of that
Lender or the Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
the Issuing Bank of making, renewing or maintaining the Loans or its Commitments
or issuing or participating in the Letters of Credit or to reduce any amount
receivable thereunder; then, in any such case, upon written demand by such
Lender or the Issuing Bank (with a copy of such demand to the Administrative
Agent), the Borrowers shall immediately pay to the Administrative Agent for the
account of such Lender or the Issuing Bank, from time to time as specified by
such Lender or the Issuing Bank, such amount or amounts as may be necessary to
compensate such Lender or the Issuing Bank or its Fixed Rate Affiliate for any
such additional cost incurred or reduced amount received. Such demand shall be
accompanied by a statement as to the amount of such compensation and include a
summary of the basis for such demand. Such statement shall be conclusive and
binding for all purposes, absent manifest error.
4.02. Special Provisions Governing Fixed Rate Loans. With
respect to Fixed Rate Loans:
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(a) Amount of Fixed Rate Loans. Each Fixed Rate Loan shall be
for a minimum amount of $5,000,000 and in integral multiples of $250,000 in
excess of that amount.
(b) Determination of Interest Period. By giving notice as set
forth in Section 2.01(b) (with respect to a Borrowing of Revolving Loans to be
made as Fixed Rate Loans) or Section 4.01(c) (with respect to a conversion into
or continuation of Fixed Rate Loans), the Borrowers shall have the option,
subject to the other provisions of this Section 4.02, to select an interest
period (each, a "Interest Period") to apply to the Loans described in such
notice, subject to the following provisions:
(i) The Borrowers may only select, as to a particular
Borrowing of Fixed Rate Loans, an Interest Period of either one, two,
three or six months in duration;
(ii) In the case of immediately successive Interest Periods
applicable to a Borrowing of Fixed Rate Loans, each successive Interest
Period shall commence on the day on which the next preceding Interest
Period expires;
(iii) If any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall be extended to
expire on the next succeeding Business Day if such Business Day occurs
in the same calendar month, and if there shall be no succeeding
Business Day in such calendar month, the Interest Period shall expire
on the immediately preceding Business Day;
(iv) The Borrowers may not select an Interest Period as to any
Loan if such Interest Period terminates later than the Commitment
Termination Date; and
(v) There shall be no more than five (5) Interest Periods in
effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on
the Fixed Rate Determination Date, the Administrative Agent shall determine the
interest rate which shall apply to the Fixed Rate Loans for which an interest
rate is then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrowers and to each Lender. The Administrative Agent's determination
shall be presumed to be correct, absent manifest error, and shall be binding
upon the Borrowers.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In
the event that at least one (1) Business Day before the Fixed Rate Determination
Date:
(i) the Administrative Agent determines that adequate and fair
means do not exist for ascertaining the Eurodollar Rate;
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(ii) the Requisite Lenders advise the Administrative Agent
that Dollar deposits in the principal amounts of the Fixed Rate Loans
comprising such Borrowing are not generally available in the London
interbank market for a period equal to such Interest Period; or
(iii) the Requisite Lenders advise the Administrative Agent
that the applicable Fixed Rate, as determined by the Administrative
Agent, after taking into account the adjustments for reserves and
increased costs provided for in Section 4.01(a)(iii) and (f), will not
adequately and fairly reflect the cost to such Lenders of funding their
Fixed Rate Loans;
then the Administrative Agent shall forthwith give notice thereof to the
Borrowers, whereupon (until the Administrative Agent notifies the Borrowers that
the circumstances giving rise to such suspension no longer exist) the right of
the Borrowers to elect to have Loans bear interest based upon the Fixed Rate
shall be suspended and each outstanding Fixed Rate Loan shall be converted into
a Floating Rate Loan on the last day of the then current Interest Period
therefor, and any Notice of Borrowing for which Revolving Loans have not then
been made shall be deemed to be a request for Floating Rate Loans,
notwithstanding any prior election by the Borrowers to the contrary.
(e) Illegality. (i) If at any time any Lender determines
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties) that the making or continuation of any Fixed Rate Loan
has become unlawful or impermissible by compliance by that Lender with any law,
governmental rule, regulation or order of any Governmental Authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful or would result in costs or penalties), then, and in any such event,
such Lender may give notice of that determination, in writing, to the Borrowers
and the Administrative Agent, and the Administrative Agent shall promptly
transmit the notice to each other Lender.
(ii) When notice is given by a Lender under Section
4.02(e)(i), (A) the Borrowers' right to request from such Lender and such
Lender's obligation, if any, to make Fixed Rate Loans shall be immediately
suspended, and such Lender shall make a Floating Rate Loan as part of any
requested Borrowing of Fixed Rate Loans and (B) if the affected Fixed Rate Loan
or Loans are then outstanding, the Borrowers shall immediately, or if permitted
by applicable law, no later than the date permitted thereby, upon at least one
(1) Business Day's prior written notice to the Administrative Agent and the
affected Lender, convert each such Loan to a Floating Rate Loan.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) such Lender determines that it may lawfully make Fixed Rate Loans,
such Lender shall promptly give notice of that determination, in writing, to the
Borrowers and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender. The Borrowers' right to
request, and such Lender's obligation, if any, to make Fixed Rate Loans shall
thereupon be restored.
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(f) Compensation. In addition to all amounts required to be
paid by the Borrowers pursuant to Section 4.01, the Borrowers shall compensate
each Lender, upon demand, for all losses, expenses and liabilities (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender's Fixed Rate Loans to the Borrowers) which that Lender may
sustain (i) if for any reason a Borrowing, conversion into or continuation of
Fixed Rate Loans does not occur on a date specified therefor in a Notice of
Borrowing or a Notice of Conversion/Continuation given by the Borrowers or in a
telephonic request by it for borrowing or conversion/continuation or a
successive Interest Period does not commence after notice therefor is given
pursuant to Section 4.01(c), including, without limitation, pursuant to Section
4.02(d), (ii) if for any reason any Fixed Rate Loan is prepaid (including,
without limitation, mandatorily pursuant to Section 3.01) on a date which is not
the last day of the applicable Interest Period, (iii) as a consequence of a
required conversion of a Fixed Rate Loan to a Floating Rate Loan as a result of
any of the events indicated in Section 4.02(d) or (e) or (iv) as a consequence
of any failure by the Borrowers to repay Fixed Rate Loans when required by the
terms hereof (without duplication). The Lender making demand for such
compensation shall deliver to the Borrowers concurrently with such demand a
written statement in reasonable detail as to such losses, expenses and
liabilities, and this statement shall be conclusive as to the amount of
compensation due to that Lender, absent manifest error.
(g) Booking of Fixed Rate Loans. Any Lender may make, carry or
transfer Fixed Rate Loans at, to, or for the account of, its Fixed Rate Lending
Office or Fixed Rate Affiliate or its other offices or Affiliates. No Lender
shall be entitled, however, to receive any greater amount under Sections 3.03,
3.04, 4.01(f) or 4.02(f) as a result of the transfer of any such Fixed Rate Loan
to any office (other than such Fixed Rate Lending Office) or any Affiliate
(other than such Fixed Rate Affiliate) than such Lender would have been entitled
to receive immediately prior thereto, unless (i) the transfer occurred at a time
when circumstances giving rise to the claim for such greater amount did not
exist and (ii) such claim would have arisen even if such transfer had not
occurred.
(h) Affiliates Not Obligated. No Fixed Rate Affiliate or other
Affiliate of any Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
4.03. Fees. (a) Letter of Credit Fee. In addition to any
charges paid pursuant to Section 2.04(g), the Borrowers shall pay to the
Administrative Agent the following fees:
(i) with respect to each Commercial Letter of Credit,
(A) a fee, for the account of the Issuing Bank, at a per annum
rate equal to one-quarter of one percent (0.25%) on the
undrawn face amount of such Letter of Credit and (B) a fee,
for the account of the Lenders in accordance with their
respective Pro Rata Shares, at a per annum rate equal to the
Applicable Commercial Letter of Credit Percentage on the
undrawn face amount of such Letter of Credit, each fee payable
monthly, in arrears, on
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the first Business Day of each month during which such Letter
of Credit is outstanding;
(ii) with respect to each Usance Letter of Credit,
(A) a fee, for the account of the Issuing Bank, at a per annum
rate equal to one-quarter of one percent (0.25%) on the sum of
the undrawn face amount of such Letter of Credit plus the
amount of the time drafts issued under such Letter of Credit
and (B) a fee, for the account of the Lenders in accordance
with their respective Pro Rata Shares, at a per annum rate
equal to the Applicable Usance Letter of Credit Percentage on
the sum of the undrawn face amount of such Letter of Credit
plus the amount of the time drafts issued under such Letter of
Credit, each fee payable monthly, in arrears, on the first
Business Day of each month during which such Letter of Credit
is outstanding;
(iii) with respect to each Standby Letter of Credit,
(A) a fee, for the account of the Issuing Bank, at a per annum
rate equal to one-quarter of one percent (0.25%) on the
undrawn face amount of such Letter of Credit and (B) a fee,
for the account of the Lenders in accordance with their
respective Pro Rata Shares, at a per annum rate equal to the
Applicable Standby Letter of Credit Percentage on the undrawn
face amount of such Letter of Credit, each fee payable
monthly, in arrears, on the first Business Day of each month
during which such Letter of Credit is outstanding; and
(iv) with respect to each Letter of Credit, after the
occurrence and during the continuation of an Event of Default,
an additional fee in an amount equal to two percent (2.00%)
per annum on the undrawn face amount of such Letter of Credit,
payable monthly, in arrears, on the first Business Day of each
calendar month.
(b) Unused Commitment Fee. The Borrowers shall pay to the
Administrative Agent, for the account of the Lenders in accordance with their
respective Pro Rata Shares, a fee (the "Unused Commitment Fee"), accruing at the
rate of three-eighths of one percent (0.375%) on the average amount by which the
Commitments exceed the Revolving Credit Obligations at such time for the period
commencing on the Closing Date and ending on the Commitment Termination Date,
such fee being payable monthly, in arrears, on the first Business Day of each
month and on the Commitment Termination Date.
(c) Other Fees. The Borrowers shall pay to the Administrative
Agent such other fees as are set forth in the Letter Agreement.
(d) Calculation and Payment of Fees. All of the above fees
shall be calculated on the basis of the actual number of days elapsed in a
360-day year. All such fees shall be payable in addition to, and not in lieu of,
interest, expense reimbursements, indemnification and other Obligations. Fees
shall be payable to the Administrative Agent's Account in accordance with
Section 3.02. All fees shall be fully earned and nonrefundable when paid.
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ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. Conditions Precedent to the Initial Loans and Letters of
Credit. The obligation of each Lender on the Closing Date to make its Revolving
Loan requested by the Borrowers and the agreement of the Issuing Bank on the
Closing Date to Issue Letters of Credit, shall be subject to the satisfaction of
all of the following conditions precedent:
(a) Documents. The Administrative Agent shall have received on
or before the Closing Date all of the following:
(i) this Agreement, the Notes and all other agreements,
documents and instruments described in the List of Closing Documents
attached hereto and made a part hereof as Exhibit F, each duly executed
where appropriate and in form and substance satisfactory to the
Lenders;
(ii) (A) a five-year business plan of the Barneys Group, (B)
projections of the financial statements (including balance sheets,
income statements and cash flow statements) of the Barneys Group,
giving effect to the transactions contemplated by the Plan of
Reorganization and financing contemplated hereunder, on a monthly basis
for the twelve months following the Closing Date, and (C) such other
financial information as the Administrative Agent or the Lenders may
reasonably request; and
(iii) such additional documentation as the Administrative
Agent may reasonably request.
(b) Collateral Information; Perfection of Liens. The
Administrative Agent shall have received complete and accurate information from
the Borrowers with respect to the name and the location of the principal place
of business and chief executive office for each Borrower; all Uniform Commercial
Code and other filing and recording fees and taxes shall have been paid or duly
provided for; and the Administrative Agent shall have received evidence to the
satisfaction of the Lenders that all Liens granted to the Administrative Agent
with respect to all Collateral are perfected and of first priority, except as
otherwise permitted under this Agreement, and except for the filing of UCC-1
financing statements and filings with the United States Patent and Trademark
Office. All certificates representing Capital Stock included in the Collateral
shall have been delivered to the Administrative Agent (with duly executed stock
powers, as appropriate) and all instruments included in the Collateral shall
have been delivered to the Administrative Agent (duly endorsed to the
Administrative Agent, as appropriate).
(c) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and the Administrative Agent
shall not have received any notice that any action, suit, investigation,
litigation or proceeding is pending or threatened in any court or before any
arbitrator or Governmental Authority which (i) purports to enjoin, prohibit,
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restrain or otherwise affect (A) the making of the Loans on the Closing Date or
(B) the consummation of the transactions contemplated pursuant to the Loan
Documents or the Plan of Reorganization, (ii) would likely impose or result in
the imposition of a Material Adverse Effect or (iii) would likely have a
material adverse effect on the ability of Holdings or any Borrower to consummate
the transactions contemplated by the Plan of Reorganization or the Loan
Documents or the ability of Holdings or any Borrower to perform its obligations
under the Plan of Reorganization or the Loan Documents.
(d) No Change in Condition. No change in the condition
(financial or otherwise), business, performance, assets, operations or prospects
of the Barneys Group, taken as a whole, shall have occurred since August 1, 1998
(other than as disclosed in the Disclosure Statement with respect to the Fall
1998 Stub Period), which change has had or is reasonably likely to have a
Material Adverse Effect.
(e) No Default. No Event of Default or Default shall have
occurred and be continuing or would result from the making of the Loans or the
Issuance of Letters of Credit.
(f) Representations and Warranties. All of the representations
and warranties contained in Section 6.01 and in the other Loan Documents shall
be true and complete in all material respects on and as of the Closing Date,
both before and after giving effect to the making of the Loans on the Closing
Date.
(g) Fees and Expenses Paid. There shall have been paid to the
Administrative Agent, for the account of the Lenders and the Administrative
Agent, all fees due and payable on or before the Closing Date (including,
without limitation, commitment fees that have accrued to the Closing Date and
all fees described in the Letter Agreement), and all expenses (including,
without limitation, legal expenses) due and payable on or before the Closing
Date.
(h) Closing Date. The Closing Date shall have occurred on or
before February 26, 1999.
(i) Consents, Etc. The Borrowers shall have obtained all
consents, approvals and authorizations required pursuant to any material
Contractual Obligation with any other Person required to be obtained and all
consents, approvals and authorizations of, and effected all notices to and
filings with, any Governmental Authority as may be necessary to allow each of
the Borrowers and Holdings lawfully (A) to execute, deliver and perform, in all
material respects, their respective obligations hereunder, under the other Loan
Documents to which each of them is, or shall be, a party and each other
agreement or instrument to be executed and delivered by each of them pursuant
thereto or in connection therewith, (B) to create and perfect the Liens on the
Collateral to be owned by each of them in the manner and for the purpose
contemplated by the Loan Documents and (C) to consummate the transactions
contemplated pursuant to the Plan of Reorganization. No such consent, approval
or authorization shall impose any conditions that are not acceptable to the
Administrative Agent and the Lenders.
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(j) Plan of Reorganization. The Administrative Agent and the
Lenders shall have approved in writing any material modification, amendment,
termination, cancellation or waiver of any term of the Plan of Reorganization.
The Administrative Agent and the Lenders shall have received and approved all
documentation implementing the Plan of Reorganization. All conditions precedent
to the effectiveness of the Plan of Reorganization shall have been satisfied (or
with the prior written consent of the Administrative Agent and the Lenders
waived), the Plan of Reorganization shall have been confirmed in accordance with
the Bankruptcy Code and the order confirming the Plan of Reorganization shall
have become a Final Order (as defined in the Plan of Reorganization).
(k) Certificate of Chief Financial Officer. The Administrative
Agent shall have received a certificate of the chief financial officer of
Barneys certifying that as of the Closing Date (i) the Consolidated EBITDA
(without giving effect to the Pension Liability Payment) of Barneys Group for
the twelve month period ending December 31, 1998 is at least $15,882,000, (ii)
after giving effect to the proposed Revolving Loans to be made, and Letters of
Credit to be issued, on the Closing Date, there is at least $10,000,000 of
Availability, and (iii) the amount of the proposed Revolving Loans to be made on
the Closing Date does not exceed $85,000,000 in the aggregate.
5.02. Conditions Precedent to All Revolving Loans and Letters
of Credit. The obligation of each Lender to make any Revolving Loan requested by
the Borrowers on any date, and the agreement of the Issuing Bank to Issue any
Letter of Credit on any date is subject to the following conditions precedent as
of each such date:
(a) Representations and Warranties. As of such date, both
before and after giving effect to the Loans to be made or the Letter of Credit
to be Issued on such date, all of the representations and warranties contained
in Section 6.01 and in any other Loan Document (as such may be amended or
updated in accordance with Section 6.02, and other than representations and
warranties which expressly speak as of a different date) shall be true, correct
and complete in all material respects.
(b) No Default. No Event of Default or Default shall have
occurred and be continuing or would result from the making of the requested Loan
or the issuance of the requested Letter of Credit.
Each submission by the Borrowers to the Administrative Agent of a Notice of
Borrowing with respect to a Revolving Loan or a Swing Loan, each acceptance by
the Borrowers of the proceeds of each such Loan so made, each submission by the
Borrowers to the Issuing Bank of a request for issuance of a Letter of Credit
and the issuance of such Letter of Credit, shall constitute a representation and
warranty by each of the Borrowers as of such Funding Date and as of the date of
Issuance of such Letter of Credit, that all the conditions contained in this
Section 5.02 have been satisfied.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrowers. In
order to induce the Lenders and the Issuing Bank to enter into this Agreement
and to make the Loans and the other financial accommodations to the Borrowers
and to Issue the Letters of Credit described herein, each Borrower represents
and warrants to each Lender, the Issuing Bank and the Administrative Agent as of
the Closing Date and thereafter on each date as required by Section 5.02 that
the following statements are true, correct and complete:
(a) Organization; Corporate Powers. Each member of the Barneys
Group (i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) except as set forth
on Schedule 6.01-A, is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which failure to
be so qualified and in good standing shall have or is reasonably likely to have
a Material Adverse Effect and (iii) has all requisite corporate power and
authority to own, operate and encumber its Property and to conduct its business
as presently conducted.
(b) Authority. (i) Each member of the Barneys Group has the
requisite corporate power and authority to execute, deliver and perform each of
the Loan Documents to which it is a party.
(ii) The execution, delivery and performance, as the case may
be, of each of the Loan Documents which have been executed and to which any
member of the Barneys Group is a party and the consummation of the transactions
contemplated thereby, have been duly approved pursuant to the Final Order (as
defined in the Plan of Reorganization) and, to the extent required by law, by
such member's board of directors and shareholders and such approvals have not
been rescinded, revoked or modified in any manner. No other corporate action or
proceedings on the part of any member of the Barneys Group is necessary to
consummate such transactions.
(iii) Each of the Loan Documents to which any member of the
Barneys Group is a party has been duly executed, or delivered on behalf of such
member and constitutes such member's legal, valid and binding obligation,
enforceable against such member in accordance with its terms, and is in full
force and effect.
(c) Subsidiaries; Ownership of Capital Stock. Schedule 6.01-C
(i) contains a diagram indicating the corporate structure of Holdings and each
member of the Barneys Group and any other Person in which any member of the
Barneys Group holds a majority equity interest as of the Closing Date; and (ii)
accurately sets forth as of the Closing Date, (A) the correct legal name, the
jurisdiction of incorporation, and Employer Identification Number of each member
of
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the Barneys Group, and the jurisdictions in which such member is qualified to
transact business as a foreign corporation and intends to remain qualified after
the Closing Date, (B) the authorized, issued and outstanding shares of each
class of Capital Stock of the each member of the Barneys Group and the owners of
such shares and (C) a summary of the direct and indirect partnership, joint
venture, or other equity interests, if any, of the each member of the Barneys
Group in any Person that is not a corporation. None of the issued and
outstanding Capital Stock of the Barneys Group is subject to any vesting,
redemption, or repurchase agreement, and there are no warrants or options
outstanding with respect to such Capital Stock. The outstanding Capital Stock of
each member of the Barneys Group is duly authorized, validly issued, fully paid
and nonassessable and is not Margin Stock.
(d) No Conflict. The execution, delivery and performance of
each of the Loan Documents to which any member of the Barneys Group is a party
do not and will not (i) conflict with the Constituent Documents of such member,
(ii) constitute a tortious interference with any Contractual Obligation of any
Person, (iii) conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Requirement of Law
or under any material Contractual Obligation of such member, or require the
termination of any material Contractual Obligation, (iv) result in or require
the creation or imposition of any Lien whatsoever upon any of the Property or
assets of such member, other than Liens contemplated by the Loan Documents, or
(v) require any approval of such member's shareholders that has not been
obtained.
(e) Governmental Consents, etc. Except as set forth on
Schedule 6.01-E, the execution, delivery and performance of each of the Loan
Documents to which any member of the Barneys Group is a party do not and will
not require any registration with, consent or approval of, or notice to, or
other action of, with or by any Governmental Authority, except (i) filings,
consents or notices which have been made, obtained or given, or, in a timely
manner, shall be made, obtained, or given and (ii) filings necessary to perfect
security interests in the Collateral. No member of the Barneys Group is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment Company Act of 1940,
or any other federal or state statute or regulation which limits its ability to
incur indebtedness or its ability to consummate the transactions contemplated in
the Loan Documents.
(f) Accommodation Obligations; Contingencies. Except as set
forth on Schedule 1.01.3, no member of the Barneys Group has any Accommodation
Obligation, contingent liability or liability for any Taxes, long-term lease or
commitment, not reflected in its financial statements delivered to the
Administrative Agent on or prior to the Closing Date or otherwise disclosed to
the Administrative Agent and the Lenders in the other Schedules hereto, which
shall have or is reasonably likely to have a Material Adverse Effect.
(g) Restricted Junior Payments. Since October 3, 1998, no
member of the Barneys Group has directly or indirectly declared, ordered, paid
or made or set apart any sum or
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Property for any Restricted Junior Payment or agreed to do so, except as
permitted pursuant to Section 9.06 hereof or pursuant to the Plan of
Reorganization.
(h) Financial Position. The projections of the Barneys Group,
the financial statements referred to in Section 5.01(a)(ii) and each business
plan and all other financial projections and related materials and documents
delivered to the Lenders pursuant hereto were prepared in good faith and are
based upon facts and assumptions believed by the Borrowers to be reasonable when
made in light of the then current and foreseeable business conditions and
prospects of the Borrowers and represent management's opinion of the projected
financial performance of the Barneys Group based on the information available to
the Borrowers at the time so furnished.
(i) Litigation; Adverse Effects. Except as set forth in
Schedule 6.01-I, there is no action, suit, audit, proceeding, investigation or
arbitration (or series of related actions, suits, proceedings, investigations or
arbitrations) before or by any Governmental Authority or private arbitrator
pending or, to the knowledge of the Borrowers, threatened in writing against any
member of the Barneys Group or any Property of any of them (i) challenging the
validity or the enforceability of any of the Loan Documents or (ii) which has
had, shall have or is reasonably likely to have a Material Adverse Effect. No
member of the Barneys Group is (A) in violation of any applicable Requirements
of Law which violation shall have or is reasonably likely to result in a
Material Adverse Effect, or (B) subject to or in default with respect to any
final judgment, writ, injunction, restraining order or order of any nature,
decree, rule or regulation of any court or Governmental Authority, in each case
which shall have or is reasonably likely to have a Material Adverse Effect.
(j) No Material Adverse Change. Since August 1, 1998 (other
than as disclosed in the Disclosure Statement with respect to the Fall 1998 Stub
Period), there has occurred no event which has had, shall have or is reasonably
likely to have a Material Adverse Effect.
(k) Payment of Taxes. All tax returns and reports of each
member of the Barneys Group required to be filed have been timely filed or are
subject to extensions duly obtained, and all taxes, assessments, fees and other
governmental charges thereupon and upon their respective Property, assets,
income and franchises which are shown in such returns or reports to be due and
payable have been paid other than such taxes, assessments, fees and other
governmental charges (A) which (i) were discharged in any bankruptcy proceedings
of the member or (ii) are provided for in the Plan of Reorganization and listed
on Schedule 6.01-K or (B) (i) which are being contested in good faith by such
member by appropriate proceedings diligently instituted and conducted and
without danger of any material risk to the Collateral and (ii) with respect to
which a reserve or other appropriate provision, if any, as is required in
conformity with GAAP shall have been made. The Borrowers have no knowledge of
any proposed tax assessment against any member of the Barneys Group that shall
have or is reasonably likely to have a Material Adverse Effect.
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(l) Performance. Other than as permitted pursuant to the
Debtors' bankruptcy proceedings, no member of the Barneys Group has received
notice or has actual knowledge that (i) it is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it or (ii) any condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default with respect to any such Contractual Obligation, in each
case, except where such default or defaults, if any, shall not have or are not
reasonably likely to have a Material Adverse Effect.
(m) Disclosure. The representations and warranties of each
member of the Barneys Group contained in the Loan Documents, and all
certificates and documents delivered to the Administrative Agent and the Lenders
pursuant to the terms hereof and the other Loan Documents, and all statements
made in the Plan of Reorganization and Disclosure Statement, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. The Borrowers have not
intentionally withheld any fact from the Administrative Agent, the Issuing Bank
or any Lender in regard to any matter which shall have or is reasonably likely
to have a Material Adverse Effect.
(n) Requirements of Law. Each member of the Barneys Group is
in compliance with all Requirements of Law applicable to it and its business, in
each case where the failure to so comply individually or in the aggregate shall
have or is reasonably likely to have a Material Adverse Effect.
(o) Environmental Matters. Except as disclosed on Schedule
6.01-O and except for matters, conditions, operations and noncompliance which
would not reasonably be expected to result in a liability to any member of the
Barneys Group in excess of $1,000,000 in any Fiscal Year or $4,000,000 in the
aggregate:
(A) the operations of the Barneys Group comply in all material
respects with all applicable Environmental Requirements of Law;
(B) each member of the Barneys Group has obtained or has taken
appropriate steps, as required by Environmental Requirements of Law, to
obtain all material environmental, health and safety Permits necessary
for their respective operations, and all such Permits are in good
standing and such member is currently in compliance in all material
respects with all terms and conditions of such Permits;
(C) no member of the Barneys Group or any of its operations or
present or to the actual knowledge of any Borrower, past Property are
currently subject to any pending or, to the actual knowledge of any
Borrower, actually threatened investigation by, or any judicial or
administrative proceeding, order, judgment, decree or settlement
alleging or addressing (i) a material violation of any Environmental
Requirement of Law; (ii) any
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Remedial Action; or (iii) any material Claims or Liabilities and Costs
arising from the Release or threatened Release of a Contaminant into
the environment;
(D) to the actual knowledge of any Borrower, no member of the
Barneys Group is the owner or operator of any Property which has any of
the following:
(i) any past or present on-site generation,
treatment, recycling, storage or disposal of any hazardous
waste, as that term is defined under 40 C.F.R. Part 261 or any
state equivalent;
(ii) any past or present landfill, underground
storage tank or surface impoundment;
(iii) any asbestos-containing material; or
(iv) any polychlorinated biphenyls (PCB) used in
hydraulic oils, electrical transformers or other Equipment;
(E) no Environmental Lien has attached to any Property of any
member of the Barneys Group;
(F) to the actual knowledge of any Borrower, there have been
no Releases of any Contaminants into the environment in reportable
quantities by any member of the Barneys Group except for any such
Releases which occurred in compliance with an environmental, health or
safety Permit;
(G) to the actual knowledge of any Borrower, the Barneys Group
has no material contingent liability in connection with any Release or
threatened Release of any Contaminants into the environment;
(H) no member of the Barneys Group has received any notice
alleging that any member of the Barneys Group sent or directly arranged
for the transport of any waste to any site listed or proposed for
listing on the National Priorities List ("NPL") pursuant to CERCLA or
on the Comprehensive Environmental Response Compensation Liability
Information System List ("CERCLIS"), or any similar state list of
sites;
(I) to the actual knowledge of any Borrower, no present or
past Property of any member of the Barneys Group is listed or proposed
for listing on the NPL pursuant to CERCLA or on the CERCLIS or any
similar state list of sites requiring Remedial Action, and no Borrower
is aware of any conditions on such Property which would qualify such
Property for inclusion on any such list;
(J) This Section 6.01(o) constitutes the sole and exclusive
representations and
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warranties regarding environmental matters, except that such matters
are also subject to Sections 6.01(e), 6.01(h), 6.01(j) and 6.01(m).
(p) ERISA Matters. Neither any Borrower nor any ERISA
Affiliate maintains or contributes to any Plan other than those listed on
Schedule 6.01-P hereto. Each Plan, other than a Multiemployer Plan, which is
intended to be qualified under Section 401(a) of the Internal Revenue Code as
currently in effect has been determined by the IRS to be so qualified, and each
trust related to any such Plan has been determined to be exempt from federal
income tax under Section 501(a) of the Internal Revenue Code as currently in
effect. Except as disclosed in Schedule 6.01-P, neither any Borrower nor any
ERISA Affiliate maintains or contributes to any employee welfare benefit plan
within the meaning of Section 3(l) of ERISA which provides health or life
insurance benefits coverage to employees after termination of employment other
than as required by Section 601 of ERISA, except as provided under any
Multiemployer Plan. The Borrowers and all of their respective ERISA Affiliates
are in compliance with the responsibilities, obligations or duties imposed on
them by ERISA, the Internal Revenue Code and regulations promulgated thereunder
with respect to all Plans except for such non-compliance which individually or
in the aggregate could reasonably result in a liability less than $1,000,000. No
Benefit Plan has any outstanding accumulated funding deficiency (as defined in
Sections 302(a)(2) of ERISA and 412(a) of the Internal Revenue Code) whether or
not waived. Neither any Borrower nor any ERISA Affiliate (i) has engaged in a
nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of
the Internal Revenue Code or (ii) has taken any action which would constitute or
result in a Termination Event. Neither any Borrower nor any ERISA Affiliate has
incurred, or can reasonably expect to incur, any material liability to or on
account of a Benefit Plan pursuant to Sections 4063, 4064, 4069, 4204 or 4212(c)
of ERISA. Neither any Borrower nor any ERISA Affiliate has incurred any
liability to the PBGC with respect to a Benefit Plan which remains outstanding
other than the payment of premiums, and there are no premium payments which have
become due which are unpaid. Neither any Borrower nor any ERISA Affiliate has
(i) failed to make a required contribution or payment to a Multiemployer Plan or
(ii) made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer Plan which individually or in the aggregate could
reasonably result in a liability in excess of $1,000,000. Neither any Borrower
nor any ERISA Affiliate has failed to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or before the
due date for such installment or other payment with respect to a Benefit Plan
which could result in a Lien under Section 412(n) of the Internal Revenue Code.
Neither any Borrower nor any ERISA Affiliate is required to provide security to
a Benefit Plan under Section 401(a)(29) of the Internal Revenue Code due to a
Plan amendment that results in an increase in current liability for the plan
year. Except as disclosed on Schedule 6.01-P the Borrowers do not have, by
reason of the transactions contemplated hereby any obligation to make any
payment to any employee pursuant to any Plan or existing contract or
arrangement. Except as disclosed on Schedule 6.01-P, the Borrowers have given to
the Administrative Agent copies of all of the following documents: each Benefit
Plan and related trust agreement (including all amendments to such Plan and
trust) in existence or committed to as of the Closing Date and in respect of
which any Borrower or any ERISA Affiliate is currently an "
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employer" as defined in section 3(5) of ERISA, and the most recent summary plan
description, actuarial report, determination letter issued by the IRS and Form
5500 filed in respect of each such Benefit Plan in existence; a listing of all
of the Multiemployer Plans currently contributed to by any Borrower or any ERISA
Affiliate with the aggregate amount of the most recent annual contributions
required to be made by any Borrower and all ERISA Affiliates to each such
Multiemployer Plan, any information which has been provided to any Borrower or
an ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan
and the collective bargaining agreement pursuant to which such contribution is
required to be made; each employee welfare benefit plan within the meaning of
Section 3(l) of ERISA which provides health or life insurance benefits coverage
to employees of any Borrower after termination of employment other than as
required by Section 601 of ERISA, the most recent summary plan description for
such plan and the aggregate amount of the most recent annual payments made to
terminated employees under each such plan.
(q) Foreign Employee Benefit Matters. Except as disclosed on
Schedule 6.01-P, neither any Borrower nor any ERISA Affiliate maintains any
Foreign Employee Benefit Plan. Each Foreign Employee Benefit Plan is in
compliance with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Plan, except for
such non-compliance which individually or in the aggregate could reasonably
result in a liability less than $1,000,000. With respect to any Foreign Employee
Benefit Plan maintained by any Borrower, any of their Subsidiaries or any ERISA
Affiliate, reasonable reserves have been established in accordance with prudent
business practice or where required by ordinary accounting practices in the
jurisdiction in which such Plan is maintained. There are no actions, suits or
claims (other than routine claims for benefits) pending or threatened in writing
against any Borrower, any of their Subsidiaries or any ERISA Affiliates with
respect to any Foreign Employee Benefit Plan which could reasonably result in a
material liability.
(r) Labor Matters. Except as set forth in Schedule 6.01-R, as
of the Closing Date there is no collective bargaining agreement covering any of
the employees of any member of the Barneys Group.
(s) Securities Activities. No member of the Barneys Group is
engaged in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(t) Solvency. After giving effect to the transactions
contemplated in the Loan Documents and the Plan of Reorganization and the Loans
to be made on the Closing Date and each such other date as Loans requested
hereunder are made and the disbursement of the proceeds of such Loans, each
member of the Barneys Group is Solvent.
(u) Intellectual Property; Government Approvals. (i) Each
member of the Barneys Group owns or otherwise has the lawful right to use,
pursuant to license, sublicense, agreement or permission all trademarks, service
marks, designs, logos, trade dress, trade names, corporate names, together with
all translations, derivations and combinations thereof and
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including all goodwill associated thereunder and all applications, registrations
and renewals in connection therewith, copyrights (whether registered or not),
technology, know-how and processes, computer software and all other proprietary
rights existing anywhere throughout the world necessary for the conduct of their
businesses as currently conducted ("Intellectual Property") except where the
failure to do so would not have a Material Adverse Effect. Each item of
Intellectual Property owned or used by the Barneys Group will be owned or
available for use by the Barneys Group on terms and conditions substantially
identical as those that presently exist immediately subsequent to the Closing
hereunder. The Barneys Group has taken all necessary action to maintain and
protect each material item of Intellectual Property that it owns or uses.
(ii) Schedule 6.01-U identifies each registration which has
been issued to, and each application which has been filed in the name of, each
member of the Barneys Group with respect to any of the Intellectual Property and
identifies each license, sublicense, agreement or other permission which any
member of the Barneys Group has granted to any third party with respect to any
of the Intellectual Property. The Barneys Group has delivered to the
Administrative Agent a correct and complete summary of all registrations and
applications evidencing ownership of each such item of Intellectual Property,
and correct and complete copies of all such licenses, agreements and
permissions. Schedule 6.01-U identifies each material trade name or corporate
name used by any member of the Barneys Group in connection with any of its
businesses, and identifies each license, sublicense, agreement and permission
that any member of the Barneys Group is a party to with respect to any
intellectual property rights of any third party. Except as set forth on Schedule
6.01-U:
(1) The Borrowers possess all right, title and interest in and
to each item of Intellectual Property, free and clear of any Lien, license or
other restriction;
(2) no action, claim or proceeding is pending or, to the
knowledge of the Borrowers, is threatened in writing which alleges that a member
of the Barneys Group has interfered with, infringed upon or come into conflict
with any intellectual property rights of any Person which could result in a
liability to any member of the Barneys Group in excess of $1,000,000;
(3) to the knowledge of the Borrowers, no Person has
interfered with, infringed upon or misappropriated any Intellectual Property
rights of any member of the Barneys Group; and
(4) no action, suit, proceeding or claim is pending or, to the
knowledge of the Borrowers, is threatened in writing which challenges the
legality, validity, enforceability, use or ownership of each item of
Intellectual Property which could result in a liability to any member of the
Barneys Group in excess of $1,000,000.
(iii) Except for Liens granted to the Administrative Agent for
the benefit of the Administrative Agent, the Issuing Bank, the Lenders and the
other Holders, the transactions
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contemplated by the Loan Documents shall not impair the ownership of or rights
under (or the license or other right to use, as the case may be) any permits and
governmental approvals, or Intellectual Property rights of any member of the
Barneys Group in any manner.
(v) Assets and Properties. Each member of the Barneys Group
has good and marketable title to all of its assets and Property (tangible and
intangible) owned by it or a valid leasehold interest in all of its leased
assets (except insofar as marketability may be limited by any laws or
regulations of any Governmental Authority affecting such assets), and all such
assets and Property are free and clear of all Liens, except Liens securing the
Obligations and Liens permitted under Section 9.03. Schedule 6.01-V contains a
true and complete list of all of the Real Property owned in fee simple by each
member of the Barneys Group as of the Closing Date, and a true and complete list
of all real estate leases in effect on the Closing Date. Substantially all of
the assets and Property owned by or leased to each such member are in adequate
operating condition and repair, ordinary wear and tear excepted, and are free
and clear of any known defects except such defects that do not substantially
interfere with the continued use thereof in the conduct of normal operations.
Except for Liens granted to the Administrative Agent for the benefit of the
Administrative Agent, the Issuing Bank, the Lenders and the other Holders,
neither this Agreement nor any other Loan Document, nor any transaction
contemplated herein or therein, shall affect any right, title or interest of any
Borrower in and to any of such assets in a manner that shall have or is
reasonably likely to have a Material Adverse Effect.
(w) Insurance. Schedule 6.01-W accurately sets forth as of the
Closing Date all insurance policies and programs (including self-insurance
programs) currently in effect with respect to the respective assets and business
of the members of the Barneys Group, specifying for each such policy and
program, (i) the amount thereof, (ii) the risks insured against thereby, (iii)
the name of the insurer, if any, and each insured party thereunder, (iv) the
policy or other identification number thereof, (v) the expiration date thereof
and (vi) the annual premium, if any, with respect thereto.
(x) Bank Accounts. Schedule 6.01-X sets forth each account
(indicating the type of account) where funds are from time to time deposited,
the financial institutions where such account is located, the address of such
financial institution and the account name and number.
(y) Senior Debt. All Obligations constitute "Senior Debt"
under each of the Subordinated Notes.
6.02. Amendment to Schedules. Any Schedule referred to in
Section 6.01 or Section 9.16 shall be automatically amended upon written notice
delivered by the Borrowers to the Administrative Agent and the Lenders. Such
notice shall specify (i) the Schedule to be amended, (ii) the information to be
added to or deleted from such Schedule and (iii) to the extent relevant, the
Section of this Agreement pursuant to which the action giving rise to such
information is permitted and shall contain a representation and warranty by each
Borrower that
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such action is permitted under such Section.
ARTICLE VII
REPORTING COVENANTS
Each Borrower covenants and agrees that so long as any
Commitment is outstanding and thereafter until payment in full of all of the
Obligations, unless the Requisite Lenders shall otherwise give prior written
consent thereto:
7.01. Financial Statements. The Borrowers shall maintain, and
shall cause each member of the Barneys Group to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of consolidated and consolidating financial statements in
conformity with GAAP, and each of the financial statements described below shall
be prepared from such system and records. The Borrowers shall deliver or cause
to be delivered to the Administrative Agent and the Lenders:
(a) Monthly Reports. Within thirty (30) days after the end of
each fiscal month in each Fiscal Year, the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such period and the related
consolidated statements of income and cash flow of Holdings and its Subsidiaries
for such fiscal month and for the period from the beginning of the then current
Fiscal Year to the end of such fiscal month (the "Year To Date Monthly
Reports"), and a comparison of the Year To Date Monthly Reports to the business
plan most recently delivered in accordance with subsection (d) below, all
certified by the chief financial officer of Barneys as fairly presenting in all
material respects the consolidated financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of its operations and
cash flow for the periods indicated in accordance with GAAP, subject to normal
year end adjustments and, with respect to the first two Year To Date Monthly
Reports delivered in each Fiscal Year, normal adjustments resulting from the
prior Fiscal Year end audits.
(b) Quarterly Reports. Within forty-five (45) days after the
end of each fiscal quarter in each Fiscal Year, the consolidated balance sheet
of Holdings and its Subsidiaries as at the end of such period and the related
consolidated statements of income and cash flow of Holdings and its Subsidiaries
for such fiscal quarter and for the period from the beginning of the then
current Fiscal Year to the end of such fiscal quarter (the "Year To Date
Quarterly Reports"), and (i) with respect to the Year To Date Quarterly Reports
for Fiscal Year 1999, a comparison of certain financial information to be
mutually agreed upon by the Borrowers and the Administrative Agent, (ii) with
respect to the Year To Date Quarterly Reports for each Fiscal Year thereafter, a
comparison of the Year To Date Quarterly Reports for such Fiscal Year to the
corresponding statements for the corresponding period from the previous Fiscal
Year and (iii) a comparison of the Year To Date Quarterly Reports to the
business plan most recently delivered in accordance with subsection (d) below,
all certified by the chief financial officer of Barneys as fairly presenting in
all material respects the consolidated and consolidating financial position of
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Holdings and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance with GAAP,
subject to normal year end adjustments.
(c) Annual Reports. Within one-hundred and twenty (120) days
after the end of the Fall 1998 Stub Period and within ninety (90) days after the
end of each Fiscal Year thereafter, the annual audited consolidated financial
statements of Holdings and its Subsidiaries reported on by independent certified
public accountants of recognized national standing reasonably acceptable to the
Requisite Lenders, which report shall be unqualified and shall state that such
financial statements fairly present in all material respects the consolidated
financial position of Holdings and its Subsidiaries as at the dates indicated
and the results of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years (except for
changes with which such independent certified public accountants shall concur
and which shall have been disclosed in the notes to the financial statements)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards.
(d) Business Plans; Financial Projections. Not later than
fifteen (15) days before the beginning of each Fiscal Year commencing with
Fiscal Year 2000, and containing substantially the same types of financial
information contained in the projections delivered to the Administrative Agent
and the Lenders pursuant to Section 5.01(a)(ii) and otherwise in form and detail
satisfactory to the Lenders, (i) the annual business plan of Holdings and its
Subsidiaries for the next succeeding Fiscal Years up to and including the Fiscal
Year 2003 and (ii) forecasts prepared by management of Barneys for each fiscal
month in each such Fiscal Year, and on an annual basis for each succeeding
Fiscal Year, containing a consolidated balance sheet, an income statement and a
consolidated statement of cash flow.
(e) Officer's Certificate and Compliance Certificate. Together
with each delivery of any financial statement pursuant to paragraphs (a), (b)
and (c) of this Section 7.01, an Officer's Certificate of the Borrowers
substantially in the form of Exhibit G attached hereto and made a part hereof
(the "Officer's Certificate"), signed by the chief financial officer of Barneys.
Together with each delivery of any financial statement pursuant to paragraphs
(b) and (c) of this Section 7.01, a Compliance Certificate substantially in the
form of Exhibit H attached hereto and made a part hereof (the "Compliance
Certificate"), signed by the chief financial officer of Barneys and setting
forth calculations for the period then ended and which demonstrate compliance,
when applicable, with the provisions of Article X.
(f) Accountants. Together with each delivery of the financial
statements referred to in Section 7.01(c), a copy of the management letter or
any similar report delivered to any Borrower or to any officer or employee
thereof by such accountants in connection with such financial statements. The
Administrative Agent and each Lender may communicate directly with such
accountants. Any Lender or the Administrative Agent that communicates with such
accountants agrees to notify the Borrowers prior to any such communication;
provided, however, that the failure to give any such notice shall not affect the
Administrative Agent's or such
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Lender's rights hereunder.
7.02. Borrowing Base Certificate. Promptly and in any event on
the first and third Friday of each fiscal month, or more frequently if the
Administrative Agent shall request, the Borrowers shall provide the
Administrative Agent and the Lenders with a Borrowing Base Certificate for the
two week period ending as of the immediately preceding Saturday, together with
such supporting documents as the Administrative Agent deems desirable, all
certified as being true, accurate and complete in all material respects by the
chief financial officer, treasurer or controller of Barneys.
7.03. Events of Default. Promptly upon any Borrower obtaining
knowledge (i) of any condition or event which constitutes an Event of Default or
Default, or becoming aware that any Lender, the Issuing Bank or the
Administrative Agent has given any written notice with respect to a claimed
Event of Default or Default, (ii) that any Person has given any written notice
to any Borrower or taken any other action with respect to a claimed default or
event or condition of the type referred to in Section 11.01(e) or (iii) of any
condition or event which has or is reasonably likely to have a Material Adverse
Effect or materially and adversely affect the value of, or the Administrative
Agent's interest in, the Collateral, such Borrower shall deliver to the
Administrative Agent and the Lenders an Officer's Certificate specifying (A) the
nature and period of existence of any such claimed default, Event of Default,
Default, condition or event, (B) the notice given or action taken by such Person
in connection therewith, and (C) the remedial action such Borrower has taken, is
taking and proposes to take with respect thereto.
7.04. Lawsuits. (i) Promptly upon any Borrower obtaining
knowledge of the institution of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting any member of the Barneys
Group or any Property of such member not previously disclosed pursuant to
Section 6.01(j), which action, suit, proceeding, governmental investigation or
arbitration exposes, or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same general
allegations or circumstances which expose, in such Borrower's reasonable
judgment, such member or other members of the Barneys Group to liability in an
amount in excess, individually or in the aggregate, of $1,000,000 (excluding
liability covered by insurance), the Borrowers shall give written notice thereof
to the Administrative Agent and the Lenders and provide such other information
as may be reasonably available to enable each Lender and the Administrative
Agent and its counsel to evaluate such matters; and (ii) in addition to the
requirements set forth in clause (i) of this Section 7.04, the Borrowers shall
give the Administrative Agent and the Lenders a written status report with
respect to any action, suit, proceeding, governmental investigation or
arbitration covered by a written notice delivered pursuant to clause (i) above
annually within 30 days following the end of each Fiscal Year and provide such
other information as may be reasonably available to it to enable each Lender and
the Administrative Agent and its counsel to evaluate such matters.
7.05. Insurance. As soon as practicable and in any event
within thirty (30) days of the end of each Fiscal Year ending after the Closing
Date, the Borrowers shall deliver to the
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Administrative Agent and the Lenders (i) a report in form and substance
reasonably satisfactory to the Administrative Agent and the Requisite Lenders
outlining all material insurance coverage (including any self-insurance provided
by the Borrowers) maintained as of the date of such report by the Barneys Group
and the duration of such coverage and (ii) an insurance broker's statement that
all premiums then due and payable with respect to such coverage have been paid.
7.06. ERISA Notices. The Borrowers shall deliver or cause to
be delivered to the Administrative Agent, at the Borrowers' expense, the
following information and notices as soon as reasonably possible, and in any
event:
(i) within ten (10) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know that a Termination Event
has occurred, a written statement of the appropriate officer of any
Borrower describing such Termination Event and the action, if any,
which any Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto, and when known, any action taken
or threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know that a prohibited
transaction (defined in Sections 406 of ERISA and 4975 of the Internal
Revenue Code) involving any Borrower or any ERISA Affiliate has
occurred, other than with respect to a Multiemployer Plan, a statement
of the appropriate officer of any Borrower describing such transaction
and the action which any Borrower or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto;
(iii) within thirty (30) Business Days after the filing
thereof with the DOL, IRS or PBGC, copies of each annual report (form
5500 series), including Schedule B thereto, filed with respect to each
Benefit Plan;
(iv) within thirty (30) Business Days after receipt by any
Borrower or any ERISA Affiliate of each actuarial report for any
Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
(v) within five (5) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by any Borrower or
any ERISA Affiliate with respect to such request;
(vi) within five (5) Business Days after the occurrence
thereof, notification of any material increase in the benefits of any
existing Benefit Plan or the establishment of any new Benefit Plan or
the commencement of contributions to any Benefit Plan to which any
Borrower or any ERISA Affiliate was not previously contributing;
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(vii) within five (5) Business Days after receipt by any
Borrower or any ERISA Affiliate of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
(viii) within five (5) Business Days after receipt by any
Borrower or any ERISA Affiliate of any unfavorable determination letter
from the IRS regarding the qualification of a Plan other than a
Multiemployer Plan under Section 401(a) of the Internal Revenue Code,
copies of each such letter;
(ix) within five (5) Business Days after receipt by any
Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan
regarding the imposition of withdrawal liability, copies of each such
notice other than with respect to the Pension Liability Payment;
(x) within five (5) Business Days after any Borrower or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment, a notification of
such failure;
(xi) within five (5) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know (a) a Multiemployer Plan
has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c)
the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan; and
(xii) within five (5) Business Days after receipt by any
Borrower of a written notice from the Administrative Agent, copies of
any Foreign Employee Benefit Plan and related documents, reports and
correspondence as requested by the Lenders in such notice.
For purposes of this Section 7.06, any Borrower and any ERISA Affiliate shall be
deemed to know all facts known by the administrator of any Plan of which any
Borrower or any ERISA Affiliate is the plan sponsor.
7.07. Environmental Notices. (a) The Borrowers shall notify
the Administrative Agent and the Lenders in writing, promptly and in any event
within 10 Business Days upon any Borrower's learning thereof, of any:
(i) notice or claim by a Governmental Authority or any third
party to the effect that any member of the Barneys Group is or may be
liable to any Person, or is subject to an investigation by a
Governmental Authority, relating to a material Release or threatened
Release of any Contaminant into the environment, which such notice or
claim exposes, or in the case of multiple notices or claims arising out
of the same general
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allegations or circumstances which expose, in such Borrower's
reasonable judgment, such member to liability in an amount aggregating
$1,000,000 or more;
(ii) notice that any Property owned by any member of the
Barneys Group is subject to an Environmental Lien;
(iii) commencement or threat of any judicial or administrative
proceeding alleging a material violation by any member of the Barneys
Group of any Environmental, Health or Safety Requirement of Law which
such proceeding exposes, or in the case of multiple proceedings arising
out of the same general allegations or circumstances which expose, in
such Borrower's reasonable judgment, such member to liability in an
amount aggregating $1,000,000 or more;
(iv) new and material changes to any existing Environmental,
Health or Safety Requirement of Law that would or could reasonably be
expected to have a Material Adverse Effect; or
(v) any intent to execute an agreement, letter of intent or
commitment to acquire stock, assets or real estate, or to lease
property, or to take any other action by any member of the Barneys
Group that would subject such member to environmental, health or safety
Liabilities and Costs that would or could reasonably be expected to
have a Material Adverse Effect.
(b) In addition to the requirements set forth in clause (a) of
this Section 7.07, the Borrowers shall give the Administrative Agent and the
Lenders a written status report with respect to any matter covered by a written
notice delivered pursuant to clause (i) above annually within 30 days following
the end of each Fiscal Year.
7.08 Isetan Leases.
(a) Promptly upon receipt thereof, the
Borrowers shall deliver to the Administrative Agent a copy of all notices of
default or breach of covenant delivered by any Person to any member of the
Barneys Group pursuant to any Isetan Lease.
(b) Promptly upon receipt thereof, the Borrowers shall deliver
to the Administrative Agent a copy of all notices or requests (other than those
notices referred to in clause (a) of Section 7.08) delivered by any Person to
any member of the Barneys Group pursuant to any Isetan Lease.
7.09. Public Filings and Reports. Promptly upon the filing
thereof with any Governmental Authority (including, without limitation, the
Securities and Exchange Commission) or the mailing thereof to the public
shareholders or debtholders of the Company generally, copies of all filings or
reports made in connection with outstanding Indebtedness and Capital Stock of
Holdings.
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7.10. Other Information. Promptly upon receipt of a request
therefor from the Administrative Agent, the Borrowers shall prepare and deliver
to the Administrative Agent and the Lenders such other information with respect
to Holdings, any member of the Barneys Group or the Collateral including,
without limitation, schedules identifying and describing the Collateral and any
dispositions thereof, as from time to time may be reasonably requested by the
Administrative Agent.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that so long as any
Commitment is outstanding and thereafter until payment in full of all of the
Obligations, unless the Requisite Lenders shall otherwise give prior written
consent:
8.01. Corporate Existence, Etc. Barneys shall, and shall cause
each other member of the Barneys Group to, at all times maintain their
respective corporate or limited liability company existence, as applicable
(except to the extent permitted by Section 9.09), and preserve and keep, or
cause to be preserved and kept, in full force and effect their respective rights
and franchises material to their respective businesses except where the board of
directors of such Person or such member (as applicable) determines that the
maintenance or preservation of such rights and franchises is not in the best
interest of such Person or such member (as applicable) and the failure to so
maintain or preserve would not have or be reasonably likely to have a Material
Adverse Effect.
8.02. Corporate Powers; Conduct of Business, Etc. Barneys
shall, and shall cause each other member of the Barneys Group to, qualify and
remain qualified to do business in each jurisdiction in which the nature of its
business requires it to be so qualified and where the failure to be so qualified
would have or would be likely to have a Material Adverse Effect.
8.03. Compliance with Laws, Etc. Barneys shall, and shall
cause each other member of the Barneys Group to, (a) comply with all
Requirements of Law and all restrictive covenants affecting such Person or the
business, Property, assets or operations of such Person, and (b) obtain as
needed all Permits necessary for such Person's operations and maintain such
Permits in good standing, except, in each case, where the failure to do so would
not have or be reasonably likely to have a Material Adverse Effect.
8.04. Payment of Taxes and Claims; Tax Consolidation. Barneys
shall, and shall cause each other member of the Barneys Group to, pay (a) all
taxes, assessments and other governmental charges imposed upon it or on any of
its Property or assets or in respect of any of its franchises, business, income
or Property before any penalty or interest for late payment (except as such
penalty or interest relates to underpayment of estimated tax payments) accrues
thereon, and (b) all claims (including, without limitation, claims for labor,
services, materials and
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supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 9.03) upon any of
Barneys' or such member's Property or assets, prior to the time when any penalty
or fine shall be incurred with respect thereto; provided, however, that no such
taxes, assessments and governmental charges referred to in clause (a) above or
claims referred to in clause (b) above are required to be paid if being
contested in good faith by Holdings, Barneys or such member, as applicable, by
appropriate proceedings diligently instituted and conducted and without danger
of any material risk to the Collateral and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor. Barneys shall not, and shall not permit any other member of the
Barneys Group to, file or consent to the filing of any consolidated income tax
return with any Person (other than Holdings and members of the Barneys Group).
8.05. Insurance. Barneys shall maintain for itself and the
other members of the Barneys Group, or shall cause each member of the Barneys
Group to maintain, in full force and effect the insurance policies and programs
listed on Schedule 6.01-W or similar policies and programs or other policies and
programs as are reasonably acceptable to the Administrative Agent (with such
ministerial changes as are from time to time effected by Barneys); provided,
however, Barneys shall not be required to maintain such policies identified on
Schedule 6.01-W that were required to be maintained by Barneys solely pursuant
to a Requirement of Law that has been legally waived or eliminated. Each
certificate and policy relating to Property damage with respect to the
Collateral and business interruption coverage shall contain an endorsement, in
form and substance acceptable to the Administrative Agent, showing loss payable
to the Administrative Agent, for the benefit of the Administrative Agent, the
Issuing Bank and the Lenders and naming the Administrative Agent as an
additional insured under such policy and providing that no act, whether willful
or negligent, or default of Barneys, any other member of the Barneys Group or
any other Person shall affect the right of the Administrative Agent to recover
under such policy or policies of insurance in case of loss or damage with
respect to the Collateral. Barneys may settle or compromise any insurance claim,
provided, that any such settlement or compromise of any claim individually or in
the aggregate exceeding $750,000 in any Fiscal Year shall require the
Administrative Agent's prior consent. Such endorsement furnished to the
Administrative Agent shall provide that the insurance companies shall give the
Administrative Agent at least thirty (30) days' written notice before any such
policy or policies of insurance shall be canceled or altered adversely to the
interests of the Administrative Agent, the Issuing Bank and the Lenders. In the
event that Barneys or any other member of the Barneys Group, at any time or
times hereafter, shall fail to obtain or maintain any of the policies or
insurance required herein or to pay any premium in whole or in part relating
thereto, then the Administrative Agent, without waiving or releasing any
obligations or resulting Event of Default hereunder, may at any time or times
thereafter (but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Administrative Agent deems advisable. All sums so
disbursed by the Administrative Agent shall be part of the Obligations, payable
as provided herein.
8.06. Inspection of Property; Books and Records; Discussions.
(a) Barneys shall
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permit, and shall cause each of the other members of the Barneys Group to
permit, any authorized representative(s) designated by the Administrative Agent
or any Lender to visit and inspect any of the Properties of such Person or such
member, to examine, audit, check and make copies of their respective financial
and accounting records, books, journals, orders, receipts and any correspondence
and other data relating to their respective businesses or the transactions
contemplated hereby and by the Loan Documents (including, in connection with
environmental compliance, hazard or liability), and to discuss their affairs,
finances and accounts with their officers and independent certified public
accountants, upon reasonable notice and at such times during normal business
hours, as often as may be reasonably requested. All costs and expenses incurred
by the Administrative Agent or, after the occurrence and during the continuance
of any Event of Default, any Lender, in each case as a result of such
inspection, audit or examination conducted pursuant to this Section 8.06 shall
be paid by the Borrowers.
(b) Barneys shall keep and maintain, and shall cause the other
members of the Barneys Group to keep and maintain, in all material respects
proper books of record and account in which entries in conformity with GAAP
shall be made of all dealings and transactions in relation to their respective
businesses and activities, including, without limitation, transactions and other
dealings with respect to the Collateral. If an Event of Default has occurred and
is continuing, the Borrowers, upon the Administrative Agent's request, shall
promptly turn over true, correct and complete copies of all such records to the
Administrative Agent or any of its representatives.
(c) Barneys shall cause the Inventory and the other Collateral
referred to in the definition of "Borrowing Base"of each member of the Barneys
Group to be appraised by an independent appraiser and to be audited by a field
auditor, in each case satisfactory to the Administrative Agent, once every two
months, provided that if an Event of Default has occurred and is continuing,
Barneys shall cause the Inventory to be appraised more frequently by such
appraiser if the Administrative Agent so requests.
8.07. Insurance and Condemnation Proceeds. Barneys hereby
directs (and, if applicable, shall cause the other members of the Barneys Group
to direct) all insurers under policies of Property damage and business
interruption insurance and payors of any condemnation claim or award relating to
the Collateral to pay all proceeds payable under such policies or with respect
to such claim or award for any loss directly to the Administrative Agent, for
the benefit of the Administrative Agent, the Issuing Bank, the Lenders and the
other Holders.
8.08. ERISA Compliance. Barneys shall, and shall cause each of
its Subsidiaries and ERISA Affiliates to, establish, maintain and operate all
Plans other than Multiemployer Plans to comply in all material respects with the
provisions of ERISA, the Internal Revenue Code, all other applicable laws, and
the regulations thereunder and the respective requirements of the governing
documents for such Plans.
8.09. Foreign Employee Benefit Plan Compliance. Barneys shall,
and shall
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cause each of its Subsidiaries and ERISA Affiliates to establish, maintain and
operate all Foreign Employee Benefit Plans to comply in all material respects
with all laws, regulations and rules applicable thereto and the respective
requirements of the governing documents for such Plans.
8.10. Establishment of Blocked Accounts; Maintenance of
Property. Each Borrower shall establish Blocked Accounts with each of the
Blocked Account Banks listed on Schedule 3.05. Each Borrower shall cause all
Property used or useful in the conduct of its business or the business of any
other member of the Barneys Group to be maintained and kept in good condition,
repair and working order, ordinary wear and tear excepted, and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof; provided, however, that
nothing in this Section shall prevent such Borrower from discontinuing the
operation or maintenance of any of such Property if such discontinuance is, in
the judgment of such Borrower, necessary or appropriate in the conduct of its
business or the business of any other member of the Barneys Group and not
materially disadvantageous to the Administrative Agent, the Issuing Bank or the
Lenders.
8.11. Condemnation. Immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of the
owned or leased Real Property of Barneys or any other member of the Barneys
Group, the Borrowers shall notify the Administrative Agent (who shall in turn
forward such notice to the Lenders) of the pendency of such proceeding, and
permit the Administrative Agent to participate in any such proceeding, and from
time to time shall deliver to the Administrative Agent all instruments
reasonably requested by the Administrative Agent to permit such participation.
8.12. Landlord Waivers. The Borrowers have obtained and
delivered to the Administrative Agent landlord waivers, in form and substance
reasonably satisfactory to the Administrative Agent, relating to the Isetan
Leases and to the storage facility located in Lyndhurst, New Jersey. The
Borrowers will use their commercially reasonable efforts to obtain and deliver
to the Administrative Agent landlord waivers, in form and substance reasonably
satisfactory to the Administrative Agent, relating to the Borrowers' leases
(other than the Isetan Leases) for locations set forth on Schedule 6.01-V.
8.13. Year 2000. The Borrowers shall take all action they deem
necessary to assure that their computer systems are able to effectively process
data on and after January 1, 2000, including date data, so as not to cause any
material disruption to the Borrowers' business. At the request of the
Administrative Agent or any Lender, the Borrowers shall provide the
Administrative Agent and the Lenders with assurance reasonably acceptable to the
Administrative Agent or the Requisite Lenders, as the case may be, of the status
of Borrowers' Year 2000 efforts and their compliance with this Section. The
Borrowers' computer systems shall be tested and in compliance with this Section
by September 30, 1999.
8.14. Post Closing Matters. The Borrowers shall cause each of
the requirements set forth on Schedule 8.14 to be satisfied on or before the
date set forth opposite such
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requirement.
ARTICLE IX
NEGATIVE COVENANTS
Each Borrower covenants and agrees that so long as any
Commitment is outstanding and thereafter until payment in full of all of the
Obligations, unless the Requisite Lenders shall otherwise give prior written
consent thereto:
9.01. Indebtedness. No member of the Barneys Group shall
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(i) the Obligations;
(ii) Permitted Existing Indebtedness;
(iii) to the extent permitted by Article X and in any event in
an aggregate amount not to exceed $2,000,000 at any time, Capital
Leases and purchase money Indebtedness;
(iv) Indebtedness arising from intercompany loans made by one
Borrower to another Borrower or from intercompany loans made by
Holdings to a Borrower provided that such loans are subordinated in
right of payment to the Obligations;
(v) Permitted Subordinated Indebtedness provided that at the
time such Indebtedness is incurred, no Default or Event of Default has
occurred and is continuing;
(vi) Indebtedness owing to Holdings arising under the Tax
Sharing Agreement; and (vii) Indebtedness constituting Accommodation
Obligations to the extent permitted under Section 9.05.
9.02. Sales of Assets. No member of the Barneys Group shall
sell, assign, transfer, lease, convey or otherwise dispose of any Property,
whether now owned or hereafter acquired, or any income or profits therefrom, or
enter into any agreement to do so, except:
(i) the sale of Inventory in the ordinary course of business;
(ii) the sale of assets (other than Inventory) in the ordinary
course of business provided that the aggregate amount of such sales
does not exceed $2,000,000 during the
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period from the date hereof to the Commitment Termination Date;
(iii) sales of assets outside of the ordinary course of
business not in excess of $1,000,000 in any Fiscal Year;
(iv) the sale or other disposition of equipment that is
obsolete or no longer used or useful in a Borrower's business;
(v) the sale, assignment, transfer, lease, conveyance or other
disposition of assets from one Borrower to another Borrower; and (vi)
the making of the Section 338 Election.
9.03. Liens. No member of the Barneys Group shall directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of their respective Property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens (including the interest of a lessor
under a Capital Lease) and Liens to which any Property is subject at
the time of the acquisition thereof) securing Indebtedness permitted
under Section 9.01(iii) and limited in each case to the property
purchased or subject to such lease; and
(v) Liens on Real Property or leasehold interest having a
second priority securing the Permitted Subordinated Indebtedness, on
terms and conditions reasonably satisfactory to the Administrative
Agent, provided that Liens on such property and interests secure the
Obligations on a first priority basis and the holders of the Permitted
Subordinated Indebtedness enter into an intercreditor agreement with
terms and conditions reasonably satisfactory to the Administrative
Agent and the Requisite Lenders.
9.04. Investments. No member of the Barneys Group shall
directly or indirectly make or own any Investment except:
(i) Investments in Cash Collateral pledged to the
Administrative Agent or deposited in the Concentration Account in
accordance with the terms hereof;
(ii) Permitted Existing Investments in an amount not greater
than the amount thereof on the Closing Date;
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(iii) Investments by one Borrower in another Borrower;
(iv) loans to Holdings (A) for its ordinary course expenses as
a public holding company (including, without limitation, administrative
overhead and any taxes, assessments, filing fees and other governmental
charges payable by Holdings in the ordinary course, but excluding all
costs, expenses and fees in connection with any registered public
offering of securities of Holdings) and (B) pursuant to the Tax Sharing
Agreement but only in an aggregate amount not to exceed the actual
taxes paid or payable by Holdings;
(v) Investments in Barneys Japan in accordance with the
Barneys Japan Option, provided that (A) the Trademark Available Amount
is zero, (B) either the Fixed Charge Coverage Ratio of the Barneys
Group on a consolidated basis, as determined as of the last day of the
immediately preceding fiscal quarter for the twelve month period ending
on such day on a pro forma basis after giving effect to such Investment
shall not be less than 1.25 to 1.0 or the purchase price paid for the
Barneys Japan Option is included in the Capital Expenditures calculated
as of the Fiscal Year in which such purchase price is paid, (C) no
Default or Event of Default has occurred and is continuing prior to and
after giving effect to such Investment and (D) the Administrative Agent
has received legal opinions and documents and other evidence
satisfactory to it that the Administration Agent has a first priority
Lien on the Stock of Barneys Japan;
(vi) loans to Holdings, provided that (A) the Trademark
Available Amount is zero, (B) the Fixed Charge Coverage Ratio of the
Barneys Group on a consolidated basis, as determined as of the last day
of the immediately preceding fiscal quarter for the twelve month period
ending on such day on a pro forma basis after giving effect to such
loan shall not be less than 1.50 to 1.0 and (C) no Default or Event of
Default has occurred and is continuing prior to and after giving effect
to such loans; and
(vii) Investments by any Borrower to create a new wholly-owned
Subsidiary; provided that such Subsidiary becomes a Borrower hereunder
and the Administrative Agent receives a first priority Lien on the
Capital Stock of such Subsidiary and on all assets and property of such
Subsidiary pursuant to documentation reasonably satisfactory to the
Administrative Agent.
9.05. Accommodation Obligations. No member of the Barneys
Group shall directly or indirectly create or become or be liable with respect to
any Accommodation Obligation, except:
(i) Permitted Existing Accommodation Obligations;
(ii) obligations, warranties and indemnities, not with respect
to
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Indebtedness of any Person, which have been or are undertaken or made
in the ordinary course of business and not for the benefit of or in
favor of an Affiliate of any Borrower;
(iii) Accommodation Obligations under the Tax Sharing
Agreement; and
(iv) Accommodation Obligations with respect to Indebtedness
permitted by Section
9.01, Investments permitted under Section 9.04 and Operating
Leases permitted by Section 9.18.
9.06. Restricted Junior Payments. No member of the Barneys
Group shall declare or make any Restricted Junior Payment other than:
(i) Restricted Junior Payments made by one Borrower to another
Borrower;
(ii) dividends or distributions to Holdings for the payment of
dividends on the Preferred Stock up to an aggregate amount of $20,000
per Fiscal Year, so long as no Default or Event of Default has occurred
and is continuing prior to and after giving effect thereto;
(iii) payments or distributions to Holdings for the purpose of
paying (A) amounts payable to Holdings pursuant to the Tax Sharing
Agreement but only in an aggregate amount not to exceed the actual
taxes paid or payable by Holdings and (B) Holdings' ordinary course
expenses as a public holding company (including, without limitation,
administrative overhead and any taxes, assessments, filing fees and
other governmental charges payable by Holdings in the ordinary course,
but excluding all costs, expenses and fees in connection with any
registered public offering of securities of Holdings);
(iv) prepayments and payments of principal on the Permitted
Subordinated Indebtedness and purchases of the Capital Stock of
Holdings, provided that (A) the Trademark Available Amount is zero, (B)
the Fixed Charge Coverage Ratio of the Barneys Group on a consolidated
basis, as determined as of the last day of the immediately preceding
fiscal quarter for the twelve month period ending on such day on a pro
forma basis after giving effect to such prepayment, payment or purchase
shall not be less than 1.25 to 1.0 and (C) no Default or Event of
Default has occurred and is continuing prior to and after giving effect
to such prepayment, payment or purchase; and
(v) repurchases of Capital Stock of Holdings owned by
employees that are no longer employed by Holdings or any Borrower in an
aggregate amount not to exceed $1,000,000.
9.07. Conduct of Business; Subsidiaries; Acquisitions. No
member of the
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Barneys Group shall engage in any business other than the businesses engaged in
by the Borrowers on the date hereof and any business or activities which are
substantially similar, related or incidental thereto. No member of the Barneys
Group shall sell or otherwise dispose of, or permit the sale or disposition of,
any shares of Capital Stock of any of its Subsidiaries except to other members
of the Barneys Group. No member of the Barneys Group shall enter into or permit
any transaction or series of transactions in which such member or any other
member of the Barneys Group acquires all or any significant portion of the
assets of another Person.
9.08. Transactions with Affiliates. No member of the Barneys
Group shall directly or indirectly (a) enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any Property or the rendering of any service) with any Affiliate of
such member on terms that are less favorable to such member than those that
could be obtained in an arm's length transaction at the time from Persons who
are not such an Affiliate or (b) pay management fees, consulting fees or
royalties to any Affiliate or (c) increase salaries of management of any member
of the Barneys Group except in the ordinary course of a retail business or as
otherwise necessary to retain key personnel.
9.09. Restriction on Fundamental Changes. No member of the
Barneys Group shall (a) enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of such member's business or Property,
whether now or hereafter acquired (other than (i) pursuant to the making of the
Section 338 Election or (ii) the merger or consolidation of one Borrower with
another Borrower provided that such merger or consolidation is on terms and
conditions reasonably satisfactory to the Administrative Agent and has no
adverse effect on the Administrative Agent's Lien securing the Obligations) or
(b) enter into any partnership or joint venture.
9.10. Sales and Leasebacks. No member of the Barneys Group
shall become liable, directly, by assumption or by Accommodation Obligation,
with respect to any lease, whether an Operating Lease or a Capital Lease of any
Property (whether real or personal or mixed) (i) which it sold or transferred or
is to sell or transfer to any other Person, or (ii) which it intends to use for
substantially the same purposes as any other Property which has been or is to be
sold or transferred by it to any other Person in connection with such lease.
9.11. Margin Regulations; Securities Laws. No member of the
Barneys Group shall use all or any portion of the proceeds of any credit
extended hereunder to purchase or carry Margin Stock.
9.12. ERISA. No member of the Barneys Group shall:
(i) engage in any prohibited transaction described in
Sections 406 of ERISA or 4975 of the Internal Revenue Code
with respect to a Plan for which a statutory, regulatory or
class exemption is not available or a private exemption has
not been
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previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in sections 302 of ERISA and 412 of the Internal Revenue Code),
with respect to any Benefit Plan, whether or not waived;
(iii) fail, or permit any ERISA Affiliate to fail, to pay
timely required contributions or annual installments due with respect
to any waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any ERISA Affiliate to terminate,
any Benefit Plan which would result in any liability of any member of
the Barneys Group or any ERISA Affiliate under Title IV of ERISA;
(v) fail to make any contribution or payment to any
Multiemployer Plan which any member of the Barneys Group or any ERISA
Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;
(vi) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such
installment or other payment;
(vii) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year
such that any member of the Barneys Group or any ERISA Affiliate is
required to provide security to such Plan under Section 401(a)(29) of
the Internal Revenue Code;
(viii) fail, or permit any member of the Barneys Group or any
ERISA Affiliate to fail, to pay any required contributions or payments
to a Foreign Employee Benefit Plan on or before the due date for such
required installment or payment;
in each case, under the foregoing clauses (i) through (viii), individually or in
the aggregate which could reasonably result in a liability in excess of
$1,000,000.
9.13. Issuance of Capital Stock. No member of the Barneys
Group shall issue any Capital Stock except the issuance of Capital Stock by one
member of the Barneys Group to another member of the Barneys Group or to
Holdings, provided that the Administrative Agent has a first priority Lien with
respect to such Capital Stock.
9.14. Constituent Documents. No member of the Barneys Group
shall amend, modify or otherwise change in any material respect any of the terms
or provisions in any of their respective Constituent Documents as in effect on
the Closing Date without the prior written
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consent of the Requisite Lenders, which consent shall not be unreasonably
withheld.
9.15. Fiscal Year. No member of the Barneys Group shall change
its Fiscal Year for accounting or tax purposes from a period consisting of the
52- or 53-week period ending on the Saturday in January of each calendar year
closest to January 31.
9.16. Cash Management. Except for the deposit accounts listed
on Schedule 9.16 under the heading "Deposit Accounts" (over which accounts a
member of the Barneys Group has dominion and control and the Administrative
Agent does not have dominion and control), fiduciary accounts listed on Schedule
9.16 under the heading "Fiduciary Accounts" (over which accounts a member of the
Barneys Group has dominion and control and the Administrative Agent does not
have dominion and control), the trust account listed on Schedule 9.16 under the
heading "Administrative Claims Trust Account" (over which accounts a member of
the Barneys Group has dominion and control and the Administrative Agent does not
have dominion and control), the Blocked Accounts, the Concentration Account and
the Cash Collateral Account, no member of the Barneys Group shall open any
deposit or payable account with any Person. No member of the Barneys Group shall
authorize or direct any Person to take any action with respect to amounts
deposited in the Blocked Accounts or the Concentration Account in contravention
of the provisions hereof. The Borrowers shall not maintain balances in the
accounts set forth on Schedule 9.16 under the heading "Deposit Accounts" in an
aggregate amount for all such Deposit Accounts in excess of $3,125,000. The
Borrowers shall not maintain balances in the accounts set forth on Schedule 9.16
under the heading "Fiduciary Accounts" in an aggregate amount for all such
Fiduciary Accounts in excess of $4,000,000. The Borrowers shall not maintain
balances in the accounts set forth on Schedule 9.16 under the heading
"Administrative Claims Trust Account" in an aggregate amount for all such
Administrative Claims Trust Accounts in excess of $6,000,000 at any time from
the date hereof to January 27, 2000 and, thereafter, in an amount in excess of
$4,000,000; provided that all amounts exceeding $4,000,000 in such accounts on
January 27, 2000 shall be deposited by the Borrowers into the Concentration
Account on such date.
9.17. Environmental Matters. No member of the Barneys Group
shall:
(i) become subject to any Liabilities and Costs which would
have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Contaminant into
the environment, or any Remedial Action in response thereto, or (b) any
violation of any Environmental Requirements of Law; or
(ii) either directly or indirectly, create, incur, assume or
permit to exist any Environmental Lien on or with respect to any of its
Property.
9.18. Operating Leases. Except for the leases set forth on
Schedule 9.18 and renewals thereof, no member of the Barneys Group shall become
liable in any way, whether directly or by assignment or by Accommodation
Obligation, for the obligations of a lessee under
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any Operating Leases if, immediately after giving effect to the incurrence of
rental payments with respect thereto, the annual amount of rental payments for
any Operating Lease would exceed $2,000,000 or the aggregate annual amount of
all rental payments with respect to all such Operating Leases would exceed
$4,500,000.
9.19. Subordinated Notes. No member of the Barneys Group shall
amend, modify or otherwise change any of the terms or provisions in the
Subordinated Notes which would be adverse to the interests of the Borrowers, the
Administrative Agent or the Lenders.
ARTICLE X
FINANCIAL COVENANTS
Each Borrower covenants and agrees that so long as any
Commitment is outstanding and thereafter until payment in full of all of the
Obligations, unless the Requisite Lenders (or such other Lenders, if so required
pursuant to Section 13.07) shall otherwise give prior written consent thereto:
10.01. Minimum Consolidated Net Worth. The Consolidated Net
Worth of the Barneys Group at the end of each fiscal quarter set forth below
shall not be less than the minimum amount set forth opposite such fiscal
quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum Amount
--------------------- --------------
<S> <C>
First fiscal quarter of Fiscal Year 1999 $140,000,000
Second fiscal quarter of Fiscal Year 1999 140,000,000
Third fiscal quarter of Fiscal Year 1999 140,000,000
Fourth fiscal quarter of Fiscal Year 1999 140,000,000
First fiscal quarter of Fiscal Year 2000 140,000,000
Second fiscal quarter of Fiscal Year 2000 140,000,000
Third fiscal quarter of Fiscal Year 2000 140,000,000
Fourth fiscal quarter of Fiscal Year 2000 140,000,000
First fiscal quarter of Fiscal Year 2001 150,000,000
Second fiscal quarter of Fiscal Year 2001 150,000,000
Third fiscal quarter of Fiscal Year 2001 150,000,000
Fourth fiscal quarter of Fiscal Year 2001 150,000,000
First fiscal quarter of Fiscal Year 2002 150,000,000
Second fiscal quarter of Fiscal Year 2002 150,000,000
Third fiscal quarter of Fiscal Year 2002 150,000,000
Fourth fiscal quarter of Fiscal Year 2002 150,000,000
</TABLE>
10.02. Maximum Leverage Ratio. The Leverage Ratio of the
Barneys Group on a consolidated basis, as determined as of the last day of each
fiscal quarter set forth below for the twelve month period ending on such day,
shall not be greater than the ratio set forth opposite
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such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
First fiscal quarter of Fiscal Year 1999 7.0
Second fiscal quarter of Fiscal Year 1999 7.0
Third fiscal quarter of Fiscal Year 1999 7.0
Fourth fiscal quarter of Fiscal Year 1999 7.0
First fiscal quarter of Fiscal Year 2000 4.5
Second fiscal quarter of Fiscal Year 2000 4.5
Third fiscal quarter of Fiscal Year 2000 4.5
Fourth fiscal quarter of Fiscal Year 2000 4.5
First fiscal quarter of Fiscal Year 2001 3.5
Second fiscal quarter of Fiscal Year 2001 3.5
Third fiscal quarter of Fiscal Year 2001 3.5
Fourth fiscal quarter of Fiscal Year 2001 3.5
First fiscal quarter of Fiscal Year 2002 3.0
Second fiscal quarter of Fiscal Year 2002 3.0
Third fiscal quarter of Fiscal Year 2002 3.0
Fourth fiscal quarter of Fiscal Year 2002 3.0
</TABLE>
10.03. Minimum Consolidated EBITDA. The Minimum Consolidated
EBITDA of the Barneys Group, as determined as of the last day of each fiscal
quarter set forth below for the twelve month period ending on such day, shall
not be less than the minimum amount set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum Amount
--------------------- --------------
<S> <C>
First fiscal quarter of Fiscal Year 1999 $16,000,000
Second fiscal quarter of Fiscal Year 1999 16,000,000
Third fiscal quarter of Fiscal Year 1999 17,000,000
Fourth fiscal quarter of Fiscal Year 1999 20,000,000
First fiscal quarter of Fiscal Year 2000 20,000,000
Second fiscal quarter of Fiscal Year 2000 20,000,000
Third fiscal quarter of Fiscal Year 2000 20,000,000
Fourth fiscal quarter of Fiscal Year 2000 25,000,000
First fiscal quarter of Fiscal Year 2001 25,000,000
Second fiscal quarter of Fiscal Year 2001 30,000,000
Third fiscal quarter of Fiscal Year 2001 30,000,000
Fourth fiscal quarter of Fiscal Year 2001 30,000,000
First fiscal quarter of Fiscal Year 2002 30,000,000
Second fiscal quarter of Fiscal Year 2002 35,000,000
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Third fiscal quarter of Fiscal Year 2002 35,000,000
Fourth fiscal quarter of Fiscal Year 2002 35,000,000
</TABLE>
10.04. Maximum Capital Expenditures. Capital Expenditures made
or incurred by the members of the Barneys Group on a consolidated basis during
any Fiscal Year shall not exceed (a) during Fiscal Year 1999, an aggregate
amount of $7,250,000, (b) during Fiscal Year 2000, an aggregate amount of
$7,500,000, (c) during Fiscal Year 2001, an aggregate amount of $7,750,000 and
(d) during Fiscal Year 2002, an aggregate amount of $7,750,000; provided,
however, the foregoing maximum amounts may be increased (i) by the amount (on a
dollar for dollar basis) of any cash equity contribution made by Holdings to
Barneys, (ii) with respect to Fiscal Year 1999, by the amount, if any, by which
the Consolidated EBITDA for the Barneys Group, calculated as of the last day of
the immediately preceding fiscal quarter for the twelve month period ending on
such day, exceeds $20,000,000, on a dollar for dollar basis, up to $4,000,000 in
the aggregate provided that the amount of such increase reduces the maximum
amount of Capital Expenditures (on a dollar for dollar basis) in a subsequent
Fiscal Year ending prior to February 7, 2003, and (iii) with respect to Fiscal
Year 2000 and each Fiscal Year thereafter, an amount of up to $4,000,000 for
such Fiscal Year if the Fixed Charge Coverage Ratio of the Barneys Group on a
consolidated basis, as determined as of the last day of the immediately
preceding fiscal quarter for the twelve month period ending on such day (after
giving effect to such increased amount of Capital Expenditures), is more than
1.25 to 1.0 provided that the amount of such increase reduces the maximum amount
of Capital Expenditures (on a dollar for dollar basis) in a subsequent Fiscal
Year selected by the Borrowers and ending prior to February 7, 2003; and
provided, further, in the event that the maximum amount which is permitted to be
expended in respect of Capital Expenditures during any Fiscal Year as set forth
above (without giving effect to this proviso) is not fully expended during such
Fiscal Year, the maximum amount expended during the immediately succeeding
Fiscal Year shall be increased by such unutilized amount.
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default. Each of the following occurrences
shall constitute an Event of Default hereunder:
(a) Failure to Make Payments When Due. The Borrowers shall
fail to pay (i) when due any principal of, interest on or fees with respect to,
the Loans or the Reimbursement Obligations or (ii) any other Obligation, and if
such non-payment relates to Obligations other than those specified in clause
(i), such non-payment continues for a period of three (3) Business Days after
the due date thereof.
(b) Breach of Certain Covenants. (i) Any Borrower shall fail
to perform or observe duly and punctually any agreement, covenant or obligation
binding on such Person under
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(A) Sections 7.02, 7.03, 7.08(a), 8.01, 8.05, 8.06, 8.07, 8.14, or (B) Article
IX or Article X or (ii) Holdings shall fail to perform or observe duly and
punctually any agreement, covenant or obligation binding on it under Sections
6(a), 6(c) or Section 7 of the Holdings Guaranty.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by Holdings or any Borrower to the
Administrative Agent, any Lender or the Issuing Bank herein or in any other Loan
Document or in any statement or certificate at any time given by any such Person
pursuant to any Loan Document shall be false or misleading in any material
respect on the date made (or deemed made).
(d) Other Defaults. Holdings or any Borrower shall default in
the performance of or compliance with any term contained herein (other than as
covered by paragraphs (a), (b) or (c) of this Section 11.01), or Holdings or any
Borrower shall default in the performance of or compliance with any term
contained in any other Loan Document, and such default shall continue for (i)
ten (10) Business Days after the occurrence thereof with respect to any term
contained in Sections 7.01, 7.04, 7.06, 7.07 and 7.08; and (ii) thirty (30) days
after the occurrence thereof with respect to any other term.
(e) Default as to Other Indebtedness; Isetan Leases.
(i) Holdings or any Borrower shall fail to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) with respect to any Indebtedness (other than an Obligation)
in an amount of $1,000,000 or more; or any breach, default or event of default
shall occur, or any other condition shall exist under any instrument, agreement
or indenture pertaining to any such Indebtedness, if the effect thereof is (or,
with the giving of notice or lapse of time or both, would be) to cause an
acceleration, mandatory redemption or other required repurchase of such
Indebtedness; or any such Indebtedness shall be otherwise declared to be due and
payable (by acceleration or otherwise) or required to be prepaid, redeemed or
otherwise repurchased by Holdings or any Borrower (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof;
(ii) (A) Any Borrower shall fail to make any payment of fixed
or additional rent when due under any Isetan Lease, and the landlord thereunder
shall have given the first notice of such non-payment to such Borrower required
under the Isetan Lease and such non-payment shall continue for two (2) Business
Days after the delivery of such first notice or five (5) Business Days after
delivery of such first notice if on the date such first notice is given the
Borrowers have Availability (after giving effect to Loans made on such date and
the repayments made on such date) of at least $10,000,000; or (B) any Borrower
shall fail to comply with any covenant under an Isetan Lease (other than the
covenants to pay fixed and additional rent) and the landlord thereunder shall
have given the second notice of such non-compliance required under the
applicable Isetan Lease; provided, however, that no Event of Default shall be
deemed to have occurred with respect to any such alleged non-monetary default
under this clause (B), if and only for so long as either (1) such alleged
non-monetary default shall be curable by the applicable
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Borrower with reasonable diligence, and the applicable Borrower commenced to
cure such default during the period prior to the receipt of the second notice of
non-compliance and continues to prosecute the curing thereof with diligence to
completion, or (2) the applicable Borrower, in accordance with the express
provisions of such Isetan Lease, has initiated (in good faith and in a timely
fashion) the dispute resolution procedure set forth in Section 5.1(a) of the
applicable Isetan Lease for determining whether such Borrower has failed to
comply with the terms of such Isetan Lease; provided, further, that if the
dispute resolution procedure results in a determination by the arbitrator that a
non-monetary default has occurred under the applicable Isetan Lease, no Event of
Default shall be deemed to have occurred if and for so long as such alleged
non-monetary default shall be curable by the applicable Borrower with reasonable
diligence, and the applicable Borrower commences to cure such default during the
remaining cure period under the Isetan Lease and continues to prosecute the
curing thereof with diligence to completion.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against Holdings or
any Borrower and the petition shall not be dismissed, stayed, bonded or
discharged within sixty (60) days after commencement of the case; or a court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of Holdings or any Borrower in an involuntary case, under any applicable
bankruptcy, insolvency or other similar law now or hereinafter in effect; or any
other similar relief shall be granted under any applicable federal, state, local
or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Holdings or any Borrower
or over all or a substantial part of the Property of Holdings or any Borrower
shall be entered; or an interim receiver, trustee or other custodian of Holdings
or any Borrower or of all or a substantial part of the property of Holdings or
such Borrower shall be appointed or a warrant of attachment, execution or
similar process against any substantial part of the Property of Holdings or any
Borrower shall be issued and any such event shall not be stayed, dismissed,
bonded or discharged within sixty (60) days after entry, appointment or
issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc.
Holdings or any Borrower shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; (ii) consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under any such
law, or consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; (iii)
make any assignment for the benefit of creditors; (iv) fail generally to pay its
debts as such debts become due, or admit in writing its inability to pay its
debts; or (v) take any corporate action in furtherance of any such action.
(h) Judgments. Any judgment, writ, order or warrant of
attachment, or other
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similar process shall be rendered against Holdings or any Borrower or any of
their respective assets involving in any single case or in the aggregate an
amount in excess of $1,000,000 is (are) entered and remains undischarged,
unvacated and unstayed for a period of sixty (60) days.
(i) Dissolution. Any order, judgment or decree shall be
entered against Holdings or any Borrower, decreeing its involuntary dissolution
or split up and such order shall remain undischarged and unstayed for a period
in excess of sixty (60) days; or any member of the Barneys Group shall otherwise
dissolve or cease to exist except as specifically permitted hereby.
(j) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or Holdings
or any Borrower seeks to repudiate its obligations thereunder or the Liens
intended to be created thereby are, or Holdings or any Borrower seeks to render
such Liens, invalid or unperfected, or (ii) Liens in favor of the Administrative
Agent, the Issuing Bank and/or the Lenders contemplated by the Loan Documents
shall, at any time, for any reason, be invalidated or otherwise cease to be in
full force and effect, or such Liens shall be subordinated or shall not have the
priority contemplated hereby or by the other Loan Documents.
(k) Termination Event. Any Termination Event occurs which the
Administrative Agent believes could reasonably be expected to subject either any
Borrower or any ERISA Affiliate to a material liability.
(l) Waiver of Minimum Funding Standard. If the plan
administrator of any Plan other than Multiemployer Plan applies under Section
412(d) of the Internal Revenue Code for a waiver of the minimum funding
standards of Section 412(a) of the Internal Revenue Code and the Administrative
Agent reasonably believes the substantial business hardship upon which the
waiver is based could subject either any Borrower or any ERISA Affiliate to a
material liability.
(m) Change of Control. A Change of Control shall occur with
respect to Holdings.
An Event of Default shall be deemed "continuing" until cured or waived in
accordance with Section 13.07.
11.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any
Event of Default described in Sections 11.01(f) or 11.01(g), the Commitments
shall automatically and immediately terminate and the unpaid principal amount
of, and any and all accrued interest on, the Obligations and all accrued fees
shall automatically become immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or
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accelerate and of acceleration), all of which are hereby expressly waived by
each Borrower; and upon the occurrence and during the continuance of any other
Event of Default, the Administrative Agent shall at the request, or may with the
consent, of the Requisite Lenders, by written notice to the Borrowers, (i)
declare that all or any portion of the Commitments are terminated, whereupon the
Commitments and the obligation of each Lender to make any Loan hereunder and of
each Lender or the Issuing Bank to issue any Letter of Credit not then issued
shall immediately terminate, and/or (ii) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Obligations to be, and the
same shall thereupon be, immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and of acceleration), all of which are hereby expressly
waived by each Borrower.
(b) Deposit for Letters of Credit. In addition, after the
occurrence and during the continuance of an Event of Default, the Borrowers
shall, promptly upon demand by the Administrative Agent, deliver to the
Administrative Agent, Cash Collateral in such form as requested by the
Administrative Agent, together with such endorsements, and execution and
delivery of such documents and instruments as the Administrative Agent may
request in order to perfect or protect the Administrative Agent's Lien with
respect thereto, in an aggregate principal amount equal to the then outstanding
Letter of Credit Obligations.
(c) Enforcement. Each Borrower acknowledges that in the event
Holdings or any Borrower fails to perform, observe or discharge any of its
respective obligations or liabilities hereunder or under any other Loan
Document, any remedy of law may prove to be inadequate relief to the
Administrative Agent, the Issuing Bank and the Lenders; therefore, the Borrowers
agree that the Administrative Agent, the Issuing Bank and the Lenders shall be
entitled after the occurrence and during the continuance of an Event of Default
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
ARTICLE XII
THE AGENTS
12.01. Appointment. (a) Each Lender and the Issuing Bank
hereby designates and appoints CUSA as the Administrative Agent hereunder, and
each Lender and the Issuing Bank hereby irrevocably authorizes the
Administrative Agent to execute such documents (including, without limitation,
the Loan Documents to which the Administrative Agent is a party) and to take
such other action on such Person's behalf under the provisions hereof and of the
Loan Documents and to exercise such powers as are set forth herein or therein
together with such other powers as are reasonably incidental thereto. As to any
matters not expressly provided for hereby (including, without limitation,
enforcement or collection of the Notes or any amount payable under any provision
of Article III when due) or the other Loan Documents, the
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Administrative Agent shall not be required to exercise any discretion or take
any action. Notwithstanding the foregoing, the Administrative Agent shall be
required to act or refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite Lenders
(unless the instructions or consent of all of the Lenders is required hereunder
or thereunder) and such instructions shall be binding upon all Lenders, the
Issuing Bank and Holders; provided, however, the Administrative Agent shall not
be required to take any action which (i) the Administrative Agent reasonably
believes shall expose it to personal liability unless the Administrative Agent
receives an indemnification satisfactory to it from the Lenders with respect to
such action or (ii) is contrary hereto, to the other Loan Documents or
applicable law. The Administrative Agent agrees to act as such on the express
conditions contained in this Article XII.
(b) The provisions of this Article XII are solely for the
benefit of the Agents, the Lenders and Issuing Bank, and no Borrower shall have
any rights to rely on or enforce any of the provisions hereof (other than as
expressly set forth in Sections 12.07 and 12.09). In performing its functions
and duties hereunder, the Administrative Agent shall act solely as agent of the
Lenders and the Issuing Bank and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency, trustee or fiduciary with or
for any Borrower or any of its Subsidiaries. The Administrative Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through
its agents or employees.
12.02. Nature of Duties. (a) The Administrative Agent shall
not have any duties or responsibilities except those expressly set forth herein
or in the Loan Documents. The duties of the Administrative Agent shall be
mechanical and administrative in nature. The Administrative Agent shall not have
by reason hereof a fiduciary relationship in respect of any Holder. Nothing
herein or in any of the Loan Documents, expressed or implied, is intended to or
shall be construed to impose upon the Administrative Agent any obligations in
respect hereof or any of the Loan Documents except as expressly set forth herein
or therein. Each Lender and the Issuing Bank shall make its own independent
investigation of the financial condition and affairs of Holdings and its
Subsidiaries in connection with the making and the continuance of the Loans
hereunder and with the issuance of the Letters of Credit and shall make its own
appraisal of the creditworthiness of Holdings and its Subsidiaries initially and
on a continuing basis, and the Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Holder
with any credit or other information with respect thereto (except for reports
required to be delivered by the Administrative Agent under the terms hereof). If
the Administrative Agent seeks the consent or approval of any of the Lenders to
the taking or refraining from taking of any action hereunder, the Administrative
Agent shall send notice thereof to each Lender. The Administrative Agent shall
promptly notify each Lender at any time that the Lenders so required hereunder
have instructed the Administrative Agent to act or refrain from acting pursuant
hereto.
(b) The Documentation Agent shall have no duties or
responsibilities under this Agreement or any other Loan Document.
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12.03. Rights, Exculpation, Etc. (a) Liabilities;
Responsibilities. None of the Administrative Agent or any Affiliate of the
Administrative Agent, nor any of their respective officers, directors, employees
or agents shall be liable to any Holder for any action taken or omitted by them
hereunder or under any of the Loan Documents, or in connection therewith, except
that no Person shall be relieved of any liability imposed by law for gross
negligence or willful misconduct. The Administrative Agent shall not be liable
for any apportionment or distribution of payments made by it in good faith
pursuant to Section 3.02(b), and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Holder to whom payment was due, but not made, shall be to recover from other
Holders any payment in excess of the amount to which they are determined to have
been entitled. The Administrative Agent shall not be responsible to any Holder
for any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, legality, enforceability,
collectibility, or sufficiency hereof or of any of the other Loan Documents or
the transactions contemplated thereby, or for the financial condition of
Holdings, any Borrower or any of its Subsidiaries. The Administrative Agent
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions hereof or of any of the
Loan Documents or the financial condition of Holdings, any Borrower or any of
its Subsidiaries, or the existence or possible existence of any Default or Event
of Default.
(b) Right to Request Instructions. The Administrative Agent
may at any time request instructions from the Lenders with respect to any
actions or approvals which by the terms of any of the Loan Documents the
Administrative Agent is permitted or required to take or to grant, and the
Administrative Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from those Lenders from whom the Administrative Agent is required
to obtain such instructions for the pertinent matter in accordance with the Loan
Documents. Without limiting the generality of the foregoing, no Holder shall
have any right of action whatsoever against the Administrative Agent as a result
of the Administrative Agent acting or refraining from acting under the Loan
Documents in accordance with the instructions of the Requisite Lenders or, where
required by the express terms hereof, a greater proportion of the Lenders.
12.04. Reliance. The Administrative Agent shall be entitled to
rely upon any written notices, statements, certificates, orders or other
documents or any telephone message believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person, and with
respect to all matters pertaining hereto or to any of the Loan Documents and its
duties hereunder or thereunder, upon advice of legal counsel (including counsel
for the Borrowers), independent public accountants and other experts selected by
it.
12.05. Indemnification. To the extent that the Administrative
Agent is not
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reimbursed and indemnified by the Borrowers, the Lenders shall reimburse and
indemnify the Administrative Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against any of them in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the
Administrative Agent under the Loan Documents, in proportion to each Lender's
Pro Rata Share; provided, however, the Lenders shall have no obligation to the
Administrative Agent with respect to the matters indemnified pursuant to this
Section resulting from the willful misconduct or gross negligence of the
Administrative Agent, as determined in a final, non-appealable judgment by a
court of competent jurisdiction. The obligations of the Lenders under this
Section 12.05 shall survive the payment in full of the Loans, the Reimbursement
Obligations and all other Obligations and the termination hereof.
12.06. CUSA Individually. With respect to its Pro Rata Shares
of the Commitments hereunder, if any, and the Loans made by it, if any, CUSA
shall have and may exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent set forth herein
for any other Lender. The terms "Lenders" or "Requisite Lenders" or any similar
terms shall, unless the context clearly otherwise indicates, include CUSA in its
individual capacity as a Lender or as one of the Requisite Lenders. CUSA and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with any Borrower or any of its
Subsidiaries as if CUSA were not acting as Administrative Agent pursuant hereto.
12.07. Successor Administrative Agent; Resignation of
Administrative Agent. (a) Resignation. The Administrative Agent may resign from
the performance of its functions and duties hereunder at any time by giving at
least thirty (30) Business Days' prior written notice to the Borrowers and the
Lenders. The resignation of the Administrative Agent shall take effect upon the
acceptance by a successor Administrative Agent of appointment pursuant to this
Section 12.07.
(b) Appointment by Requisite Lenders. Upon any such notice of
resignation by the Administrative Agent, the Requisite Lenders shall have the
right to appoint a successor Administrative Agent selected from among the
Lenders which appointment shall be subject to the prior written approval of the
Borrowers (which may not be unreasonably withheld and shall not be required upon
the occurrence and during the continuance of an Event of Default).
(c) Appointment by Retiring Administrative Agent. If a
successor Administrative Agent shall not have been appointed within the thirty
(30) Business Day period provided in paragraph (a) of this Section 12.07, the
retiring Administrative Agent, with the consent of the Borrowers (which may not
be unreasonably withheld, and shall not be required upon the occurrence and
during the continuance of an Event of Default), shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent until such time, if
any, as the Requisite Lenders appoint a successor Administrative Agent as
provided above.
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(d) Rights of the Successor and Retiring Administrative Agent.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder thereafter
to be performed. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Article XII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent hereunder.
12.08. Relations Among Lenders. Each Lender agrees that it
shall not take any legal action, nor institute any actions or proceedings,
against the Borrowers or any other obligor hereunder or with respect to any
Collateral without the prior written consent of the Requisite Lenders. Without
limiting the generality of the foregoing, no Lender may accelerate or otherwise
enforce its portion of the Obligations, or terminate its Commitments except in
accordance with Section 11.02(a) or a setoff permitted under Section 13.05.
12.09. Concerning the Collateral and the Loan Documents. (a)
Disbursements and Advances. The Administrative Agent may from time to time,
after the occurrence and during the continuance of an Event of Default, make
such disbursements and advances pursuant to the Loan Documents which the
Administrative Agent, in its sole discretion, deems necessary or desirable to
preserve or protect the Collateral or any portion thereof. The Administrative
Agent shall notify the Borrowers and each Lender in writing of each such
disbursement and advance, which notice shall include a description of the
purpose thereof. The Borrowers agree to pay the Administrative Agent, upon
demand, the amount of all outstanding disbursements and advances.
(b) Authority. Each Lender and the Issuing Bank authorizes and
directs the Administrative Agent to enter into the Loan Documents relating to
the Collateral for the benefit of the Lenders and the Issuing Bank. Each Lender
and the Issuing Bank agrees that any action taken by the Administrative Agent or
the Requisite Lenders (or, where required by the express terms hereof, a
different proportion of the Lenders) in accordance with the provisions hereof or
of the other Loan Documents, and the exercise by the Administrative Agent or the
Requisite Lenders (or, where so required, such different proportion) of the
powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders and the Issuing Bank. Without limiting the generality of the foregoing,
the Administrative Agent shall have the sole and exclusive right and authority
to (i) act as the disbursing and collecting agent for the Lenders and the
Issuing Bank with respect to all payments and collections arising in connection
herewith and with the Loan Documents relating to the Collateral; (ii) execute
and deliver each Loan Document relating to the Collateral and accept delivery of
each such agreement delivered by Holdings, any Borrowers or any of their
respective Subsidiaries; (iii) act as collateral agent for the Lenders and the
Issuing Bank for purposes of the perfection of all security interests and Liens
created by such agreements and all other purposes stated therein, provided,
however, the Administrative Agent hereby appoints,
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authorizes and directs each Lender and the Issuing Bank to act as collateral
sub-agent for the Administrative Agent, the Lenders and the Issuing Bank for
purposes of the perfection of all security interests and Liens with respect to
the Borrowers' and their respective Subsidiaries' respective deposit accounts
maintained with, and cash and Cash Equivalents held by, such Lender or the
Issuing Bank; (iv) manage, supervise and otherwise deal with the Collateral; (v)
take such action as is necessary or desirable to maintain the perfection and
priority of the security interests and liens created or purported to be created
by the Loan Documents; and (vi) except as may be otherwise specifically
restricted by the terms hereof or of any other Loan Document, exercise all
remedies given to the Administrative Agent, the Lenders or the Issuing Bank with
respect to the Collateral under the Loan Documents relating thereto, applicable
law or otherwise.
(c) Release of Collateral. (i) Each of the Administrative
Agent, the Lenders and the Issuing Bank hereby directs, in accordance with the
terms hereof, the Administrative Agent to release any Lien held by the
Administrative Agent for the benefit of the Administrative Agent, the Lenders,
the Issuing Bank and the other Holders:
(A) against all of the Collateral, upon final payment in full
of the Obligations and termination hereof; and
(B) against any part of the Collateral sold or disposed of by
any Borrower, if such sale or disposition is permitted by Section 9.02.
(ii) Each of the Lenders and the Issuing Bank hereby directs
the Administrative Agent to execute and deliver or file such termination and
partial release statements and do such other things as are necessary to release
Liens to be released pursuant to this Section 12.09(c) promptly upon the
effectiveness of any such release.
(d) Confirmation by Lenders. Without in any manner limiting
the Administrative Agent's authority to act without any specific or further
authorization or consent by the Lenders (as set forth in subsection (c) above),
each Lender agrees to confirm in writing, upon request by the Borrowers, the
authority to release Collateral conferred upon the Administrative Agent under
clauses (A) and (B) of subsection (c) above. So long as no Event of Default is
then continuing, upon receipt by the Administrative Agent of any such written
confirmation from the Lenders of the Administrative Agent's authority to release
any particular items or types of Collateral, and in any event upon any sale and
transfer of Collateral which is expressly permitted pursuant to the terms of
this Agreement, and upon at least five (5) Business Days' prior written request
by the Borrowers, the Administrative Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be necessary to
evidence the release of the Liens upon such Collateral granted to the
Administrative Agent for the benefit of Administrative Agent, the Lenders, the
Issuing Bank and the other Holders; provided, however, that (i) the
Administrative Agent shall not be required to execute any such document on terms
which, in the Administrative Agent's opinion, would expose the
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Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of any Borrower or any of their
respective Subsidiaries in respect of) all interests retained by the Borrowers
and/or any of their respective Subsidiaries, including (without limitation) the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(e) No Obligation. The Administrative Agent shall not have any
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by the Borrowers or any of their respective
Subsidiaries or is cared for, protected or insured or has been encumbered or
that the Liens granted to the Administrative Agent herein or pursuant to the
Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Administrative Agent in this
Section 12.09 or in any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, the Administrative Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Administrative Agent's own interests in the
Collateral as one of the Lenders and that the Administrative Agent shall not
have any duty or liability whatsoever to any Lender.
ARTICLE XIII
MISCELLANEOUS
13.01. Assignments. (a) Assignments. No assignments or
participations of any Lender's rights or obligations hereunder shall be made
except in accordance with this Section 13.01. Each Lender may assign to one or
more Eligible Assignees all or a portion of its rights and obligations hereunder
in accordance with the provisions of this Section 13.01.
(b) Limitations on Assignments. Each assignment shall be
subject to the following conditions: (i) each assignment shall be approved by
the Administrative Agent, which approval shall not be unreasonably withheld, and
so long as no Event of Default has occurred and is continuing, by the Borrowers,
which approval shall not be unreasonably withheld; (ii) each such assignment
shall be to an Eligible Assignee; (iii) each such assignment shall be in an
amount at least equal to $10,000,000, except if the Eligible Assignee is a
Lender or an Affiliate of a Lender or if such assignment shall constitute all
the assigning Lender's interest hereunder; (iv) any such assignment shall
consist of the simultaneous assignment of corresponding pro rata portions of the
assigning Lender's Commitment, Revolving Loans and Reimbursement Obligations,
and (v) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance. Upon such execution, delivery, acceptance and
recording in the Register, from and after the effective date specified in each
Assignment and Acceptance and agreed to by the
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Administrative Agent, (x) the assignee thereunder shall, in addition to any
rights and obligations hereunder held by it immediately prior to such effective
date, if any, have the rights and obligations hereunder that have been assigned
to it pursuant to such Assignment and Acceptance and shall, to the fullest
extent permitted by law, have the same rights and benefits hereunder as if it
were an original Lender hereunder and (y) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations hereunder (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of such assigning Lender's rights and
obligations hereunder, the assigning Lender shall cease to be a party hereto).
(c) The Register. The Administrative Agent shall maintain at
its address referred to in Section 13.08 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment
under each Loan of, and principal amount of the Loans under each facility owing
to, each Lender from time to time and whether such Lender is an original Lender
or the assignee of another Lender pursuant to an Assignment and Acceptance. The
Register shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, (ii) the effective date and amount of
each Assignment and Acceptance delivered to and accepted by it and the parties
thereto, (iii) the amount of any principal or interest due and payable or to
become due and payable from the Borrowers to each Lender hereunder or under the
Notes, and (iv) the amount of any sum received by the Administrative Agent from
the Borrowers and each Lender's share thereof. The Administrative Agent shall
deliver a statement of such account to the Borrowers whenever an Assignment and
Acceptance is accepted by it and the parties hereto; provided, however, the
Administrative Agent shall not be obligated to deliver such statement more
frequently than once a month. Each such statement shall be deemed final, binding
and conclusive upon the Borrowers in all respects as to all matters reflected
therein (absent manifest error) unless the Borrowers, within thirty (30) days
after the date such statement is delivered to the Borrowers, deliver to the
Administrative Agent written notice of any objections which the Borrowers may
have to any such statement. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by the Borrowers. The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes hereof. The Register shall be available for inspection by the
Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Fee. Upon its receipt of an Assignment and Acceptance
executed by the assigning Lender and an Eligible Assignee and a processing and
recordation fee of $3,000 (payable by the assigning Lender or the Replacement
Lender, in the case of assignments pursuant to Section 3.06 or Section
13.07(c)), the Administrative Agent shall, if such Assignment and Acceptance has
been completed and is in compliance herewith and in substantially the form of
Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) record the
information
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contained therein in the Register and (iii) give prompt notice thereof to the
Borrowers and the other Lenders.
(e) Information Regarding the Borrowers. Any Lender may, in
connection with any assignment or proposed assignment pursuant to this Section
13.01, disclose to the assignee or proposed assignee any information relating to
the Borrowers or their respective Subsidiaries furnished to such Lender by the
Administrative Agent or by or on behalf of the Borrowers; provided that, prior
to any such disclosure, such assignee or proposed assignee shall agree (for the
Borrowers' benefit) to preserve in accordance with Section 13.20 the
confidentiality of any confidential information described therein.
(f) Lenders' Creation of Security Interests. Notwithstanding
any other provision set forth herein, any Lender may at any time create a
security interest in all or any portion of its rights hereunder (including,
without limitation, Obligations owing to it and Notes held by it) in favor of
any Federal Reserve bank in accordance with Regulation A.
(g) Assignments by the Issuing Bank. If CUSA ceases to be a
Lender hereunder by virtue of any assignment made pursuant to this Section 13.01
and if the Issuing Bank is an Affiliate of CUSA, then, as of the effective date
of such cessation, the Issuing Bank's obligations to issue Letters of Credit
pursuant to Section 2.04 shall terminate and such Issuing Bank shall be an
Issuing Bank hereunder only with respect to outstanding Letters of Credit issued
prior to such date.
(h) Participations. Each Lender may sell participations to one
or more other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities hereunder (including,
without limitation, all or a portion of any or all of its Commitments hereunder
and the Loans owing to it and its undivided interest in the Letters of Credit);
provided, however, that (i) such Lender's obligations hereunder (including,
without limitation, its Commitments hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the Borrowers, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations hereunder and
(iv) such participant's rights to agree or to restrict such Lender's ability to
agree to the modification, waiver or release of any of the terms of the Loan
Documents or to the release of any Collateral covered by the Loan Documents, to
consent to any action or failure to act by any party to any of the Loan
Documents or any of their respective Affiliates, or to exercise or refrain from
exercising any powers or rights which any Lender may have under or in respect of
the Loan Documents or any Collateral, shall be limited to the right to consent
to (A) reduction of the principal of, or rate or amount of interest on the
Loans(s) subject to such participation (other than by the payment or prepayment
thereof), (B) postponement of any scheduled date for any payment of principal
of, or interest on, the Loan(s) subject to such participation (except with
respect to any modifications of the application provisions relating to the
prepayments of Loans and other Obligations) and (C) release of any guarantor of
the Obligations or all or a substantial portion of
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the Collateral except as provided in Section 12.09(c). No holder of a
participation in all or any part of the Loans shall be a "Lender" or a "Holder"
for any purposes hereunder by reason of such participation.
(i) Payment to Participants. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrowers under the Loan Documents shall be calculated and made in the manner
and to the parties required hereby as if no such participation had been sold.
13.02. Expenses.
(a) Generally. The Borrowers, jointly and severally, agree
upon demand to pay, or reimburse the Administrative Agent for, all of the
Administrative Agent's internal and external audit, legal, appraisal, valuation,
filing, document duplication and reproduction and investigation expenses and for
all other out-of-pocket costs and expenses of every type and nature (including,
without limitation, the reasonable fees, expenses and disbursements of the
Administrative Agent's counsel, Sidley & Austin, local legal counsel, auditors,
accountants, appraisers, printers, insurance and environmental advisers, and
other consultants and agents) incurred by the Administrative Agent in connection
with (A) the Administrative Agent's audit and investigation of each Borrower and
its Subsidiaries in connection with the preparation, negotiation, and execution
of the Loan Documents and the Administrative Agent's periodic audits of each
Borrower or any of its Subsidiaries; (B) the preparation, negotiation, execution
and interpretation hereof (including, without limitation, the satisfaction or
attempted satisfaction of any of the conditions set forth in Article V), the
other Loan Documents and any proposal letter or commitment letter issued in
connection therewith and the making of the Loans hereunder; (C) the creation,
perfection or protection of the Liens under the Loan Documents (including,
without limitation, any reasonable fees and expenses for local counsel in
various jurisdictions); (D) the ongoing administration hereof and the Loans,
including consultation with attorneys in connection therewith and with respect
to the Administrative Agent's rights and responsibilities hereunder and under
the other Loan Documents; (E) the protection, collection or enforcement of any
of the Obligations or the enforcement of any of the Loan Documents; (F) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, the Property, the Borrowers, this Agreement or any of
the other Loan Documents; (G) the response to, and preparation for, any subpoena
or request for document production with which the Administrative Agent is served
or deposition or other proceeding in which the Administrative Agent is called to
testify, in each case, relating in any way to the Obligations, the Property, the
Borrowers, this Agreement or any of the other Loan Documents; and (H) any
amendments, consents, waivers, assignments, restatements, or supplements to any
of the Loan Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrowers further agree to pay or
reimburse the Administrative Agent, the Issuing Bank and the Lenders upon demand
for all out-of-pocket costs and expenses, including, without limitation,
reasonable attorneys' fees (including allocated costs
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of internal counsel and costs of settlement), incurred by the Administrative
Agent, any Issuing Bank or any Lender after the occurrence of an Event of
Default (i) in enforcing any Loan Document or Obligation or any security
therefor or exercising or enforcing any other right or remedy available by
reason of such Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to the
Obligations, the Property, the Borrowers and related to or arising out of the
transactions contemplated hereby or by any of the other Loan Documents; and (iv)
in taking any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) described in clauses (i) through (iii) above.
13.03. Indemnity. The Borrowers further agree jointly and
severally to defend, protect, indemnify, and hold harmless each Agent and each
and all of the Lenders and the Issuing Bank and each of their respective
Affiliates, and each of such Agent's, Lender's, Issuing Bank's or Affiliate's
respective officers, directors, employees, attorneys and agents (including,
without limitation, those retained in connection with the satisfaction or
attempted satisfaction of any of the conditions set forth in Article V)
(collectively, the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party thereto,
but excluding taxes and other governmental charges excluded from the definition
of Taxes in Section 3.03(a)), imposed on, incurred by, or asserted against such
Indemnitees in any manner relating to or arising out of or in connection with
(a) this Agreement, the other Loan Documents or any act, event or transaction
related or attendant thereto, whether or not such Indemnitee is a party thereto
and whether or not such transactions are consummated, the making of the Loans,
the issuance of and participation in Letters of Credit hereunder, the management
of such Loans or Letters of Credit, the use or intended use of the proceeds of
the Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Loan Documents, or (b) any Liabilities and Costs under
federal, state or local environmental, health or safety laws, regulations or
common law principles arising from or in connection with the past, present or
future operations of the Borrowers or any of their respective predecessors in
interest, or, the past, present or future environmental, health or safety
condition of any respective Property of any Borrower, the presence of
asbestos-containing materials at any respective Property of any Borrower or the
Release or threatened Release of any Contaminant into the environment
(collectively, the "Indemnified Matters"); provided, however, such Borrower
shall have no obligation to an Indemnitee hereunder with respect to Indemnified
Matters resulting from the willful misconduct or gross negligence of such
Indemnitee, as determined in a final, non-appealable judgment by a court of
competent jurisdiction. Notwithstanding anything herein to the contrary, each
Borrower understands and hereby agrees that its obligation to indemnify pursuant
to this Section 13.03 shall apply in the event of the sole, concurrent or
contributory negligence of any Indemnitee. To the extent that the undertaking to
indemnify, pay and hold
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harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees.
13.04. Change in Accounting Principles. If (i) any change in
the accounting principles used in the preparation of the most recent financial
statements referred to in Section 7.01 is hereafter required or permitted by the
rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrowers with the agreement of their independent certified public accountants
and such change results in a change in the method of calculation of any of the
covenants, standards or terms found in Article IX and Article X or (ii) as a
consequence of "fresh start" accounting in accordance with GAAP adjustments are
required to be made in the calculations of the covenants in Article IX and
Article X, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such change or adjustment with the
desired result that the criteria for evaluating compliance with such covenants,
standards and terms by the Borrowers shall be the same after such change or
adjustment as if such change or adjustment had not been made; provided, however,
no change in GAAP that would affect the method of calculation of any of the
covenants, standards or terms and no adjustment as a consequence of "fresh
start" accounting shall be given effect in such calculations until such
provisions are amended to reflect such change or adjustment, in a manner
satisfactory to the Requisite Lenders and the Borrowers; provided further that
no change or adjustment as a consequence of "fresh start" accounting shall be
given effect, if such change or adjustment shall affect the calculation of the
covenant set forth in Section 10.03 during the period from the date hereof to
the last day of January, 2000, until such covenant is amended to reflect such
change or adjustment in a manner satisfactory to the Borrowers and to Lenders
holding, in the aggregate, more than seventy-five percent (75%) of the
Commitments in effect at such time (or in the event that the Commitments have
been terminated pursuant to the terms hereof, Lenders whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all Loans are greater than seventy-five percent (75%)).
13.05. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender and
any Affiliate of any Lender is hereby authorized by the Borrowers at any time or
from time to time, without notice to any Person (any such notice being hereby
expressly waived) to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured (but not
including trust accounts)) and any other Indebtedness at any time held or owing
by such Lender or any of its Affiliates to or for the credit or the account of
the Borrowers against and on account of the Obligations of the Borrowers to such
Lender or any of its Affiliates, including, but not limited to, all Loans and
Letters of Credit and all claims of any nature or description arising out of or
in connection herewith, irrespective
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of whether or not (i) such Lender shall have made any demand hereunder or (ii)
the Administrative Agent, at the request or with the consent of the Requisite
Lenders, shall have declared the principal of and interest on the Loans and
other amounts due hereunder to be due and payable as permitted by Article XI and
even though such Obligations may be contingent or unmatured.
13.06. Ratable Sharing. The Lenders agree among themselves
that, except as otherwise expressly provided in any Loan Document, (i) with
respect to all amounts received by them which are applicable to the payment of
the Obligations (excluding the fees described in Sections 2.04(g), 3.03, 3.04,
4.01(f) and 4.02) equitable adjustment shall be made so that, in effect, all
such amounts shall be shared among them ratably in accordance with their Pro
Rata Shares, whether received by voluntary payment, by the exercise of the right
of setoff or banker's lien, by counterclaim or cross-action or by the
enforcement of any or all of the Obligations (excluding the fees described in
Sections 2.04(g), 3.03, 3.04, 4.01(f) and 4.02) or the Collateral, (ii) if any
of them shall by voluntary payment or by the exercise of any right of
counterclaim, setoff, banker's lien or otherwise, receive payment of a
proportion of the aggregate amount of the Obligations held by it which is
greater than the amount which such Lender is entitled to receive hereunder, the
Lender receiving such excess payment shall purchase, without recourse or
warranty, an undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such Obligations
owed to the others so that all such recoveries with respect to such Obligations
shall be applied ratably in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participation shall be returned to such party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 13.06 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to Section 13.05, the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrowers in the amount of such participation.
13.07. Amendments and Waivers. (a) General Provisions. Unless
otherwise provided herein, no amendment or modification of any provision hereof
shall be effective without the written agreement of the Requisite Lenders and
the Borrowers, and no termination or waiver of any provision hereof, or consent
to any departure by the Borrowers therefrom, shall be effective without the
written concurrence of the Requisite Lenders, which the Requisite Lenders shall
have the right to grant or withhold in their sole discretion, provided that no
amendment, modification or waiver of compliance with Section 10.03 for each
fiscal quarter in Fiscal Year 1999 shall be effective without the written
agreement of the Borrowers and Lenders holding, in the aggregate, more than
seventy-five percent (75%) of the Commitments in effect at such time (or in the
event that the Commitments have been terminated pursuant to the terms hereof,
Lenders whose aggregate ratable shares (stated as a percentage) of the aggregate
outstanding principal balance of all Loans are greater than seventy-five percent
(75%)).
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(b) Amendments, Consents and Waivers by All Lenders.
Notwithstanding the foregoing, any amendment, modification, termination, waiver
or consent with respect to any of the following provisions hereof shall be
effective only by a written agreement, signed by each Lender:
(i) waiving any of the conditions specified in Section 5.01
(except with respect to a condition based upon another provision
hereof, the waiver of which requires only the concurrence of the
Requisite Lenders),
(ii) increasing the amount of any of the Commitments,
(iii) reducing the principal of, rate or amount of interest on
the Revolving Loans or Reimbursement Obligations or any fees or other
amounts payable to any Lender or the Issuing Bank,
(iv) postponing any date on which any payment of principal of,
or interest on, the Revolving Loans or Reimbursement Obligations or any
fees or other amounts payable to any Lender or the Issuing Bank would
otherwise be due,
(v) releasing all or a substantial portion of the Collateral
(except as provided in Section 12.09(c)),
(vi) changing the definition of "Pro Rata Share" (or the
application of proceeds set forth in Section 3.02(b)(i)(A)(II)) or
"Requisite Lenders",
(vii) terminating the Holdings Guaranty,
(viii) increasing the advance rates specified in the
definition of "Borrowing Base" (except as provided within such
definition) or amending any definition used in the definition of
"Borrowing Base" if the result of such amendment is to increase such
advance rates, or
(ix) amending Sections 12.09(c) or 13.06 or this Section
13.07.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further notice
or demand in similar or other circumstances. Notwithstanding anything to the
contrary contained in this Section 13.07, no amendment, modification, waiver or
consent shall affect the rights or duties of the Administrative Agent hereunder
or the other Loan Documents, unless made in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action.
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(c) Replacement Lender. If any Lender (the "Non-Consenting
Lender") fails to agree in writing to any amendment, modification, consent or
waiver that requires the written agreement of each Lender or the agreement of
such percentage of the Lenders as is specified in the proviso to Section
13.07(a), the Non-Consenting Lender agrees to sell, assign and transfer to any
Replacement Lender designated by the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, agreed to by the Borrowers all
of its Commitment and outstanding Loans and participations in outstanding
Letters of Credit and at the time of any replacement pursuant to this Section
13.07(c), the Replacement Lender shall enter into one or more Assignment and
Acceptances pursuant to Section 13.01 (and with all fees payable pursuant to
said Section 13.01(d) to be paid by the Replacement Lender) pursuant to which
the Replacement Lender shall acquire all of the Commitments and outstanding
Loans and participations in outstanding Letters of Credit of the Non-Consenting
Lender and, in connection therewith, shall pay to the Non-Consenting Lender in
respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the
Non-Consenting Lender, (B) an amount equal to all accrued, but theretofore
unpaid, fees owing to the Non-Consenting Lender under this Agreement and (C) an
amount equal to all other outstanding Obligations owing to the Non-Consenting
Lender. Upon the execution of the respective Assignment and Acceptance, the
payment of amounts referred to above and, if so requested by the Replacement
Lender, delivery to the Replacement Lender of the appropriate instruments
otherwise required by this Agreement executed by the Borrowers, the Replacement
Lender shall become a Lender hereunder and the Non-Consenting Lender shall cease
to be a Lender hereunder, except with respect to indemnification provisions
applicable to the Non-Consenting Lender under this Agreement, which shall
survive as to such Non-Consenting Lender.
13.08. Notices. Unless otherwise specifically provided herein,
any notice, consent or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, or sent by
courier service and shall be deemed to have been given when delivered in person
or by courier service, or upon receipt of a telecopy. Notices to the
Administrative Agent pursuant to Articles I or II shall not be effective until
received by the Administrative Agent. For the purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is delivered as provided in
this Section 13.08) shall be as set forth on the signature pages hereof or the
signature page of any applicable Assignment and Acceptance, or, as to each
party, at such other address as may be designated by such party in a written
notice to all of the other parties hereto.
13.09. Survival of Warranties and Agreements. All
representations and warranties made herein and all obligations of the Borrowers
in respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery hereof and of the other Loan Documents, the making and
repayment of the Loans, the issuance and discharge of Letters of Credit
hereunder and the termination hereof and shall not be limited in any way by the
passage of time or occurrence of any event and shall expressly cover time
periods when the Administrative Agent, the Issuing Bank or any of the Lenders
may have come into possession or control of any
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Property of any Borrower.
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of the Administrative Agent, any Lender or the
Issuing Bank in the exercise of any power, right or privilege under any of the
Loan Documents shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under the Loan Documents are cumulative to and not exclusive
of any rights or remedies otherwise available.
13.11. Marshalling; Payments Set Aside. None of the
Administrative Agent, any Lender or the Issuing Bank shall be under any
obligation to marshall any assets in favor of any Borrower or any other party or
against or in payment of any or all of the Obligations. To the extent that any
Borrower makes a payment or payments to the Administrative Agent, the Lenders or
the Issuing Bank or any of such Persons receives payment from the proceeds of
the Collateral or exercise their rights of setoff, and such payment or payments
or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, right and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
13.12. Severability. In case any provision in or obligation
hereunder or under the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
13.13. Headings. Section headings herein are included herein
for convenience of reference only and shall not constitute a part hereof or be
given any substantive effect.
13.14. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
13.15. Limitation of Liability. No claim may be made by the
Borrowers, any Lender, the Issuing Bank, the Agents or any other Person against
the Agents, the Issuing Bank or any other Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any special,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated hereby, or any act, omission or event occurring in connection
therewith; and each Borrower, each Lender, the Issuing Bank and each Agent
hereby waives, releases and agrees not to sue upon any such claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
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13.16. Successors and Assigns. This Agreement and the other
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
the successors and permitted assigns of the Lenders and the Issuing Bank. The
rights hereunder and the interest herein of any Borrower may not be assigned
without the written consent of all Lenders. Any attempted assignment without
such written consent shall be void.
13.17. Certain Consents and Waivers.
(a) Personal Jurisdiction. (i) EACH OF THE AGENTS, THE
LENDERS, THE ISSUING BANK AND BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING
JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR
PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE AGENTS, THE LENDERS, THE
ISSUING BANK AND THE BORROWERS AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER
WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT CONSIDERING THE DISPUTE.
(ii) EACH BORROWER AGREES THAT THE ADMINISTRATIVE AGENT SHALL
HAVE THE RIGHT TO PROCEED AGAINST ANY BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE ADMINISTRATIVE AGENT, THE ISSUING BANK AND THE LENDERS TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE
AGENT, THE ISSUING BANK OR ANY LENDER. EACH BORROWER WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENT, THE
ISSUING BANK OR ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
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(b) Service of Process. EACH BORROWER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH BORROWER'S NOTICE ADDRESS SPECIFIED PURSUANT TO SECTION
13.08, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH
BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
THE ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST EACH BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE AGENTS, THE ISSUING
BANK, THE LENDERS AND THE BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
13.18. Counterparts; Effectiveness; Inconsistencies. This
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective against the
Borrowers, each Lender, the Issuing Bank and the Agents on the date hereof. This
Agreement and each of the other Loan Documents shall be construed to the extent
reasonable to be consistent one with the other, but to the extent that the terms
and conditions hereof are actually inconsistent with the terms and conditions of
any other Loan Document, this Agreement shall govern.
13.19. Limitation on Agreements. All agreements between the
Borrowers, the Administrative Agent, each Lender and the Issuing Bank in the
Loan Documents are hereby expressly limited so that in no event shall any of the
Loans or other amounts payable by any Borrower under any of the Loan Documents
be directly or indirectly secured (within the meaning of Regulation U) by Margin
Stock.
13.20. Confidentiality. Subject to Section 13.01(e), the
Lenders and the Issuing Bank shall hold all nonpublic information obtained
pursuant to the requirements hereof and identified as such by the Borrowers in
accordance with such Lender's or the Issuing Bank's customary procedures for
handling confidential information of this nature and in accordance with
112
<PAGE>
safe and sound banking practices and in any event may make disclosure reasonably
required by a bona fide offeree or transferee (or participant) in connection
with the contemplated transfer (or participation), or as required or requested
by any Governmental Authority or representative thereof, or pursuant to legal
process, or to its accountants, lawyers and other advisors, and shall require
any such offeree or transferee (or participant) to agree (and require any of its
offerees, transferees or participants to agree) to comply with this Section
13.20. In no event shall any Lender or the Issuing Bank be obligated or required
to return any materials furnished by the Borrowers; provided, however, each
offeree shall be required to agree that if it does not become a transferee (or
participant) it shall return all materials furnished to it by the Borrowers in
connection herewith.
13.21. Contribution as Between Borrowers. The Borrowers agree
as among themselves that, to the extent any Borrower shall make a payment of a
portion of the Obligations of another Borrower which shall exceed the greater of
(i) the amount of economic benefit actually received by such Borrower from the
Loans and (ii) the amount which such Borrower would otherwise have paid if such
Borrower had paid the aggregate amount of the Obligations (excluding the amount
thereof repaid by another Borrower) in the same proportion as such Borrower's
net worth at the date payment is sought bears to the aggregate net worth of all
the Borrowers at such date, then such Borrower shall be reimbursed by the other
Borrowers for the amount of such excess, pro rata based on the net worth of such
other Borrower at that date. The agreement in this Section 13.21 is only
intended to define the relative rights of the Borrowers, and is not intended to
nor shall it impair the obligations of the Borrowers, jointly and severally, to
pay to the Administrative Agent, the Issuing Banks and the Lenders the
Obligations as and when the same shall become due and payable.
13.22. Entire Agreement. This Agreement, taken together with
all of the other Loan Documents, embodies the entire agreement and understanding
among the parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
113
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
BARNEY'S, INC.
BARNEYS AMERICA, INC.
PFP FASHIONS INC.
BARNEYS (CA) LEASE CORP.
BARNEYS (NY) LEASE CORP.
BASCO ALL-AMERICAN SPORTSWEAR CORP.
BNY LICENSING CORP.
BARNEYS AMERICA (CHICAGO) LEASE CORP.
By: /s/ Edward Lambert
--------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
Notice address:
c/o Barney's, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: Marc H. Perlowitz
Phone: (212) 450-8606
Fax: (212) 450-8480
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Ted S. Waksman, Esq.
Phone: (212) 310-8362
Fax: (212) 310-8007
114
<PAGE>
CITICORP USA, INC.,
as Administrative Agent and as a
Lender
By: /s/ Brenda Cotsen
--------------------------------
Name: Brenda Cotsen
Title: Vice President
Commitment:
$50,000,000
Domestic Lending Office:
399 Park Avenue
New York, New York 10043
Fixed Rate Affiliate:
same as above
Fixed Rate Lending Office:
same as above
Notice address:
Citicorp USA, Inc.
399 Park Avenue
New York, New York 10043
Attention: Brenda Cotsen
Telecopy: (212) 793-1290
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Barbara A. Vrancik, Esq.
Telecopy: (212) 906-2021
115
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent and as a Lender
By: /s/ Charles Chiodo
-----------------------------------
Name: Charles Chiodo
Title: Duly Authorized Signatory
Commitment:
$30,000,000
Domestic Lending Office:
201 High Ridge Road
Stamford, CT 06927
Fixed Rate Affiliate:
same as above
Fixed Rate Lending Office:
same as above
Notice address:
General Electric Capital Corporation
Account Manager
Attention: Stephen M. Metivier
Phone: 203-316-7652
Fax: 203-316-7893
with a copy to: Borrowing Base only
Collateral Analyst
Allison Fountain
Attention:
Phone: 203-316-7899
Fax: 203-316-7817
116
<PAGE>
CITIBANK, N.A., as Issuing Bank
By: /s/ Brenda Cotsen
--------------------------------
Name: Brenda Cotsen
Title: Vice President
Notice address:
Citibank, N.A.
399 Park Avenue
New York, NY 10017
Attention: Brenda Cotsen
Telephone: (212) 559-0681
Fax: (212) 793-1290
with a copy to:
Sidley & Austin
875 Third Avenue
New York, NY 10022
Attention: Barbara A. Vrancik, Esq.
Phone: (212) 906-2306
Fax: (212) 906-2021
117
<PAGE>
BNY FINANCIAL CORPORATION
By: /s/ Thomas M. Strachan
--------------------------------
Name: Thomas M. Strachan
Title: Executive V. P.
Commitment:
$25,000,000
Domestic Lending Office:
BNY Financial Corporation
1290 Avenue of the Americas
Fixed Rate Affiliate:
Same
Fixed Rate Lending Office:
Same
Notice address:
BNY Financial Corporation
1290 Avenue of the Americas
New York, NY 10104
Attention:Sam Cirelli SVP
Phone: 212-408-7247
Fax: 212-408-4384
with a copy to:
BNY Financial Corporation
Attention: Frank Imperato SVP
1290 Avenue of the Americas
New York, NY 10104
Phone: 212-408-7026
Fax: 212-408-4384
118
<PAGE>
NATIONAL CITY COMMERCIAL FINANCE,
INC.
By: /s/ Elizabeth M. Lynch
--------------------------------
Name: Elizabeth M. Lynch
Title: Vice President
Commitment:
$15,000,000
Domestic Lending Office:
195 E. Sixth Street, Suite 400
Cleveland, OH 44114-2214
Fixed Rate Affiliate:
same as above
Fixed Rate Lending Office:
same as above
Notice address:
National City Commercial Finance, Inc.
195 E. Sixth Street, Suite 400
Cleveland, Ohio 44114-2214
Attention: Kate George, Vice President
Phone: (216) 575-2951
Fax: (216) 575-9555
with a copy to:
National City Commercial Finance, Inc.
195 E. Sixth Street, Suite 400
Cleveland, Ohio 44114-2214
Attention: Kathy Ellero, AVP
Phone: (216) 575-3261
Fax: (216) 575-9555
119
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I.....................................................................2
1.01. Certain Defined Terms...............................................2
1.02. Computation of Time Periods.........................................2
1.03. Accounting Terms....................................................2
1.04. Other Definitional Provisions.......................................2
1.05. Other Terms.........................................................2
ARTICLE II....................................................................2
2.01 Revolving Credit Facility............................................2
2.02. Swing Loans.........................................................2
2.03. Use of Proceeds.....................................................2
2.04. Letters of Credit...................................................2
2.05. Promise to Repay; Evidence of Indebtedness..........................2
2.06. Authorized Officers and Agents......................................2
ARTICLE III...................................................................2
3.01. Prepayments; Reductions in Commitments..............................2
3.02. Payments............................................................2
3.03. Taxes...............................................................2
3.04. Increased Capital...................................................2
3.05. Cash Management.....................................................2
3.06. Replacement of Lenders..............................................2
ARTICLE IV....................................................................2
4.01. Interest on the Loans and Other Obligations.........................2
4.02. Special Provisions Governing Fixed Rate Loans.......................2
4.03. Fees................................................................2
ARTICLE V.....................................................................2
5.01. Conditions Precedent to the Initial Loans and Letters of Credit.....2
5.02. Conditions Precedent to All Revolving Loans and Letters of
Credit.............................................................2
ARTICLE VI....................................................................2
6.01. Representations and Warranties of the Borrowers.....................2
ARTICLE VII...................................................................2
7.01. Financial Statements................................................2
<PAGE>
7.02. Borrowing Base Certificate..........................................2
7.03. Events of Default...................................................2
7.04. Lawsuits............................................................2
7.05. Insurance...........................................................2
7.06. ERISA Notices.......................................................2
7.07. Environmental Notices...............................................2
7.08 Isetan Leases.......................................................2
7.09. Public Filings and Reports..........................................2
7.10. Other Information...................................................2
ARTICLE VIII..................................................................2
8.01. Corporate Existence, Etc............................................2
8.02. Corporate Powers; Conduct of Business, Etc..........................2
8.03. Compliance with Laws, Etc...........................................2
8.04. Payment of Taxes and Claims; Tax Consolidation......................2
8.05. Insurance...........................................................2
8.06. Inspection of Property; Books and Records;Discussions...............2
8.07. Insurance and Condemnation Proceeds.................................2
8.08. ERISA Compliance....................................................2
8.09. Foreign Employee Benefit Plan Compliance............................2
8.10. Establishment of Blocked Accounts; Maintenance of Property..........2
8.11. Condemnation........................................................2
8.12. Landlord Waivers....................................................2
8.13. Year 2000...........................................................2
8.14. Post Closing Matters................................................2
ARTICLE IX....................................................................2
9.01. Indebtedness........................................................2
9.02. Sales of Assets.....................................................2
9.03. Liens...............................................................2
9.04. Investments.........................................................2
9.05. Accommodation Obligations...........................................2
9.06. Restricted Junior Payments..........................................2
9.07. Conduct of Business; Subsidiaries; Acquisitions.....................2
9.08. Transactions with Affiliates........................................2
9.09. Restriction on Fundamental Changes..................................2
9.10. Sales and Leasebacks................................................2
9.11. Margin Regulations; Securities Laws.................................2
9.12. ERISA. No member of the Barneys Group shall.........................2
9.13. Issuance of Capital Stock...........................................2
9.14. Constituent Documents...............................................2
9.15. Fiscal Year.........................................................2
9.16. Cash Management.....................................................2
<PAGE>
9.17. Environmental Matters...............................................2
9.18. Operating Leases....................................................2
9.19. Subordinated Notes..................................................2
ARTICLE X.....................................................................2
10.01. Minimum Consolidated Net Worth.....................................2
10.02. Maximum Leverage Ratio.............................................2
10.03. Minimum Consolidated EBITDA........................................2
10.04. Maximum Capital Expenditures.......................................2
ARTICLE XI....................................................................2
11.01. Events of Default..................................................2
11.02. Rights and Remedies................................................2
ARTICLE XII...................................................................2
12.01. Appointment........................................................2
12.02. Nature of Duties...................................................2
12.03. Rights, Exculpation, Etc...........................................2
12.04. Reliance...........................................................2
12.05. Indemnification....................................................2
12.06. CUSA Individually..................................................2
12.07. Successor Administrative Agent; Resignation of Administrative
Agent.............................................................2
12.08. Relations Among Lenders............................................2
12.09. Concerning the Collateral and the Loan Documents...................2
ARTICLE XIII..................................................................2
13.01. Assignments........................................................2
13.02. Expenses...........................................................2
13.03. Indemnity..........................................................2
13.04. Change in Accounting Principles....................................2
13.05. Setoff.............................................................2
13.06. Ratable Sharing....................................................2
13.07. Amendments and Waivers.............................................2
13.08. Notices............................................................2
13.09. Survival of Warranties and Agreements..............................2
13.10. Failure or Indulgence Not Waiver; Remedies Cumulative..............2
13.11. Marshalling; Payments Set Aside....................................2
13.12. Severability.......................................................2
13.13. Headings...........................................................2
13.14. Governing Law......................................................2
13.15. Limitation of Liability............................................2
13.16. Successors and Assigns.............................................2
13.17. Certain Consents and Waivers.......................................2
<PAGE>
13.18. Counterparts; Effectiveness; Inconsistencies.......................2
13.19. Limitation on Agreements...........................................2
13.20. Confidentiality....................................................2
13.21. Contribution as Between Borrowers..................................2
13.22. Entire Agreement...................................................2
<PAGE>
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrowing Base Certificate
Exhibit C-1 -- Form of Revolving Loan Note
Exhibit C-2 -- Form of Swing Loan Note
Exhibit D -- Form of Notice of Borrowing
Exhibit E -- Form of Notice of Continuation/Conversion
Exhibit F -- List of Closing Documents
Exhibit G -- Form of Officer's Certificate to Accompany Reports
Exhibit H -- Form of Compliance Certificate
SCHEDULES
Schedule 1.01.1 -- Permitted Existing Accommodation Obligations
Schedule 1.01.2 -- Permitted Existing Indebtedness
Schedule 1.01.3 -- Permitted Existing Investments
Schedule 1.01.4 -- Permitted Existing Liens
Schedule 1.01.5 -- Subordination Terms
Schedule 1.01.6 -- Rent Reserve Time Periods
Schedule 3.05 -- Lock Boxes; Blocked Accounts; Blocked Account Banks
Schedule 6.01-A -- Due Qualification
Schedule 6.01-C -- Subsidiaries; Ownership of Capital Stock
Schedule 6.01-E -- Governmental Consents, etc.
Schedule 6.01-K -- Taxes
Schedule 6.01-I -- Litigation; Adverse Effects
Schedule 6.01-O -- Environmental Matters
Schedule 6.01-P -- ERISA Matters
Schedule 6.01-R -- Labor Matters
Schedule 6.01-U -- Patents, Trademarks, Permits, Etc.; Governmental Approvals
Schedule 6.01-V -- Assets and Properties
Schedule 6.01-W -- Insurance Policies and Programs
Schedule 6.01-X -- Bank Accounts
Schedule 8.14 -- Post-Closing Items
Schedule 9.16 -- Cash Management
Schedule 9.18 -- Operating Leases
<PAGE>
Exhibit 10.2
EXECUTION COPY
FIRST AMENDMENT
Dated as of March 23, 1999
This FIRST AMENDMENT among Barney's, Inc., a New York
corporation ("BARNEYS"), Barneys America, Inc., a Delaware corporation ("BAI"),
PFP Fashions Inc., a New York corporation ("PFP"), Barneys (CA) Lease Corp., a
Delaware corporation ("CA LEASE"), Barneys (NY) Lease Corp., a Delaware
corporation ("NY LEASE"), Basco All-American Sportswear Corp., a New York
corporation ("BASCO"), BNY Licensing Corp., a Delaware corporation ("BNY"), and
Barneys America (Chicago) Lease Corp., a Delaware corporation ("CHICAGO LEASE;"
and together with Barney's, BAI, PFP, CA Lease, NY Lease, Basco and BNY
collectively the "BORROWERS"), the Lenders (as defined below) and the
Administrative Agent (as defined below), and amends the Credit Agreement dated
as of January 28, 1999 (as amended hereby and as the same may be further
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT") entered into among the Borrowers, the financial institutions from
time to time parties thereto (the "LENDERS"), the issuing banks from time to
time parties thereto (the "ISSUING BANKS"), General Electric Capital
Corporation, in its capacity as documentation agent and Citicorp USA, Inc., in
its capacity as agent for the Lenders and the Issuing Banks (the "ADMINISTRATIVE
AGENT"). Unless otherwise defined herein, the terms defined in the Credit
Agreement shall be used herein as therein defined.
PRELIMINARY STATEMENTS:
(1) The Borrowers have requested the Lenders to amend the
Credit Agreement to amend the Leverage Ratios of the Barney's Group for the
first three fiscal quarters of Fiscal Year 1999.
(2) The Borrowers and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. AMENDMENT TO CREDIT AGREEMENT. Section 10.02 of the
Credit Agreement is, effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof, hereby
amended by deleting in its entirety the entries for the first, second and third
fiscal quarter of Fiscal Year 1999 therein and replacing such entries in their
entirety with the following:
"First fiscal quarter of Fiscal Year 1999 8.5
Second fiscal quarter of Fiscal Year 1999 8.1
Third fiscal quarter of Fiscal Year 1999 7.5".
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS. This First
Amendment shall become effective as of the date hereof on the date (the
"Amendment Effective Date") when the following conditions precedent have been
satisfied:
<PAGE>
(a) CERTAIN DOCUMENTS. The Administrative Agent shall have
received all of the following:
(i) this First Amendment executed by the Borrowers and
the Requisite Lenders; and
(ii) an Acknowledgment substantially in the form of
EXHIBIT A attached hereto executed by Barneys New York, Inc.
("Holdings").
(b) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrowers or Holdings in
or pursuant to the Credit Agreement, as amended by this First
Amendment, and the other Loan Documents to which the Borrowers or
Holdings is a party or by which the Borrowers or Holdings is bound,
shall be true, correct and complete in all material respects on and
as of the Amendment Effective Date (other than representations and
warranties in any such Loan Document which expressly speak as of a
different date).
(c) NO EVENTS OF DEFAULT. No Event of Default or Default
shall have occurred and be continuing on the Amendment Effective
Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each Borrower
represents and warrants as follows:
(a) After giving effect to this First Amendment, all of the
representations and warranties contained in Section 6.01 of the
Credit Agreement and in the other Loan Documents shall be true,
correct and complete in all material respects.
(b) After giving effect to this First Amendment, no Default
or Event of Default shall have occurred and be continuing.
(c) As of the date hereof, no material adverse change shall
have occurred in the condition (financial or otherwise),
performance, properties, operations or prospects of the Barneys
Group since August 1, 1998 except as publicly disclosed prior to the
date hereof.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS.
(a) Upon the effectiveness of this First Amendment, on and
after the date hereof each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the
other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement
as amended hereby.
(b) Except as specifically amended above, the Credit
Agreement and all other Loan Documents, are and shall continue to be
in full force and effect and are hereby in all respects ratified and
confirmed. Without limiting the generality of the foregoing, the
Loan
<PAGE>
Documents and all of the Collateral described therein do and shall
continue to secure the payment of all obligations of the Borrowers
under the Credit Agreement, the Notes and the other Loan Documents,
in each case as amended hereby.
(c) The execution, delivery and effectiveness of this First
Amendment shall not, except as expressly provided herein, operate as
a waiver of any right, power or remedy of any Lender or the Agent
under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.
SECTION 5 EXECUTION IN COUNTERPARTS. This First Amendment may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
SECTION 6 GOVERNING LAW. This First Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed as of the date first above written.
BARNEY'S, INC.
BARNEYS AMERICA, INC.
PFP FASHIONS INC.
BARNEYS (CA) LEASE CORP.
BARNEYS (NY) LEASE CORP.
BASCO ALL-AMERICAN SPORTSWEAR CORP.
BNY LICENSING CORP.
BARNEYS AMERICA (CHICAGO) LEASE CORP.
By: /s/ Edward Lambert
--------------------------------------------
Title: Corporate Financial Officer
CITICORP USA, INC., as Administrative Agent and
Lender
By: /s/ Brenda M. Cotsen
--------------------------------------------
Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: /s/ Charles Chiodo
--------------------------------------------
Title: Authorized Signatory
<PAGE>
BNY FINANCIAL CORPORATION, as Lender
By: /s/ Sam Cirelli
--------------------------------------------
Title: Senior Vice President
NATIONAL CITY COMMERCIAL
FINANCE, INC., as Lender
By: /s/ Kathy Ellero
--------------------------------------------
Title: Assistant Vice President
<PAGE>
Exhibit 10.3
EXECUTION COPY
GUARANTY
This GUARANTY ("Guaranty") is made as of the 28th day of
January, 1999, by BARNEYS NEW YORK, INC., a Delaware corporation (the
"Guarantor"), in favor of CITICORP USA, INC., as agent for the Lenders and the
Issuing Banks (with its successors and permitted assigns in such capacity, the
"Administrative Agent") for the ratable benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings ascribed to them
in the Credit Agreement referred to below.
W I T N E S S E T H
WHEREAS, Barney's, Inc., Barneys America, Inc., PFP Fashions
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively, the "Borrowers"), the Administrative Agent, the lenders from time
to time a party thereto (the "Lenders"), the issuing banks from time to time a
party thereto (the "Issuing Banks"), the Administrative Agent and General
Electric Capital Corporation, as documentation agent, have entered into that
certain Credit Agreement, dated as of January 28, 1999 (as the same may be
amended, restated, modified or supplemented from time to time, the "Credit
Agreement");
WHEREAS, the Guarantor is the sole shareholder of Barney's,
Inc., one of the Borrowers, and will derive benefits, directly and indirectly,
from the loans and other financial accommodations made to the Borrowers pursuant
to the Credit Agreement;
WHEREAS, the Lenders, the Issuing Banks and the Administrative
Agent have required as a condition, among others, to entering into the Credit
Agreement, that the Guarantor guarantee the Obligations of the Borrowers;
NOW THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. GUARANTY. (i) For value received and in consideration of
any loan, advance or financial accommodation of any kind whatsoever heretofore,
now or hereafter made, given or granted to the Borrowers by the Lenders, the
Issuing Banks and the other Holders, the Guarantor unconditionally guarantees
for the benefit of the Administrative Agent, the Issuing Banks, the Lenders and
the other Holders the full and prompt payment when due, whether at maturity or
earlier, by reason of acceleration or otherwise, and at all times thereafter, of
all the Obligations (including, without limitation, interest accruing following
the filing of a bankruptcy petition by or against any Borrower, at the
applicable rate specified in the Credit Agreement, whether or not
<PAGE>
such interest is allowed as a claim in bankruptcy).
(ii) At any time after the occurrence and during the
continuance of an Event of Default, the Guarantor shall pay to the
Administrative Agent, for the benefit of the Administrative Agent, the Issuing
Banks, the Lenders and the other Holders, on demand and in immediately available
funds, the full amount of the Obligations. The Guarantor further agrees to pay
and reimburse the Administrative Agent, the Issuing Banks, the Lenders and the
other Holders for, on demand and in immediately available funds, (a) all
reasonable fees, costs and expenses (including, without limitation, all court
costs and reasonable attorneys' fees, costs and expenses) paid or incurred by
such Person in: (1) endeavoring to collect all or any part of the Obligations
owing to such Person from, or in prosecuting any action against, any Borrower
relating to the Credit Agreement, this Guaranty or the transactions contemplated
thereby; (2) taking any action with respect to any security or collateral
securing such Obligations or the Guarantor's obligations hereunder; and (3)
preserving, protecting or defending the enforceability of, or enforcing, this
Guaranty or the Administrative Agent's rights hereunder (all such costs and
expenses are hereinafter referred to as the "Expenses") and (b) interest on (1)
such Obligations which do not constitute interest, (2) to the extent permitted
by applicable law, such Obligations which constitute interest, and (3) the
Expenses, from the date of demand under this Guaranty until paid in full in cash
at the per annum rate of interest described in SECTION 4.01(D) of the Credit
Agreement. The Guarantor hereby agrees that this Guaranty is an absolute
guaranty of payment and is not a guaranty of collection.
2. OBLIGATIONS UNCONDITIONAL. The Guarantor hereby agrees
that its obligations under this Guaranty shall be unconditional, irrespective
of:
(i) the validity, enforceability, avoidance or subordination
of any of the Obligations or any of the Loan Documents;
(ii) the absence of any attempt by, or on behalf of, the
Administrative Agent, any of the Issuing Banks, any of the Lenders
or any of the other Holders to collect, or to take any other action
to enforce, all or any part of the Obligations whether from or
against any of the Borrowers or any other Person;
(iii) the election of any remedy available under the Loan
Documents or applicable Requirements of Law by, or on behalf of, the
Administrative Agent, any of the Issuing Banks, any of the Lenders
or any of the other Holders with respect to all or any part of the
Obligations;
(iv) the waiver, consent, extension, forbearance or granting
of any indulgence by, or on behalf of, the Administrative Agent, any
of the Issuing Banks, any of the Lenders or any of the other Holders
with respect to any provision of any of the Loan Documents;
(v) the failure of the Administrative Agent, any of the
Issuing Banks, any of the Lenders or any of the other Holders to
take any steps to perfect and maintain its security interest in, or
to preserve its rights to, any security or collateral for the
Obligations;
<PAGE>
(vi) the election by, or on behalf of, the Administrative
Agent, any of the Issuing Banks, any of the Lenders, or any of the
other Holders in any proceeding instituted under Chapter 11 of the
Bankruptcy Code, of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(vii) any borrowing or grant of a security interest by any
Borrower, as debtor-in-possession, under Section 364 of the
Bankruptcy Code;
(viii) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of the claims against the Borrower held
by any of the Lenders, any of the Issuing Banks, the Administrative
Agent or any of the other Holders, for repayment of all or any part
of the Obligations or any Expenses; or
(ix) any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of any Borrower or
guarantor of the Obligations.
3. ENFORCEMENT; APPLICATION OF PAYMENTS. Upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent, the Issuing Banks, the Lenders and/or the other Holders may proceed
directly and at once, without notice, against the Guarantor to obtain
performance of and to collect and recover the full amount, or any portion, of
the Obligations owing to such Persons, without first proceeding against any
Borrower or any other Person, or against any security or collateral for the
Obligations. Subject only to the terms and provisions of the Credit Agreement,
the Lenders and the Issuing Banks shall have the exclusive right to determine
the application of payments and credits, if any, from the Guarantor, the
Borrowers or any other Person, on account of the Obligations or any other
liability of the Guarantor to the Administrative Agent, any of the Issuing
Banks, any of the Lenders, or any of the other Holders.
4. WAIVERS. (i) The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of any Borrower, protest or notice with respect to
the Obligations, all setoffs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor and notices of acceptance of this Guaranty, the benefits of all
statutes of limitation, and all other demands whatsoever (and shall not require
that the same be made on the Borrowers as a condition precedent to the
Guarantor's obligations hereunder), and covenants that this Guaranty will not be
discharged, except by complete payment (in cash) and performance of the
Obligations and any other obligations contained herein. The Guarantor further
waives all notices of the existence, creation or incurring of new or additional
Indebtedness, arising either from additional loans extended to any Borrower or
otherwise, and also waives all notices that the principal amount, or any portion
thereof, and/or any interest on any instrument or document evidencing all or any
part of the Obligations is due, notices of any and all proceedings to collect
from the maker, any endorser or any other guarantor of all or any part of the
Obligations, or from any other Person, and, to the extent permitted by law,
notices of exchange, sale,
<PAGE>
surrender or other handling of security or collateral given to the
Administrative Agent, any of the Issuing Banks or any of the Lenders to secure
payment of all or any part of the Obligations.
(ii) The Administrative Agent, the Issuing Banks, the Lenders
and/or the other Holders are hereby authorized, without notice or demand and
without affecting the liability of the Guarantor hereunder, from time to time,
(a) to renew, extend, accelerate or otherwise change the time for payment of, or
other terms relating to, all or any part of the Obligations, or to otherwise
modify, amend or change the terms of any of the Loan Documents; (b) to accept
partial payments on all or any part of the Obligations; (c) to take and hold
security or collateral for the payment of all or any part of the Obligations,
this Guaranty, or any other guaranties of all or any part of the Obligations or
other liabilities of the Borrowers, (d) to exchange, enforce, waive and release
any such security or collateral; (e) to apply such security or collateral and
direct the order or manner of sale thereof as in its discretion it may
determine; (f) to settle, release, exchange, enforce, waive, compromise or
collect or otherwise liquidate all or any part of the Obligations, this
Guaranty, any other guaranty of all or any part of the Obligations, and any
security or collateral for the Obligations or for any such guaranty. Any of the
foregoing may be done in any manner, without affecting or impairing the
obligations of the Guarantor hereunder.
5. REPRESENTATIONS AND WARRANTIES.
(a) ORGANIZATION, CORPORATE POWER AND AUTHORITY. The
Guarantor (i) is duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which the failure to be so qualified and in good standing shall have or is
reasonably likely to have a Material Adverse Effect, and (iii) has all requisite
corporate power and authority to own, operate and encumber its Property and to
conduct its business as presently conducted and to execute, deliver and perform
this Guaranty and each of the Loan Documents to which it is a party.
(b) AUTHORIZATIONS. The execution, delivery and performance,
as the case may be, of this Guaranty and each other Loan Document to which it is
a party and the consummation of the transactions contemplated thereby, have been
duly approved pursuant to the Final Order (as defined in the Plan of
Reorganization) and, to the extent required by law, by its Board of Directors
and its shareholders and such approvals have not been rescinded, revoked or
modified in any manner. No other corporate action or proceedings on its part is
necessary to consummate such transactions.
(c) NO CONFLICT. The execution, delivery and performance of
the Guaranty and each other Loan Document to which the Guarantor is a party do
not and will not (i) conflict with the Constituent Documents of the Guarantor,
(ii) constitute a tortutious interference with any Contractual Obligations of
any Person, (iii) conflict with, or result in a breach of, or constitute (with
or without notice or lapse of time or both) a default under any Requirement of
Law or under any material Contractual Obligation of such member, or require the
termination of
<PAGE>
any material Contractual Obligation, (iv) result in or require the creation or
imposition of any Lien whatsoever upon any of its Property or assets, except for
Liens created by the Loan Documents or (v) require any approval of the
Guarantor's shareholders that has not been obtained.
(d) EXECUTION, DELIVERY AND ENFORCEABILITY. Each of this
Guaranty and each other Loan Document to which the Guarantor is a party has been
duly executed and delivered by the Guarantor and is the legal, valid and binding
obligation of the Guarantor, enforceable against the Guarantor in accordance
with its terms.
(e) GOVERNMENTAL CONSENTS, ETC. The execution, delivery and
performance of each Loan Document to which the Guarantor is a party do not and
will not require any registration with, consent or approval of or notice to or
other action of, with or by any Governmental Authority, except (i) filings,
consents or notices which have been made, obtained or given or, in timely
manner, shall be made, obtained or given and (ii) filings necessary to perfect
the security interest in the Collateral pledged by the Guarantor. The Guarantor
is not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act or the Investment
Company Act of 1940, or any other federal or state statute or regulation which
limits its ability to incur indebtedness or its ability to consummate the
transactions contemplated in the Loan Documents, except federal statutes
regarding margin rules.
(f) REQUIREMENTS OF LAW. The Guarantor is in compliance with
all Requirements of Law applicable to it and its business, in each case where
the failure to so comply individually or in the aggregate shall have or is
reasonably likely to have a Material Adverse Effect.
(g) SOLVENCY. After giving effect to the transactions
contemplated in the Loan Documents and the Plan of Reorganization and the Loans
to be made on the Closing Date and each such other date as Loans requested
hereunder are made and the disbursement of the proceeds of such Loans, the
Guarantor is Solvent.
6. AFFIRMATIVE COVENANTS. The Guarantor covenants and
agrees that, so long as any part of the Obligations shall remain unpaid or any
Lender shall have any Commitment under the Credit Agreement, the Guarantor will:
(a) CORPORATE EXISTENCE. Maintain its corporate existence
and preserve and keep in full force and effect its rights and franchises
material to its business except where the board of directors of Holdings
determines that the maintenance or preservation of such rights and franchises is
not in the best interest of Holdings and the failure to so maintain or preserve
would not have or be reasonably likely to have a Material Adverse Effect.
(b) COMPLIANCE WITH LAWS. Comply with all Requirements of
Law and obtain as needed all Permits necessary for the Guarantor's operations
and maintain such Permits
<PAGE>
in good standing, except, in each case, where the failure to do so would not
have or be reasonably likely to have a Material Adverse Effect.
(c) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Permit any authorized representative(s) designated by the Administrative Agent
or any Lender to visit and inspect any of the Properties of the Guarantor, to
examine, audit, check and make copies of its financial and accounting records,
books, journals, orders, receipts and any correspondence and other data relating
to its business or the transactions contemplated hereby and by the other Loan
Documents, and to discuss its affairs, finances and accounts with its officers
and independent certified public accountants, upon reasonable notice and at such
times during normal business hours, as often as may be reasonably requested. All
costs and expenses incurred by the Administrative Agent or, after the occurrence
and during the continuance of any Event of Default, any Lender, in each case as
a result of such inspection, audit or examination conducted pursuant to this
SECTION 6(C) shall be paid by the Guarantor.
7. NEGATIVE COVENANTS. The Guarantor covenants and agrees
that, so long as any part of the Obligations shall remain unpaid or any Lender
shall have any Commitment under the Credit Agreement, the Guarantor will not:
(a) BUSINESS. Enter into or conduct any business or engage
in any activity except in connection with (i) the ownership of the capital stock
of Barneys, (ii) the performance of its Obligations under the Loan Documents to
which it is a party, and (iii) the performance of its obligations set forth in
the Plan of Reorganization.
(b) LIENS. Directly or indirectly create, incur assume or
suffer to exist any Lien on or with respect to any of its Property except Liens
created by or pursuant to the Loan Documents and Customary Permitted Liens.
(c) INDEBTEDNESS. Directly or indirectly create, incur,
assume or otherwise become or remain directly or indirectly liable with respect
to any Indebtedness except in respect of (i) accounts payable on ordinary terms
incurred in the ordinary course of the business activities permitted under this
Guaranty or (ii) Indebtedness permitted under SECTION 9.01 of the Credit
Agreement.
(d) INVESTMENTS. Directly or indirectly make or own any
Investments other than Investments in a Borrower or as otherwise permitted under
the Credit Agreement and Cash Equivalents in a Borrower and Treasury Notes
required pursuant to the Plan of Reorganization.
(e) ACCOMMODATION OBLIGATIONS. Directly or indirectly create
or become liable or be liable with respect to any Accommodation Obligation
except Accommodation Obligations (i) under the Tax Sharing Agreement, (ii) set
forth in the Plan of Reorganization and (iii) in respect of Indebtedness
permitted under SECTION 9.01 of the Credit Agreement and other Obligations
permitted under SECTION 9.05 of the Credit Agreement.
<PAGE>
(f) RESTRICTED JUNIOR PAYMENTS. Declare or make any
Restricted Payments other than (i) the payment of dividends to the holders of
the Preferred Stock so long as no Default or Event of Default has occurred and
is continuing prior to and after giving effect thereto and (ii) purchases of the
Capital Stock of Holdings to the extent permitted under SECTION 9.06(IV) AND
9.06(V) of the Credit Agreement.
(g) CONSTITUENT DOCUMENTS. Amend, modify or otherwise change
in any material respect any of the terms or provisions in any of its Constituent
Documents as in effect on the Closing Date without the prior written consent of
the Requisite Lenders, which consent shall not be unreasonably withheld.
(h) SUBSIDIARIES. Create, organize, incorporate or acquire
any Subsidiaries other than the Borrowers and any other Subsidiaries permitted
under SECTION 9.04(VII) of the Credit Agreement.
(i) RESTRICTIONS ON FUNDAMENTAL CHANGES. (a) Enter into any
merger or consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or substantially
all its business or Property, whether now or hereafter acquired or (b) enter
into any partnership or joint venture.
8. SETOFF. At any time after all or any part of the
Obligations have become due and payable (by acceleration or otherwise), the
Lenders, the Issuing Banks or the other Holders may, without notice to the
Guarantor and regardless of the acceptance of any security or collateral for the
payment hereof, appropriate and apply toward the payment of all or any part of
the Obligations owing to such Persons (i) any Indebtedness due or to become due
from the Lenders or the Issuing Banks to the Guarantor, and (ii) any moneys,
credits or other property belonging to the Guarantor, at any time held by or
coming into the possession of the Lenders or the Issuing Banks or their
respective affiliates.
9. FINANCIAL INFORMATION. The Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of the
Borrowers and any and all other endorsers and/or other guarantors of all or any
part of the Obligations, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations, or any part thereof, that diligent inquiry would
reveal, and the Guarantor hereby agrees that the Administrative Agent, the
Issuing Banks and the Lenders shall have no duty to advise the Guarantor of
information known to it regarding such condition or any circumstances. In the
event the Administrative Agent, any of the Issuing Banks or any of the Lenders,
in its sole discretion, undertakes at any time or from time to time to provide
any such information to the Guarantor, the Administrative Agent, such Issuing
Bank or such Lender shall be under no obligation (i) to undertake any
investigation not a part of its regular business routine, (ii) to disclose any
information which the Administrative Agent, such Issuing Bank or such Lender,
pursuant to accepted or reasonable commercial finance or banking practices,
wishes to maintain confidential or (iii) to make any other or future disclosures
of such information or any other information to the Guarantor.
<PAGE>
10. NO MARSHALLING; REINSTATEMENT. The Guarantor consents
and agrees that none of the Administrative Agent, any of the Issuing Banks or
any of the Lenders or any Person acting for or on behalf of the Administrative
Agent shall be under any obligation to marshall any assets in favor of the
Guarantor or against or in payment of any or all of the Obligations. The
Guarantor further agrees that, to the extent that the Borrower or any other
guarantor of all or any part of the Obligations makes a payment or payments to
the Administrative Agent, the Lenders or the Issuing Banks, or the
Administrative Agent, or any Lender or Issuing Bank receives any proceeds of
Collateral, which payment, payments or proceeds, or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a Borrower, the Guarantor, such other guarantor
or any other Person, or their respective estates, trustees, receivers or any
other party, including, without limitation, the Guarantor under any bankruptcy
law, state or federal law, common law or equitable cause, then, to the extent of
such payment or repayment, the part of the Obligations which has been paid,
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
11. SUBROGATION. Until the Obligations have been paid in
full, the Guarantor hereby agrees that it (i) shall have no right of subrogation
with respect to such Obligations (under contract, Section 509 of the Bankruptcy
Code or otherwise) or any other right of indemnity, reimbursement or
contribution, and (ii) hereby waives any right to enforce any remedy which the
Administrative Agent, any of the Lenders or any of the Issuing Banks now have or
may hereafter have against the Borrower, any endorser or any other guarantor of
all or any part of the Obligations or any other Person, and the Guarantor hereby
waives any benefit of, and any right to participate in, any security or
collateral given to the Administrative Agent, the Lenders and the Issuing Banks
to secure the payment or performance of all or any part of the Obligations or
any other liability of the Borrower to the Administrative Agent, the Lenders and
the Issuing Banks.
12. SUBORDINATION. The Guarantor agrees that any and all
claims of the Guarantor against the Borrowers, any endorser or other guarantor
of all or any part of the Obligations, or against any of their respective
properties, shall be subordinated to all of the Obligations. Notwithstanding any
right of the Guarantor to ask for, demand, sue for, take or receive any payment
from any Borrower, all rights and Liens of the Guarantor, whether now or
hereafter arising and howsoever existing, in any assets of the Borrowers
(whether constituting part of the Collateral or otherwise) shall be and hereby
are subordinated to the rights of the Administrative Agent, the Issuing Banks or
the Lenders in those assets. The Guarantor shall have no right to possession of
any such asset or to foreclose upon any such asset, whether by judicial action
or otherwise, unless and until all of the Obligations shall have been fully paid
and satisfied and all financing arrangements between the Borrowers and the
Lenders and the Issuing Banks have been terminated. If all or any part of the
assets of the Borrowers, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of the Borrower, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or
<PAGE>
proceeding, or if the business of any Borrower is dissolved or if substantially
all of the assets of any Borrower are sold, then, and in any such event, any
payment or distribution of any kind or character, either in cash, securities or
other property, which shall be payable or deliverable upon or with respect to
any Indebtedness of the Borrowers to the Guarantor ("Borrower Indebtedness")
shall be paid or delivered directly to the Lenders and the Issuing Banks for
application on the Obligations, due or to become due, until such Obligations
shall have first been fully paid and satisfied. The Guarantor irrevocably
authorizes and empowers the Administrative Agent and each of the Lenders and
each of the Issuing Banks to demand, sue for, collect and receive every such
payment or distribution and give acquittance therefor and to make and present
for and on behalf of the Guarantor such proofs of claim and take such other
action, in the Administrative Agent's, such Lender's or Issuing Bank's own name
or in the name of the Guarantor or otherwise, as the Administrative Agent, any
Lender or Issuing Bank may deem necessary or advisable for the enforcement of
this Guaranty. After the occurrence and during the continuance of an Event of
Default, each Lender and each Issuing Bank may vote, with respect to the
Obligations owed to it, such proofs of claim in any such proceeding, receive and
collect any and all dividends or other payments or disbursements made thereon in
whatever form the same may be paid or issued and apply the same on account of
any of the Obligations. After the occurrence and during the continuance of an
Event of Default, should any payment, distribution, security or instrument or
proceeds thereof be received by the Guarantor upon or with respect to the
Borrower Indebtedness prior to the satisfaction of all of the Obligations and
the termination of all financing arrangements between the Borrowers and the
Lenders and the Issuing Banks, the Guarantor shall receive and hold the same in
trust, as trustee, for the benefit of the Administrative Agent, the Issuing
Banks and the Lenders and shall forthwith deliver the same to the Administrative
Agent in precisely the form received (accompanied by the endorsement or
assignment of the Guarantor where necessary), for application to the
Obligations, due or not due, and, until so delivered, the same shall be held in
trust by the Guarantor as the property of the Administrative Agent, the Issuing
Banks and the Lenders. After the occurrence and during the continuance of an
Event of Default, if the Guarantor fails to make any such endorsement or
assignment to the Administrative Agent, the Issuing Banks or the Lenders, the
Administrative Agent, the Issuing Banks or the Lenders or any of its officers or
employees are hereby irrevocably authorized to make the same. The Guarantor
agrees that until the Obligations have been paid in full in cash and the Credit
Agreement and the Commitments have been terminated, the Guarantor will not
assign or transfer to any Person (other than to the Administrative Agent or any
Borrower) any claim the Guarantor has or may have against any of the Borrowers.
13. ENFORCEMENT; AMENDMENTS; WAIVERS. No delay on the part
of the Administrative Agent, any of the Issuing Banks or any of the Lenders in
the exercise of any right or remedy arising under this Guaranty, the Credit
Agreement, any of the other Loan Documents or otherwise with respect to all or
any part of the Obligations, the Collateral or any other guaranty of or security
for all or any part of the Obligations shall operate as a waiver thereof, and no
single or partial exercise by the Administrative Agent, any of the Issuing Banks
or any of the Lenders of any such right or remedy shall preclude any further
exercise thereof. No modification or waiver of any of the provisions of this
Guaranty shall be binding upon the Administrative Agent, any of the Issuing
Banks or any of the Lenders, except as expressly set forth in a writing
<PAGE>
duly signed and delivered by the Administrative Agent. Failure by the
Administrative Agent, or any of the Lenders at any time or times hereafter to
require strict performance by the Borrowers, any other guarantor of all or any
part of the Obligations or any other Person of any of the provisions,
warranties, terms and conditions contained in any of the Loan Documents now or
at any time or times hereafter executed by such Persons and delivered to the
Administrative Agent, any of the Issuing Banks or any of the Lenders shall not
waive, affect or diminish any right of the Administrative Agent, any of the
Issuing Banks or any of the Lenders at any time or times hereafter to demand
strict performance thereof and such right shall not be deemed to have been
waived by any act or knowledge of the Administrative Agent, any of the Issuing
Banks or any of the Lenders, or its agents, officers or employees, unless such
waiver is contained in an instrument in writing, directed and delivered to the
Borrower or the Guarantor, as applicable, specifying such waiver, and is signed
by the Administrative Agent. No waiver of any Event of Default by the Lenders
shall operate as a waiver of any other Event of Default or the same Event of
Default on a future occasion, and no action by the Administrative Agent, any of
the Issuing Banks or any of the Lenders permitted hereunder shall in any way
affect or impair the Administrative Agent's, any Issuing Bank's or any Lender's
rights and remedies or the obligations of the Guarantor under this Guaranty. Any
determination by a court of competent jurisdiction of the amount of any
principal and/or interest owing by the Borrower to the Administrative Agent, the
Lenders and the Issuing Banks shall be conclusive and binding on the Guarantor
irrespective of whether the Guarantor was a party to the suit or action in which
such determination was made.
14. EFFECTIVENESS; TERMINATION. This Guaranty shall become
effective against the Guarantor upon its execution by the Guarantor and shall
continue in full force and effect and may not be terminated or otherwise revoked
until the Obligations shall have been fully paid and discharged and the
Commitments shall have been terminated. If, notwithstanding the foregoing, the
Guarantor shall have any right under applicable law to terminate or revoke its
obligations under this Guaranty, the Guarantor agrees that such termination or
revocation shall not be effective until a written notice of such revocation or
termination, specifically referring hereto, signed by the Guarantor, is received
by the Administrative Agent. Such notice shall not affect the right and power of
the Administrative Agent, any of the Issuing Banks or any of the Lenders to
enforce rights arising prior to receipt thereof by the Administrative Agent, the
Issuing Banks and the Lenders. If any of the Lenders or Issuing Banks grants
loans or takes other action after the Guarantor terminates or revokes its
obligations under this Guaranty but before the Administrative Agent receives
such written notice, the rights of such Lender or such Issuing Bank with respect
thereto shall be the same as if such termination or revocation had not occurred.
15. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding
upon the Guarantor and upon the successors and permitted assigns of the
Guarantor and shall inure to the benefit of the Administrative Agent, the
Issuing Banks and the Lenders and their respective successors and permitted
assigns; all references herein to the Borrowers and to the Guarantor shall be
deemed to include their respective successors and permitted assigns. The
successors and permitted assigns of the Guarantor and the Borrowers shall
include, without limitation, their respective receivers, trustees or
debtors-in-possession. All references to the singular shall be deemed to include
the plural where the context so requires.
<PAGE>
16. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED AND
ENFORCED AND THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED IN ALL
RESPECTS IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. CERTAIN CONSENTS AND WAIVERS.
(A) PERSONAL JURISDICTION. (I) EACH OF THE ADMINISTRATIVE
AGENT, AND THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION
OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS GUARANTY OR THE OTHER LOAN
DOCUMENTS, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE ADMINISTRATIVE AGENT
AND THE GUARANTOR AGREES THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE GUARANTOR
WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT CONSIDERING THE DISPUTE.
(II) THE GUARANTOR AGREES THAT THE ADMINISTRATIVE AGENT SHALL
HAVE THE RIGHT TO PROCEED AGAINST SUCH PERSON OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE GUARANTEED
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY LENDER. THE GUARANTOR WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY LENDER MAY COMMENCE A PROCEEDING
DESCRIBED IN THIS SECTION.
(B) SERVICE OF PROCESS. THE GUARANTOR IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF
<PAGE>
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE GUARANTOR'S NOTICE
ADDRESS SPECIFIED PURSUANT TO SECTION 20, SUCH SERVICE TO BECOME EFFECTIVE FIVE
(5) DAYS AFTER SUCH MAILING. THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST THE
GUARANTOR IN THE COURTS OF ANY ISSUING BANK OR ANY LENDER OTHER JURISDICTION.
(C) WAIVER OF JURY TRIAL. EACH OF THE ADMINISTRATIVE AGENT
AND THE GUARANTOR WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG ANY OF THE ADMINISTRATIVE AGENT,
THE ISSUING BANKS, THE LENDERS OR THE GUARANTOR ARISING OUT OF OR RELATED TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT. ANY SUCH PERSON MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
18. WAIVER OF BOND. The Guarantor waives the posting of any
bond otherwise required of the Administrative Agent in connection with any
judicial process or proceeding to realize on the Collateral or any other
security for the Obligations, to enforce any judgment or other court order
entered in favor of the Administrative Agent, or to enforce by specific
performance, temporary restraining order, or preliminary or permanent
injunction, this Guaranty or any other agreement or document between the
Administrative Agent, and the Guarantor.
19. ADVICE OF COUNSEL. The Guarantor represents and warrants
to the Administrative Agent that it has discussed this Guaranty and,
specifically, the provisions of SECTIONS 16 through 18 hereof, with the
Guarantor's lawyers.
20. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered to the attention of
Holdings, c/o Barney's, Inc., at the address as provided in Section 13.08 of the
Credit Agreement.
21. SEVERABILITY. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of
<PAGE>
such provision or the remaining provisions of this Guaranty.
22. COLLATERAL. The Guarantor hereby acknowledges and agrees
that its obligations under this Guaranty are secured pursuant to the terms and
provisions of the applicable Loan Documents to which it is a party.
23. MERGER. This Guaranty represents the final agreement of
the Guarantor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, subsequent oral
agreements, between the Guarantor and the Administrative Agent.
24. EXECUTION IN COUNTERPARTS. This Guaranty may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed as of
the day and year first set forth above.
BARNEYS NEW YORK, INC.
By /s/ Edward Lambert
--------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
Acknowledged and agreed to
as of the 28th day of January, 1999
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
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Name: Brenda Cotsen
Title: Vice President
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Exhibit 10.4
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among BARNEYS NEW YORK, INC. (with its successors and permitted
assigns, the "Grantor"), and CITICORP USA, INC., in its capacity as
administrative agent (with its successors in such capacity, the "Administrative
Agent") for the Lenders (as defined below) and the Issuing Banks (as defined
below) under that certain Credit Agreement dated as of January 28, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Barney's, Inc., Barneys America, Inc., PFP Fashions
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively, the "Borrowers"), the Administrative Agent, the lenders from time
to time a party thereto (the "Lenders"), the issuing banks from time to time a
party thereto (the "Issuing Banks") and General Electric Capital Corporation, in
its capacity as documentation agent (in such capacity, the "Documentation
Agent") . Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
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WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the
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State of New York are used herein as defined therein.
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable
and other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any letters of credit, indemnity,
warranty or guaranty payable to the Grantor from time to time with
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respect to the foregoing or proceeds of any insurance policies on which the
Grantor is named as beneficiary, claims against third parties for advances and
other financial accommodations and any other obligations whatsoever owing to the
Grantor, contract rights, customer and supplier contracts, rights in and to all
security agreements, security interests or other security held by the Grantor to
secure payment of the Grantor's accounts, all right, title and interest under
leases, subleases, and concessions and other agreements relating to personal
property (including, without limitation, all rents, issues and profits related
thereto), rights in and under guarantees, instruments, securities, documents of
title and other contracts securing, evidencing, supporting or otherwise relating
to any of the foregoing, together with all rights in any goods, merchandise or
Inventory (as defined below) which any of the foregoing may represent
(collectively, "General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code), all
bills of lading, warehouse receipts and other documents of title and documents,
in each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in
Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody,
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pledge, transmission, collection or otherwise), including, without limitation,
(i) notes, drafts, letters of credit, stocks, bonds, and debt and equity
securities, whether or not certificated, and warrants, options, puts and calls
and other rights to acquire or otherwise relating to the same (in each case only
to the extent not otherwise constituting Investment Property); (ii) money; (iii)
proceeds of loans, including without limitation, all the Loans made to the
Grantor under the Credit Agreement; and (iv) insurance proceeds and books and
records relating to any of the property covered by this Agreement (collectively,
"Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or obligation or applicable law,
rule or regulation, shall the Administrative Agent, Lender
<PAGE>
or Issuer be permitted), in any manner, to (a) perform or fulfill any of the
obligations of the Grantor thereunder or pursuant thereto, (b) make any payment,
or make any inquiry as to the nature or the sufficiency of any payment received
by the Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to the Grantor, on which the Grantor has
been granted a Lien to which the Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified in
SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making all
filings under the Uniform Commercial Code necessary or appropriate to
preserve the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all filings
reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security
interests described herein. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and
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clear of all Liens, except as permitted under SECTION 9.03 of the Credit
Agreement. The Grantor has not, during the five (5) years preceding the
date hereof, been known as or used any other corporate or fictitious name,
except as disclosed on SCHEDULE 3 hereto, nor acquired all or
substantially all the assets, capital stock or operating unit of any
Person, except as disclosed on SCHEDULE 3 hereto and each predecessor in
interest of the Grantor during the five (5) years preceding the Closing
Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Administrative
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on SCHEDULES
1 AND 2 hereto, the Administrative Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created hereby,
except for the Uniform Commercial Code filings referred to in clause (d)
(and except for the filings with the United States Patent and Trademark
Office and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative Agent's
security interest) or (ii) for the exercise by the Administrative Agent of
its rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect and
protect any Lien granted or purported to be granted hereby or to enable
the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative
Agent, mark conspicuously each item of chattel paper included in the
Collateral and each related contract and each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to the
Administrative Agent, indicating that such document, chattel paper,
related contract or Collateral is
<PAGE>
subject to the security interest granted hereby; (ii) if any Collateral
shall be evidenced by a promissory note or other instrument (other than
checks or drafts received in the ordinary course of the Grantor's
business), deliver and pledge to the Administrative Agent hereunder such
note or instrument duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Administrative Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such
other instruments or notices as the Administrative Agent may request, as
may be necessary or desirable, in order to perfect and preserve the
security interest granted or purported to be granted hereby. The Grantor
hereby authorizes the Administrative Agent to file any such financing or
continuation statements without the signature of the Grantor to the extent
permitted by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security Agreement
or of a financing statement is sufficient as a financing statement to the
extent permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or
in the possession and control of subcontractors of the Grantor and
vehicles) at the places specified in SCHEDULE 1 hereto and deliver written
notice to the Administrative Agent at least 30 days prior to establishing
any other location at which it reasonably expects to maintain Inventory
and/or Equipment (it being understood and agreed that all action required
by SECTION 5(A) hereof shall have been taken in the relevant jurisdiction
with respect to all such Equipment and/or Inventory prior to the
establishment of any such location). Upon the establishment of any such
location, and after notice thereof to the Administrative Agent as required
in the preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the Administrative
Agent or the Grantor and the Grantor hereby authorizes the Administrative
Agent to substitute a new SCHEDULE 1 hereto to reflect such additional
location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the Administrative
Agent's security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or the Administrative Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Administrative Agent or the Administrative Agent's designated
representative, copies of any such books and records (including, without
limitation, any and all computer tapes, programs and source codes relating
to the Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent
<PAGE>
under any Account comprising part of the Collateral, the Grantor will
save, indemnify and keep the Administrative Agent, each Lender and each
Issuing Bank harmless from and against all expense, loss or damages
suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the obligor thereunder, arising out
of a breach by the Grantor of any obligation or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of
such obligor or its successors from the Grantor, and all such obligations
of the Grantor shall be and shall remain enforceable against and only
against the Grantor and shall not be enforceable against the
Administrative Agent, any Lender or any Issuing Bank; PROVIDED, HOWEVER,
the Grantor shall have no obligation to the Administrative Agent with
respect to the matters indemnified pursuant to this subsection (d)
resulting from the willful misconduct or gross negligence of the
Administrative Agent, any Lender or an Issuing Bank as determined in a
final non-appealable judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend the
right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Grantor will not, without the Administrative Agent's prior
written consent, except in the ordinary course of business and for amounts
which are not material to the Barneys Group, taken as a whole in the
aggregate, (i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less than the
full amount thereof; (ii) release, wholly or partly, any Person liable for
the payment thereof; or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Administrative Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6,
the Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to
<PAGE>
enforce collection of the Accounts; PROVIDED, HOWEVER, that the Administrative
Agent shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default, to require the Grantor to notify the account
debtors or obligors under any Accounts of the assignment of such Accounts to the
Administrative Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to the Grantor thereunder directly
to the Administrative Agent and, upon such notification and at the expense of
the Grantor, to enforce collection of any such Accounts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Administrative Agent referred to in the proviso to the preceding
sentence, all amounts and proceeds (including instruments) received by the
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied to the Obligations in accordance
with the Credit Agreement (including, without limitation, SECTION 3.02(B)(II)
thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent, promptly
assemble all, or such part, of the Collateral as directed by the
Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without
charge or liability to the Administrative Agent, seize and remove such
Collateral and such books and records from such premises, or remain upon
such premises and use the same for the purpose of enforcing any and all
rights and remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of all
or any part of the Collateral in
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one or more parcels, at public or private sale or sales, at any exchange,
broker's board or at any of the Administrative Agent's offices or
elsewhere, at such prices as the Administrative Agent may deem best, for
cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable; PROVIDED, HOWEVER,
that the Grantor shall not be credited with the net proceeds of any such
credit sale, future delivery or lease of the Collateral until the cash
proceeds thereof are actually received by the Administrative Agent. The
Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) Business Days' notice, or such longer period as may
be required by law, to the Grantor of the time and place of any public
sale, or the time after which any private sale is to be made, shall
constitute reasonable notification. No notification required by law need
be given to the Grantor if the Grantor has signed, after the occurrence of
an Event of Default, a statement renouncing any right to notification of
sale or other intended disposition. The Administrative Agent shall not be
obligated to make any sale of any of the Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. The Administrative Agent, any
Lender and any of the Issuing Banks shall have the right upon any such
public sale or sales and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Grantor, which
right or equity is hereby expressly waived and released. In the event of a
sale of any Collateral, or any part thereof, to a Lender, an Issuing Bank,
or the Administrative Agent upon the occurrence and during the continuance
of an Event of Default, such Lender, Issuing Bank, or the Administrative
Agent shall not deduct or offset from any part of the purchase price to be
paid therefor any indebtedness owing to it by the Grantor. Any and all
proceeds received by the Administrative Agent with respect to any sale of,
collection from or other realization upon all or any part of the
Collateral, whether consisting of monies, checks, notes, drafts, bills of
exchange, money orders or commercial paper of any kind whatsoever, shall
be held by the Administrative Agent and distributed by the Administrative
Agent in accordance with the Credit Agreement (including, without
limitation, SECTION 3.02(B)(II) thereof) and the Grantor shall remain
liable for any deficiency following the sale of the Collateral. Subject to
the terms of any applicable license agreement to which the Grantor is a
party, the Administrative Agent is hereby granted an irrevocable license
or other right to use, without charge, the Grantor's labels, copyrights,
patents, rights of use of any name, trade names, general intangibles,
trademarks and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands against the Administrative Agent, any Lender or
any Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the
<PAGE>
Administrative Agent.
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative Agent and
promptly
<PAGE>
following such request, to take any action and execute any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Security Agreement. The Grantor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or Administrative Agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of the Grantor, or in
its own name, from time to time in the Administrative Agent's discretion upon
the occurrence and during the continuance of an Event of Default, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes hereof and,
without limiting the generality of the foregoing, hereby gives the
Administrative Agent the power and right on behalf of the Grantor, without
notice to or assent by the Grantor, to the extent permitted by applicable law,
to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Grantor, at any time or from time to time, all acts and things which
the Administrative Agent deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement is
held to be prohibited or unenforceable in any jurisdiction the substantive laws
of which are held to be applicable hereto, such prohibition or unenforceability
shall not affect the validity or enforceability of the remaining provisions
hereof and shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any
<PAGE>
departure by the Grantor herefrom shall be effective, except by or pursuant to
an instrument in writing which (i) is duly executed by the Grantor (if the
Grantor is adversely affected by such amendment) and the Administrative Agent
and (ii) complies with the requirements of the Credit Agreement. Any such waiver
shall be valid only to the extent set forth therein. A waiver by the
Administrative Agent of any right or remedy under this Security Agreement on any
one occasion shall not be construed as a waiver of any right or remedy which the
Administrative Agent would otherwise have on any future occasion. No failure to
exercise or delay in exercising any right, power or privilege under this
Security Agreement on the part of the Administrative Agent shall operate as a
waiver thereof; and no single or partial exercise of any right, power or
privilege under this Security Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL.
(a) The security interest granted by the Grantor under this Security Agreement
shall terminate against all the Collateral upon final payment in full in cash of
the Obligations and termination of the Commitments. Upon such termination and at
the written request of the Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Administrative
Agent shall execute in a timely manner a satisfaction of this Security Agreement
and such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be
<PAGE>
necessary to release the Liens granted hereunder; PROVIDED, HOWEVER, that (i)
the Administrative Agent shall not be required to execute any such documents on
terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN
OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Security Agreement. The Administrative Agent
<PAGE>
shall have the right to proceed against the Grantor or its personal property in
a court in any location to enable the Administrative Agent to obtain personal
jurisdiction over the Grantor, to realize on the Collateral or any other
security for the Liabilities or to enforce a judgment or other court order
entered in favor of the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to the
Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 18, 21, 22
and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time and
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all the
other Loan Documents, embodies the entire agreement and understanding, between
the Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BARNEYS NEW YORK, INC.
By /s/ Edward Lambert
-------------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
-------------------------------------
Name: Brenda Cotsen
Title: Vice President
<PAGE>
Exhibit 10.5
EXECUTION COPY
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated as of January 28,
1999, is executed by and between BARNEYS NEW YORK, INC. (the "Pledgor"), and
CITICORP USA, INC., as "Administrative Agent" for itself and for the "Lenders"
and the "Issuing Banks" under the Credit Agreement defined below. Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to such terms in the "Credit Agreement" (as defined below).
WITNESSETH:
(1) Barney's, Inc., Barneys America, Inc., PFP Fashions Inc.,
Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively the "Borrowers") have entered into the Credit Agreement dated as
of even date herewith with the financial institutions a party thereto as lenders
(the "Lenders"), the financial institutions a party thereto as issuing banks
(the "Issuing Banks"), Citicorp USA, Inc., as administrative agent (the
"Administrative Agent") for the Lenders and the Issuing Banks and General
Electric Capital Corporation as documentation agent (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
pursuant to which the Lenders and the Issuing Banks have agreed, subject to
certain conditions precedent, to make loans and other financial accommodations
to the Borrowers from time to time;
(2) The Pledgor owns the issued and outstanding equity interests
(the "Equity Interests") set forth on EXHIBIT A attached hereto and made a part
hereof; and
(3) The Administrative Agent, the Lenders and the Issuing Banks have
required, as a condition to their entering into the Credit Agreement, that the
Pledgor execute and deliver this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrowers pursuant to the Credit Agreement or
any other agreement, instrument or document executed pursuant to or in
connection therewith, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor and the
Administrative Agent hereby agree as follows:
1. PLEDGE. The Pledgor hereby pledges to the Administrative
Agent, for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders, and grants to the Administrative Agent for the
benefit of the Administrative Agent, the Lenders, the
<PAGE>
Issuing Banks and the other Holders, a security interest in, the following
(collectively, the "Pledged Collateral"):
(a) All of the right, title and interest of the Pledgor in the
Equity Interests, whether now existing or hereafter arising, and the
certificates representing the shares of such capital stock (such
now-existing shares being identified on EXHIBIT A attached hereto and made
a part hereof), all options and warrants for the purchase of additional
equity interests now or hereafter held in the name of the Pledgor (all of
said Equity Interests, options and warrants and all capital stock held in
the name of the Pledgor as a result of the exercise of such options or
warrants being hereinafter collectively referred to as the "Pledged
Stock"), herewith delivered to the Administrative Agent accompanied by
stock powers in the form of EXHIBIT B attached hereto and made a part
hereof duly executed in blank, and all dividends, distributions, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
Pledged Stock;
(b) All additional equity interests from time to time acquired by
the Pledgor in any manner, and the certificates representing such
additional equity interests (any such additional equity interests shall
constitute part of the Pledged Stock and the Administrative Agent is
irrevocably authorized to amend EXHIBIT A from time to time to reflect
such additional equity interests), and all options, warrants, dividends,
distributions, cash, instruments and other rights and options from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such equity interests;
(c) The property and interests in property described in SECTION 4
below; and
(d) All proceeds of the foregoing.
2. SECURITY FOR LIABILITIES. The Pledged Collateral secures the
prompt payment, performance and observance of (i) all Obligations and (ii) all
obligations of Pledgor under this Agreement (all such obligations referred to in
clauses (i) and (ii) now or hereafter existing being hereinafter collectively
referred to as the "Liabilities").
3. DELIVERY OF PLEDGED COLLATERAL; REGISTRATION AND
ACKNOWLEDGMENTS. All certificates or instruments representing or evidencing the
Pledged Collateral, if any, shall be delivered to and held by or on behalf of
the Administrative Agent pursuant hereto and shall be in suitable form for
transfer by delivery and shall be accompanied by duly executed instruments of
transfer, powers, or assignments in blank as appropriate (such instruments of
transfer, powers, or assignments in blank, being the "Powers"), all in form and
substance satisfactory to the Administrative Agent. After the occurrence and
during the continuance of an Event of Default, the Administrative Agent shall
have the right, at any time in its discretion and without notice to the Pledgor,
to transfer to or to register in the name of the Administrative Agent or any of
its nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in SECTIONS 7
<PAGE>
AND 8. In addition, the Administrative Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
4. PLEDGED COLLATERAL ADJUSTMENTS. If, during the term of this
Agreement:
(a) Any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of any issuer of the
Pledged Stock, or any option included within the Pledged Collateral is
exercised, or both, or
(b) Any subscription warrants, shares, or any other rights or
options shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants, shares, rights,
options or other securities, issued by reason of any of the foregoing, shall be
immediately delivered to and held by the Administrative Agent under the terms of
this Agreement and shall constitute Pledged Collateral hereunder; PROVIDED,
HOWEVER, that nothing contained in this SECTION 4 shall be deemed to permit any
distribution, issuance of additional shares, warrants, shares, rights or
options, reclassification, readjustment or other change in the capital structure
which is not expressly permitted in the Credit Agreement nor to prohibit any
such distribution, issuance of additional equity interests, warrants, shares,
rights or options, reclassification, readjustment or other change in the capital
structure of such issuer which is expressly permitted in the Credit Agreement.
5. SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. The Pledgor
represents and warrants that it has made its own arrangements for keeping itself
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of distributions, reorganization or other exchanges, offers to purchase and
voting rights), and the Pledgor agrees that none of the Administrative Agent,
any of the Lenders or any Issuing Banks shall have any obligation to inform the
Pledgor of any such changes or potential changes or to take any action or omit
to take any action with respect thereto. The Administrative Agent may, after the
occurrence and during the continuance of an Event of Default, without notice and
at its option, transfer or register the Pledged Collateral or any part thereof
into its or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of the
Equity Interests as set forth on Exhibit A attached hereto and made a part
hereof, free and clear of any Lien except for the security interest
created by this Agreement;
(b) The Pledgor has full power and authority to enter into this
Agreement;
<PAGE>
(c) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral except
pursuant to the Securities Act;
(d) The Pledgor has the right to vote, pledge, assign and grant a
security interest in or otherwise transfer such Pledged Collateral free of
any Liens, except as set forth in paragraph (c) above;
(e) No authorization, approval, or other action by, and no notice
to or filing with, any Governmental Authority is required either (i) for
the pledge of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor or
(ii) for the exercise by the Administrative Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required
in connection with such disposition by laws affecting the offering and
sale of securities generally);
(f) The pledge of the Pledged Collateral pursuant to this
Agreement, together with the delivery of the stock certificates pertaining
thereto to the Administrative Agent, creates a valid and perfected first
priority security interest in the Pledged Collateral, in favor of the
Administrative Agent for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, securing the payment and
performance of the Liabilities;
(g) This Agreement has been duly executed and delivered by and on
behalf of Pledgor and constitutes the legal, valid and binding obligation
of the Pledgor, enforceable against the Pledgor in accordance with its
terms;
(h) There is no action, suit, proceeding, governmental
investigation or arbitration, at law or in equity, or before or by any
Governmental Authority, pending, or to the knowledge of the Pledgor,
threatened against the Pledgor or any of its property which will
materially and adversely affect the ability of the Pledgor to perform its
obligations under this Agreement;
(i) The Pledgor (i) is a corporation duly formed, validly existing
and in good standing and is duly qualified to do business under the laws
of the State of its incorporation and (ii) has all requisite corporate
power and authority to own, operate and encumber its property and assets
and to conduct its business as presently conducted and as proposed to be
conducted in connection with and following the consummation of the
transactions contemplated by this Agreement, the Credit Agreement or any
of the other Loan Documents;
(j) The execution, delivery and performance of this Agreement by
the Pledgor (i) does not violate any indenture, mortgage, or any other
agreement to which the Pledgor is a party or by which any of its
properties or assets may be bound; (ii) complies with all
<PAGE>
corporate organization documents of the Pledgor; and (iii) does not
violate any restriction on such transfer or encumbrance of the Pledged
Collateral; and
(k) The Powers are effective endorsements duly executed by an
appropriate person and give the Administrative Agent the authority they
purport to confer.
7. VOTING RIGHTS. During the term of this Agreement, and except
as provided in this SECTION 7 below, the Pledgor shall have the right to vote
the Pledged Stock on all corporate questions in a manner not inconsistent with
the terms of this Agreement, the Credit Agreement and the other Loan Documents.
After the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall, at the Administrative Agent's option and following
written notice from the Administrative Agent to the Pledgor, exercise all voting
rights pertaining to the Pledged Collateral, including the right to take action
by shareholder consent.
8. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and
all dividends, interest and distributions paid in respect of the Pledged
Collateral, notwithstanding such dividends, interest and distributions
being subject to the pledge and assignment thereof pursuant to SECTION 1;
PROVIDED, HOWEVER, that any and all
(A) dividends, interest and distributions paid or payable
other than in cash with respect to, and instruments and other
property received, receivable or otherwise distributed with respect
to, or in exchange for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in
cash with respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect
to principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the
Administrative Agent to hold, for the benefit of the Administrative Agent,
the Lenders, the Issuing Banks and the other Holders, as Pledged
Collateral and shall, if received by the Pledgor, be received in trust for
the Administrative Agent, for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, be segregated from the
other property or funds of the Pledgor, and be delivered immediately to
the Administrative Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement); and
<PAGE>
(ii) The Administrative Agent shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the dividends or interest payments which
it is authorized to receive and retain pursuant to clause (i) above.
(b) After the occurrence and during the continuation of an Event
of Default:
(i) All rights of the Pledgor to receive the dividends, interest
payments and other distributions which it would otherwise be authorized to
receive and retain pursuant to SECTION 8(A)(I) hereof shall cease, and all
such rights shall thereupon become vested in the Administrative Agent, for
the benefit of the Administrative Agent, the Lenders, the Issuing Banks
and the other Holders, which shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends, interest payments
and other distributions;
(ii) All dividends, interest payments and other distributions which
are received by the Pledgor contrary to the provisions of clause (i) of
this SECTION 8(B) shall be received in trust for the Administrative Agent,
for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders, shall be segregated from other funds of the
Pledgor and shall be paid over immediately to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsements);
(iii) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, execute and deliver, and
cause the issuer of the Pledged Stock (other than Barneys Japan Company
Limited) and its officers and directors to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of the Administrative
Agent, the Pledgor or its or their counsel, advisable to register the
applicable Pledged Collateral under the provisions of the Securities Act,
and to exercise its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Administrative Agent, the Pledgor or its or
their counsel, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Commission applicable thereto;
(iv) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at Pledgor's expense, use its best efforts to
qualify the Pledged Collateral under state securities or "Blue Sky" laws
and to obtain all necessary governmental approvals for the sale of the
Pledged Collateral, as requested by the Administrative Agent;
(v) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, cause the issuers of the
Pledged Stock to make available to the holders of its securities, as soon
as practicable, earnings statements which will satisfy the
<PAGE>
provisions of Section 11(a) of the Securities Act; and
(vi) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, do or cause to be done all
such other acts and things as may be necessary to make such sale of the
Pledged Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Pledgor will reimburse the Administrative Agent for all expenses incurred by
the Administrative Agent, including, without limitation, reasonable attorneys'
and accountants' fees and expenses in connection with the foregoing. Upon or at
any time after the occurrence and during the continuation of an Event of
Default, if the Administrative Agent determines that, prior to any public
offering of any securities constituting part of the Pledged Collateral, such
securities should be registered under the Securities Act and/or registered or
qualified under any other federal or state law and such registration and/or
qualification is not practicable, then the Pledgor agrees that it will be
commercially reasonable if a private sale, upon at least ten (10) Business Days'
notice to the Pledgor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less than prices which could have been obtained for such security
on any market or exchange or in any other public sale.
9. TRANSFERS AND OTHER LIENS. Other than as permitted under the
Credit Agreement, the Pledgor agrees that it will not (i) sell, transfer or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Administrative Agent, or
(ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral (except for the security interest under this Agreement).
10. REMEDIES. (a) The Administrative Agent shall have, in addition
to any other rights given under this Agreement or by law, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the
Uniform Commercial Code as in effect in the State of New York. In addition,
after the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged Collateral or any part
thereof which shall then be in or shall thereafter come into the possession or
custody of the Administrative Agent or which the Administrative Agent shall
otherwise have the ability to transfer under applicable law, the Administrative
Agent may, in its sole discretion, without notice except as specified below,
after the occurrence and during the continuation of an Event of Default, sell or
cause the same to be sold at any exchange, broker's board or at public or
private sale, in one or more sales or lots, at such price as the Administrative
Agent may deem best, for cash or on credit or for future delivery, without
assumption of any credit risk, and the purchaser of any or all of the Pledged
Collateral so sold shall thereafter own the same, absolutely free from any
claim, encumbrance or right of any kind whatsoever. The Administrative Agent,
any Lender or any Issuing Banks may, in its own name, or in the name of a
designee or nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at any private sale. The
Pledgor will pay to the Administrative Agent all reasonable expenses (including,
without limitation, court costs
<PAGE>
and reasonable attorneys, and paralegals' fees and expenses) of, or incident to,
the enforcement of any of the provisions hereof. The Administrative Agent agrees
to distribute any proceeds of the sale of the Pledged Collateral in accordance
with the Credit Agreement and the Pledgor shall remain liable for any deficiency
following the sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Administrative Agent will give the Pledgor reasonable notice of the time and
place of any public sale thereof, or of the time after which any private sale or
other intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Notwithstanding any provision to the
contrary contained herein, the Pledgor agrees that any requirements of
reasonable notice shall be met if such notice is received by the Pledgor as
provided in SECTION 25 below at least ten (10) Business Days before the time of
the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgor agrees that
after the occurrence and during the continuation of an Event of Default, the
Administrative Agent may, from time to time, attempt to sell all or any part of
the Pledged Collateral by means of a private placement restricting the bidders
and prospective purchasers to those who are qualified and will represent and
agree that they are purchasing for investment only and not for distribution. In
so doing, the Administrative Agent may solicit offers to buy the Pledged
Collateral, or any part of it, from a limited number of investors deemed by the
Administrative Agent, in its reasonable judgment, to be financially responsible
parties who might be interested in purchasing the Pledged Collateral. If the
Administrative Agent solicits such offers from not less than four (4) such
investors, then the acceptance by the Administrative Agent of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposing of such Pledged Collateral; provided, however, that this Section does
not impose a requirement that the Administrative Agent solicit offers from four
or more investors in order for the sale to be commercially reasonable.
11. SECURITY INTEREST ABSOLUTE. All rights of the Administrative
Agent and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(i) Any lack of validity or enforceability of the Credit
Agreement, the Loan Documents, or any other agreement or instrument
relating thereto;
(ii) Any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Liabilities, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement or the other Loan Documents;
<PAGE>
(iii) Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the Liabilities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Agreement.
12. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Administrative Agent its attorney-in-fact, with full
authority, in the name of the Pledgor or otherwise, after the occurrence and
during the continuation of an Event of Default, from time to time in the
Administrative Agent's sole discretion, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor
representing any dividend, interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same and to arrange for the transfer of all or any part of the Pledged
Collateral on the books of the issuers of the Pledged Stock to the name of the
Administrative Agent or the Administrative Agent's nominee.
13. WAIVERS. The Pledgor waives to the fullest extent permitted by
applicable laws presentment and demand for payment of any of the Liabilities,
protest and notice of dishonor or Event of Default with respect to any of the
Liabilities and all other notices to which the Pledgor might otherwise be
entitled except as otherwise expressly provided herein or in the Credit
Agreement.
14. TERM. This Agreement shall remain in full force and effect
until the final payment in full, in cash, of the Liabilities, the Commitment
Termination Date has occurred and the Credit Agreement has terminated pursuant
to its terms. Upon the termination of this Agreement as provided above (other
than as a result of the sale of the Pledged Collateral), the Administrative
Agent will release the security interest created hereunder and, if it then has
possession of any Pledged Stock, will deliver any Pledged Stock previously
delivered to it and the Powers to the Pledgor.
15. DEFINITIONS. The singular shall include the plural and vice
versa and any gender shall include any other gender as the context may require.
16. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon the Pledgor and its successors and assigns, and shall inure to
the benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, and their respective successors and assigns. Nothing set forth
herein or in any other Loan Document is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of
<PAGE>
this Agreement, the Credit Agreement or any other Loan Document or any
Collateral. The Pledgor's successors shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Pledgor.
17. GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED
BY THE PARTIES HERETO IN NEW YORK, NEW YORK. ANY DISPUTE BETWEEN THE
ADMINISTRATIVE AGENT AND THE PLEDGOR ARISING OUT OF OR RELATED TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. CONSENT TO JURISDICTION; AND SERIVE OF PROCESS. The Pledgor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Agreement. The Administrative Agent shall have the right to proceed against the
Pledgor or its personal property in a court in any location to enable the
Administrative Agent to obtain personal jurisdiction over the Pledgor, to
realize on the Pledged Collateral or any other security for the Liabilities or
to enforce a judgment or other court order entered in favor of the
Administrative Agent.
19. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE PLEDGOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EITHER THE PLEDGOR OR THE ADMINISTRATIVE AGENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
20. ADVICE OF COUNSEL. The Pledgor represents and warrants to the
Administrative Agent, the Lenders, the Issuing Banks and the other Holders that
it has discussed this Agreement and, specifically, the provisions of SECTIONS 17
through 20 hereof, with the Pledgor's lawyers.
21. SEVERABILITY. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
22. FURTHER ASSURANCES. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to
<PAGE>
exercise and enforce its rights and remedies hereunder with respect to any of
the Pledged Collateral.
23. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Pledged Collateral, except for those arising out
of or in connection with the Administrative Agent's (i) gross negligence or
willful misconduct, or (ii) failure to use reasonable care with respect to the
safe custody of the Pledged Collateral in the Administrative Agent's possession.
Without limiting the generality of the foregoing, the Administrative Agent shall
be under no obligation to take any steps necessary to preserve rights in the
Pledged Collateral against any other parties but may do so at its option. All
expenses incurred in connection therewith shall be for the sole account of the
Pledgor, and shall constitute part of the Liabilities secured hereby.
24. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
25. INDEMNITY AND EXPENSES. The Pledgor will upon demand pay to
the Administrative Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Administrative Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of the Administrative Agent hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
26. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Pledgor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Pledgor and the Administrative Agent and (ii) complies with the requirements of
the Credit Agreement. Any such waiver shall be valid only to the extent set
forth therein. A waiver by the Administrative Agent of any right or remedy under
this Agreement on any one occasion shall not be construed as a waiver of any
right or remedy which the Administrative Agent would otherwise have on any
future occasion. No failure to exercise or delay in exercising any right, power
or privilege under this Agreement on the part of the Administrative Agent shall
operate as a waiver thereof; and no single or partial exercise of any right,
power or privilege under this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
27. SECTION HEADINGS: TERMS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof. Unless otherwise defined herein
or in the Credit Agreement, terms used in Article 8 and Article 9 of the Code
are used herein as therein defined.
<PAGE>
28. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
29. MERGER. This Agreement, taken together with all the other Loan
Documents, embodies the entire agreement and understanding, between the Pledgor
and the Administrative Agent, any Lender or any Issuing Banks and supersedes all
prior agreements and understandings, written and oral, relating to the subject
matter hereof.
30. TERMINATION; RELEASE OF COLLATERAL. Notwithstanding anything
in this Agreement to the contrary, the Pledgor may, to the extent permitted by
SECTION 9.02 of the Credit Agreement, sell, assign, transfer or otherwise
dispose of any Pledged Collateral. In addition, the Pledged Collateral shall be
subject to release in accordance with SECTION 12.09(C) of the Credit Agreement
(such Pledged Collateral and the Pledged Collateral referred to in the
immediately preceding sentence being the "Released Collateral"). The Liens under
this Agreement shall terminate with respect to the Released Collateral upon such
sale, transfer, assignment, disposition or release and upon the request of the
Pledgor, the Administrative Agent shall execute and deliver such instrument or
document as may be necessary to release the Liens granted hereunder; PROVIDED,
HOWEVER, that (i) the Administrative Agent shall not be required to execute any
such documents on terms which, in the Administrative Agent's opinion, would
expose the Administrative Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Liabilities or any Liens on (or obligations of the Pledgor in respect
of) all interests retained by the Pledgor, including without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
Pledged Collateral.
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Administrative Agent have
executed this Agreement as of the date set forth above.
BARNEYS NEW YORK, INC.
By: /s/ Edward Lambert
-------------------------------------
Title: Executive VP and CFO
----------------------------------
Acknowledged and agreed to
as of the date first written above.
CITICORP USA, INC., as Administrative Agent
By: /s/ Brenda Cotsen
---------------------------------
Vice President
<PAGE>
Exhibit 10.6
EXECUTION COPY
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated as of January 28,
1999, is executed by and between BARNEY'S, INC. (the "Pledgor"), and CITICORP
USA, INC., as "Administrative Agent" for itself and for the "Lenders" and the
"Issuing Banks" under the Credit Agreement defined below. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the "Credit Agreement" (as defined below).
WITNESSETH:
(1) Barney's, Inc., Barneys America, Inc., PFP Fashions Inc.,
Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively the "Borrowers") have entered into the Credit Agreement dated as
of even date herewith with the financial institutions a party thereto as lenders
(the "Lenders"), the financial institutions a party thereto as issuing banks
(the "Issuing Banks"), Citicorp USA, Inc., as administrative agent (the
"Administrative Agent") for the Lenders and the Issuing Banks and General
Electric Capital Corporation as documentation agent (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
pursuant to which the Lenders and the Issuing Banks have agreed, subject to
certain conditions precedent, to make loans and other financial accommodations
to the Borrowers from time to time;
(2) The Pledgor owns the issued and outstanding equity interests
(the "Equity Interests") set forth on EXHIBIT A attached hereto and made a part
hereof; and
(3) The Administrative Agent, the Lenders and the Issuing Banks
have required, as a condition to their entering into the Credit Agreement, that
the Pledgor execute and deliver this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrowers pursuant to the Credit Agreement or
any other agreement, instrument or document executed pursuant to or in
connection therewith, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor and the
Administrative Agent hereby agree as follows:
1. PLEDGE. The Pledgor hereby pledges to the Administrative
Agent, for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders, and grants to the Administrative Agent for the
benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, a security interest in, the following (collectively, the
<PAGE>
"Pledged Collateral"):
(a) All of the right, title and interest of the Pledgor in
the Equity Interests, whether now existing or hereafter arising, and
the certificates representing the shares of such capital stock (such
now-existing shares being identified on EXHIBIT A attached hereto
and made a part hereof), all options and warrants for the purchase
of additional equity interests now or hereafter held in the name of
the Pledgor (all of said Equity Interests, options and warrants and
all capital stock held in the name of the Pledgor as a result of the
exercise of such options or warrants being hereinafter collectively
referred to as the "Pledged Stock"), herewith delivered to the
Administrative Agent accompanied by stock powers in the form of
EXHIBIT B attached hereto and made a part hereof duly executed in
blank, and all dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of, or in exchange for, any or all of the
Pledged Stock;
(b) All additional equity interests from time to time
acquired by the Pledgor in any manner, and the certificates
representing such additional equity interests (any such additional
equity interests shall constitute part of the Pledged Stock and the
Administrative Agent is irrevocably authorized to amend EXHIBIT A
from time to time to reflect such additional equity interests), and
all options, warrants, dividends, distributions, cash, instruments
and other rights and options from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such equity interests;
(c) The property and interests in property described in
SECTION 4 below; and (d) All proceeds of the foregoing.
2. SECURITY FOR LIABILITIES. The Pledged Collateral secures the
prompt payment, performance and observance of (i) all Obligations and (ii) all
obligations of Pledgor under this Agreement (all such obligations referred to in
clauses (i) and (ii) now or hereafter existing being hereinafter collectively
referred to as the "Liabilities").
3. DELIVERY OF PLEDGED COLLATERAL; REGISTRATION AND
ACKNOWLEDGMENTS. All certificates or instruments representing or evidencing the
Pledged Collateral, if any, shall be delivered to and held by or on behalf of
the Administrative Agent pursuant hereto and shall be in suitable form for
transfer by delivery and shall be accompanied by duly executed instruments of
transfer, powers, or assignments in blank as appropriate (such instruments of
transfer, powers, or assignments in blank, being the "Powers"), all in form and
substance satisfactory to the Administrative Agent. After the occurrence and
during the continuance of an Event of Default, the Administrative Agent shall
have the right, at any time in its discretion and without notice to the Pledgor,
to transfer to or to register in the name of the Administrative Agent or any of
its nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in SECTIONS 7 AND 8. In addition, the Administrative Agent
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller
<PAGE>
or larger denominations.
4. PLEDGED COLLATERAL ADJUSTMENTS. If, during the term of this
Agreement:
(a) Any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of any issuer of
the Pledged Stock, or any option included within the Pledged
Collateral is exercised, or both, or
(b) Any subscription warrants, shares, or any other rights or
options shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants, shares, rights,
options or other securities, issued by reason of any of the foregoing, shall be
immediately delivered to and held by the Administrative Agent under the terms of
this Agreement and shall constitute Pledged Collateral hereunder; PROVIDED,
HOWEVER, that nothing contained in this SECTION 4 shall be deemed to permit any
distribution, issuance of additional shares, warrants, shares, rights or
options, reclassification, readjustment or other change in the capital structure
which is not expressly permitted in the Credit Agreement nor to prohibit any
such distribution, issuance of additional equity interests, warrants, shares,
rights or options, reclassification, readjustment or other change in the capital
structure of such issuer which is expressly permitted in the Credit Agreement.
5. SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. The Pledgor
represents and warrants that it has made its own arrangements for keeping itself
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of distributions, reorganization or other exchanges, offers to purchase and
voting rights), and the Pledgor agrees that none of the Administrative Agent,
any of the Lenders or any Issuing Banks shall have any obligation to inform the
Pledgor of any such changes or potential changes or to take any action or omit
to take any action with respect thereto. The Administrative Agent may, after the
occurrence and during the continuance of an Event of Default, without notice and
at its option, transfer or register the Pledged Collateral or any part thereof
into its or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of the
Equity Interests as set forth on Exhibit A attached hereto and made a part
hereof, free and clear of any Lien except for the security interest
created by this Agreement;
(b) The Pledgor has full power and authority to enter into this
Agreement;
(c) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral except
pursuant to (i) the Securities Act and (ii)
<PAGE>
the terms of the Option to Purchase Capital Stock of Barneys Japan Company
Limited, granted to Barney's, Inc., dated as of the date hereof;
(d) The Pledgor has the right to vote, pledge, assign and grant a
security interest in or otherwise transfer such Pledged Collateral free of
any Liens, except as set forth in paragraph (c) above;
(e) No authorization, approval, or other action by, and no notice
to or filing with, any Governmental Authority is required either (i) for
the pledge of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor or
(ii) for the exercise by the Administrative Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required
in connection with such disposition by laws affecting the offering and
sale of securities generally);
(f) The pledge of the Pledged Collateral pursuant to this
Agreement, together with the delivery of the stock certificates pertaining
thereto to the Administrative Agent, creates a valid and perfected first
priority security interest in the Pledged Collateral, in favor of the
Administrative Agent for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, securing the payment and
performance of the Liabilities;
(g) This Agreement has been duly executed and delivered by and on
behalf of Pledgor and constitutes the legal, valid and binding obligation
of the Pledgor, enforceable against the Pledgor in accordance with its
terms;
(h) There is no action, suit, proceeding, governmental
investigation or arbitration, at law or in equity, or before or by any
Governmental Authority, pending, or to the knowledge of the Pledgor,
threatened against the Pledgor or any of its property which will
materially and adversely affect the ability of the Pledgor to perform its
obligations under this Agreement;
(i) The Pledgor (i) is a corporation duly formed, validly existing
and in good standing and is duly qualified to do business under the laws
of the State of its incorporation and (ii) has all requisite corporate
power and authority to own, operate and encumber its property and assets
and to conduct its business as presently conducted and as proposed to be
conducted in connection with and following the consummation of the
transactions contemplated by this Agreement, the Credit Agreement or any
of the other Loan Documents;
(j) The execution, delivery and performance of this Agreement by
the Pledgor (i) does not violate any indenture, mortgage, or any other
agreement to which the Pledgor is a party or by which any of its
properties or assets may be bound; (ii) complies with all
<PAGE>
corporate organization documents of the Pledgor; and (iii) does not
violate any restriction on such transfer or encumbrance of the Pledged
Collateral; and
(k) The Powers are effective endorsements duly executed by an
appropriate person and give the Administrative Agent the authority they
purport to confer.
7. VOTING RIGHTS. During the term of this Agreement, and except
as provided in this SECTION 7 below, the Pledgor shall have the right to vote
the Pledged Stock on all corporate questions in a manner not inconsistent with
the terms of this Agreement, the Credit Agreement and the other Loan Documents.
After the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall, at the Administrative Agent's option and following
written notice from the Administrative Agent to the Pledgor, exercise all voting
rights pertaining to the Pledged Collateral, including the right to take action
by shareholder consent.
8. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and
all dividends, interest and distributions paid in respect of the Pledged
Collateral, notwithstanding such dividends, interest and distributions
being subject to the pledge and assignment thereof pursuant to SECTION 1;
PROVIDED, HOWEVER, that any and all
(A) dividends, interest and distributions paid or payable
other than in cash with respect to, and instruments and other
property received, receivable or otherwise distributed with respect
to, or in exchange for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in
cash with respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect
to principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the
Administrative Agent to hold, for the benefit of the Administrative Agent,
the Lenders, the Issuing Banks and the other Holders, as Pledged
Collateral and shall, if received by the Pledgor, be received in trust for
the Administrative Agent, for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, be segregated from the
other property or funds of the Pledgor, and be delivered immediately to
the Administrative Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement); and
<PAGE>
(ii) The Administrative Agent shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to receive the dividends or interest payments which
it is authorized to receive and retain pursuant to clause (i) above.
(b) After the occurrence and during the continuation of an Event of
Default:
(i) All rights of the Pledgor to receive the dividends, interest
payments and other distributions which it would otherwise be authorized to
receive and retain pursuant to SECTION 8(A)(I) hereof shall cease, and all
such rights shall thereupon become vested in the Administrative Agent, for
the benefit of the Administrative Agent, the Lenders, the Issuing Banks
and the other Holders, which shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends, interest payments
and other distributions;
(ii) All dividends, interest payments and other distributions which
are received by the Pledgor contrary to the provisions of clause (i) of
this SECTION 8(B) shall be received in trust for the Administrative Agent,
for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders, shall be segregated from other funds of the
Pledgor and shall be paid over immediately to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsements);
(iii) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, execute and deliver, and
cause the issuer of the Pledged Stock (other than Barneys Japan Company
Limited) and its officers and directors to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of the Administrative
Agent, the Pledgor or its or their counsel, advisable to register the
applicable Pledged Collateral under the provisions of the Securities Act,
and to exercise its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Administrative Agent, the Pledgor or its or
their counsel, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Commission applicable thereto;
(iv) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at Pledgor's expense, use its best efforts to
qualify the Pledged Collateral under state securities or "Blue Sky" laws
and to obtain all necessary governmental approvals for the sale of the
Pledged Collateral, as requested by the Administrative Agent;
(v) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, cause the issuers of the
Pledged Stock to make available to the holders of its securities, as soon
as practicable, earnings statements which will satisfy the
<PAGE>
provisions of Section 11(a) of the Securities Act; and
(vi) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, do or cause to be done all
such other acts and things as may be necessary to make such sale of the
Pledged Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Pledgor will reimburse the Administrative Agent for all expenses incurred by
the Administrative Agent, including, without limitation, reasonable attorneys'
and accountants' fees and expenses in connection with the foregoing. Upon or at
any time after the occurrence and during the continuation of an Event of
Default, if the Administrative Agent determines that, prior to any public
offering of any securities constituting part of the Pledged Collateral, such
securities should be registered under the Securities Act and/or registered or
qualified under any other federal or state law and such registration and/or
qualification is not practicable, then the Pledgor agrees that it will be
commercially reasonable if a private sale, upon at least ten (10) Business Days'
notice to the Pledgor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less than prices which could have been obtained for such security
on any market or exchange or in any other public sale.
9. TRANSFERS AND OTHER LIENS. Other than as permitted under the
Credit Agreement, the Pledgor agrees that it will not (i) sell, transfer or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Administrative Agent, or
(ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral (except for the security interest under this Agreement).
10. REMEDIES. (a) The Administrative Agent shall have, in addition
to any other rights given under this Agreement or by law, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the
Uniform Commercial Code as in effect in the State of New York. In addition,
after the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged Collateral or any part
thereof which shall then be in or shall thereafter come into the possession or
custody of the Administrative Agent or which the Administrative Agent shall
otherwise have the ability to transfer under applicable law, the Administrative
Agent may, in its sole discretion, without notice except as specified below,
after the occurrence and during the continuation of an Event of Default, sell or
cause the same to be sold at any exchange, broker's board or at public or
private sale, in one or more sales or lots, at such price as the Administrative
Agent may deem best, for cash or on credit or for future delivery, without
assumption of any credit risk, and the purchaser of any or all of the Pledged
Collateral so sold shall thereafter own the same, absolutely free from any
claim, encumbrance or right of any kind whatsoever. The Administrative Agent,
any Lender or any Issuing Banks may, in its own name, or in the name of a
designee or nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at any private sale. The
Pledgor will pay to the Administrative Agent all reasonable expenses (including,
without limitation, court costs
<PAGE>
and reasonable attorneys, and paralegals' fees and expenses) of, or incident to,
the enforcement of any of the provisions hereof. The Administrative Agent agrees
to distribute any proceeds of the sale of the Pledged Collateral in accordance
with the Credit Agreement and the Pledgor shall remain liable for any deficiency
following the sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Administrative Agent will give the Pledgor reasonable notice of the time and
place of any public sale thereof, or of the time after which any private sale or
other intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Notwithstanding any provision to the
contrary contained herein, the Pledgor agrees that any requirements of
reasonable notice shall be met if such notice is received by the Pledgor as
provided in SECTION 25 below at least ten (10) Business Days before the time of
the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgor agrees that
after the occurrence and during the continuation of an Event of Default, the
Administrative Agent may, from time to time, attempt to sell all or any part of
the Pledged Collateral by means of a private placement restricting the bidders
and prospective purchasers to those who are qualified and will represent and
agree that they are purchasing for investment only and not for distribution. In
so doing, the Administrative Agent may solicit offers to buy the Pledged
Collateral, or any part of it, from a limited number of investors deemed by the
Administrative Agent, in its reasonable judgment, to be financially responsible
parties who might be interested in purchasing the Pledged Collateral. If the
Administrative Agent solicits such offers from not less than four (4) such
investors, then the acceptance by the Administrative Agent of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposing of such Pledged Collateral; provided, however, that this Section does
not impose a requirement that the Administrative Agent solicit offers from four
or more investors in order for the sale to be commercially reasonable.
11. SECURITY INTEREST ABSOLUTE. All rights of the Administrative
Agent and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(i) Any lack of validity or enforceability of the Credit
Agreement, the Loan Documents, or any other agreement or instrument
relating thereto;
(ii) Any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Liabilities, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement or the other Loan Documents;
<PAGE>
(iii) Any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any part of the Liabilities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Agreement.
12. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Administrative Agent its attorney-in-fact, with full
authority, in the name of the Pledgor or otherwise, after the occurrence and
during the continuation of an Event of Default, from time to time in the
Administrative Agent's sole discretion, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor
representing any dividend, interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same and to arrange for the transfer of all or any part of the Pledged
Collateral on the books of the issuers of the Pledged Stock to the name of the
Administrative Agent or the Administrative Agent's nominee.
13. WAIVERS. The Pledgor waives to the fullest extent permitted by
applicable laws presentment and demand for payment of any of the Liabilities,
protest and notice of dishonor or Event of Default with respect to any of the
Liabilities and all other notices to which the Pledgor might otherwise be
entitled except as otherwise expressly provided herein or in the Credit
Agreement.
14. TERM. This Agreement shall remain in full force and effect
until the final payment in full, in cash, of the Liabilities, the Commitment
Termination Date has occurred and the Credit Agreement has terminated pursuant
to its terms. Upon the termination of this Agreement as provided above (other
than as a result of the sale of the Pledged Collateral), the Administrative
Agent will release the security interest created hereunder and, if it then has
possession of any Pledged Stock, will deliver any Pledged Stock previously
delivered to it and the Powers to the Pledgor.
15. DEFINITIONS. The singular shall include the plural and vice
versa and any gender shall include any other gender as the context may require.
16. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon the Pledgor and its successors and assigns, and shall inure to
the benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, and their respective successors and assigns. Nothing set forth
herein or in any other Loan Document is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of
<PAGE>
this Agreement, the Credit Agreement or any other Loan Document or any
Collateral. The Pledgor's successors shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Pledgor.
17. GOVERNING LAW. This Agreement has been executed and delivered
by the parties hereto in New York, New York. Any dispute between the
Administrative Agent and the Pledgor arising out of or related to the
relationship established between them in connection with this Agreement, and
whether arising in contract, tort, equity, or otherwise, shall be resolved in
accordance with the laws of the State of New York.
18. CONSENT TO JURISDICTION; AND SERIVE OF PROCESS. The Pledgor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Agreement. The Administrative Agent shall have the right to proceed against the
Pledgor or its personal property in a court in any location to enable the
Administrative Agent to obtain personal jurisdiction over the Pledgor, to
realize on the Pledged Collateral or any other security for the Liabilities or
to enforce a judgment or other court order entered in favor of the
Administrative Agent.
19. WAIVER OF JURY TRIAL. Each of the Pledgor and the
Administrative Agent waives any right to trial by jury in any dispute, whether
sounding in contract, tort, or otherwise, between the Administrative Agent and
the Pledgor arising out of or related to the transactions contemplated by this
Agreement or any other instrument, document or agreement executed or delivered
in connection herewith. Either the Pledgor or the Administrative Agent may file
an original counterpart or a copy of this Agreement with any court as written
evidence of the consent of the parties hereto to the waiver of their right to
trial by jury.
20. ADVICE OF COUNSEL. The Pledgor represents and warrants to the
Administrative Agent, the Lenders, the Issuing Banks and the other Holders that
it has discussed this Agreement and, specifically, the provisions of SECTIONS 17
through 20 hereof, with the Pledgor's lawyers.
21. SEVERABILITY. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
22. FURTHER ASSURANCES. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to
<PAGE>
exercise and enforce its rights and remedies hereunder with respect to any of
the Pledged Collateral.
23. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Pledged Collateral, except for those arising out
of or in connection with the Administrative Agent's (i) gross negligence or
willful misconduct, or (ii) failure to use reasonable care with respect to the
safe custody of the Pledged Collateral in the Administrative Agent's possession.
Without limiting the generality of the foregoing, the Administrative Agent shall
be under no obligation to take any steps necessary to preserve rights in the
Pledged Collateral against any other parties but may do so at its option. All
expenses incurred in connection therewith shall be for the sole account of the
Pledgor, and shall constitute part of the Liabilities secured hereby.
24. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
25. INDEMNITY AND EXPENSES. The Pledgor will upon demand pay to
the Administrative Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Administrative Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of the Administrative Agent hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
26. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Pledgor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Pledgor and the Administrative Agent and (ii) complies with the requirements of
the Credit Agreement. Any such waiver shall be valid only to the extent set
forth therein. A waiver by the Administrative Agent of any right or remedy under
this Agreement on any one occasion shall not be construed as a waiver of any
right or remedy which the Administrative Agent would otherwise have on any
future occasion. No failure to exercise or delay in exercising any right, power
or privilege under this Agreement on the part of the Administrative Agent shall
operate as a waiver thereof; and no single or partial exercise of any right,
power or privilege under this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
27. SECTION HEADINGS: TERMS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof. Unless otherwise defined herein
or in the Credit Agreement, terms used in Article 8 and Article 9 of the Code
are used herein as therein defined.
<PAGE>
28. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
29. MERGER. This Agreement, taken together with all the other Loan
Documents, embodies the entire agreement and understanding, between the Pledgor
and the Administrative Agent, any Lender or any Issuing Banks and supersedes all
prior agreements and understandings, written and oral, relating to the subject
matter hereof.
30. TERMINATION; RELEASE OF COLLATERAL. Notwithstanding anything
in this Agreement to the contrary, the Pledgor may, to the extent permitted by
SECTION 9.02 of the Credit Agreement, sell, assign, transfer or otherwise
dispose of any Pledged Collateral. In addition, the Pledged Collateral shall be
subject to release in accordance with SECTION 12.09(C) of the Credit Agreement
(such Pledged Collateral and the Pledged Collateral referred to in the
immediately preceding sentence being the "Released Collateral"). The Liens under
this Agreement shall terminate with respect to the Released Collateral upon such
sale, transfer, assignment, disposition or release and upon the request of the
Pledgor, the Administrative Agent shall execute and deliver such instrument or
document as may be necessary to release the Liens granted hereunder; PROVIDED,
HOWEVER, that (i) the Administrative Agent shall not be required to execute any
such documents on terms which, in the Administrative Agent's opinion, would
expose the Administrative Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Liabilities or any Liens on (or obligations of the Pledgor in respect
of) all interests retained by the Pledgor, including without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
Pledged Collateral.
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Administrative Agent have
executed this Agreement as of the date set forth above.
BARNEY'S, INC.
By: /s/ Edward Lambert
-------------------------------------
Title: Executive VP and CFO
-------------------------------
Acknowledged and agreed to
as of the date first written above.
CITICORP USA, INC., as Administrative Agent
By: /s/ Brenda Cotsen
-------------------------------------
Vice President
<PAGE>
Exhibit 10.7
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise modified from
time to time, this "Security Agreement"), dated as of January 28, 1999, by and
among BARNEY'S, INC. (with its successors and permitted assigns, the "Grantor"),
and CITICORP USA, INC., in its capacity as administrative agent (with its
successors in such capacity, the "Administrative Agent") for the Lenders (as
defined below) and the Issuing Banks (as defined below) under that certain
Credit Agreement dated as of January 28, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among Barney's, Inc., Barneys America, Inc., PFP Fashions Inc., Barneys (CA)
Lease Corp., Barneys (NY) Lease Corp., Basco All-American Sportswear Corp., BNY
Licensing Corp., and Barneys America (Chicago) Lease Corp. (collectively, the
"Borrowers"), the Administrative Agent, the lenders from time to time a party
thereto (the "Lenders"), the issuing banks from time to time a party thereto
(the "Issuing Banks") and General Electric Capital Corporation, in its capacity
as documentation agent (in such capacity, the "Documentation Agent") .
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
--------------------
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit
<PAGE>
Agreement. Unless otherwise defined herein or in the Credit Agreement, all terms
defined in Article 8 and Article 9 of the Uniform Commercial Code in effect as
of the date hereof in the State of New York are used herein as defined therein.
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable
and other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any
<PAGE>
letters of credit, indemnity, warranty or guaranty payable to the Grantor from
time to time with respect to the foregoing or proceeds of any insurance policies
on which the Grantor is named as beneficiary, claims against third parties for
advances and other financial accommodations and any other obligations whatsoever
owing to the Grantor, contract rights, customer and supplier contracts, rights
in and to all security agreements, security interests or other security held by
the Grantor to secure payment of the Grantor's accounts, all right, title and
interest under leases, subleases, and concessions and other agreements relating
to personal property (including, without limitation, all rents, issues and
profits related thereto), rights in and under guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory (as defined below) which any of
the foregoing may represent (collectively, "General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code), all
bills of lading, warehouse receipts and other documents of title and documents,
in each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in
Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or
<PAGE>
affiliate of any of them in any way or for any purpose (whether for safekeeping,
deposit, custody, pledge, transmission, collection or otherwise), including,
without limitation, (i) notes, drafts, letters of credit, stocks, bonds, and
debt and equity securities, whether or not certificated, and warrants, options,
puts and calls and other rights to acquire or otherwise relating to the same (in
each case only to the extent not otherwise constituting Investment Property);
(ii) money; (iii) proceeds of loans, including without limitation, all the Loans
made to the Grantor under the Credit Agreement; and (iv) insurance proceeds and
books and records relating to any of the property covered by this Agreement
(collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement,
<PAGE>
interest or obligation or applicable law, rule or regulation, shall the
Administrative Agent, Lender or Issuer be permitted), in any manner, to (a)
perform or fulfill any of the obligations of the Grantor thereunder or pursuant
thereto, (b) make any payment, or make any inquiry as to the nature or the
sufficiency of any payment received by the Grantor or the sufficiency of any
performance by any party under any such contract, agreement, interest or
obligation, or (c) present or file any claim, or take any action to collect or
enforce any performance or payment of any amounts which may have been assigned
to the Grantor, on which the Grantor has been granted a Lien to which the
Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified in
SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making all
filings under the Uniform Commercial Code necessary or appropriate to
preserve the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all filings
reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security
interests described herein. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
<PAGE>
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under SECTION
9.03 of the Credit Agreement. The Grantor has not, during the five (5)
years preceding the date hereof, been known as or used any other corporate
or fictitious name, except as disclosed on SCHEDULE 3 hereto, nor acquired
all or substantially all the assets, capital stock or operating unit of
any Person, except as disclosed on SCHEDULE 3 hereto and each predecessor
in interest of the Grantor during the five (5) years preceding the Closing
Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Administrative
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on SCHEDULES
1 AND 2 hereto, the Administrative Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created hereby,
except for the Uniform Commercial Code filings referred to in clause (d)
(and except for the filings with the United States Patent and Trademark
Office and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative Agent's
security interest) or (ii) for the exercise by the Administrative Agent of
its rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect and
protect any Lien granted or purported to be granted hereby or to enable
the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative
Agent, mark conspicuously each item of chattel paper included in the
Collateral and each related contract and each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to the
Administrative
<PAGE>
Agent, indicating that such document, chattel paper, related contract or
Collateral is subject to the security interest granted hereby; (ii) if any
Collateral shall be evidenced by a promissory note or other instrument
(other than checks or drafts received in the ordinary course of the
Grantor's business), deliver and pledge to the Administrative Agent
hereunder such note or instrument duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Administrative Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such
other instruments or notices as the Administrative Agent may request, as
may be necessary or desirable, in order to perfect and preserve the
security interest granted or purported to be granted hereby. The Grantor
hereby authorizes the Administrative Agent to file any such financing or
continuation statements without the signature of the Grantor to the extent
permitted by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security Agreement
or of a financing statement is sufficient as a financing statement to the
extent permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or
in the possession and control of subcontractors of the Grantor and
vehicles) at the places specified in SCHEDULE 1 hereto and deliver written
notice to the Administrative Agent at least 30 days prior to establishing
any other location at which it reasonably expects to maintain Inventory
and/or Equipment (it being understood and agreed that all action required
by SECTION 5(A) hereof shall have been taken in the relevant jurisdiction
with respect to all such Equipment and/or Inventory prior to the
establishment of any such location). Upon the establishment of any such
location, and after notice thereof to the Administrative Agent as required
in the preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the Administrative
Agent or the Grantor and the Grantor hereby authorizes the Administrative
Agent to substitute a new SCHEDULE 1 hereto to reflect such additional
location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the Administrative
Agent's security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or the Administrative Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Administrative Agent or the Administrative Agent's designated
representative, copies of any such books and records (including, without
limitation, any and all computer tapes, programs and source codes relating
to the Collateral or any part or parts thereof).
<PAGE>
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the Collateral,
the Grantor will save, indemnify and keep the Administrative Agent, each
Lender and each Issuing Bank harmless from and against all expense, loss
or damages suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by the Grantor of any obligation or arising out of
any other agreement, indebtedness or liability at any time owing to or in
favor of such obligor or its successors from the Grantor, and all such
obligations of the Grantor shall be and shall remain enforceable against
and only against the Grantor and shall not be enforceable against the
Administrative Agent, any Lender or any Issuing Bank; PROVIDED, HOWEVER,
the Grantor shall have no obligation to the Administrative Agent with
respect to the matters indemnified pursuant to this subsection (d)
resulting from the willful misconduct or gross negligence of the
Administrative Agent, any Lender or an Issuing Bank as determined in a
final non-appealable judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend the
right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Grantor will not, without the Administrative Agent's prior
written consent, except in the ordinary course of business and for amounts
which are not material to the Barneys Group, taken as a whole in the
aggregate, (i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less than the
full amount thereof; (ii) release, wholly or partly, any Person liable for
the payment thereof; or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Administrative Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6,
the Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
<PAGE>
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to require the Grantor to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to the Administrative Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the Grantor
thereunder directly to the Administrative Agent and, upon such notification and
at the expense of the Grantor, to enforce collection of any such Accounts, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Grantor might have done. After receipt by
the Grantor of the notice from the Administrative Agent referred to in the
proviso to the preceding sentence, all amounts and proceeds (including
instruments) received by the Grantor in respect of the Accounts shall be
received in trust for the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Administrative
Agent in the same form as so received (with any necessary endorsement) to be
applied to the Obligations in accordance with the Credit Agreement (including,
without limitation, SECTION 3.02(B)(II) thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent, promptly
assemble all, or such part, of the Collateral as directed by the
Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without
charge or liability to the Administrative Agent, seize and remove such
Collateral and such books and records from such premises, or remain upon
such premises and use the same for the purpose of enforcing any and all
rights and remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an
<PAGE>
option or options to purchase or otherwise dispose of all or any part of
the Collateral in one or more parcels, at public or private sale or sales,
at any exchange, broker's board or at any of the Administrative Agent's
offices or elsewhere, at such prices as the Administrative Agent may deem
best, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable;
PROVIDED, HOWEVER, that the Grantor shall not be credited with the net
proceeds of any such credit sale, future delivery or lease of the
Collateral until the cash proceeds thereof are actually received by the
Administrative Agent. The Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) Business Days' notice, or
such longer period as may be required by law, to the Grantor of the time
and place of any public sale, or the time after which any private sale is
to be made, shall constitute reasonable notification. No notification
required by law need be given to the Grantor if the Grantor has signed,
after the occurrence of an Event of Default, a statement renouncing any
right to notification of sale or other intended disposition. The
Administrative Agent shall not be obligated to make any sale of any of the
Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned. The Administrative Agent, any Lender and any of the Issuing
Banks shall have the right upon any such public sale or sales and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Grantor, which right or equity is hereby
expressly waived and released. In the event of a sale of any Collateral,
or any part thereof, to a Lender, an Issuing Bank, or the Administrative
Agent upon the occurrence and during the continuance of an Event of
Default, such Lender, Issuing Bank, or the Administrative Agent shall not
deduct or offset from any part of the purchase price to be paid therefor
any indebtedness owing to it by the Grantor. Any and all proceeds received
by the Administrative Agent with respect to any sale of, collection from
or other realization upon all or any part of the Collateral, whether
consisting of monies, checks, notes, drafts, bills of exchange, money
orders or commercial paper of any kind whatsoever, shall be held by the
Administrative Agent and distributed by the Administrative Agent in
accordance with the Credit Agreement (including, without limitation,
SECTION 3.02(B)(II) thereof) and the Grantor shall remain liable for any
deficiency following the sale of the Collateral. Subject to the terms of
any applicable license agreement to which the Grantor is a party, the
Administrative Agent is hereby granted an irrevocable license or other
right to use, without charge, the Grantor's labels, copyrights, patents,
rights of use of any name, trade names, general intangibles, trademarks
and advertising matter, or any property of a similar nature, in completing
production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands against the Administrative Agent, any Lender or
any Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any
<PAGE>
such claims, damages and awards arising out of the gross negligence or willful
misconduct of the Administrative Agent.
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
<PAGE>
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes of this Security Agreement. The Grantor hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or Administrative Agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of the Grantor, or in
its own name, from time to time in the Administrative Agent's discretion upon
the occurrence and during the continuance of an Event of Default, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes hereof and,
without limiting the generality of the foregoing, hereby gives the
Administrative Agent the power and right on behalf of the Grantor, without
notice to or assent by the Grantor, to the extent permitted by applicable law,
to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Grantor, at any time or from time to time, all acts and things which
the Administrative Agent deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement is
held to be prohibited or unenforceable in any jurisdiction the substantive laws
of which are held to be applicable hereto, such prohibition or unenforceability
shall not affect the validity or enforceability of the remaining provisions
hereof and shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of
<PAGE>
this Security Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Grantor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Grantor (if the Grantor is adversely affected by such amendment) and the
Administrative Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Administrative Agent of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right or
remedy which the Administrative Agent would otherwise have on any future
occasion. No failure to exercise or delay in exercising any right, power or
privilege under this Security Agreement on the part of the Administrative Agent
shall operate as a waiver thereof; and no single or partial exercise of any
right, power or privilege under this Security Agreement shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF Collateral.
(a) The security interest granted by the Grantor under this Security Agreement
shall terminate against all the Collateral upon final payment in full in cash of
the Obligations and termination of the Commitments. Upon such termination and at
the written request of the Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Administrative
Agent shall execute in a timely manner a satisfaction of this Security Agreement
and such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the
<PAGE>
Administrative Agent shall execute and deliver such instrument or document as
may be necessary to release the Liens granted hereunder; PROVIDED, HOWEVER, that
(i) the Administrative Agent shall not be required to execute any such documents
on terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN
OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and
<PAGE>
service of process shall apply equally to this Security Agreement. The
Administrative Agent shall have the right to proceed against the Grantor or its
personal property in a court in any location to enable the Administrative Agent
to obtain personal jurisdiction over the Grantor, to realize on the Collateral
or any other security for the Liabilities or to enforce a judgment or other
court order entered in favor of the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to the
Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 18, 21, 22
and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time and
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all the
other Loan Documents, embodies the entire agreement and understanding, between
the Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BARNEY'S, INC.
By /s/ Edward Lambert
---------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
---------------------------
Name: Brenda Cotsen
Title: Vice President
<PAGE>
Exhibit 10.8
EXECUTION COPY
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement"), dated as of January 28,
1999, is entered into by and among BARNEY'S, INC., a New York corporation and
BNY LICENSING CORP., a Delaware corporation (with their respective successors
and permitted assigns, each individually the "Grantor" and collectively the
"Grantors"), and CITICORP USA, INC., in its capacity as administrative agent
(with its successors in such capacity, the "Administrative Agent") for the
Lenders (as defined below) and the Issuing Banks (as defined below) under a
certain Credit Agreement dated as of January 28, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among the Grantors, Barney's America Inc., PFP Fashions Inc., Barneys (CA) Lease
Corp., Barneys (NY) Lease Corp., Basco All-American Sportswear Corp., and
Barneys America (Chicago) Lease Corp. (collectively, the "Borrowers"), the
Administrative Agent and General Electric Capital Corporation, in its capacity
as documentation agent (in such capacity, the "Documentation Agent"), the
lenders from time to time a party thereto (the "Lenders"), the issuing banks
from time to time a party thereto (the "Issuing Banks").
W I T N E S S E T H:
-------------------
WHEREAS, the Grantors are parties to the Credit Agreement, pursuant
to which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make loans and other financial accommodations to the
Borrowers from time to time;
WHEREAS, Barney's, Inc. as Grantor and the Administrative Agent are
parties to a certain Security Agreement of even date herewith (as the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, the "Security Agreement"), pursuant to which the Grantor has granted a
security interest in certain of its assets to the Administrative Agent for the
benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders;
WHEREAS, BNY Licensing Corp. as Grantor and the Administrative Agent
are parties to a certain Subsidiary Security Agreement of even date herewith (as
the same may hereafter be amended, restated, supplemented or otherwise modified
from time to time, the "Subsidiary Security Agreement"), pursuant to which the
Grantor has granted a security interest in certain of its assets to the
Administrative Agent for the benefit of the Administrative Agent, the Lenders,
the Issuing Banks and the other
<PAGE>
Holders;
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all the Obligations and (ii) all the Grantors'
obligations and liabilities hereunder and in connection herewith (all the
Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantors execute and deliver this
Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of like
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section references are to
this Agreement unless otherwise specified.
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and VICE VERSA, unless otherwise
specified.
2. INCORPORATION OF THE CREDIT AGREEMENT. The Credit Agreement
and the terms and provisions thereof are hereby incorporated herein in their
entirety by this reference thereto.
3. INCORPORATION OF PREMISES. The premises set forth above are
incorporated into this Agreement by this reference thereto and are made a part
hereof.
4. GRANT OF SECURITY INTEREST IN TRADEMARKS. To secure the
complete and timely payment, performance and satisfaction of all of the
Liabilities, the Grantors hereby grant to the Administrative Agent, for the
benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, a security interest in, as and by way of a first mortgage and
security interest having priority over all other security interests, with power
of sale to the extent permitted by applicable law, all of the Grantors' now
owned or existing and hereafter acquired or arising:
<PAGE>
(i) trademarks, trade names, trade dress, design marks, service
marks, logos, corporate names, company names, business names, domain
names, trade styles and other source of business identifiers, and all
federal, state and foreign registrations, renewals and recordings thereof
and all applications in connection therewith, including, without
limitation, those listed on SCHEDULE A attached hereto and made a part
hereof, and (a) all income, royalties, damages and payments now and
hereafter due and/or payable under and with respect thereto, including,
without limitation, payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or
dilutions thereof, (b) the right to sue for past, present and future
infringements and dilutions thereof, (c) the goodwill of the Grantors'
businesses symbolized by the foregoing and connected therewith, and (d)
all of the Grantors' rights corresponding thereto throughout the world
(all of the foregoing items described in this PARAGRAPH 4(I), are
sometimes hereinafter individually and/or collectively referred to as the
"Trademarks"); and
(ii) rights under or interest in any trademark or service mark
licenses or agreements with any other party, whether either Grantor is a
licensee or licensor, including, without limitation, those trademark or
service mark licenses and agreements listed on SCHEDULE B attached hereto
and made a part hereof, in each case to the extent assignable without
violation thereof, together with any goodwill connected with and
symbolized by any such trademark or service mark licenses and agreements,
the right to collect and receive payments, including but not limited to
royalties, under such licenses and agreements or damages for breach
thereof and the right to prepare for sale and sell any and all Inventory
now or hereafter owned by the Grantors and now or hereafter covered by
such licenses and agreements and all rights corresponding thereto in the
United States and any foreign country (all of the foregoing are
hereinafter referred to collectively as the "Licenses").
5. RESTRICTIONS ON FUTURE AGREEMENTS. The Grantors agree that
they will not take any action, and will use best efforts not to permit any
action to be taken by others, including, without limitation, licensees, or fail
to take any action, which could reasonably be expected to have a material
adverse effect on the validity or enforcement of the rights collaterally
assigned to the Administrative Agent under this Agreement or the rights
associated with any Trademarks or Licenses, and in particular, the Grantors will
not permit to lapse or become abandoned the Trademarks or Licenses if such lapse
or abandonment could reasonably be expected to have a Material Adverse Effect.
6. NO OTHER LIENS; PERFECTED FIRST PRIORITY LIENS. Except for the
Lien granted pursuant to this Agreement, the Grantors own each of the Trademarks
free and clear of any and all Liens. No security agreement, financing statement
or other public notice with respect to all or any part of the Trademarks is on
file or of record in any public office (except for the filings in favor of GFBC,
Inc. and BankBoston Retail
<PAGE>
Finance, Inc., which will still be recorded as of the Closing Date), except such
as have been filed in favor of the Administrative Agent for the benefit of the
Administrative Agent, the Lenders, the Issuing Banks and the other Holders
pursuant to this Agreement. The Lien granted pursuant to this Agreement (i) upon
completion of the filings and other actions in appropriate filing offices will
constitute perfected security interests in the Trademarks in favor of the
Administrative Agent for the benefit of the Administrative Agent, the Lenders,
the Issuing Banks and the other Holders and (ii) is enforceable as such against
all creditors of and purchasers from the Grantors. The Grantors represent and
warrant that, (a) the Trademarks listed on SCHEDULE A include all of the
registered trademarks, trademark applications, registered service marks and
service mark applications now owned or held by either or both of the Grantors
and (b) the Licenses listed on SCHEDULE B include all of the trademark and
service mark licenses and agreements under which either of the Grantors is
presently the licensee or licensor and which are material individually or in the
aggregate to the operation of the businesses of the Grantors.
7. NEW TRADEMARKS AND LICENSES. If, prior to the termination of
this Agreement, the Grantors shall (i) obtain rights to any new Trademarks, (ii)
become entitled to the benefit of any Trademarks, whether as licensee or
licensor, or (iii) enter into any new Licenses, the provisions of PARAGRAPH 4
above shall automatically apply thereto (except in cases where either Grantor is
the licensee, to the extent such licenses are assignable without violation
thereof, it being understood and agreed that the Grantors shall use commercially
reasonable efforts to ensure that such licenses are assignable for security
purposes). The Grantors shall give to the Administrative Agent written notice
within 30 Business Days after the occurrence of any of the events described in
CLAUSES (I), (II) and (III) of the preceding sentence. The Grantors hereby
authorize the Administrative Agent to modify this Agreement unilaterally (i) by
amending SCHEDULE A to include any future Trademarks owned or held by the
Grantors and by amending SCHEDULE B to include Licenses to which either Grantor
becomes a party, (ii) by preparing this Agreement for filing with the United
States Patent and Trademark Office or any corresponding foreign trademark office
or governmental agency, and (iii) by filing, in addition to and not in
substitution for this Agreement, a duplicate original of this Agreement
containing on SCHEDULE A or B thereto, as the case may be, such future
Trademarks and Licenses.
8. COVENANTS. The Grantors covenant and agree with the
Administrative Agent that:
(a) FURTHER DOCUMENTATION. At any time and from time to time, upon
the written request of the Administrative Agent, the Grantors will promptly and
duly execute and deliver such further instruments and documents and take such
further action as the Administrative Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the filing
of any financing or continuation statements under the Uniform Commercial Code.
Any costs or expenses incurred in connection with the performance of the
obligations set forth in the first sentence of this section (a) shall be borne
by the Grantors.
(b) MAINTENANCE OF RECORDS. The Grantors will keep and maintain at
<PAGE>
their own cost and expense satisfactory and complete records of the Trademarks.
The Grantors will mark their books and records pertaining to the Trademarks to
evidence this Agreement and the security interests granted hereby.
(c) COMPLIANCE WITH LAWS, ETC. The Grantors will comply in all
material respects with all Requirements of Law applicable to the Trademarks and
Licenses or any part thereof or to the operation of the Grantors' businesses to
the extent necessary to prevent an impairment of the Lien granted hereby or the
Administrative Agent, Lenders, Issuing Banks or the other Holders' interest in
the Trademarks.
(d) LIMITATION ON LIENS ON TRADEMARKS. The Grantors will not
create, incur or permit to exist, will defend the Administrative Agent, Lenders,
Issuing Banks or the other Holders against, and will take such other action as
is necessary to remove any Lien or claim on or to the Trademarks other than the
Liens created hereby. The Grantors will advise the Administrative Agent promptly
of any Lien on any of the Trademarks.
(e) PAYMENT OF OBLIGATIONS. The Grantors will pay and discharge or
otherwise satisfy at or before maturity, or before they become delinquent, as
the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Trademarks and Licenses or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Trademarks and Licenses.
9. ROYALTIES. The Grantors hereby agree that when an Event of
Default has occurred and is continuing, the use by the Administrative Agent of
the Trademarks and Licenses as authorized hereunder in connection with the
Administrative Agent's exercise of its rights and remedies under PARAGRAPH 18 or
pursuant to SECTION 7 of the Security Agreement shall be coextensive with the
Grantors' rights thereunder and with respect thereto and without any liability
for royalties or other related charges from the Administrative Agent, the
Lenders, the Issuing Banks or the other Holders to the Grantors.
10. FURTHER ASSIGNMENTS AND SECURITY INTERESTS. The Grantors agree
except as provided in SECTION 9.02 of the Credit Agreement, not to directly or
indirectly sell, assign, transfer or otherwise dispose of their respective
interests in the Trademarks or the Licenses without the prior and express
written consent of the Administrative Agent. From and after the occurrence and
during the continuance of an Event of Default, the Grantors agree that the
Administrative Agent, or a conservator appointed by the Administrative Agent,
shall have the right to establish such reasonable quality controls as the
Administrative Agent or such conservator, in its sole and absolute judgment, may
deem necessary to assure maintenance of the quality of inventory marketed by the
Grantors under the Trademarks and the Licenses or in connection with which such
Trademarks and Licenses are used.
11. NATURE AND CONTINUATION OF THE ADMINISTRATIVE AGENT'S SECURITY
INTEREST; TERMINATION OF THE ADMINISTRATIVE AGENT'S SECURITY Interest. This
Agreement is made for collateral security purposes only. This Agreement shall
create a continuing security interest in
<PAGE>
the Trademarks and Licenses and shall terminate only upon final payment in full
in cash of the Obligations and termination of the commitment. Upon such
termination and at the written request of the Grantors or their successors or
assigns, and at the cost and expense of the Grantors or their successors or
assigns, the Administrative Agent shall execute in a timely manner such
instruments, documents or agreements as are necessary or desirable to terminate
the Administrative Agent's security interest in the Trademarks and the Licenses,
subject to any disposition thereof which may have been made by the
Administrative Agent pursuant to this Agreement or the Security Agreement.
12. DUTIES OF THE GRANTORS. The Grantors shall have the duty, to
the extent desirable in the normal conduct of the Grantors' businesses, to: (i)
prosecute diligently any trademark or service mark application that is part of
the Trademarks pending as of the date hereof or hereafter until the termination
of this Agreement, and (ii) make application for the registration of any
trademarks or service marks whether currently or hereafter used or adopted by
the Grantors in the United States and any foreign country or territory
throughout the world. The Grantors further agree (i) not to abandon any
Trademarks or Licenses if such abandonment could reasonably be expected to have
a Material Adverse Effect without the prior written consent of the
Administrative Agent, and (ii) to use reasonable best efforts to obtain and
maintain in full force and effect the Trademarks and the Licenses that are or
shall be necessary or economically desirable in the operation of the Grantors'
businesses. Any expenses incurred in connection with the foregoing shall be
borne by the Grantors. None of the Administrative Agent, the Lenders, the
Issuing Banks or the other Holders shall have any duty with respect to the
Trademarks and Licenses. Without limiting the generality of the foregoing, none
of the Administrative Agent, the Lenders, the Issuing Banks or the other Holders
shall be under any obligation to take any steps necessary to preserve rights in
the Trademarks or Licenses against any other parties, but the Administrative
Agent may do so at its option from and after the occurrence and during the
continuance of an Event of Default, and all expenses incurred in connection
therewith shall be for the sole account of the Grantors and shall be added to
the Liabilities secured hereby.
13. THE ADMINISTRATIVE AGENT'S RIGHT TO SUE. From and after the
occurrence and during the continuance of an Event of Default, the Administrative
Agent shall have the right, but shall not be obligated, to bring suit in its own
name to enforce the Trademarks and the Licenses and, if the Administrative Agent
shall commence any such suit, the Grantors shall, at the request of the
Administrative Agent, do any and all lawful acts and execute any and all proper
documents required by the Administrative Agent in aid of such enforcement. The
Grantors shall, upon demand, promptly reimburse the Administrative Agent for all
costs and expenses incurred by the Administrative Agent in the exercise of its
rights under this PARAGRAPH 13 (including, without limitation, reasonable fees
and expenses of attorneys and paralegals for the Administrative Agent).
14. WAIVERS. The Administrative Agent's failure, at any time or
times hereafter, to require strict performance by the Grantors of any provision
of this Agreement shall not waive, affect or diminish any right of the
Administrative Agent thereafter to demand strict compliance and performance
therewith nor shall any course of dealing between the Grantors and the
Administrative Agent have such effect. No single or partial exercise of any
right hereunder
<PAGE>
shall preclude any other or further exercise thereof or the exercise of any
other right. None of the undertakings, agreements, warranties, covenants and
representations of the Grantors contained in this Agreement shall be deemed to
have been suspended or waived by the Administrative Agent unless such suspension
or waiver is in writing signed by an officer of the Administrative Agent and
directed to the Grantors specifying such suspension or waiver.
15. SEVERABILITY. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
16. MODIFICATION. This Agreement cannot be altered, amended,
supplemented or modified in any way, except as specifically provided in
PARAGRAPH 7 hereof or by a writing signed by the parties hereto.
17. POWER OF ATTORNEY. The Grantors agree, upon the request of the
Administrative Agent and promptly following such request, to take any action and
execute any instrument which the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement. The Grantors hereby
irrevocably designate, constitute and appoint the Administrative Agent (and all
Persons designated by the Administrative Agent in its sole and absolute
discretion) with full power of substitution, as the Grantors' true and lawful
attorney-in-fact, with full power and authority in the name of the Grantors, or
in its own name, from time to time in the Administrative Agent's discretion upon
the occurrence and during the continuance of an Event of Default, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes hereof and, without
limiting the generality of the foregoing, hereby give the Administrative Agent
the power and right on behalf of the Grantors, without notice or assent by the
Grantors, to the extent permitted by applicable law, to (i) endorse the
Grantors' names on all applications, documents, papers and instruments necessary
or desirable for the Administrative Agent in the use, prosecution or protection
of the Trademarks or the Licenses, (ii) assign, pledge, convey or otherwise
transfer title in or dispose of the Trademarks or the Licenses to anyone on
commercially reasonable terms (but subject to the terms thereof), (iii) grant or
issue any exclusive or nonexclusive license under the Trademarks (not to
conflict with any existing License) or under the Licenses, to anyone on
commercially reasonable terms (but only, in the case of Licenses, to the extent
permitted under such Licenses), and (iv) take any other actions with respect to
the Trademarks or, to the extent permitted, the Licenses as the Administrative
Agent deems in its own best interest or in the best interest of the Lenders or
the Issuing Banks. The Grantors hereby ratify all that such attorney shall
lawfully do or, to the extent permitted, cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until all
of the Obligations shall have been paid in full in cash and the Credit Agreement
shall have been terminated. The Grantors acknowledge and agree that this
Agreement is not intended to limit or restrict in any way the rights and
remedies of the Administrative Agent, the Lenders or the Issuing Banks under the
Loan Documents, but rather is intended to facilitate the exercise of such rights
and remedies.
<PAGE>
18. EVENT OF DEFAULT; CUMULATIVE REMEDIES. The Administrative
Agent shall have, in addition to all other rights and remedies given it by the
terms of this Agreement, all rights and remedies allowed by law and the rights
and remedies of a secured party under the Uniform Commercial Code as enacted in
any jurisdiction in which the Trademarks or the Licenses may be located or
deemed located. Upon the occurrence and during the continuance of an Event of
Default, the Grantors agree to assign, convey and otherwise transfer title in
and to the Trademarks and the Licenses to the Administrative Agent or any
transferee of the Administrative Agent and to execute and deliver to the
Administrative Agent or any such transferee all such agreements, documents and
instruments as may be necessary, in the Administrative Agent's sole discretion
exercised in a commercially reasonable manner, to effect such assignment,
conveyance and transfer. All of the Administrative Agent's rights and remedies
with respect to the Trademarks and the Licenses, whether established hereby, by
the Security Agreement, by any other agreements or by law, shall be cumulative
and may be exercised separately or concurrently. Notwithstanding anything set
forth herein to the contrary, it is hereby expressly agreed that upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent may exercise any of the rights and remedies provided in this Agreement,
the Security Agreement and any of the other Loan Documents, including, but not
limited to, the right to sell, transfer or otherwise dispose of any and all
finished goods Inventory bearing the Trademarks in any manner determined solely
by the Administrative Agent. The Grantors agree that any notification of
intended disposition of any of the Trademarks and Licenses required by law shall
be deemed reasonably and properly given if given at least ten (10) Business Days
before such disposition. The Grantors hereby agree that they shall have no right
to satisfy the Administrative Agent's rights to equitable remedies by the
payment of money damages, and nothing contained in this Agreement will restrict
the Administrative Agent's rights to obtain equitable remedies for breaches of
this Agreement. To the extent permitted by applicable law, the Grantors waive
all claims, damages, and demands they may acquire against the Administrative
Agent arising out of the lawful exercise by it of its rights hereunder.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Grantors and their successors and assigns, and shall inure to the benefit of
each of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, and each of all of their nominees, successors and assigns. The
Grantors' successors and assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession of or for the Grantors; PROVIDED, HOWEVER, that
the Grantors shall not voluntarily assign or transfer either of their rights or
obligations hereunder without the Administrative Agent's prior written consent.
20. GOVERNING LAW. This Agreement shall be construed and enforced
and the rights and duties of the parties shall be governed in all respects in
accordance with the laws and decisions of the State of New York.
21. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
22. SECTION HEADINGS. The section headings herein are for
convenience of
<PAGE>
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
23. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
24. EXECUTION OF FINANCING STATEMENTS. A carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.
25. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantors
agree that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Agreement.
26. WAIVER OF JURY TRIAL. EACH OF THE GRANTORS AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTORS ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EITHER THE GRANTORS OR THE ADMINISTRATIVE AGENT MAY FILE
AN ORIGINAL COUNTERPART OR COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
27. TERMINATION; RELEASE OF COLLATERAL. Notwithstanding anything
in this Agreement to the contrary, the Grantors may, to the extent permitted by
SECTION 9.02 of the Credit Agreement, sell, assign, transfer or otherwise
dispose of any Collateral. In addition, the Collateral shall be subject to
release in accordance with SECTION 12.09(C) of the Credit Agreement (such
Collateral and the Collateral referred to in the immediately preceding sentence
being the "Released Collateral"). The Liens under this Agreement shall terminate
with respect to the Released Collateral upon such sale, transfer, assignment,
disposition or release and upon the request of the Grantors, the Administrative
Agent shall execute and deliver such instrument or document as may be necessary
to release the Liens granted hereunder; PROVIDED, HOWEVER, that (i) the
Administrative Agent shall not be required to execute any such documents on
terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of any Grantor in respect of) all
interests retained by any Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BARNEY'S, INC.
By: /s/ Edward Lambert
----------------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
BNY LICENSING CORP.
By: /s/ Edward Lambert
----------------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
Accepted and agreed to as of the day and
year first above written.
CITICORP USA, INC., as Administrative Agent
By: /s/ Brenda Cotsen
----------------------------------------
Name: Brenda Cotsen
Title: Vice President
<PAGE>
Exhibit 10.9
EXECUTION COPY
CASH COLLATERAL
PLEDGE AND ASSIGNMENT AGREEMENT
CASH COLLATERAL PLEDGE AND ASSIGNMENT AGREEMENT, dated as of January 28,
1999, made by Barney's, Inc., a New York corporation (the "Pledgor"), to
Citicorp USA, Inc., as agent (the "Administrative Agent") for the financial
institutions from time to time parties to the Credit Agreement (as defined
below) as lenders (the "Lenders"), the financial institutions from time to time
parties to the Credit Agreement (as defined below) as issuing banks (the
"Issuing Banks").
PRELIMINARY STATEMENTS:
(1) The Pledgor has opened a special non-interest-bearing cash
collateral account (the "Account") with Citibank, N.A. ("Citibank") at 399 Park
Avenue, New York, New York 10043, Account No. 40787258 (CUSA f/a/o Barney's,
Inc.), in the name of the Administrative Agent and under the sole control and
dominion of the Administrative Agent and subject to the terms of this Agreement.
(2) Barney's, Inc., Barneys America, Inc., PFP Fashions, Inc., Barneys
(CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American Sportswear Corp.,
BNY Licensing Corp., and Barneys America (Chicago) Lease Corp., (collectively,
the "Borrowers") the Lenders, the Issuing Banks, the Administrative Agent for
the Lenders and the Issuing Banks and General Electric Capital Corporation, in
its capacity as documentation agent (in such capacity, the "Documentation
Agent") have entered into a Credit Agreement dated as of January 28, 1999 (said
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined).
(3) It is a condition precedent to the making of the Loans and the
issuing of the Letters of Credit by the Issuing Banks under the Credit Agreement
that the Pledgor shall have made the pledge and assignment contemplated by this
Agreement.
NOW THEREFORE, in consideration of the premises and in order to induce
the Lenders to make the Loans and the Issuing Banks to issue the Letters of
Credit under the Credit Agreement, the Pledgor hereby agrees with the
Administrative Agent for its benefit and the ratable benefit of the Lenders, the
Issuing Banks and the other Holders as follows:
SECTION 1. PLEDGE AND ASSIGNMENT. The Pledgor hereby pledges and assigns
to the Administrative Agent for its benefit and the ratable benefit of the
Lenders, the Issuing Banks and the other Holders, and grants to the
Administrative Agent for its benefit and the ratable
-1-
<PAGE>
benefit of the Lenders, the Issuing Banks and the other Holders a security
interest in, the following collateral (the "Collateral"):
(i) the Account, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing the
Account;
(ii) all Investments (as hereinafter defined) from time to time,
and all certificates and instruments, if any, from time to time
representing or evidencing the Investments;
(iii) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Administrative Agent for or on behalf of the
Pledgor in substitution for or in addition to any or all of the then
existing Collateral;
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then existing
Collateral; and
(v) all proceeds of any and all of the foregoing Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment
of all Obligations and all obligations of the Pledgor now or hereafter existing
under this Agreement (all such obligations being the "Liabilities").
SECTION 3. DELIVERY OF COLLATERAL. All certificates or instruments, if
any, representing or evidencing the Collateral shall be delivered to and held by
or on behalf of the Administrative Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Administrative Agent. The Administrative Agent shall have
the right, at any time in its discretion and without notice to the Pledgor, to
transfer to or to register in the name of the Administrative Agent or any of its
nominees any or all of the Collateral. In addition, the Administrative Agent
shall have the right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of smaller
or larger denominations.
SECTION 4. MAINTAINING THE ACCOUNT. So long as any Lender has any
Commitment or any Note shall remain unpaid:
(a) The Pledgor will maintain the Account with Citibank.
(b) It shall be a term and condition of the Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Account and except as otherwise provided by
the provisions of SECTION 6 and SECTION 13, that no amount
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(including interest on the Account) shall be paid or released to or for
the account of, or withdrawn by or for the account of, the Pledgor or
any other person or entity from the Account.
The Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 5. INVESTING OF AMOUNTS IN THE ACCOUNT. If requested by the
Pledgor, the Administrative Agent will, subject to the provisions of SECTION 6
and SECTION 13, from time to time (a) invest amounts on deposit in the Account
in such Cash Equivalents as the Pledgor may select and the Administrative Agent
may approve and (b) invest interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents which
may mature or be sold, in each case in such Cash Equivalents as the Pledgor may
select and the Administrative Agent may approve (the Cash Equivalents referred
to in clauses (a) and (b) above being collectively "Investments"). Interest and
proceeds that are not invested or reinvested in Investments as provided above
shall be deposited and held in the Account.
SECTION 6. RELEASE OF AMOUNTS. (a) So long as no Default or Event of
Default shall have occurred and be continuing, the Administrative Agent will pay
and release to the Pledgor after the Commitment Termination Date and at the
request of the Pledgor, the amount of credit balance of the Account on any
maturity date of the Investment to the extent that (i) the credit balance of the
Account exceeds (ii) the Liabilities.
(b) At all other times, the Administrative Agent will pay and release to
the Pledgor all amounts in accordance with Section 3.01(b)(iii) of the Credit
Agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the legal and beneficial owner of the Collateral free
and clear of any Lien, except for the security interest created by this
Agreement.
(b) The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Collateral, securing the payment of the Liabilities.
(c) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the pledge and assignment by
the Pledgor of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Pledgor, (ii) for the
perfection or maintenance of the security interest created hereby (including the
first
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priority nature of such security interest) or (iii) for the exercise by the
Administrative Agent of its rights and remedies hereunder.
SECTION 8. FURTHER ASSURANCES. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 9. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will
not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Collateral, or (ii) create or
permit to exist any lien, security interest, option or other charge or
encumbrance upon or with respect to any of the Collateral, except for the
security interest under this Agreement.
SECTION 10. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Administrative Agent its attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, at any time during the occurrence and continuance of an Event of
Default, in the Administrative Agent's discretion to take any action and to
execute any instrument which the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, indorse and collect all instruments made payable to the
Pledgor representing any interest payment, dividend or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
SECTION 11. ADMINISTRATIVE AGENT MAY PERFORM. If the Pledgor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by the
Pledgor under SECTION 14.
SECTION 12. THE ADMINISTRATIVE AGENT'S DUTIES. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Administrative
Agent, any Lender or any Issuing Bank has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Collateral. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that
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<PAGE>
which Citibank accords its own property.
SECTION 13. REMEDIES UPON DEFAULT. If any Event of Default shall have
occurred and be continuing:
(a) The Administrative Agent may, without notice to the Pledgor
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Account against the
Liabilities or any part thereof.
(b) The Administrative Agent may also exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code in effect in the
State of New York at that time (the "Code") (whether or not the Code
applies to the affected Collateral), and may also, without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Administrative
Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable. The Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the
Pledgor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
The Administrative Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it
was so adjourned.
(c) Any cash held by the Administrative Agent as Collateral and
all cash proceeds received by the Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Administrative Agent, be
held by the Administrative Agent as collateral for, and/or then or at
any time thereafter be applied (after payment of any amounts payable to
the Administrative Agent pursuant to SECTION 14) in whole or in part by
the Administrative Agent for the ratable benefit of the Administrative
Agent, the Lenders and the Issuing Banks against, all or any part of the
Liabilities in such order as the Administrative Agent shall elect. Any
surplus of such cash or cash proceeds held by the Administrative Agent
and remaining after payment in full of all the Liabilities shall be paid
over to the Pledgor.
SECTION 14. EXPENSES. The Pledgor will upon demand pay to the
Administrative Agent the amount of any and all expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Administrative Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Administrative Agent, the Lenders or the
Issuing Banks hereunder or (iv) the failure by the Pledgor to perform or observe
any of the provisions hereof.
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SECTION 15. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Pledgor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Pledgor (if the Pledgor is adversely affected by such amendment) and the
Administrative Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Administrative Agent of any right or remedy under this Agreement
on any one occasion shall not be construed as a waiver of any right or remedy
which the Administrative Agent would otherwise have on any future occasion. No
failure to exercise or delay in exercising any right, power or privilege under
this Agreement on the part of the Administrative Agent shall operate as a waiver
thereof; and no single or partial exercise of any right, power or privilege
under this Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
SECTION 16. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and may be personally served,
telecopied or sent by courier service and shall be deemed to have been given
when delivered in person or by courier service, or upon receipt of a telecopy.
Notices to the Pledgor shall be sent to its address specified in the Credit
Agreement, and if to the Administrative Agent, at its address specified in the
Credit Agreement, or, as to either party, at such other address as shall be
designated by such party in a written notice to the other party.
SECTION 17. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER CREDIT
AGREEMENT. This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the later of (x)
the payment in full of the Liabilities and all other amounts payable under this
Agreement and (y) the Commitment Termination Date, (ii) be binding upon the
Pledgor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, the Administrative Agent, the Lenders or the Issuing Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), any Lender or any Issuing Bank may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement (including, without limitation, all or any portion of
its Commitment, the Loans owing to it and any Note held by it) to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such Lender or such Issuing
Bank herein or otherwise in accordance with the provisions of the Credit
Agreement. Upon the later of the payment in full of the Liabilities and all
other amounts payable under this Agreement and the Commitment Termination Date,
the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Pledgor. Upon any such termination, the
Administrative Agent will, at the Pledgor's expense, return to the Pledgor such
of the Collateral as shall not have been sold or otherwise applied pursuant to
the terms hereof and execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence such termination.
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<PAGE>
SECTION 18. GOVERNING LAW; TERMS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York. Unless otherwise defined herein
or in the Credit Agreement, terms defined in Article 9 of the Code are used
herein as therein defined.
SECTION 19. SEVERABILITY. If any provision of this Agreement is held to
be prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 20. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 21. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE PLEDGOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EITHER THE PLEDGOR OR THE ADMINISTRATIVE AGENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
SECTION 22. ADVICE OF COUNSEL. The Pledgor represents and warrants to
the Administrative Agent, the Lenders and the Issuing Banks that it has
discussed this Agreement with the Pledgor's attorneys.
SECTION 23. TERMINATION; RELEASE OF COLLATERAL. Notwithstanding anything
in this Agreement to the contrary, the Pledgor may, to the extent permitted by
SECTION 9.02 of the Credit Agreement, sell, assign, transfer or otherwise
dispose of any Collateral. In addition, the Collateral shall be subject to
release in accordance with SECTION 12.09(C) of the Credit Agreement (such
Collateral and the Collateral referred to in the immediately preceding sentence
being the "Released Collateral"). The Liens under this Agreement shall terminate
with respect to the Released Collateral upon such sale, transfer, assignment,
disposition or release and upon the request of the Pledgor, the Administrative
Agent shall execute and deliver such instrument or document as may be necessary
to release the Liens granted hereunder; PROVIDED, HOWEVER, that (i) the
Administrative Agent shall not be required to execute any such documents on
terms which, in
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<PAGE>
the Administrative Agent's opinion, would expose the Administrative Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Liabilities or any Liens on
(or obligations of the Pledgor in respect of) all interests retained by the
Pledgor, including without limitation, the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
SECTION 23. MERGER. This Agreement, taken together with all the other
Loan Documents, embodies the entire agreement and understanding, between the
Pledgor and the Administrative Agent, any Lender or any Issuing Bank and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BARNEY'S, INC.
By: /s/ Edward Lambert
----------------------------------
Title: Executive VP and CFO
ACCEPTED AND AGREED:
CITICORP USA, INC., as Administrative Agent
By: /s/ Brenda Cotsen
------------------------------
Title: Vice President
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<PAGE>
Exhibit 10.10
EXECUTION COPY
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated as of January 28,
1999, is executed by and between BARNEYS AMERICA, INC. (the "Pledgor"), and
CITICORP USA, INC., as "Administrative Agent" for itself and for the "Lenders"
and the "Issuing Banks" under the Credit Agreement defined below. Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to such terms in the "Credit Agreement" (as defined below).
WITNESSETH:
(1) Barney's, Inc., Barneys America, Inc., PFP Fashions Inc.,
Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively the "Borrowers") have entered into the Credit Agreement dated as
of even date herewith with the financial institutions a party thereto as lenders
(the "Lenders"), the financial institutions a party thereto as issuing banks
(the "Issuing Banks"), Citicorp USA, Inc., as administrative agent (the
"Administrative Agent") for the Lenders and the Issuing Banks and General
Electric Capital Corporation as documentation agent (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
pursuant to which the Lenders and the Issuing Banks have agreed, subject to
certain conditions precedent, to make loans and other financial accommodations
to the Borrowers from time to time;
(2) The Pledgor owns the issued and outstanding equity interests
(the "Equity Interests") set forth on EXHIBIT A attached hereto and made a part
hereof; and
(3) The Administrative Agent, the Lenders and the Issuing Banks
have required, as a condition to their entering into the Credit Agreement, that
the Pledgor execute and deliver this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrowers pursuant to the Credit Agreement or
any other agreement, instrument or document executed pursuant to or in
connection therewith, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor and the
Administrative Agent hereby agree as follows:
1. PLEDGE. The Pledgor hereby pledges to the Administrative
Agent, for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders, and grants to the Administrative Agent for the
benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, a security interest in, the following (collectively, the "Pledged
Collateral"):
<PAGE>
(a) All of the right, title and interest of the Pledgor in the
Equity Interests, whether now existing or hereafter arising, and the
certificates representing the shares of such capital stock (such
now-existing shares being identified on EXHIBIT A attached hereto and made
a part hereof), all options and warrants for the purchase of additional
equity interests now or hereafter held in the name of the Pledgor (all of
said Equity Interests, options and warrants and all capital stock held in
the name of the Pledgor as a result of the exercise of such options or
warrants being hereinafter collectively referred to as the "Pledged
Stock"), herewith delivered to the Administrative Agent accompanied by
stock powers in the form of EXHIBIT B attached hereto and made a part
hereof duly executed in blank, and all dividends, distributions, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
Pledged Stock;
(b) All additional equity interests from time to time acquired by
the Pledgor in any manner, and the certificates representing such
additional equity interests (any such additional equity interests shall
constitute part of the Pledged Stock and the Administrative Agent is
irrevocably authorized to amend EXHIBIT A from time to time to reflect
such additional equity interests), and all options, warrants, dividends,
distributions, cash, instruments and other rights and options from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such equity interests;
(c) The property and interests in property described in SECTION 4
below; and
(d) All proceeds of the foregoing.
2. SECURITY FOR LIABILITIES. The Pledged Collateral secures the
prompt payment, performance and observance of (i) all Obligations and (ii) all
obligations of Pledgor under this Agreement (all such obligations referred to in
clauses (i) and (ii) now or hereafter existing being hereinafter collectively
referred to as the "Liabilities").
3. DELIVERY OF PLEDGED COLLATERAL; REGISTRATION AND
ACKNOWLEDGMENTS. All certificates or instruments representing or evidencing the
Pledged Collateral, if any, shall be delivered to and held by or on behalf of
the Administrative Agent pursuant hereto and shall be in suitable form for
transfer by delivery and shall be accompanied by duly executed instruments of
transfer, powers, or assignments in blank as appropriate (such instruments of
transfer, powers, or assignments in blank, being the "Powers"), all in form and
substance satisfactory to the Administrative Agent. After the occurrence and
during the continuance of an Event of Default, the Administrative Agent shall
have the right, at any time in its discretion and without notice to the Pledgor,
to transfer to or to register in the name of the Administrative Agent or any of
its nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in SECTIONS 7 AND 8. In addition, the Administrative Agent
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments of
smaller
<PAGE>
or larger denominations.
4. PLEDGED COLLATERAL ADJUSTMENTS. If, during the term of this
Agreement:
(a) Any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of any issuer of the
Pledged Stock, or any option included within the Pledged Collateral is
exercised, or both, or
(b) Any subscription warrants, shares, or any other rights or
options shall be issued in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants, shares, rights,
options or other securities, issued by reason of any of the foregoing, shall be
immediately delivered to and held by the Administrative Agent under the terms of
this Agreement and shall constitute Pledged Collateral hereunder; PROVIDED,
HOWEVER, that nothing contained in this SECTION 4 shall be deemed to permit any
distribution, issuance of additional shares, warrants, shares, rights or
options, reclassification, readjustment or other change in the capital structure
which is not expressly permitted in the Credit Agreement nor to prohibit any
such distribution, issuance of additional equity interests, warrants, shares,
rights or options, reclassification, readjustment or other change in the capital
structure of such issuer which is expressly permitted in the Credit Agreement.
5. SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. The Pledgor
represents and warrants that it has made its own arrangements for keeping itself
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of distributions, reorganization or other exchanges, offers to purchase and
voting rights), and the Pledgor agrees that none of the Administrative Agent,
any of the Lenders or any Issuing Banks shall have any obligation to inform the
Pledgor of any such changes or potential changes or to take any action or omit
to take any action with respect thereto. The Administrative Agent may, after the
occurrence and during the continuance of an Event of Default, without notice and
at its option, transfer or register the Pledged Collateral or any part thereof
into its or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of the
Equity Interests as set forth on Exhibit A attached hereto and made a part
hereof, free and clear of any Lien except for the security interest
created by this Agreement;
(b) The Pledgor has full power and authority to enter into this
Agreement;
(c) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral except
pursuant to the Securities Act;
<PAGE>
(d) The Pledgor has the right to vote, pledge, assign and grant a
security interest in or otherwise transfer such Pledged Collateral free of
any Liens, except as set forth in paragraph (c) above;
(e) No authorization, approval, or other action by, and no notice
to or filing with, any Governmental Authority is required either (i) for
the pledge of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor or
(ii) for the exercise by the Administrative Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required
in connection with such disposition by laws affecting the offering and
sale of securities generally);
(f) The pledge of the Pledged Collateral pursuant to this
Agreement, together with the delivery of the stock certificates pertaining
thereto to the Administrative Agent, creates a valid and perfected first
priority security interest in the Pledged Collateral, in favor of the
Administrative Agent for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, securing the payment and
performance of the Liabilities;
(g) This Agreement has been duly executed and delivered by and on
behalf of Pledgor and constitutes the legal, valid and binding obligation
of the Pledgor, enforceable against the Pledgor in accordance with its
terms;
(h) There is no action, suit, proceeding, governmental
investigation or arbitration, at law or in equity, or before or by any
Governmental Authority, pending, or to the knowledge of the Pledgor,
threatened against the Pledgor or any of its property which will
materially and adversely affect the ability of the Pledgor to perform its
obligations under this Agreement;
(i) The Pledgor (i) is a corporation duly formed, validly existing
and in good standing and is duly qualified to do business under the laws
of the State of its incorporation and (ii) has all requisite corporate
power and authority to own, operate and encumber its property and assets
and to conduct its business as presently conducted and as proposed to be
conducted in connection with and following the consummation of the
transactions contemplated by this Agreement, the Credit Agreement or any
of the other Loan Documents;
(j) The execution, delivery and performance of this Agreement by
the Pledgor (i) does not violate any indenture, mortgage, or any other
agreement to which the Pledgor is a party or by which any of its
properties or assets may be bound; (ii) complies with all corporate
organization documents of the Pledgor; and (iii) does not violate any
restriction on such transfer or encumbrance of the Pledged Collateral; and
<PAGE>
(k) The Powers are effective endorsements duly executed by an
appropriate person and give the Administrative Agent the authority they
purport to confer.
7. VOTING RIGHTS. During the term of this Agreement, and except
as provided in this SECTION 7 below, the Pledgor shall have the right to vote
the Pledged Stock on all corporate questions in a manner not inconsistent with
the terms of this Agreement, the Credit Agreement and the other Loan Documents.
After the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall, at the Administrative Agent's option and following
written notice from the Administrative Agent to the Pledgor, exercise all voting
rights pertaining to the Pledged Collateral, including the right to take action
by shareholder consent.
8. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to receive and retain any and
all dividends, interest and distributions paid in respect of the Pledged
Collateral, notwithstanding such dividends, interest and distributions
being subject to the pledge and assignment thereof pursuant to SECTION 1;
PROVIDED, HOWEVER, that any and all
(A) dividends, interest and distributions paid or payable
other than in cash with respect to, and instruments and other
property received, receivable or otherwise distributed with respect
to, or in exchange for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in
cash with respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect
to principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the
Administrative Agent to hold, for the benefit of the Administrative Agent,
the Lenders, the Issuing Banks and the other Holders, as Pledged
Collateral and shall, if received by the Pledgor, be received in trust for
the Administrative Agent, for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, be segregated from the
other property or funds of the Pledgor, and be delivered immediately to
the Administrative Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement); and
(ii) The Administrative Agent shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may
<PAGE>
reasonably request for the purpose of enabling the Pledgor to receive the
dividends or interest payments which it is authorized to receive and
retain pursuant to clause (i) above.
(b) After the occurrence and during the continuation of an Event of
Default:
(i) All rights of the Pledgor to receive the dividends, interest
payments and other distributions which it would otherwise be authorized to
receive and retain pursuant to SECTION 8(A)(I) hereof shall cease, and all
such rights shall thereupon become vested in the Administrative Agent, for
the benefit of the Administrative Agent, the Lenders, the Issuing Banks
and the other Holders, which shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends, interest payments
and other distributions;
(ii) All dividends, interest payments and other distributions which
are received by the Pledgor contrary to the provisions of clause (i) of
this SECTION 8(B) shall be received in trust for the Administrative Agent,
for the benefit of the Administrative Agent, the Lenders, the Issuing
Banks and the other Holders, shall be segregated from other funds of the
Pledgor and shall be paid over immediately to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsements);
(iii) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, execute and deliver, and
cause the issuer of the Pledged Stock (other than Barneys Japan Company
Limited) and its officers and directors to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of the Administrative
Agent, the Pledgor or its or their counsel, advisable to register the
applicable Pledged Collateral under the provisions of the Securities Act,
and to exercise its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Administrative Agent, the Pledgor or its or
their counsel, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Commission applicable thereto;
(iv) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at Pledgor's expense, use its best efforts to
qualify the Pledged Collateral under state securities or "Blue Sky" laws
and to obtain all necessary governmental approvals for the sale of the
Pledged Collateral, as requested by the Administrative Agent;
(v) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, cause the issuers of the
Pledged Stock to make available to the holders of its securities, as soon
as practicable, earnings statements which will satisfy the provisions of
Section 11(a) of the Securities Act; and
<PAGE>
(vi) The Pledgor shall, upon the reasonable request of the
Administrative Agent, at the Pledgor's expense, do or cause to be done all
such other acts and things as may be necessary to make such sale of the
Pledged Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Pledgor will reimburse the Administrative Agent for all expenses incurred by
the Administrative Agent, including, without limitation, reasonable attorneys'
and accountants' fees and expenses in connection with the foregoing. Upon or at
any time after the occurrence and during the continuation of an Event of
Default, if the Administrative Agent determines that, prior to any public
offering of any securities constituting part of the Pledged Collateral, such
securities should be registered under the Securities Act and/or registered or
qualified under any other federal or state law and such registration and/or
qualification is not practicable, then the Pledgor agrees that it will be
commercially reasonable if a private sale, upon at least ten (10) Business Days'
notice to the Pledgor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less than prices which could have been obtained for such security
on any market or exchange or in any other public sale.
9. TRANSFERS AND OTHER LIENS. Other than as permitted under the
Credit Agreement, the Pledgor agrees that it will not (i) sell, transfer or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Administrative Agent, or
(ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral (except for the security interest under this Agreement).
10. REMEDIES. (a) The Administrative Agent shall have, in addition
to any other rights given under this Agreement or by law, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the
Uniform Commercial Code as in effect in the State of New York. In addition,
after the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged Collateral or any part
thereof which shall then be in or shall thereafter come into the possession or
custody of the Administrative Agent or which the Administrative Agent shall
otherwise have the ability to transfer under applicable law, the Administrative
Agent may, in its sole discretion, without notice except as specified below,
after the occurrence and during the continuation of an Event of Default, sell or
cause the same to be sold at any exchange, broker's board or at public or
private sale, in one or more sales or lots, at such price as the Administrative
Agent may deem best, for cash or on credit or for future delivery, without
assumption of any credit risk, and the purchaser of any or all of the Pledged
Collateral so sold shall thereafter own the same, absolutely free from any
claim, encumbrance or right of any kind whatsoever. The Administrative Agent,
any Lender or any Issuing Banks may, in its own name, or in the name of a
designee or nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at any private sale. The
Pledgor will pay to the Administrative Agent all reasonable expenses (including,
without limitation, court costs and reasonable attorneys, and paralegals' fees
and expenses) of, or incident to, the enforcement of any of the provisions
hereof. The Administrative Agent agrees to distribute any proceeds of the
<PAGE>
sale of the Pledged Collateral in accordance with the Credit Agreement and the
Pledgor shall remain liable for any deficiency following the sale of the Pledged
Collateral.
(b) Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Administrative Agent will give the Pledgor reasonable notice of the time and
place of any public sale thereof, or of the time after which any private sale or
other intended disposition is to be made. Any sale of the Pledged Collateral
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Notwithstanding any provision to the
contrary contained herein, the Pledgor agrees that any requirements of
reasonable notice shall be met if such notice is received by the Pledgor as
provided in SECTION 25 below at least ten (10) Business Days before the time of
the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgor agrees that
after the occurrence and during the continuation of an Event of Default, the
Administrative Agent may, from time to time, attempt to sell all or any part of
the Pledged Collateral by means of a private placement restricting the bidders
and prospective purchasers to those who are qualified and will represent and
agree that they are purchasing for investment only and not for distribution. In
so doing, the Administrative Agent may solicit offers to buy the Pledged
Collateral, or any part of it, from a limited number of investors deemed by the
Administrative Agent, in its reasonable judgment, to be financially responsible
parties who might be interested in purchasing the Pledged Collateral. If the
Administrative Agent solicits such offers from not less than four (4) such
investors, then the acceptance by the Administrative Agent of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposing of such Pledged Collateral; provided, however, that this Section does
not impose a requirement that the Administrative Agent solicit offers from four
or more investors in order for the sale to be commercially reasonable.
11. SECURITY INTEREST ABSOLUTE. All rights of the Administrative
Agent and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(i) Any lack of validity or enforceability of the Credit
Agreement, the Loan Documents, or any other agreement or instrument
relating thereto;
(ii) Any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Liabilities, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement or the other Loan Documents;
(iii) Any exchange, release or non-perfection of any other
collateral, or any
<PAGE>
release or amendment or waiver of or consent to departure from any
guaranty, for all or any part of the Liabilities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Liabilities or of this Agreement.
12. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Administrative Agent its attorney-in-fact, with full
authority, in the name of the Pledgor or otherwise, after the occurrence and
during the continuation of an Event of Default, from time to time in the
Administrative Agent's sole discretion, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor
representing any dividend, interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same and to arrange for the transfer of all or any part of the Pledged
Collateral on the books of the issuers of the Pledged Stock to the name of the
Administrative Agent or the Administrative Agent's nominee.
13. WAIVERS. The Pledgor waives to the fullest extent permitted by
applicable laws presentment and demand for payment of any of the Liabilities,
protest and notice of dishonor or Event of Default with respect to any of the
Liabilities and all other notices to which the Pledgor might otherwise be
entitled except as otherwise expressly provided herein or in the Credit
Agreement.
14. TERM. This Agreement shall remain in full force and effect
until the final payment in full, in cash, of the Liabilities, the Commitment
Termination Date has occurred and the Credit Agreement has terminated pursuant
to its terms. Upon the termination of this Agreement as provided above (other
than as a result of the sale of the Pledged Collateral), the Administrative
Agent will release the security interest created hereunder and, if it then has
possession of any Pledged Stock, will deliver any Pledged Stock previously
delivered to it and the Powers to the Pledgor.
15. DEFINITIONS. The singular shall include the plural and vice
versa and any gender shall include any other gender as the context may require.
16. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon the Pledgor and its successors and assigns, and shall inure to
the benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, and their respective successors and assigns. Nothing set forth
herein or in any other Loan Document is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of this
Agreement, the Credit Agreement or any other Loan Document or any Collateral.
The Pledgor's successors shall include, without limitation, a receiver, trustee
or debtor-in-possession of
<PAGE>
or for the Pledgor.
17. GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED
BY THE PARTIES HERETO IN NEW YORK, NEW YORK. ANY DISPUTE BETWEEN THE
ADMINISTRATIVE AGENT AND THE PLEDGOR ARISING OUT OF OR RELATED TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. CONSENT TO JURISDICTION; AND SERIVE OF PROCESS. The Pledgor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Agreement. The Administrative Agent shall have the right to proceed against the
Pledgor or its personal property in a court in any location to enable the
Administrative Agent to obtain personal jurisdiction over the Pledgor, to
realize on the Pledged Collateral or any other security for the Liabilities or
to enforce a judgment or other court order entered in favor of the
Administrative Agent.
19. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE PLEDGOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EITHER THE PLEDGOR OR THE ADMINISTRATIVE AGENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
20. ADVICE OF COUNSEL. The Pledgor represents and warrants to the
Administrative Agent, the Lenders, the Issuing Banks and the other Holders that
it has discussed this Agreement and, specifically, the provisions of SECTIONS 17
through 20 hereof, with the Pledgor's lawyers.
21. SEVERABILITY. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
22. FURTHER ASSURANCES. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any of
the Pledged Collateral.
<PAGE>
23. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Pledged Collateral, except for those arising out
of or in connection with the Administrative Agent's (i) gross negligence or
willful misconduct, or (ii) failure to use reasonable care with respect to the
safe custody of the Pledged Collateral in the Administrative Agent's possession.
Without limiting the generality of the foregoing, the Administrative Agent shall
be under no obligation to take any steps necessary to preserve rights in the
Pledged Collateral against any other parties but may do so at its option. All
expenses incurred in connection therewith shall be for the sole account of the
Pledgor, and shall constitute part of the Liabilities secured hereby.
24. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
25. INDEMNITY AND EXPENSES. The Pledgor will upon demand pay to
the Administrative Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Administrative Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of the Administrative Agent hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
26. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Pledgor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Pledgor and the Administrative Agent and (ii) complies with the requirements of
the Credit Agreement. Any such waiver shall be valid only to the extent set
forth therein. A waiver by the Administrative Agent of any right or remedy under
this Agreement on any one occasion shall not be construed as a waiver of any
right or remedy which the Administrative Agent would otherwise have on any
future occasion. No failure to exercise or delay in exercising any right, power
or privilege under this Agreement on the part of the Administrative Agent shall
operate as a waiver thereof; and no single or partial exercise of any right,
power or privilege under this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
27. SECTION HEADINGS: TERMS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof. Unless otherwise defined herein
or in the Credit Agreement, terms used in Article 8 and Article 9 of the Code
are used herein as therein defined.
28. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall together
<PAGE>
constitute one and the same agreement.
29. MERGER. This Agreement, taken together with all the other Loan
Documents, embodies the entire agreement and understanding, between the Pledgor
and the Administrative Agent, any Lender or any Issuing Banks and supersedes all
prior agreements and understandings, written and oral, relating to the subject
matter hereof.
30. TERMINATION; RELEASE OF COLLATERAL. Notwithstanding anything
in this Agreement to the contrary, the Pledgor may, to the extent permitted by
SECTION 9.02 of the Credit Agreement, sell, assign, transfer or otherwise
dispose of any Pledged Collateral. In addition, the Pledged Collateral shall be
subject to release in accordance with SECTION 12.09(C) of the Credit Agreement
(such Pledged Collateral and the Pledged Collateral referred to in the
immediately preceding sentence being the "Released Collateral"). The Liens under
this Agreement shall terminate with respect to the Released Collateral upon such
sale, transfer, assignment, disposition or release and upon the request of the
Pledgor, the Administrative Agent shall execute and deliver such instrument or
document as may be necessary to release the Liens granted hereunder; PROVIDED,
HOWEVER, that (i) the Administrative Agent shall not be required to execute any
such documents on terms which, in the Administrative Agent's opinion, would
expose the Administrative Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Liabilities or any Liens on (or obligations of the Pledgor in respect
of) all interests retained by the Pledgor, including without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
Pledged Collateral.
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Administrative Agent have
executed this Agreement as of the date set forth above.
BARNEYS AMERICA, INC.
By: /s/ Edward Lambert
--------------------------------
Title: Executive VP and CFO
-----------------------------
Acknowledged and agreed to
as of the date first written above.
CITICORP USA, INC., as Administrative Agent
By: /s/ Brenda Cotsen
--------------------------------
Vice President
<PAGE>
Exhibit 10.11
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among BARNEYS AMERICA, INC. (with its successors and permitted
assigns, the "Grantor"), and CITICORP USA, INC., in its capacity as
administrative agent (with its successors in such capacity, the "Administrative
Agent") for the Lenders (as defined below) and the Issuing Banks (as defined
below) under that certain Credit Agreement dated as of January 28, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Barney's, Inc., Barneys America, Inc., PFP Fashions
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively, the "Borrowers"), the Administrative Agent, the lenders from time
to time a party thereto (the "Lenders"), the issuing banks from time to time a
party thereto (the "Issuing Banks") and General Electric Capital Corporation, in
its capacity as documentation agent (in such capacity, the "Documentation
Agent") . Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
--------------------
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit
<PAGE>
Agreement. Unless otherwise defined herein or in the Credit Agreement, all terms
defined in Article 8 and Article 9 of the Uniform Commercial Code in effect as
of the date hereof in the State of New York are used herein as defined therein.
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable
and other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any
<PAGE>
letters of credit, indemnity, warranty or guaranty payable to the Grantor from
time to time with respect to the foregoing or proceeds of any insurance policies
on which the Grantor is named as beneficiary, claims against third parties for
advances and other financial accommodations and any other obligations whatsoever
owing to the Grantor, contract rights, customer and supplier contracts, rights
in and to all security agreements, security interests or other security held by
the Grantor to secure payment of the Grantor's accounts, all right, title and
interest under leases, subleases, and concessions and other agreements relating
to personal property (including, without limitation, all rents, issues and
profits related thereto), rights in and under guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory (as defined below) which any of
the foregoing may represent (collectively, "General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code), all
bills of lading, warehouse receipts and other documents of title and documents,
in each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in
Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or
<PAGE>
affiliate of any of them in any way or for any purpose (whether for safekeeping,
deposit, custody, pledge, transmission, collection or otherwise), including,
without limitation, (i) notes, drafts, letters of credit, stocks, bonds, and
debt and equity securities, whether or not certificated, and warrants, options,
puts and calls and other rights to acquire or otherwise relating to the same (in
each case only to the extent not otherwise constituting Investment Property);
(ii) money; (iii) proceeds of loans, including without limitation, all the Loans
made to the Grantor under the Credit Agreement; and (iv) insurance proceeds and
books and records relating to any of the property covered by this Agreement
(collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement,
<PAGE>
interest or obligation or applicable law, rule or regulation, shall the
Administrative Agent, Lender or Issuer be permitted), in any manner, to (a)
perform or fulfill any of the obligations of the Grantor thereunder or pursuant
thereto, (b) make any payment, or make any inquiry as to the nature or the
sufficiency of any payment received by the Grantor or the sufficiency of any
performance by any party under any such contract, agreement, interest or
obligation, or (c) present or file any claim, or take any action to collect or
enforce any performance or payment of any amounts which may have been assigned
to the Grantor, on which the Grantor has been granted a Lien to which the
Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified in
SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making all
filings under the Uniform Commercial Code necessary or appropriate to
preserve the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all filings
reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security
interests described herein. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
<PAGE>
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under SECTION
9.03 of the Credit Agreement. The Grantor has not, during the five (5)
years preceding the date hereof, been known as or used any other corporate
or fictitious name, except as disclosed on SCHEDULE 3 hereto, nor acquired
all or substantially all the assets, capital stock or operating unit of
any Person, except as disclosed on SCHEDULE 3 hereto and each predecessor
in interest of the Grantor during the five (5) years preceding the Closing
Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Administrative
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on SCHEDULES
1 AND 2 hereto, the Administrative Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created hereby,
except for the Uniform Commercial Code filings referred to in clause (d)
(and except for the filings with the United States Patent and Trademark
Office and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative Agent's
security interest) or (ii) for the exercise by the Administrative Agent of
its rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect and
protect any Lien granted or purported to be granted hereby or to enable
the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative
Agent, mark conspicuously each item of chattel paper included in the
Collateral and each related contract and each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to the
Administrative
<PAGE>
Agent, indicating that such document, chattel paper, related contract or
Collateral is subject to the security interest granted hereby; (ii) if any
Collateral shall be evidenced by a promissory note or other instrument
(other than checks or drafts received in the ordinary course of the
Grantor's business), deliver and pledge to the Administrative Agent
hereunder such note or instrument duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Administrative Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such
other instruments or notices as the Administrative Agent may request, as
may be necessary or desirable, in order to perfect and preserve the
security interest granted or purported to be granted hereby. The Grantor
hereby authorizes the Administrative Agent to file any such financing or
continuation statements without the signature of the Grantor to the extent
permitted by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security Agreement
or of a financing statement is sufficient as a financing statement to the
extent permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or
in the possession and control of subcontractors of the Grantor and
vehicles) at the places specified in SCHEDULE 1 hereto and deliver written
notice to the Administrative Agent at least 30 days prior to establishing
any other location at which it reasonably expects to maintain Inventory
and/or Equipment (it being understood and agreed that all action required
by SECTION 5(A) hereof shall have been taken in the relevant jurisdiction
with respect to all such Equipment and/or Inventory prior to the
establishment of any such location). Upon the establishment of any such
location, and after notice thereof to the Administrative Agent as required
in the preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the Administrative
Agent or the Grantor and the Grantor hereby authorizes the Administrative
Agent to substitute a new SCHEDULE 1 hereto to reflect such additional
location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the Administrative
Agent's security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or the Administrative Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Administrative Agent or the Administrative Agent's designated
representative, copies of any such books and records (including, without
limitation, any and all computer tapes, programs and source codes relating
to the Collateral or any part or parts thereof).
<PAGE>
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the Collateral,
the Grantor will save, indemnify and keep the Administrative Agent, each
Lender and each Issuing Bank harmless from and against all expense, loss
or damages suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by the Grantor of any obligation or arising out of
any other agreement, indebtedness or liability at any time owing to or in
favor of such obligor or its successors from the Grantor, and all such
obligations of the Grantor shall be and shall remain enforceable against
and only against the Grantor and shall not be enforceable against the
Administrative Agent, any Lender or any Issuing Bank; PROVIDED, HOWEVER,
the Grantor shall have no obligation to the Administrative Agent with
respect to the matters indemnified pursuant to this subsection (d)
resulting from the willful misconduct or gross negligence of the
Administrative Agent, any Lender or an Issuing Bank as determined in a
final non-appealable judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend the
right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Grantor will not, without the Administrative Agent's prior
written consent, except in the ordinary course of business and for amounts
which are not material to the Barneys Group, taken as a whole in the
aggregate, (i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less than the
full amount thereof; (ii) release, wholly or partly, any Person liable for
the payment thereof; or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Administrative Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6,
the Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
<PAGE>
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to require the Grantor to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to the Administrative Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the Grantor
thereunder directly to the Administrative Agent and, upon such notification and
at the expense of the Grantor, to enforce collection of any such Accounts, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Grantor might have done. After receipt by
the Grantor of the notice from the Administrative Agent referred to in the
proviso to the preceding sentence, all amounts and proceeds (including
instruments) received by the Grantor in respect of the Accounts shall be
received in trust for the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Administrative
Agent in the same form as so received (with any necessary endorsement) to be
applied to the Obligations in accordance with the Credit Agreement (including,
without limitation, SECTION 3.02(B)(II) thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent, promptly
assemble all, or such part, of the Collateral as directed by the
Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without
charge or liability to the Administrative Agent, seize and remove such
Collateral and such books and records from such premises, or remain upon
such premises and use the same for the purpose of enforcing any and all
rights and remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an
<PAGE>
option or options to purchase or otherwise dispose of all or any part of
the Collateral in one or more parcels, at public or private sale or sales,
at any exchange, broker's board or at any of the Administrative Agent's
offices or elsewhere, at such prices as the Administrative Agent may deem
best, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable;
PROVIDED, HOWEVER, that the Grantor shall not be credited with the net
proceeds of any such credit sale, future delivery or lease of the
Collateral until the cash proceeds thereof are actually received by the
Administrative Agent. The Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) Business Days' notice, or
such longer period as may be required by law, to the Grantor of the time
and place of any public sale, or the time after which any private sale is
to be made, shall constitute reasonable notification. No notification
required by law need be given to the Grantor if the Grantor has signed,
after the occurrence of an Event of Default, a statement renouncing any
right to notification of sale or other intended disposition. The
Administrative Agent shall not be obligated to make any sale of any of the
Collateral regardless of notice of sale having been given. The
Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned. The Administrative Agent, any Lender and any of the Issuing
Banks shall have the right upon any such public sale or sales and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Grantor, which right or equity is hereby
expressly waived and released. In the event of a sale of any Collateral,
or any part thereof, to a Lender, an Issuing Bank, or the Administrative
Agent upon the occurrence and during the continuance of an Event of
Default, such Lender, Issuing Bank, or the Administrative Agent shall not
deduct or offset from any part of the purchase price to be paid therefor
any indebtedness owing to it by the Grantor. Any and all proceeds received
by the Administrative Agent with respect to any sale of, collection from
or other realization upon all or any part of the Collateral, whether
consisting of monies, checks, notes, drafts, bills of exchange, money
orders or commercial paper of any kind whatsoever, shall be held by the
Administrative Agent and distributed by the Administrative Agent in
accordance with the Credit Agreement (including, without limitation,
SECTION 3.02(B)(II) thereof) and the Grantor shall remain liable for any
deficiency following the sale of the Collateral. Subject to the terms of
any applicable license agreement to which the Grantor is a party, the
Administrative Agent is hereby granted an irrevocable license or other
right to use, without charge, the Grantor's labels, copyrights, patents,
rights of use of any name, trade names, general intangibles, trademarks
and advertising matter, or any property of a similar nature, in completing
production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands against the Administrative Agent, any Lender or
any Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any
<PAGE>
such claims, damages and awards arising out of the gross negligence or willful
misconduct of the Administrative Agent.
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
<PAGE>
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes of this Security Agreement. The Grantor hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or Administrative Agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of the Grantor, or in
its own name, from time to time in the Administrative Agent's discretion upon
the occurrence and during the continuance of an Event of Default, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes hereof and,
without limiting the generality of the foregoing, hereby gives the
Administrative Agent the power and right on behalf of the Grantor, without
notice to or assent by the Grantor, to the extent permitted by applicable law,
to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Grantor, at any time or from time to time, all acts and things which
the Administrative Agent deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement is
held to be prohibited or unenforceable in any jurisdiction the substantive laws
of which are held to be applicable hereto, such prohibition or unenforceability
shall not affect the validity or enforceability of the remaining provisions
hereof and shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of
<PAGE>
this Security Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Grantor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Grantor (if the Grantor is adversely affected by such amendment) and the
Administrative Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Administrative Agent of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right or
remedy which the Administrative Agent would otherwise have on any future
occasion. No failure to exercise or delay in exercising any right, power or
privilege under this Security Agreement on the part of the Administrative Agent
shall operate as a waiver thereof; and no single or partial exercise of any
right, power or privilege under this Security Agreement shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF Collateral.
(a) The security interest granted by the Grantor under this Security Agreement
shall terminate against all the Collateral upon final payment in full in cash of
the Obligations and termination of the Commitments. Upon such termination and at
the written request of the Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Administrative
Agent shall execute in a timely manner a satisfaction of this Security Agreement
and such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
<PAGE>
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the
<PAGE>
Administrative Agent shall execute and deliver such instrument or document as
may be necessary to release the Liens granted hereunder; PROVIDED, HOWEVER, that
(i) the Administrative Agent shall not be required to execute any such documents
on terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN
OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and
<PAGE>
service of process shall apply equally to this Security Agreement. The
Administrative Agent shall have the right to proceed against the Grantor or its
personal property in a court in any location to enable the Administrative Agent
to obtain personal jurisdiction over the Grantor, to realize on the Collateral
or any other security for the Liabilities or to enforce a judgment or other
court order entered in favor of the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to the
Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 18, 21, 22
and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time and
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all the
other Loan Documents, embodies the entire agreement and understanding, between
the Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BARNEYS AMERICA, INC.
By /s/ Edward Lambert
--------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
--------------------------------
Name: Brenda Cotsen
Title: Vice President
<PAGE>
Exhibit 10.12
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among PFP FASHIONS INC. (with its successors and permitted assigns,
the "Grantor"), and CITICORP USA, INC., in its capacity as administrative agent
(with its successors in such capacity, the "Administrative Agent") for the
Lenders (as defined below) and the Issuing Banks (as defined below) under that
certain Credit Agreement dated as of January 28, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among Barney's, Inc., Barneys America, Inc., PFP Fashions Inc., Barneys (CA)
Lease Corp., Barneys (NY) Lease Corp., Basco All-American Sportswear Corp., BNY
Licensing Corp., and Barneys America (Chicago) Lease Corp. (collectively, the
"Borrowers"), the Administrative Agent, the lenders from time to time a party
thereto (the "Lenders"), the issuing banks from time to time a party thereto
(the "Issuing Banks") and General Electric Capital Corporation, in its capacity
as documentation agent (in such capacity, the "Documentation Agent") .
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
--------------------
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein.
<PAGE>
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable
and other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any letters of credit, indemnity,
warranty or guaranty payable to the Grantor from time to time with respect to
the foregoing or proceeds of any insurance policies on which the Grantor is
named as
<PAGE>
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the Grantor to secure
payment of the Grantor's accounts, all right, title and interest under leases,
subleases, and concessions and other agreements relating to personal property
(including, without limitation, all rents, issues and profits related thereto),
rights in and under guarantees, instruments, securities, documents of title and
other contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or Inventory
(as defined below) which any of the foregoing may represent (collectively,
"General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code), all
bills of lading, warehouse receipts and other documents of title and documents,
in each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in
Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts,
<PAGE>
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same (in each case only to the extent not otherwise
constituting Investment Property); (ii) money; (iii) proceeds of loans,
including without limitation, all the Loans made to the Grantor under the Credit
Agreement; and (iv) insurance proceeds and books and records relating to any of
the property covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or obligation or applicable law,
rule or regulation, shall the Administrative Agent, Lender or Issuer be
permitted), in any manner, to (a) perform or fulfill any of the obligations of
the
<PAGE>
Grantor thereunder or pursuant thereto, (b) make any payment, or make any
inquiry as to the nature or the sufficiency of any payment received by the
Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to the Grantor, on which the Grantor has
been granted a Lien to which the Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified in
SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making all
filings under the Uniform Commercial Code necessary or appropriate to
preserve the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all filings
reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security
interests described herein. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under SECTION
9.03 of the Credit Agreement. The
<PAGE>
Grantor has not, during the five (5) years preceding the date hereof, been
known as or used any other corporate or fictitious name, except as
disclosed on SCHEDULE 3 hereto, nor acquired all or substantially all the
assets, capital stock or operating unit of any Person, except as disclosed
on SCHEDULE 3 hereto and each predecessor in interest of the Grantor
during the five (5) years preceding the Closing Date is disclosed on
SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Administrative
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on SCHEDULES
1 AND 2 hereto, the Administrative Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created hereby,
except for the Uniform Commercial Code filings referred to in clause (d)
(and except for the filings with the United States Patent and Trademark
Office and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative Agent's
security interest) or (ii) for the exercise by the Administrative Agent of
its rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect and
protect any Lien granted or purported to be granted hereby or to enable
the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative
Agent, mark conspicuously each item of chattel paper included in the
Collateral and each related contract and each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to the
Administrative Agent, indicating that such document, chattel paper,
related contract or Collateral is subject to the security interest granted
hereby; (ii) if any Collateral shall be evidenced by
<PAGE>
a promissory note or other instrument (other than checks or drafts
received in the ordinary course of the Grantor's business), deliver and
pledge to the Administrative Agent hereunder such note or instrument duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Administrative
Agent; and (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices
as the Administrative Agent may request, as may be necessary or desirable,
in order to perfect and preserve the security interest granted or
purported to be granted hereby. The Grantor hereby authorizes the
Administrative Agent to file any such financing or continuation statements
without the signature of the Grantor to the extent permitted by applicable
law. The Grantor hereby agrees that a carbon, photographic, photostatic or
other reproduction of this Security Agreement or of a financing statement
is sufficient as a financing statement to the extent permitted by
applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or
in the possession and control of subcontractors of the Grantor and
vehicles) at the places specified in SCHEDULE 1 hereto and deliver written
notice to the Administrative Agent at least 30 days prior to establishing
any other location at which it reasonably expects to maintain Inventory
and/or Equipment (it being understood and agreed that all action required
by SECTION 5(A) hereof shall have been taken in the relevant jurisdiction
with respect to all such Equipment and/or Inventory prior to the
establishment of any such location). Upon the establishment of any such
location, and after notice thereof to the Administrative Agent as required
in the preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the Administrative
Agent or the Grantor and the Grantor hereby authorizes the Administrative
Agent to substitute a new SCHEDULE 1 hereto to reflect such additional
location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the Administrative
Agent's security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or the Administrative Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Administrative Agent or the Administrative Agent's designated
representative, copies of any such books and records (including, without
limitation, any and all computer tapes, programs and source codes relating
to the Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the Collateral,
the Grantor will save, indemnify
<PAGE>
and keep the Administrative Agent, each Lender and each Issuing Bank
harmless from and against all expense, loss or damages suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by the
Grantor of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such obligor
or its successors from the Grantor, and all such obligations of the
Grantor shall be and shall remain enforceable against and only against the
Grantor and shall not be enforceable against the Administrative Agent, any
Lender or any Issuing Bank; PROVIDED, HOWEVER, the Grantor shall have no
obligation to the Administrative Agent with respect to the matters
indemnified pursuant to this subsection (d) resulting from the willful
misconduct or gross negligence of the Administrative Agent, any Lender or
an Issuing Bank as determined in a final non-appealable judgment by a
court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend the
right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Grantor will not, without the Administrative Agent's prior
written consent, except in the ordinary course of business and for amounts
which are not material to the Barneys Group, taken as a whole in the
aggregate, (i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less than the
full amount thereof; (ii) release, wholly or partly, any Person liable for
the payment thereof; or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Administrative Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6,
the Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have
<PAGE>
the right at any time, upon the occurrence and during the continuance of an
Event of Default, to require the Grantor to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the
Administrative Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to the Grantor thereunder directly
to the Administrative Agent and, upon such notification and at the expense of
the Grantor, to enforce collection of any such Accounts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Administrative Agent referred to in the proviso to the preceding
sentence, all amounts and proceeds (including instruments) received by the
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied to the Obligations in accordance
with the Credit Agreement (including, without limitation, SECTION 3.02(B)(II)
thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent, promptly
assemble all, or such part, of the Collateral as directed by the
Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without
charge or liability to the Administrative Agent, seize and remove such
Collateral and such books and records from such premises, or remain upon
such premises and use the same for the purpose of enforcing any and all
rights and remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of all
or any part of the Collateral in one or more parcels, at public or private
sale or sales, at any exchange, broker's board or
<PAGE>
at any of the Administrative Agent's offices or elsewhere, at such prices
as the Administrative Agent may deem best, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Agent may
deem commercially reasonable; PROVIDED, HOWEVER, that the Grantor shall
not be credited with the net proceeds of any such credit sale, future
delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
Business Days' notice, or such longer period as may be required by law, to
the Grantor of the time and place of any public sale, or the time after
which any private sale is to be made, shall constitute reasonable
notification. No notification required by law need be given to the Grantor
if the Grantor has signed, after the occurrence of an Event of Default, a
statement renouncing any right to notification of sale or other intended
disposition. The Administrative Agent shall not be obligated to make any
sale of any of the Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned. The Administrative Agent, any Lender and any
of the Issuing Banks shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Grantor, which right or equity
is hereby expressly waived and released. In the event of a sale of any
Collateral, or any part thereof, to a Lender, an Issuing Bank, or the
Administrative Agent upon the occurrence and during the continuance of an
Event of Default, such Lender, Issuing Bank, or the Administrative Agent
shall not deduct or offset from any part of the purchase price to be paid
therefor any indebtedness owing to it by the Grantor. Any and all proceeds
received by the Administrative Agent with respect to any sale of,
collection from or other realization upon all or any part of the
Collateral, whether consisting of monies, checks, notes, drafts, bills of
exchange, money orders or commercial paper of any kind whatsoever, shall
be held by the Administrative Agent and distributed by the Administrative
Agent in accordance with the Credit Agreement (including, without
limitation, SECTION 3.02(B)(II) thereof) and the Grantor shall remain
liable for any deficiency following the sale of the Collateral. Subject to
the terms of any applicable license agreement to which the Grantor is a
party, the Administrative Agent is hereby granted an irrevocable license
or other right to use, without charge, the Grantor's labels, copyrights,
patents, rights of use of any name, trade names, general intangibles,
trademarks and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands against the Administrative Agent, any Lender or
any Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
<PAGE>
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative
<PAGE>
Agent may deem necessary or advisable to accomplish the purposes of this
Security Agreement. The Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or Administrative Agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Grantor, or in its own name, from time to time
in the Administrative Agent's discretion upon the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes hereof and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right on behalf
of the Grantor, without notice to or assent by the Grantor, to the extent
permitted by applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Grantor, at any time or from time to time, all acts and things which
the Administrative Agent deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement is
held to be prohibited or unenforceable in any jurisdiction the substantive laws
of which are held to be applicable hereto, such prohibition or unenforceability
shall not affect the validity or enforceability of the remaining provisions
hereof and shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Grantor herefrom shall be
effective, except by or pursuant to an instrument in
<PAGE>
writing which (i) is duly executed by the Grantor (if the Grantor is adversely
affected by such amendment) and the Administrative Agent and (ii) complies with
the requirements of the Credit Agreement. Any such waiver shall be valid only to
the extent set forth therein. A waiver by the Administrative Agent of any right
or remedy under this Security Agreement on any one occasion shall not be
construed as a waiver of any right or remedy which the Administrative Agent
would otherwise have on any future occasion. No failure to exercise or delay in
exercising any right, power or privilege under this Security Agreement on the
part of the Administrative Agent shall operate as a waiver thereof; and no
single or partial exercise of any right, power or privilege under this Security
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL.
(a) The security interest granted by the Grantor under this Security Agreement
shall terminate against all the Collateral upon final payment in full in cash of
the Obligations and termination of the Commitments. Upon such termination and at
the written request of the Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Administrative
Agent shall execute in a timely manner a satisfaction of this Security Agreement
and such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the
<PAGE>
Administrative Agent shall not be required to execute any such documents on
terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN
OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Security Agreement. The Administrative Agent shall have the right to proceed
against the Grantor or its personal property in a court in any
<PAGE>
location to enable the Administrative Agent to obtain personal jurisdiction over
the Grantor, to realize on the Collateral or any other security for the
Liabilities or to enforce a judgment or other court order entered in favor of
the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to the
Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 18, 21, 22
and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time and
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all the
other Loan Documents, embodies the entire agreement and understanding, between
the Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
PFP FASHIONS INC.
By /s/ Edward Lambert
--------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
--------------------------------
Name: Brenda Cotsen
Title: Vice President
<PAGE>
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among BARNEYS (CA) LEASE CORP. (with its successors and permitted
assigns, the "Grantor"), and CITICORP USA, INC., in its capacity as
administrative agent (with its successors in such capacity, the "Administrative
Agent") for the Lenders (as defined below) and the Issuing Banks (as defined
below) under that certain Credit Agreement dated as of January 28, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Barney's, Inc., Barneys America, Inc., PFP Fashions
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively, the "Borrowers"), the Administrative Agent, the lenders from time
to time a party thereto (the "Lenders"), the issuing banks from time to time a
party thereto (the "Issuing Banks") and General Electric Capital Corporation, in
its capacity as documentation agent (in such capacity, the "Documentation
Agent") . Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Grantor is a party to the Credit Agreement,
pursuant to which the Lenders and the Issuing Banks have agreed, subject to
certain conditions precedent, to make certain loans and other financial
accommodations to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term
used herein that is defined in the Credit Agreement shall have the meaning
specified for such term in the Credit Agreement. Unless otherwise defined herein
or in the Credit Agreement, all terms defined in Article 8 and Article 9 of the
Uniform Commercial Code in effect as of the date hereof in the State of New York
are used herein as defined therein.
<PAGE>
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the
singular shall have comparable meanings when used in the plural, and VICE VERSA,
unless otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and
complete payment, observance and performance of all the Liabilities, the Grantor
hereby grants (subject as set forth below) to the Administrative Agent for the
benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, a security interest in all of the Grantor's rights, title and
interests in and to the following property, whether now owned or existing or
hereafter arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts
receivable and other rights of the Grantor to payment for the sale or lease of
goods or the rendition of services (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance (collectively,
"Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and
future general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any letters of credit, indemnity,
warranty or guaranty payable to the Grantor from time to time with respect to
the foregoing or proceeds of any insurance policies on which the Grantor is
named as
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<PAGE>
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the Grantor to secure
payment of the Grantor's accounts, all right, title and interest under leases,
subleases, and concessions and other agreements relating to personal property
(including, without limitation, all rents, issues and profits related thereto),
rights in and under guarantees, instruments, securities, documents of title and
other contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or Inventory
(as defined below) which any of the foregoing may represent (collectively,
"General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel
paper, all instruments (as defined in Article 9 of the Uniform Commercial Code),
all bills of lading, warehouse receipts and other documents of title and
documents, in each instance whether now owned or hereafter acquired by the
Grantor (collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined
in Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts,
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<PAGE>
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same (in each case only to the extent not otherwise
constituting Investment Property); (ii) money; (iii) proceeds of loans,
including without limitation, all the Loans made to the Grantor under the Credit
Agreement; and (iv) insurance proceeds and books and records relating to any of
the property covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or obligation or applicable law,
rule or regulation, shall the Administrative Agent, Lender or Issuer be
permitted), in any manner, to (a) perform or fulfill any of the obligations of
the
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<PAGE>
Grantor thereunder or pursuant thereto, (b) make any payment, or make any
inquiry as to the nature or the sufficiency of any payment received by the
Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to the Grantor, on which the Grantor has
been granted a Lien to which the Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor
hereby represents, warrants and covenants that as of the date of the execution
of this Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory
and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in
transit or in the possession and control of subcontractors of the
Grantor or any other Person for processing and vehicles) are
located at the places specified in SCHEDULE 1 attached hereto as
amended from time to time pursuant to SECTION 5(B) below and such
location is an owned, leased or bailment location as specified in
SCHEDULE 1 attached hereto. As of the date hereof, the correct
corporate name, the principal place of business, the chief
executive office, and the federal tax identification number of
the Grantor and the places where the Grantor's books and records
concerning the Collateral are currently kept are set forth in
SCHEDULE 2 attached hereto and made a part hereof, and the
Grantor will not change such principal place of business or chief
executive office or remove such records without (i) providing the
Administrative Agent with at least thirty (30) days' prior
written notice of such change, and (ii) making all filings under
the Uniform Commercial Code necessary or appropriate to preserve
the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings.
The Grantor will not change its name, identity or corporate
structure in any manner which might make any financing statement
filed hereunder misleading, UNLESS the Grantor shall have (A)
given the Administrative Agent at least thirty (30) days' prior
written notice thereof (and received any consent that may be
required under the terms of the Credit Agreement), and (B)
certified to the Administrative Agent that all filings reflecting
such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the
security interests described herein. The Grantor will hold and
preserve such records and chattel paper and will permit
representatives of the Administrative Agent, upon reasonable
notice and at times during normal business hours to inspect and
make abstracts from such records and chattel paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit
Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under
SECTION 9.03 of the Credit Agreement. The
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<PAGE>
Grantor has not, during the five (5) years preceding the date
hereof, been known as or used any other corporate or fictitious
name, except as disclosed on SCHEDULE 3 hereto, nor acquired all
or substantially all the assets, capital stock or operating unit
of any Person, except as disclosed on SCHEDULE 3 hereto and each
predecessor in interest of the Grantor during the five (5) years
preceding the Closing Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the
Administrative Agent a legal, valid and enforceable security
interest in the Collateral, securing the payment of the
Liabilities. When financing statements have been filed in the
appropriate offices in the locations listed on SCHEDULES 1 AND 2
hereto, the Administrative Agent will have a fully perfected
first priority Lien on the Collateral to the extent such Lien may
be perfected by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval
or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other third party is
required either for (i) the perfection or maintenance of the
security interest created hereby, except for the Uniform
Commercial Code filings referred to in clause (d) (and except for
the filings with the United States Patent and Trademark Office
and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative
Agent's security interest) or (ii) for the exercise by the
Administrative Agent of its rights provided for in this Agreement
or the remedies in respect of the Collateral pursuant to this
Agreement.
(f) The Inventory produced by the Grantor has been produced
in compliance in all material respects with all requirements of
the Fair Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the
Administrative Agent's written request and at the expense of the
Grantor, the Grantor will promptly and duly execute and deliver
any and all such further instruments and documents and take such
further action as the Administrative Agent reasonably may deem
desirable in order to perfect and protect any Lien granted or
purported to be granted hereby or to enable the Administrative
Agent to exercise and enforce its rights and remedies hereunder
with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and
during the continuance of an Event of Default, at the request of
the Administrative Agent, mark conspicuously each item of chattel
paper included in the Collateral and each related contract and
each of its records pertaining to the Collateral, with a legend,
in form and substance satisfactory to the Administrative Agent,
indicating that such document, chattel paper, related contract or
Collateral is subject to the security interest granted hereby;
(ii) if any Collateral shall be evidenced by
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a promissory note or other instrument (other than checks or
drafts received in the ordinary course of the Grantor's
business), deliver and pledge to the Administrative Agent
hereunder such note or instrument duly endorsed and accompanied
by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Administrative Agent; and
(iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices as
the Administrative Agent may request, as may be necessary or
desirable, in order to perfect and preserve the security interest
granted or purported to be granted hereby. The Grantor hereby
authorizes the Administrative Agent to file any such financing or
continuation statements without the signature of the Grantor to
the extent permitted by applicable law. The Grantor hereby agrees
that a carbon, photographic, photostatic or other reproduction of
this Security Agreement or of a financing statement is sufficient
as a financing statement to the extent permitted by applicable
law.
(b) The Grantor shall keep the Equipment and Inventory
(other than Inventory and Equipment sold in accordance with the
terms of the Credit Agreement, Equipment being repaired or
serviced, Inventory in transit or in the possession and control
of subcontractors of the Grantor and vehicles) at the places
specified in SCHEDULE 1 hereto and deliver written notice to the
Administrative Agent at least 30 days prior to establishing any
other location at which it reasonably expects to maintain
Inventory and/or Equipment (it being understood and agreed that
all action required by SECTION 5(A) hereof shall have been taken
in the relevant jurisdiction with respect to all such Equipment
and/or Inventory prior to the establishment of any such
location). Upon the establishment of any such location, and after
notice thereof to the Administrative Agent as required in the
preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the
Administrative Agent or the Grantor and the Grantor hereby
authorizes the Administrative Agent to substitute a new SCHEDULE
1 hereto to reflect such additional location(s).
(c) The Grantor will keep and maintain at the Grantor's own
cost and expense satisfactory and complete records of the
Collateral in a manner reasonably acceptable to the
Administrative Agent, including, without limitation, a record of
all payments received and all credits granted with respect to
such Collateral and a record of the Administrative Agent's
security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall,
for the Administrative Agent's further security, deliver and turn
over to the Administrative Agent or the Administrative Agent's
designated representatives at any time upon three (3) Business
Days' notice from the Administrative Agent or the Administrative
Agent's designated representative, copies of any such books and
records (including, without limitation, any and all computer
tapes, programs and source codes relating to the Collateral or
any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the
Collateral, the Grantor will save, indemnify
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and keep the Administrative Agent, each Lender and each Issuing
Bank harmless from and against all expense, loss or damages
suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Grantor of any
obligation or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligor or its
successors from the Grantor, and all such obligations of the
Grantor shall be and shall remain enforceable against and only
against the Grantor and shall not be enforceable against the
Administrative Agent, any Lender or any Issuing Bank; PROVIDED,
HOWEVER, the Grantor shall have no obligation to the
Administrative Agent with respect to the matters indemnified
pursuant to this subsection (d) resulting from the willful
misconduct or gross negligence of the Administrative Agent, any
Lender or an Issuing Bank as determined in a final non-appealable
judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist,
and will defend the Collateral against and take such other action
as is necessary to remove, any Lien on such Collateral, other
than Liens permitted under SECTION 9.03 of the Credit Agreement,
and will defend the right, title and interest of the
Administrative Agent in and to the Grantor's rights to such
Collateral, including, without limitation, the proceeds and
products thereof, against the claims and demands of all Persons
whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an
Event of Default, the Grantor will not, without the
Administrative Agent's prior written consent, except in the
ordinary course of business and for amounts which are not
material to the Barneys Group, taken as a whole in the aggregate,
(i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less
than the full amount thereof; (ii) release, wholly or partly, any
Person liable for the payment thereof; or (iii) allow any credit
or discount whatsoever thereon other than trade discounts granted
in the ordinary course of business.
(g) The Grantor will advise the Administrative Agent
promptly, in reasonable detail, of (i) any material Lien or claim
made by or asserted against any or all of the Collateral, and
(ii) the occurrence of any other event which would have a
material adverse effect on the aggregate value of the Collateral
or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION
6, the Grantor shall continue to collect, at its own expense, all amounts due or
to become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have
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the right at any time, upon the occurrence and during the continuance of an
Event of Default, to require the Grantor to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the
Administrative Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to the Grantor thereunder directly
to the Administrative Agent and, upon such notification and at the expense of
the Grantor, to enforce collection of any such Accounts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Administrative Agent referred to in the proviso to the preceding
sentence, all amounts and proceeds (including instruments) received by the
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied to the Obligations in accordance
with the Credit Agreement (including, without limitation, SECTION 3.02(B)(II)
thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may exercise in respect of the Collateral,
in addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees
that it will at its expense and upon request of the
Administrative Agent, promptly assemble all, or such part, of the
Collateral as directed by the Administrative Agent and make such
Collateral available to the Administrative Agent at a place
designated by the Administrative Agent, which place shall be
reasonably convenient to the Administrative Agent, whether at the
premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without
breach of the peace, any premises where any of the Collateral or
the books and records of the Grantor related thereto are or may
be located and, without charge or liability to the Administrative
Agent, seize and remove such Collateral and such books and
records from such premises, or remain upon such premises and use
the same for the purpose of enforcing any and all rights and
remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan
Documents; and
(iii) without notice, except as specified below, sell,
lease, assign, grant an option or options to purchase or
otherwise dispose of all or any part of the Collateral in one or
more parcels, at public or private sale or sales, at any
exchange, broker's board or
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at any of the Administrative Agent's offices or elsewhere, at
such prices as the Administrative Agent may deem best, for cash,
on credit or for future delivery, and upon such other terms as
the Administrative Agent may deem commercially reasonable;
PROVIDED, HOWEVER, that the Grantor shall not be credited with
the net proceeds of any such credit sale, future delivery or
lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees
that, to the extent notice of sale shall be required by law, at
least ten (10) Business Days' notice, or such longer period as
may be required by law, to the Grantor of the time and place of
any public sale, or the time after which any private sale is to
be made, shall constitute reasonable notification. No
notification required by law need be given to the Grantor if the
Grantor has signed, after the occurrence of an Event of Default,
a statement renouncing any right to notification of sale or other
intended disposition. The Administrative Agent shall not be
obligated to make any sale of any of the Collateral regardless of
notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to
which it was so adjourned. The Administrative Agent, any Lender
and any of the Issuing Banks shall have the right upon any such
public sale or sales and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of
redemption in the Grantor, which right or equity is hereby
expressly waived and released. In the event of a sale of any
Collateral, or any part thereof, to a Lender, an Issuing Bank, or
the Administrative Agent upon the occurrence and during the
continuance of an Event of Default, such Lender, Issuing Bank, or
the Administrative Agent shall not deduct or offset from any part
of the purchase price to be paid therefor any indebtedness owing
to it by the Grantor. Any and all proceeds received by the
Administrative Agent with respect to any sale of, collection from
or other realization upon all or any part of the Collateral,
whether consisting of monies, checks, notes, drafts, bills of
exchange, money orders or commercial paper of any kind
whatsoever, shall be held by the Administrative Agent and
distributed by the Administrative Agent in accordance with the
Credit Agreement (including, without limitation, SECTION
3.02(B)(II) thereof) and the Grantor shall remain liable for any
deficiency following the sale of the Collateral. Subject to the
terms of any applicable license agreement to which the Grantor is
a party, the Administrative Agent is hereby granted an
irrevocable license or other right to use, without charge, the
Grantor's labels, copyrights, patents, rights of use of any name,
trade names, general intangibles, trademarks and advertising
matter, or any property of a similar nature, in completing
production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor
waives all claims, damages and demands against the Administrative Agent, any
Lender or any Issuing Bank arising out of the repossession, retention or sale of
the Collateral, or any part or parts thereof, except any such claims, damages
and awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
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(c) The Grantor recognizes that in the event the Grantor fails
to perform, observe or discharge any of its obligations or liabilities under
this Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails
to perform any agreement contained herein, the Administrative Agent, upon
written notice to the Grantor if practicable, may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall constitute an Obligation payable by the
Grantor on demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any pay ment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative
Agent and promptly following such request, to take any action and execute any
instrument which the Administrative Agent
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may deem necessary or advisable to accomplish the purposes of this Security
Agreement. The Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or Administrative Agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Grantor, or in its own name, from time to time
in the Administrative Agent's discretion upon the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes hereof and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right on behalf
of the Grantor, without notice to or assent by the Grantor, to the extent
permitted by applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to
the Administrative Agent pursuant to SECTION 8.05 of the Credit
Agreement;
(ii) ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipt for monies due and to
become due under or in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other
negotiable and nonnegotiable instruments, documents and chattel
paper taken or received by the Administrative Agent in connection
with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle,
compromise or adjust any claim, suit, action or proceeding with
respect to the Collateral;
(v) to sell, transfer, assign or otherwise deal in or with
the Collateral or any part thereof pursuant to the terms and
conditions of this Security Agreement; and
(vi) to do, at its option and at the expense and for the
account of the Grantor, at any time or from time to time, all
acts and things which the Administrative Agent deems necessary to
protect or preserve the Collateral and to realize upon the
Collateral.
11. SEVERABILITY. If any provision of this Security Agreement
is held to be prohibited or unenforceable in any jurisdiction the substantive
laws of which are held to be applicable hereto, such prohibition or
unenforceability shall not affect the validity or enforceability of the
remaining provisions hereof and shall not invalidate or render unenforceable
such provision in any other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Grantor herefrom shall be
effective, except by or pursuant to an instrument in
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writing which (i) is duly executed by the Grantor (if the Grantor is adversely
affected by such amendment) and the Administrative Agent and (ii) complies with
the requirements of the Credit Agreement. Any such waiver shall be valid only to
the extent set forth therein. A waiver by the Administrative Agent of any right
or remedy under this Security Agreement on any one occasion shall not be
construed as a waiver of any right or remedy which the Administrative Agent
would otherwise have on any future occasion. No failure to exercise or delay in
exercising any right, power or privilege under this Security Agreement on the
part of the Administrative Agent shall operate as a waiver thereof; and no
single or partial exercise of any right, power or privilege under this Security
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF
COLLATERAL. (a) The security interest granted by the Grantor under this Security
Agreement shall terminate against all the Collateral upon final payment in full
in cash of the Obligations and termination of the Commitments. Upon such
termination and at the written request of the Grantor or its successors or
assigns, and at the cost and expense of the Grantor or its successors or
assigns, the Administrative Agent shall execute in a timely manner a
satisfaction of this Security Agreement and such instruments, documents or
agreements as are necessary or desirable to terminate and remove of record any
documents constituting public notice of this Security Agreement and the security
interests and assignments granted hereunder and shall assign and transfer, or
cause to be assigned and transferred, and shall deliver or cause to be delivered
to the Grantor, all property, including all monies, instruments and securities
of the Grantor then held by the Administrative Agent or any agent, bailee or
nominee of the Administrative Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the
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Administrative Agent shall not be required to execute any such documents on
terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED
BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS
IN OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE
JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The
Grantor agrees that the terms of SECTION 13.17 of the Credit Agreement with
respect to consent to jurisdiction and service of process shall apply equally to
this Security Agreement. The Administrative Agent shall have the right to
proceed against the Grantor or its personal property in a court in any
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location to enable the Administrative Agent to obtain personal jurisdiction over
the Grantor, to realize on the Collateral or any other security for the
Liabilities or to enforce a judgment or other court order entered in favor of
the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to
the Administrative Agent, the Lenders and the Issuing Banks that it has
discussed this Security Agreement and, specifically, the provisions of SECTIONS
18, 21, 22 and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time
and from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all
the other Loan Documents, embodies the entire agreement and understanding,
between the Grantor and the Administrative Agent, any Lender or any Issuing
Banks and supersedes all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Security Agreement or caused this Security Agreement to be executed and
delivered by their duly authorized officers as of the date first set forth
above.
BARNEYS (CA) LEASE CORP.
By /s/ Edward Lambert
---------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
---------------------------------
Name: Brenda Cotsen
Title: Vice President
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Exhibit 10.14
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among BARNEYS (NY) LEASE CORP. (with its successors and permitted
assigns, the "Grantor"), and CITICORP USA, INC., in its capacity as
administrative agent (with its successors in such capacity, the "Administrative
Agent") for the Lenders (as defined below) and the Issuing Banks (as defined
below) under that certain Credit Agreement dated as of January 28, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Barney's, Inc., Barneys America, Inc., PFP Fashions
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively, the "Borrowers"), the Administrative Agent, the lenders from time
to time a party thereto (the "Lenders"), the issuing banks from time to time a
party thereto (the "Issuing Banks") and General Electric Capital Corporation, in
its capacity as documentation agent (in such capacity, the "Documentation
Agent") . Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
--------------------
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein.
<PAGE>
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable
and other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any letters of credit, indemnity,
warranty or guaranty payable to the Grantor from time to time with respect to
the foregoing or proceeds of any insurance policies on which the Grantor is
named as
<PAGE>
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the Grantor to secure
payment of the Grantor's accounts, all right, title and interest under leases,
subleases, and concessions and other agreements relating to personal property
(including, without limitation, all rents, issues and profits related thereto),
rights in and under guarantees, instruments, securities, documents of title and
other contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or Inventory
(as defined below) which any of the foregoing may represent (collectively,
"General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code), all
bills of lading, warehouse receipts and other documents of title and documents,
in each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in
Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts,
<PAGE>
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same (in each case only to the extent not otherwise
constituting Investment Property); (ii) money; (iii) proceeds of loans,
including without limitation, all the Loans made to the Grantor under the Credit
Agreement; and (iv) insurance proceeds and books and records relating to any of
the property covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or obligation or applicable law,
rule or regulation, shall the Administrative Agent, Lender or Issuer be
permitted), in any manner, to (a) perform or fulfill any of the obligations of
the
<PAGE>
Grantor thereunder or pursuant thereto, (b) make any payment, or make any
inquiry as to the nature or the sufficiency of any payment received by the
Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to the Grantor, on which the Grantor has
been granted a Lien to which the Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified in
SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making all
filings under the Uniform Commercial Code necessary or appropriate to
preserve the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all filings
reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security
interests described herein. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under SECTION
9.03 of the Credit Agreement. The
<PAGE>
Grantor has not, during the five (5) years preceding the date hereof, been
known as or used any other corporate or fictitious name, except as
disclosed on SCHEDULE 3 hereto, nor acquired all or substantially all the
assets, capital stock or operating unit of any Person, except as disclosed
on SCHEDULE 3 hereto and each predecessor in interest of the Grantor
during the five (5) years preceding the Closing Date is disclosed on
SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Administrative
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on SCHEDULES
1 AND 2 hereto, the Administrative Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created hereby,
except for the Uniform Commercial Code filings referred to in clause (d)
(and except for the filings with the United States Patent and Trademark
Office and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative Agent's
security interest) or (ii) for the exercise by the Administrative Agent of
its rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect and
protect any Lien granted or purported to be granted hereby or to enable
the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative
Agent, mark conspicuously each item of chattel paper included in the
Collateral and each related contract and each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to the
Administrative Agent, indicating that such document, chattel paper,
related contract or Collateral is subject to the security interest granted
hereby; (ii) if any Collateral shall be evidenced by
<PAGE>
a promissory note or other instrument (other than checks or drafts
received in the ordinary course of the Grantor's business), deliver and
pledge to the Administrative Agent hereunder such note or instrument duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Administrative
Agent; and (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices
as the Administrative Agent may request, as may be necessary or desirable,
in order to perfect and preserve the security interest granted or
purported to be granted hereby. The Grantor hereby authorizes the
Administrative Agent to file any such financing or continuation statements
without the signature of the Grantor to the extent permitted by applicable
law. The Grantor hereby agrees that a carbon, photographic, photostatic or
other reproduction of this Security Agreement or of a financing statement
is sufficient as a financing statement to the extent permitted by
applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or
in the possession and control of subcontractors of the Grantor and
vehicles) at the places specified in SCHEDULE 1 hereto and deliver written
notice to the Administrative Agent at least 30 days prior to establishing
any other location at which it reasonably expects to maintain Inventory
and/or Equipment (it being understood and agreed that all action required
by SECTION 5(A) hereof shall have been taken in the relevant jurisdiction
with respect to all such Equipment and/or Inventory prior to the
establishment of any such location). Upon the establishment of any such
location, and after notice thereof to the Administrative Agent as required
in the preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the Administrative
Agent or the Grantor and the Grantor hereby authorizes the Administrative
Agent to substitute a new SCHEDULE 1 hereto to reflect such additional
location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the Administrative
Agent's security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or the Administrative Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Administrative Agent or the Administrative Agent's designated
representative, copies of any such books and records (including, without
limitation, any and all computer tapes, programs and source codes relating
to the Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the Collateral,
the Grantor will save, indemnify
<PAGE>
and keep the Administrative Agent, each Lender and each Issuing Bank
harmless from and against all expense, loss or damages suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by the
Grantor of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such obligor
or its successors from the Grantor, and all such obligations of the
Grantor shall be and shall remain enforceable against and only against the
Grantor and shall not be enforceable against the Administrative Agent, any
Lender or any Issuing Bank; PROVIDED, however, the Grantor shall have no
obligation to the Administrative Agent with respect to the matters
indemnified pursuant to this subsection (d) resulting from the willful
misconduct or gross negligence of the Administrative Agent, any Lender or
an Issuing Bank as determined in a final non-appealable judgment by a
court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend the
right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Grantor will not, without the Administrative Agent's prior
written consent, except in the ordinary course of business and for amounts
which are not material to the Barneys Group, taken as a whole in the
aggregate, (i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less than the
full amount thereof; (ii) release, wholly or partly, any Person liable for
the payment thereof; or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Administrative Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6,
the Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have
<PAGE>
the right at any time, upon the occurrence and during the continuance of an
Event of Default, to require the Grantor to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the
Administrative Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to the Grantor thereunder directly
to the Administrative Agent and, upon such notification and at the expense of
the Grantor, to enforce collection of any such Accounts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Administrative Agent referred to in the proviso to the preceding
sentence, all amounts and proceeds (including instruments) received by the
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied to the Obligations in accordance
with the Credit Agreement (including, without limitation, SECTION 3.02(B)(II)
thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent, promptly
assemble all, or such part, of the Collateral as directed by the
Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without
charge or liability to the Administrative Agent, seize and remove such
Collateral and such books and records from such premises, or remain upon
such premises and use the same for the purpose of enforcing any and all
rights and remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of all
or any part of the Collateral in one or more parcels, at public or private
sale or sales, at any exchange, broker's board or
<PAGE>
at any of the Administrative Agent's offices or elsewhere, at such prices
as the Administrative Agent may deem best, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Agent may
deem commercially reasonable; PROVIDED, HOWEVER, that the Grantor shall
not be credited with the net proceeds of any such credit sale, future
delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
Business Days' notice, or such longer period as may be required by law, to
the Grantor of the time and place of any public sale, or the time after
which any private sale is to be made, shall constitute reasonable
notification. No notification required by law need be given to the Grantor
if the Grantor has signed, after the occurrence of an Event of Default, a
statement renouncing any right to notification of sale or other intended
disposition. The Administrative Agent shall not be obligated to make any
sale of any of the Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned. The Administrative Agent, any Lender and any
of the Issuing Banks shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Grantor, which right or equity
is hereby expressly waived and released. In the event of a sale of any
Collateral, or any part thereof, to a Lender, an Issuing Bank, or the
Administrative Agent upon the occurrence and during the continuance of an
Event of Default, such Lender, Issuing Bank, or the Administrative Agent
shall not deduct or offset from any part of the purchase price to be paid
therefor any indebtedness owing to it by the Grantor. Any and all proceeds
received by the Administrative Agent with respect to any sale of,
collection from or other realization upon all or any part of the
Collateral, whether consisting of monies, checks, notes, drafts, bills of
exchange, money orders or commercial paper of any kind whatsoever, shall
be held by the Administrative Agent and distributed by the Administrative
Agent in accordance with the Credit Agreement (including, without
limitation, SECTION 3.02(B)(II) thereof) and the Grantor shall remain
liable for any deficiency following the sale of the Collateral. Subject to
the terms of any applicable license agreement to which the Grantor is a
party, the Administrative Agent is hereby granted an irrevocable license
or other right to use, without charge, the Grantor's labels, copyrights,
patents, rights of use of any name, trade names, general intangibles,
trademarks and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands against the Administrative Agent, any Lender or
any Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
<PAGE>
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative
<PAGE>
Agent may deem necessary or advisable to accomplish the purposes of this
Security Agreement. The Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or Administrative Agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Grantor, or in its own name, from time to time
in the Administrative Agent's discretion upon the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes hereof and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right on behalf
of the Grantor, without notice to or assent by the Grantor, to the extent
permitted by applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Grantor, at any time or from time to time, all acts and things which
the Administrative Agent deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement is
held to be prohibited or unenforceable in any jurisdiction the substantive laws
of which are held to be applicable hereto, such prohibition or unenforceability
shall not affect the validity or enforceability of the remaining provisions
hereof and shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Grantor herefrom shall be
effective, except by or pursuant to an instrument in
<PAGE>
writing which (i) is duly executed by the Grantor (if the Grantor is adversely
affected by such amendment) and the Administrative Agent and (ii) complies with
the requirements of the Credit Agreement. Any such waiver shall be valid only to
the extent set forth therein. A waiver by the Administrative Agent of any right
or remedy under this Security Agreement on any one occasion shall not be
construed as a waiver of any right or remedy which the Administrative Agent
would otherwise have on any future occasion. No failure to exercise or delay in
exercising any right, power or privilege under this Security Agreement on the
part of the Administrative Agent shall operate as a waiver thereof; and no
single or partial exercise of any right, power or privilege under this Security
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL.
(a) The security interest granted by the Grantor under this Security Agreement
shall terminate against all the Collateral upon final payment in full in cash of
the Obligations and termination of the Commitments. Upon such termination and at
the written request of the Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Administrative
Agent shall execute in a timely manner a satisfaction of this Security Agreement
and such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the
<PAGE>
Administrative Agent shall not be required to execute any such documents on
terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN
OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Security Agreement. The Administrative Agent shall have the right to proceed
against the Grantor or its personal property in a court in any
<PAGE>
location to enable the Administrative Agent to obtain personal jurisdiction over
the Grantor, to realize on the Collateral or any other security for the
Liabilities or to enforce a judgment or other court order entered in favor of
the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to the
Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 18, 21, 22
and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time and
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all the
other Loan Documents, embodies the entire agreement and understanding, between
the Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BARNEYS (NY) LEASE CORP.
By /s/ Edward Lambert
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Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
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Name: Brenda Cotsen
Title: Vice President
<PAGE>
Exhibit 10.15
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among BASCO ALL-AMERICAN SPORTSWEAR CORP. (with its successors and
permitted assigns, the "Grantor"), and CITICORP USA, INC., in its capacity as
administrative agent (with its successors in such capacity, the "Administrative
Agent") for the Lenders (as defined below) and the Issuing Banks (as defined
below) under that certain Credit Agreement dated as of January 28, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Barney's, Inc., Barneys America, Inc., PFP Fashions
Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco All-American
Sportswear Corp., BNY Licensing Corp., and Barneys America (Chicago) Lease Corp.
(collectively, the "Borrowers"), the Administrative Agent, the lenders from time
to time a party thereto (the "Lenders"), the issuing banks from time to time a
party thereto (the "Issuing Banks") and General Electric Capital Corporation, in
its capacity as documentation agent (in such capacity, the "Documentation
Agent") . Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Grantor is a party to the Credit Agreement,
pursuant to which the Lenders and the Issuing Banks have agreed, subject to
certain conditions precedent, to make certain loans and other financial
accommodations to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term
used herein that is defined in the Credit Agreement shall have the meaning
specified for such term in the Credit Agreement. Unless otherwise defined herein
or in the Credit Agreement, all terms defined in Article 8 and Article 9 of the
Uniform Commercial Code in effect as of the date hereof in the State of New York
are used herein as defined therein.
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(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the
singular shall have comparable meanings when used in the plural, and VICE VERSA,
unless otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and
complete payment, observance and performance of all the Liabilities, the Grantor
hereby grants (subject as set forth below) to the Administrative Agent for the
benefit of the Administrative Agent, the Lenders, the Issuing Banks and the
other Holders, a security interest in all of the Grantor's rights, title and
interests in and to the following property, whether now owned or existing or
hereafter arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts
receivable and other rights of the Grantor to payment for the sale or lease of
goods or the rendition of services (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance (collectively,
"Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and
future general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any letters of credit, indemnity,
warranty or guaranty payable to the Grantor from time to time with respect to
the foregoing or proceeds of any insurance policies on which the Grantor is
named as
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<PAGE>
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the Grantor to secure
payment of the Grantor's accounts, all right, title and interest under leases,
subleases, and concessions and other agreements relating to personal property
(including, without limitation, all rents, issues and profits related thereto),
rights in and under guarantees, instruments, securities, documents of title and
other contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or Inventory
(as defined below) which any of the foregoing may represent (collectively,
"General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel
paper, all instruments (as defined in Article 9 of the Uniform Commercial Code),
all bills of lading, warehouse receipts and other documents of title and
documents, in each instance whether now owned or hereafter acquired by the
Grantor (collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined
in Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts, letters of credit,
stocks, bonds, and debt and equity securities, whether or not certificated, and
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<PAGE>
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same (in each case only to the extent not otherwise constituting
Investment Property); (ii) money; (iii) proceeds of loans, including without
limitation, all the Loans made to the Grantor under the Credit Agreement; and
(iv) insurance proceeds and books and records relating to any of the property
covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or obligation or applicable law,
rule or regulation, shall the Administrative Agent, Lender or Issuer be
permitted), in any manner, to (a) perform or fulfill any of the obligations of
the
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<PAGE>
Grantor thereunder or pursuant thereto, (b) make any payment, or make any
inquiry as to the nature or the sufficiency of any payment received by the
Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to the Grantor, on which the Grantor has
been granted a Lien to which the Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor
hereby represents, warrants and covenants that as of the date of the execution
of this Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory
and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit
or in the possession and control of subcontractors of the Grantor or
any other Person for processing and vehicles) are located at the places
specified in SCHEDULE 1 attached hereto as amended from time to time
pursuant to SECTION 5(B) below and such location is an owned, leased or
bailment location as specified in SCHEDULE 1 attached hereto. As of the
date hereof, the correct corporate name, the principal place of
business, the chief executive office, and the federal tax
identification number of the Grantor and the places where the Grantor's
books and records concerning the Collateral are currently kept are set
forth in SCHEDULE 2 attached hereto and made a part hereof, and the
Grantor will not change such principal place of business or chief
executive office or remove such records without (i) providing the
Administrative Agent with at least thirty (30) days' prior written
notice of such change, and (ii) making all filings under the Uniform
Commercial Code necessary or appropriate to preserve the perfection of
the security interests described herein to the extent such security
interest may be perfected by such filings. The Grantor will not change
its name, identity or corporate structure in any manner which might
make any financing statement filed hereunder misleading, UNLESS the
Grantor shall have (A) given the Administrative Agent at least thirty
(30) days' prior written notice thereof (and received any consent that
may be required under the terms of the Credit Agreement), and (B)
certified to the Administrative Agent that all filings reflecting such
new name, identity or structure have been made which are necessary or
appropriate to preserve the perfection of the security interests
described herein. The Grantor will hold and preserve such records and
chattel paper and will permit representatives of the Administrative
Agent, upon reasonable notice and at times during normal business hours
to inspect and make abstracts from such records and chattel paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and
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<PAGE>
clear of all Liens, except as permitted under SECTION 9.03 of the Credit
Agreement. The Grantor has not, during the five (5) years preceding the
date hereof, been known as or used any other corporate or fictitious
name, except as disclosed on SCHEDULE 3 hereto, nor acquired all or
substantially all the assets, capital stock or operating unit of any
Person, except as disclosed on SCHEDULE 3 hereto and each predecessor in
interest of the Grantor during the five (5) years preceding the Closing
Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the
Administrative Agent a legal, valid and enforceable security interest in
the Collateral, securing the payment of the Liabilities. When financing
statements have been filed in the appropriate offices in the locations
listed on SCHEDULES 1 AND 2 hereto, the Administrative Agent will have a
fully perfected first priority Lien on the Collateral to the extent such
Lien may be perfected by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created
hereby, except for the Uniform Commercial Code filings referred to in
clause (d) (and except for the filings with the United States Patent and
Trademark Office and except for, in the case of motor vehicles,
certificates of title which have been issued, which note the
Administrative Agent's security interest) or (ii) for the exercise by
the Administrative Agent of its rights provided for in this Agreement or
the remedies in respect of the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect
and protect any Lien granted or purported to be granted hereby or to
enable the Administrative Agent to exercise and enforce its rights and
remedies hereunder with respect to the Collateral. Without limiting the
generality of the foregoing, the Grantor will: (i) upon the occurrence
and during the continuance of an Event of Default, at the request of the
Administrative Agent, mark conspicuously each item of chattel paper
included in the Collateral and each related contract and each of its
records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Administrative
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<PAGE>
Agent, indicating that such document, chattel paper, related contract or
Collateral is subject to the security interest granted hereby; (ii) if
any Collateral shall be evidenced by a promissory note or other
instrument (other than checks or drafts received in the ordinary course
of the Grantor's business), deliver and pledge to the Administrative
Agent hereunder such note or instrument duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Administrative Agent; and (iii) execute
and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices as the Administrative
Agent may request, as may be necessary or desirable, in order to perfect
and preserve the security interest granted or purported to be granted
hereby. The Grantor hereby authorizes the Administrative Agent to file
any such financing or continuation statements without the signature of
the Grantor to the extent permitted by applicable law. The Grantor
hereby agrees that a carbon, photographic, photostatic or other
reproduction of this Security Agreement or of a financing statement is
sufficient as a financing statement to the extent permitted by
applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other
than Inventory and Equipment sold in accordance with the terms of the
Credit Agreement, Equipment being repaired or serviced, Inventory in
transit or in the possession and control of subcontractors of the
Grantor and vehicles) at the places specified in SCHEDULE 1 hereto and
deliver written notice to the Administrative Agent at least 30 days
prior to establishing any other location at which it reasonably expects
to maintain Inventory and/or Equipment (it being understood and agreed
that all action required by SECTION 5(A) hereof shall have been taken
in the relevant jurisdiction with respect to all such Equipment and/or
Inventory prior to the establishment of any such location). Upon the
establishment of any such location, and after notice thereof to the
Administrative Agent as required in the preceding sentence, SCHEDULE 1
hereto shall be deemed amended to add such location thereto without
further action by the Administrative Agent or the Grantor and the
Grantor hereby authorizes the Administrative Agent to substitute a new
SCHEDULE 1 hereto to reflect such additional location(s).
(c) The Grantor will keep and maintain at the Grantor's own
cost and expense satisfactory and complete records of the Collateral in
a manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the
Administrative Agent's security interest in the Collateral. Upon the
occurrence and during the continuance of an Event of Default, the
Grantor shall, for the Administrative Agent's further security, deliver
and turn over to the Administrative Agent or the Administrative Agent's
designated representatives at any time upon three (3) Business Days'
notice from the Administrative Agent or the Administrative Agent's
designated representative, copies of any such books and records
(including, without limitation, any and all computer tapes, programs
and source codes relating to the Collateral or any part or parts
thereof).
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(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the
Collateral, the Grantor will save, indemnify and keep the
Administrative Agent, each Lender and each Issuing Bank harmless from
and against all expense, loss or damages suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by the
Grantor of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such
obligor or its successors from the Grantor, and all such obligations of
the Grantor shall be and shall remain enforceable against and only
against the Grantor and shall not be enforceable against the
Administrative Agent, any Lender or any Issuing Bank; PROVIDED,
HOWEVER, the Grantor shall have no obligation to the Administrative
Agent with respect to the matters indemnified pursuant to this
subsection (d) resulting from the willful misconduct or gross
negligence of the Administrative Agent, any Lender or an Issuing Bank
as determined in a final non-appealable judgment by a court of
competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist,
and will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend
the right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event
of Default, the Grantor will not, without the Administrative Agent's
prior written consent, except in the ordinary course of business and
for amounts which are not material to the Barneys Group, taken as a
whole in the aggregate, (i) grant any extension of the time of payment
of any of the Collateral or compromise, compound or settle the same for
less than the full amount thereof; (ii) release, wholly or partly, any
Person liable for the payment thereof; or (iii) allow any credit or
discount whatsoever thereon other than trade discounts granted in the
ordinary course of business.
(g) The Grantor will advise the Administrative Agent promptly,
in reasonable detail, of (i) any material Lien or claim made by or
asserted against any or all of the Collateral, and (ii) the occurrence
of any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the Liens with respect to such
Collateral created hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION
6, the Grantor shall continue to collect, at its own expense, all amounts due or
to become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the
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occurrence and during the continuation of an Event of Default, at the
Administrative Agent's direction, must take) such action as the Grantor or,
after the occurrence and during the continuation an Event of Default, the
Administrative Agent may deem necessary or advisable to enforce collection of
the Accounts; PROVIDED, HOWEVER, that the Administrative Agent shall have the
right at any time, upon the occurrence and during the continuance of an Event of
Default, to require the Grantor to notify the account debtors or obligors under
any Accounts of the assignment of such Accounts to the Administrative Agent and
to direct such account debtors or obligors to make payment of all amounts due or
to become due to the Grantor thereunder directly to the Administrative Agent
and, upon such notification and at the expense of the Grantor, to enforce
collection of any such Accounts, and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as the Grantor
might have done. After receipt by the Grantor of the notice from the
Administrative Agent referred to in the proviso to the preceding sentence, all
amounts and proceeds (including instruments) received by the Grantor in respect
of the Accounts shall be received in trust for the benefit of the Administrative
Agent, the Lenders, the Issuing Banks and the other Holders hereunder, shall be
segregated from other funds of the Grantor and shall be forthwith paid over to
the Administrative Agent in the same form as so received (with any necessary
endorsement) to be applied to the Obligations in accordance with the Credit
Agreement (including, without limitation, SECTION 3.02(B)(II) thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may exercise in respect of the Collateral,
in addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that
it will at its expense and upon request of the Administrative Agent,
promptly assemble all, or such part, of the Collateral as directed by
the Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and,
without charge or liability to the Administrative Agent, seize and
remove such Collateral and such books and records from such premises, or
remain upon such premises and use the same for the purpose of enforcing
any and all rights and remedies of the Administrative Agent under this
Security Agreement, the
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Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of
all or any part of the Collateral in one or more parcels, at public or
private sale or sales, at any exchange, broker's board or at any of the
Administrative Agent's offices or elsewhere, at such prices as the
Administrative Agent may deem best, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable; PROVIDED, HOWEVER, that the Grantor shall not
be credited with the net proceeds of any such credit sale, future
delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten (10)
Business Days' notice, or such longer period as may be required by law,
to the Grantor of the time and place of any public sale, or the time
after which any private sale is to be made, shall constitute reasonable
notification. No notification required by law need be given to the
Grantor if the Grantor has signed, after the occurrence of an Event of
Default, a statement renouncing any right to notification of sale or
other intended disposition. The Administrative Agent shall not be
obligated to make any sale of any of the Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. The Administrative
Agent, any Lender and any of the Issuing Banks shall have the right upon
any such public sale or sales and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the
Grantor, which right or equity is hereby expressly waived and released.
In the event of a sale of any Collateral, or any part thereof, to a
Lender, an Issuing Bank, or the Administrative Agent upon the occurrence
and during the continuance of an Event of Default, such Lender, Issuing
Bank, or the Administrative Agent shall not deduct or offset from any
part of the purchase price to be paid therefor any indebtedness owing to
it by the Grantor. Any and all proceeds received by the Administrative
Agent with respect to any sale of, collection from or other realization
upon all or any part of the Collateral, whether consisting of monies,
checks, notes, drafts, bills of exchange, money orders or commercial
paper of any kind whatsoever, shall be held by the Administrative Agent
and distributed by the Administrative Agent in accordance with the
Credit Agreement (including, without limitation, SECTION 3.02(B)(II)
thereof) and the Grantor shall remain liable for any deficiency
following the sale of the Collateral. Subject to the terms of any
applicable license agreement to which the Grantor is a party, the
Administrative Agent is hereby granted an irrevocable license or other
right to use, without charge, the Grantor's labels, copyrights, patents,
rights of use of any name, trade names, general intangibles, trademarks
and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any
Collateral.
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(b) To the extent permitted by applicable law, the Grantor
waives all claims, damages and demands against the Administrative Agent, any
Lender or any Issuing Bank arising out of the repossession, retention or sale of
the Collateral, or any part or parts thereof, except any such claims, damages
and awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
(c) The Grantor recognizes that in the event the Grantor fails
to perform, observe or discharge any of its obligations or liabilities under
this Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails
to perform any agreement contained herein, the Administrative Agent, upon
written notice to the Grantor if practicable, may itself perform, or cause
performance of, such agreement, and the expenses of the Administrative Agent
incurred in connection therewith shall constitute an Obligation payable by the
Grantor on demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
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federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative
Agent and promptly following such request, to take any action and execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement. The Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer or
Administrative Agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the
Grantor, or in its own name, from time to time in the Administrative Agent's
discretion upon the occurrence and during the continuance of an Event of
Default, for the purpose of carrying out the terms of this Security Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes
hereof and, without limiting the generality of the foregoing, hereby gives the
Administrative Agent the power and right on behalf of the Grantor, without
notice to or assent by the Grantor, to the extent permitted by applicable law,
to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under
or in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account
of the Grantor, at any time or from time to time, all acts and things
which the Administrative Agent deems necessary to protect or preserve
the Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement
is held to be
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prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Grantor herefrom shall be
effective, except by or pursuant to an instrument in writing which (i) is duly
executed by the Grantor (if the Grantor is adversely affected by such amendment)
and the Administrative Agent and (ii) complies with the requirements of the
Credit Agreement. Any such waiver shall be valid only to the extent set forth
therein. A waiver by the Administrative Agent of any right or remedy under this
Security Agreement on any one occasion shall not be construed as a waiver of any
right or remedy which the Administrative Agent would otherwise have on any
future occasion. No failure to exercise or delay in exercising any right, power
or privilege under this Security Agreement on the part of the Administrative
Agent shall operate as a waiver thereof; and no single or partial exercise of
any right, power or privilege under this Security Agreement shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF
COLLATERAL. (a) The security interest granted by the Grantor under this Security
Agreement shall terminate against all the Collateral upon final payment in full
in cash of the Obligations and termination of the Commitments. Upon such
termination and at the written request of the Grantor or its successors or
assigns, and at the cost and expense of the Grantor or its successors or
assigns, the Administrative Agent shall execute in a timely manner a
satisfaction of this Security Agreement and such instruments, documents or
agreements as are necessary or desirable to terminate and remove of record any
documents constituting public notice of this Security Agreement and the security
interests and assignments granted hereunder and shall assign and transfer, or
cause to be assigned and transferred, and shall deliver or cause to be delivered
to the Grantor, all property, including all monies, instruments and securities
of the Grantor then held by the Administrative Agent or any agent, bailee or
nominee of the Administrative Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the
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Grantor may, to the extent permitted by SECTION 9.02 of the Credit Agreement,
sell, assign, transfer or otherwise dispose of any Collateral. In addition, the
Collateral shall be subject to release in accordance with SECTION 12.09(C) of
the Credit Agreement (such Collateral and the Collateral referred to in the
immediately preceding sentence being the "Released Collateral"). The Liens under
this Security Agreement shall terminate with respect to the Released Collateral
upon such sale, transfer, assignment, disposition or release and upon the
request of the Grantor, the Administrative Agent shall execute and deliver such
instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the Administrative Agent shall not be
required to execute any such documents on terms which, in the Administrative
Agent's opinion, would expose the Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Liabilities or any Liens on (or obligations of
the Grantor in respect of) all interests retained by the Grantor, including
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED
BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS
IN OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE
JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
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20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The
Grantor agrees that the terms of SECTION 13.17 of the Credit Agreement with
respect to consent to jurisdiction and service of process shall apply equally to
this Security Agreement. The Administrative Agent shall have the right to
proceed against the Grantor or its personal property in a court in any location
to enable the Administrative Agent to obtain personal jurisdiction over the
Grantor, to realize on the Collateral or any other security for the Liabilities
or to enforce a judgment or other court order entered in favor of the
Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to
the Administrative Agent, the Lenders and the Issuing Banks that it has
discussed this Security Agreement and, specifically, the provisions of SECTIONS
18, 21, 22 and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time
and from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
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26. MERGER. This Security Agreement, taken together with all
the other Loan Documents, embodies the entire agreement and understanding,
between the Grantor and the Administrative Agent, any Lender or any Issuing
Banks and supersedes all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Security Agreement or caused this Security Agreement to be executed and
delivered by their duly authorized officers as of the date first set forth
above.
BASCO ALL-AMERICAN SPORTSWEAR CORP.
By /s/ Edward Lambert
-------------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
-------------------------------------
Name: Brenda Cotsen
Title: Vice President
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Exhibit 10.16
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of January 28,
1999, by and among BARNEYS AMERICA (CHICAGO) LEASE CORP. (with its successors
and permitted assigns, the "Grantor"), and CITICORP USA, INC., in its capacity
as administrative agent (with its successors in such capacity, the
"Administrative Agent") for the Lenders (as defined below) and the Issuing Banks
(as defined below) under that certain Credit Agreement dated as of January 28,
1999 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Barney's, Inc., Barneys America, Inc., PFP
Fashions Inc., Barneys (CA) Lease Corp., Barneys (NY) Lease Corp., Basco
All-American Sportswear Corp., BNY Licensing Corp., and Barneys America
(Chicago) Lease Corp. (collectively, the "Borrowers"), the Administrative Agent,
the lenders from time to time a party thereto (the "Lenders"), the issuing banks
from time to time a party thereto (the "Issuing Banks") and General Electric
Capital Corporation, in its capacity as documentation agent (in such capacity,
the "Documentation Agent") . Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Credit Agreement.
W I T N E S S E T H:
--------------------
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Grantor's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein.
<PAGE>
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable
and other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Grantor's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
interests in partnerships and limited liability companies that do not constitute
securities, inventions, designs, patents, patent applications, trademarks,
service marks, trademark applications, service mark applications, trade names,
trade secrets, goodwill, registrations, copyrights, licenses, franchises,
customer lists, computer programs, software and other computer materials, tax
refunds, tax refund claims, rights and claims against charters, carriers,
shippers, franchisees, lessors, and lessees, and rights to indemnification,
intercompany receivables, and any security documents executed in connection
therewith, deposit accounts, proceeds of any letters of credit, indemnity,
warranty or guaranty payable to the Grantor from time to time with respect to
the foregoing or proceeds of any insurance policies on which the Grantor is
named as
<PAGE>
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the Grantor to secure
payment of the Grantor's accounts, all right, title and interest under leases,
subleases, and concessions and other agreements relating to personal property
(including, without limitation, all rents, issues and profits related thereto),
rights in and under guarantees, instruments, securities, documents of title and
other contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or Inventory
(as defined below) which any of the foregoing may represent (collectively,
"General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (I) through (III) above, (v) goods
in which the Grantor has a joint or other interest to the extent of the
Grantor's interest therein or right of any kind (including, without limitation,
goods in which the Grantor has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Grantor; in each case whether
in the possession of the Grantor, a bailee, a consignee, or any other Person for
sale, storage, transit, processing, use or otherwise, and any and all documents
for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code), all
bills of lading, warehouse receipts and other documents of title and documents,
in each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in
Article 9 of the Uniform Commercial Code) including, without limitation, all
securities (as defined in Article 8 of the Uniform Commercial Code), whether
certificated or uncertificated, security entitlements, securities accounts,
commodities contracts and commodity accounts (collectively, "Investment
Property");
(g) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Grantor whether in the possession, custody or
control of the Administrative Agent, any Lender, any Issuing Bank or any other
Holder, or any agent or affiliate of any of them in any way or for any purpose
(whether for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts,
<PAGE>
letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to acquire
or otherwise relating to the same (in each case only to the extent not otherwise
constituting Investment Property); (ii) money; (iii) proceeds of loans,
including without limitation, all the Loans made to the Grantor under the Credit
Agreement; and (iv) insurance proceeds and books and records relating to any of
the property covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Administrative Agent
hereunder for the observance and performance of all of the conditions and
obligations to be observed and performed by the Grantor thereunder, all in
accordance with and pursuant to the terms and provisions thereof, and the
exercise by the Administrative Agent, any Lender or any Issuing Bank of any
rights under this Security Agreement, the Credit Agreement or any other Loan
Document shall not release the Grantor from any of the Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Administrative Agent nor any Lender or Issuing Bank
shall have any duty, responsibility, obligation or liability under any such
contract, agreement, interest or obligation by reason of or arising out of this
Security Agreement or the assignment thereof by the Grantor to the
Administrative Agent or the granting by the Grantor to the Administrative Agent
of a Lien thereon or the receipt by the Administrative Agent, any Lender or any
Issuing Bank of any payment relating to any such contract, agreement, interest
or obligation pursuant hereto, nor shall the Administrative Agent, any Lender or
any Issuing Bank be required or obligated (nor to the extent prohibited by the
terms of such contract, agreement, interest or obligation or applicable law,
rule or regulation, shall the Administrative Agent, Lender or Issuer be
permitted), in any manner, to (a) perform or fulfill any of the obligations of
the
<PAGE>
Grantor thereunder or pursuant thereto, (b) make any payment, or make any
inquiry as to the nature or the sufficiency of any payment received by the
Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to the Grantor, on which the Grantor has
been granted a Lien to which the Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified in
SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making all
filings under the Uniform Commercial Code necessary or appropriate to
preserve the perfection of the security interests described herein to the
extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all filings
reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security
interests described herein. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under SECTION
9.03 of the Credit Agreement. The
<PAGE>
Grantor has not, during the five (5) years preceding the date hereof, been
known as or used any other corporate or fictitious name, except as
disclosed on SCHEDULE 3 hereto, nor acquired all or substantially all the
assets, capital stock or operating unit of any Person, except as disclosed
on SCHEDULE 3 hereto and each predecessor in interest of the Grantor
during the five (5) years preceding the Closing Date is disclosed on
SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Administrative
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on SCHEDULES
1 AND 2 hereto, the Administrative Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created hereby,
except for the Uniform Commercial Code filings referred to in clause (d)
(and except for the filings with the United States Patent and Trademark
Office and except for, in the case of motor vehicles, certificates of
title which have been issued, which note the Administrative Agent's
security interest) or (ii) for the exercise by the Administrative Agent of
its rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Security Agreement and
until the termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect and
protect any Lien granted or purported to be granted hereby or to enable
the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to the Collateral. Without limiting the generality
of the foregoing, the Grantor will: (i) upon the occurrence and during the
continuance of an Event of Default, at the request of the Administrative
Agent, mark conspicuously each item of chattel paper included in the
Collateral and each related contract and each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to the
Administrative Agent, indicating that such document, chattel paper,
related contract or Collateral is subject to the security interest granted
hereby; (ii) if any Collateral shall be evidenced by
<PAGE>
a promissory note or other instrument (other than checks or drafts
received in the ordinary course of the Grantor's business), deliver and
pledge to the Administrative Agent hereunder such note or instrument duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Administrative
Agent; and (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices
as the Administrative Agent may request, as may be necessary or desirable,
in order to perfect and preserve the security interest granted or
purported to be granted hereby. The Grantor hereby authorizes the
Administrative Agent to file any such financing or continuation statements
without the signature of the Grantor to the extent permitted by applicable
law. The Grantor hereby agrees that a carbon, photographic, photostatic or
other reproduction of this Security Agreement or of a financing statement
is sufficient as a financing statement to the extent permitted by
applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other than
Inventory and Equipment sold in accordance with the terms of the Credit
Agreement, Equipment being repaired or serviced, Inventory in transit or
in the possession and control of subcontractors of the Grantor and
vehicles) at the places specified in SCHEDULE 1 hereto and deliver written
notice to the Administrative Agent at least 30 days prior to establishing
any other location at which it reasonably expects to maintain Inventory
and/or Equipment (it being understood and agreed that all action required
by SECTION 5(A) hereof shall have been taken in the relevant jurisdiction
with respect to all such Equipment and/or Inventory prior to the
establishment of any such location). Upon the establishment of any such
location, and after notice thereof to the Administrative Agent as required
in the preceding sentence, SCHEDULE 1 hereto shall be deemed amended to
add such location thereto without further action by the Administrative
Agent or the Grantor and the Grantor hereby authorizes the Administrative
Agent to substitute a new SCHEDULE 1 hereto to reflect such additional
location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the Administrative
Agent's security interest in the Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or the Administrative Agent's designated
representatives at any time upon three (3) Business Days' notice from the
Administrative Agent or the Administrative Agent's designated
representative, copies of any such books and records (including, without
limitation, any and all computer tapes, programs and source codes relating
to the Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the Collateral,
the Grantor will save, indemnify
<PAGE>
and keep the Administrative Agent, each Lender and each Issuing Bank
harmless from and against all expense, loss or damages suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by the
Grantor of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such obligor
or its successors from the Grantor, and all such obligations of the
Grantor shall be and shall remain enforceable against and only against the
Grantor and shall not be enforceable against the Administrative Agent, any
Lender or any Issuing Bank; PROVIDED, however, the Grantor shall have no
obligation to the Administrative Agent with respect to the matters
indemnified pursuant to this subsection (d) resulting from the willful
misconduct or gross negligence of the Administrative Agent, any Lender or
an Issuing Bank as determined in a final non-appealable judgment by a
court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend the
right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Grantor will not, without the Administrative Agent's prior
written consent, except in the ordinary course of business and for amounts
which are not material to the Barneys Group, taken as a whole in the
aggregate, (i) grant any extension of the time of payment of any of the
Collateral or compromise, compound or settle the same for less than the
full amount thereof; (ii) release, wholly or partly, any Person liable for
the payment thereof; or (iii) allow any credit or discount whatsoever
thereon other than trade discounts granted in the ordinary course of
business.
(g) The Grantor will advise the Administrative Agent promptly, in
reasonable detail, of (i) any material Lien or claim made by or asserted
against any or all of the Collateral, and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of
the Collateral or on the Liens with respect to such Collateral created
hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6,
the Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have
<PAGE>
the right at any time, upon the occurrence and during the continuance of an
Event of Default, to require the Grantor to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the
Administrative Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to the Grantor thereunder directly
to the Administrative Agent and, upon such notification and at the expense of
the Grantor, to enforce collection of any such Accounts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Grantor might have done. After receipt by the Grantor of the
notice from the Administrative Agent referred to in the proviso to the preceding
sentence, all amounts and proceeds (including instruments) received by the
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied to the Obligations in accordance
with the Credit Agreement (including, without limitation, SECTION 3.02(B)(II)
thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent, promptly
assemble all, or such part, of the Collateral as directed by the
Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and, without
charge or liability to the Administrative Agent, seize and remove such
Collateral and such books and records from such premises, or remain upon
such premises and use the same for the purpose of enforcing any and all
rights and remedies of the Administrative Agent under this Security
Agreement, the Credit Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of all
or any part of the Collateral in one or more parcels, at public or private
sale or sales, at any exchange, broker's board or
<PAGE>
at any of the Administrative Agent's offices or elsewhere, at such prices
as the Administrative Agent may deem best, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Agent may
deem commercially reasonable; PROVIDED, HOWEVER, that the Grantor shall
not be credited with the net proceeds of any such credit sale, future
delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten (10)
Business Days' notice, or such longer period as may be required by law, to
the Grantor of the time and place of any public sale, or the time after
which any private sale is to be made, shall constitute reasonable
notification. No notification required by law need be given to the Grantor
if the Grantor has signed, after the occurrence of an Event of Default, a
statement renouncing any right to notification of sale or other intended
disposition. The Administrative Agent shall not be obligated to make any
sale of any of the Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned. The Administrative Agent, any Lender and any
of the Issuing Banks shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Grantor, which right or equity
is hereby expressly waived and released. In the event of a sale of any
Collateral, or any part thereof, to a Lender, an Issuing Bank, or the
Administrative Agent upon the occurrence and during the continuance of an
Event of Default, such Lender, Issuing Bank, or the Administrative Agent
shall not deduct or offset from any part of the purchase price to be paid
therefor any indebtedness owing to it by the Grantor. Any and all proceeds
received by the Administrative Agent with respect to any sale of,
collection from or other realization upon all or any part of the
Collateral, whether consisting of monies, checks, notes, drafts, bills of
exchange, money orders or commercial paper of any kind whatsoever, shall
be held by the Administrative Agent and distributed by the Administrative
Agent in accordance with the Credit Agreement (including, without
limitation, SECTION 3.02(B)(II) thereof) and the Grantor shall remain
liable for any deficiency following the sale of the Collateral. Subject to
the terms of any applicable license agreement to which the Grantor is a
party, the Administrative Agent is hereby granted an irrevocable license
or other right to use, without charge, the Grantor's labels, copyrights,
patents, rights of use of any name, trade names, general intangibles,
trademarks and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any Collateral.
(b) To the extent permitted by applicable law, the Grantor waives
all claims, damages and demands against the Administrative Agent, any Lender or
any Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
<PAGE>
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
9. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative
Agent shall not be liable for any acts, omissions, errors of judgment or
mistakes of fact or law including, without limitation, acts, omissions, errors
or mistakes with respect to the Collateral, except for those arising out of or
in connection with the Administrative Agent's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect to the safe
custody of the Collateral in the Administrative Agent's possession. Without
limiting the generality of the foregoing, the Administrative Agent shall be
under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantor,
and shall constitute part of the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT
APPOINTED ATTORNEY-IN-FACT. The Administrative Agent shall be under no
obligation to marshal any assets in favor of the Grantor or against or in
payment of any or all of the Liabilities. To the extent that the Grantor makes a
payment or payments to the Administrative Agent or the Administrative Agent
receives any payment or proceeds of the Collateral for the benefit of the
Administrative Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative
<PAGE>
Agent may deem necessary or advisable to accomplish the purposes of this
Security Agreement. The Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or Administrative Agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full power
and authority in the name of the Grantor, or in its own name, from time to time
in the Administrative Agent's discretion upon the occurrence and during the
continuance of an Event of Default, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes hereof and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right on behalf
of the Grantor, without notice to or assent by the Grantor, to the extent
permitted by applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Grantor, at any time or from time to time, all acts and things which
the Administrative Agent deems necessary to protect or preserve the
Collateral and to realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement is
held to be prohibited or unenforceable in any jurisdiction the substantive laws
of which are held to be applicable hereto, such prohibition or unenforceability
shall not affect the validity or enforceability of the remaining provisions
hereof and shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Grantor herefrom shall be
effective, except by or pursuant to an instrument in
<PAGE>
writing which (i) is duly executed by the Grantor (if the Grantor is adversely
affected by such amendment) and the Administrative Agent and (ii) complies with
the requirements of the Credit Agreement. Any such waiver shall be valid only to
the extent set forth therein. A waiver by the Administrative Agent of any right
or remedy under this Security Agreement on any one occasion shall not be
construed as a waiver of any right or remedy which the Administrative Agent
would otherwise have on any future occasion. No failure to exercise or delay in
exercising any right, power or privilege under this Security Agreement on the
part of the Administrative Agent shall operate as a waiver thereof; and no
single or partial exercise of any right, power or privilege under this Security
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Grantor and its successors and assign(s),
and shall inure to the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, and their respective successors and
assigns. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give any other Person any right, remedy or claim under, to
or in respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Grantor's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Grantor.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL.
(a) The security interest granted by the Grantor under this Security Agreement
shall terminate against all the Collateral upon final payment in full in cash of
the Obligations and termination of the Commitments. Upon such termination and at
the written request of the Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Administrative
Agent shall execute in a timely manner a satisfaction of this Security Agreement
and such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the
<PAGE>
Administrative Agent shall not be required to execute any such documents on
terms which, in the Administrative Agent's opinion, would expose the
Administrative Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Grantor in respect of) all
interests retained by the Grantor, including without limitation, the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
15. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence and during the continuance of an Event
of Default, the Administrative Agent may, and upon the written direction of the
Requisite Lenders shall, exercise any of the rights and remedies provided in
this Security Agreement, the Credit Agreement and any of the other Loan
Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN
OTHER JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to
save the Administrative Agent, each Lender and each Issuing Bank harmless from,
any and all liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Security Agreement. The Administrative Agent shall have the right to proceed
against the Grantor or its personal property in a court in any
<PAGE>
location to enable the Administrative Agent to obtain personal jurisdiction over
the Grantor, to realize on the Collateral or any other security for the
Liabilities or to enforce a judgment or other court order entered in favor of
the Administrative Agent.
22. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
23. ADVICE OF COUNSEL. The Grantor represents and warrants to the
Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 18, 21, 22
and 25 hereof, with the Grantor's attorneys.
24. FURTHER ASSURANCES. The Grantor agrees that at any time and
from time to time, at the expense of the Grantor, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
25. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE
ADMINISTRATIVE AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND
THE GRANTOR ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS
SECURITY AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
26. MERGER. This Security Agreement, taken together with all the
other Loan Documents, embodies the entire agreement and understanding, between
the Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BARNEYS AMERICA (CHICAGO) LEASE CORP.
By /s/ Edward Lambert
-------------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
-------------------------------------
Name: Brenda Cotsen
Title: Vice President
<PAGE>
Exhibit 10.17
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise modified
from time to time, this "Security Agreement"), dated as of January 28, 1999, by
and among BNY LICENSING CORP. (with its successors and permitted assigns, the
"Grantor"), and CITICORP USA, INC., in its capacity as administrative agent
(with its successors in such capacity, the "Administrative Agent") for the
Lenders (as defined below) and the Issuing Banks (as defined below) under that
certain Credit Agreement dated as of January 28, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among Barney's, Inc., Barneys America, Inc., PFP Fashions Inc., Barneys (CA)
Lease Corp., Barneys (NY) Lease Corp., Basco All-American Sportswear Corp., BNY
Licensing Corp., and Barneys America (Chicago) Lease Corp. (collectively, the
"Borrowers"), the Administrative Agent, the lenders from time to time a party
thereto (the "Lenders"), the issuing banks from time to time a party thereto
(the "Issuing Banks") and General Electric Capital Corporation, in its capacity
as documentation agent (in such capacity, the "Documentation Agent").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Grantor is a party to the Credit Agreement, pursuant to
which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make certain loans and other financial accommodations
to the Borrowers from time to time; and
WHEREAS, in order to secure the prompt and complete payment, observance
and performance of (i) all of the Obligations and (ii) all of the Grantor's
obligations and liabilities hereunder and in connection herewith (all the
Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Administrative Agent, the
Lenders and the Issuing Banks have required as a condition, among others, to
entering into the Credit Agreement that the Grantor execute and deliver this
Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used herein
that is defined in the Credit Agreement shall have the meaning specified for
such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein.
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(b) The words "hereby," "hereof," "herein" and "hereunder" and words of
like import when used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular shall
have comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, observance and performance of all the Liabilities, the Grantor hereby
grants (subject as set forth below) to the Administrative Agent for the benefit
of the Administrative Agent, the Lenders, the Issuing Banks and the other
Holders, a security interest in all of the Grantor's rights, title and interests
in and to the following property, whether now owned or existing or hereafter
arising or acquired and wheresoever located (the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts receivable and
other rights of the Grantor to payment for the sale or lease of goods or the
rendition of services (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or
not they have been earned by performance (collectively, "Accounts");
(b) EQUIPMENT: All of the Grantor's present and future (i) equipment and
fixtures, including, without limitation, wherever located, printing presses and
other machinery, manufacturing, distribution, selling, data processing and
office equipment, furniture, furnishings, assembly systems, tools, tooling,
molds, dies, appliances and vehicles, vessels and aircraft, (ii) other tangible
personal property (other than the Grantor's Inventory) and (iii) any and all
accessions, parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements, products
and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Grantor's present and future general
intangibles, choses in action, causes of action, and all other intangible
personal property of every kind and nature including, without limitation,
corporate, partnership and other business books and records, interests in
partnerships and limited liability companies that do not constitute securities,
inventions, designs, patents, patent applications, trademarks, service marks,
trademark applications, service mark applications, trade names, trade secrets,
goodwill, registrations, copyrights, licenses, franchises, customer lists,
computer programs, software and other computer materials, tax refunds, tax
refund claims, rights and claims against charters, carriers, shippers,
franchisees, lessors, and lessees, and rights to indemnification, intercompany
receivables, and any security documents executed in connection therewith,
deposit accounts, proceeds of any letters of credit, indemnity, warranty or
guaranty payable to the Grantor from time to time with respect to the foregoing
or proceeds of any insurance policies on which the Grantor is named as
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to the Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by the
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Grantor to secure payment of the Grantor's accounts, all right, title and
interest under leases, subleases, and concessions and other agreements relating
to personal property (including, without limitation, all rents, issues and
profits related thereto), rights in and under guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory (as defined below) which any of
the foregoing may represent (collectively, "General Intangibles");
(d) INVENTORY: All of the Grantor's present and future (i) inventory,
(ii) goods, merchandise and other personal property furnished or to be furnished
under any contract of service or intended for sale or lease, and all goods
consigned by the Grantor and all other items which have previously constituted
Equipment but are then currently being held for sale or lease in the ordinary
course of the Grantor's business, (iii) raw materials, work-in-process and
finished goods, (iv) materials, components and supplies of any kind, nature or
description used or consumed in the Grantor's business or in connection with the
manufacture, production, packing, shipping, advertising, finishing or sale of
any of the Property described in CLAUSES (I) through (III) above, (v) goods in
which the Grantor has a joint or other interest to the extent of the Grantor's
interest therein or right of any kind (including, without limitation, goods in
which the Grantor has an interest or right as consignee), and (vi) goods which
are returned to or repossessed by the Grantor; in each case whether in the
possession of the Grantor, a bailee, a consignee, or any other Person for sale,
storage, transit, processing, use or otherwise, and any and all documents for or
relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all
instruments (as defined in Article 9 of the Uniform Commercial Code), all bills
of lading, warehouse receipts and other documents of title and documents, in
each instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in Article
9 of the Uniform Commercial Code) including, without limitation, all securities
(as defined in Article 8 of the Uniform Commercial Code), whether certificated
or uncertificated, security entitlements, securities accounts, commodities
contracts and commodity accounts (collectively, "Investment Property");
(g) OTHER PROPERTY: All property or interests in property now owned or
hereafter acquired by the Grantor whether in the possession, custody or control
of the Administrative Agent, any Lender, any Issuing Bank or any other Holder,
or any agent or affiliate of any of them in any way or for any purpose (whether
for safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), including, without limitation, (i) notes, drafts, letters of credit,
stocks, bonds, and debt and equity securities, whether or not certificated, and
warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same (in each case only to the extent not otherwise constituting
Investment Property); (ii) money; (iii) proceeds of loans, including without
limitation, all the Loans made to the Grantor under the Credit Agreement; and
(iv) insurance proceeds and books and records relating to any of the
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property covered by this Agreement (collectively, "Other Property");
together with in respect to each of the items set forth in paragraphs (a)
through (g) above, all accessions and additions thereto, substitutions therefor,
and replacements, proceeds and products thereof. Notwithstanding anything to the
contrary in this Security Agreement, nothing herein or otherwise shall be deemed
or construed, directly or indirectly, as a grant by the Grantor to the
Administrative Agent, the Lenders, the Issuing Banks or the other Holders of a
Lien of any kind whatsoever on any "Collateral" (as defined in the (i) Security
Agreement dated as of the date hereof between the Grantor and BI-Equipment
Lessors LLC, (ii) the Security Agreement dated as of the date hereof between the
Grantor and Copelco Capital, Inc. and (iii) the Security Agreement dated as of
the date hereof between the Grantor and John Hancock Leasing Corporation)
subject to a Lien granted to any of the Equipment Lessors (as defined in the
Plan of Reorganization) pursuant to any of the Security Agreements referred to
immediately above as in effect on the date hereof.
This Security Agreement shall not create or be filed as a lien against the land,
building and/or improvements to the real property in which the goods, machinery,
equipment, appliances or other personal property covered hereby are to be
located or installed.
3. CONTINUING LIABILITY. The Grantor hereby expressly agrees that,
notwithstanding anything set forth herein to the contrary, the Grantor shall
remain solely responsible under each contract, agreement, interest or obligation
as to which a Lien has been granted to the Administrative Agent hereunder for
the observance and performance of all of the conditions and obligations to be
observed and performed by the Grantor thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and the exercise by the
Administrative Agent, any Lender or any Issuing Bank of any rights under this
Security Agreement, the Credit Agreement or any other Loan Document shall not
release the Grantor from any of the Grantor's duties or obligations hereunder
and under each such contract, agreement, interest or obligation. Neither the
Administrative Agent nor any Lender or Issuing Bank shall have any duty,
responsibility, obligation or liability under any such contract, agreement,
interest or obligation by reason of or arising out of this Security Agreement or
the assignment thereof by the Grantor to the Administrative Agent or the
granting by the Grantor to the Administrative Agent of a Lien thereon or the
receipt by the Administrative Agent, any Lender or any Issuing Bank of any
payment relating to any such contract, agreement, interest or obligation
pursuant hereto, nor shall the Administrative Agent, any Lender or any Issuing
Bank be required or obligated (nor to the extent prohibited by the terms of such
contract, agreement, interest or obligation or applicable law, rule or
regulation, shall the Administrative Agent, Lender or Issuer be permitted), in
any manner, to (a) perform or fulfill any of the obligations of the Grantor
thereunder or pursuant thereto, (b) make any payment, or make any inquiry as to
the nature or the sufficiency of any payment received by the Grantor or the
sufficiency of any performance by any party under any such contract, agreement,
interest or obligation, or (c) present or file any claim, or take any action to
collect or enforce any performance or payment of any amounts which may have been
assigned to the Grantor, on which the Grantor has been granted a Lien to which
the Grantor may be entitled at any time or times.
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4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor hereby
represents, warrants and covenants that as of the date of the execution of this
Security Agreement, and until the termination of this Security Agreement
pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Grantor or any other
Person for processing and vehicles) are located at the places specified
in SCHEDULE 1 attached hereto as amended from time to time pursuant to
SECTION 5(B) below and such location is an owned, leased or bailment
location as specified in SCHEDULE 1 attached hereto. As of the date
hereof, the correct corporate name, the principal place of business, the
chief executive office, and the federal tax identification number of the
Grantor and the places where the Grantor's books and records concerning
the Collateral are currently kept are set forth in SCHEDULE 2 attached
hereto and made a part hereof, and the Grantor will not change such
principal place of business or chief executive office or remove such
records without (i) providing the Administrative Agent with at least
thirty (30) days' prior written notice of such change, and (ii) making
all filings under the Uniform Commercial Code necessary or appropriate
to preserve the perfection of the security interests described herein to
the extent such security interest may be perfected by such filings. The
Grantor will not change its name, identity or corporate structure in any
manner which might make any financing statement filed hereunder
misleading, UNLESS the Grantor shall have (A) given the Administrative
Agent at least thirty (30) days' prior written notice thereof (and
received any consent that may be required under the terms of the Credit
Agreement), and (B) certified to the Administrative Agent that all
filings reflecting such new name, identity or structure have been made
which are necessary or appropriate to preserve the perfection of the
security interests described herein. The Grantor will hold and preserve
such records and chattel paper and will permit representatives of the
Administrative Agent, upon reasonable notice and at times during normal
business hours to inspect and make abstracts from such records and
chattel paper.
(b) The Grantor has exclusive possession and control of the
Equipment and Inventory except as permitted under the Credit Agreement.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens, except as permitted under
SECTION 9.03 of the Credit Agreement. The Grantor has not, during the
five (5) years preceding the date hereof, been known as or used any
other corporate or fictitious name, except as disclosed on SCHEDULE 3
hereto, nor acquired all or substantially all the assets, capital stock
or operating unit of any Person, except as disclosed on SCHEDULE 3
hereto and each predecessor in interest of the Grantor during the five
(5) years preceding the Closing Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the
Administrative Agent a legal, valid and enforceable security interest in
the Collateral, securing the payment of the Liabilities. When financing
statements have been filed in the appropriate offices in the
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locations listed on SCHEDULES 1 AND 2 hereto, the Administrative Agent
will have a fully perfected first priority Lien on the Collateral to the
extent such Lien may be perfected by Uniform Commercial Code filings.
(e) No consent of any Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either for
(i) the perfection or maintenance of the security interest created
hereby, except for the Uniform Commercial Code filings referred to in
clause (d) (and except for the filings with the United States Patent and
Trademark Office and except for, in the case of motor vehicles,
certificates of title which have been issued, which note the
Administrative Agent's security interest) or (ii) for the exercise by
the Administrative Agent of its rights provided for in this Agreement or
the remedies in respect of the Collateral pursuant to this Agreement.
(f) The Inventory produced by the Grantor has been produced in
compliance in all material respects with all requirements of the Fair
Labor Standards Act.
5. COVENANTS. The Grantor covenants and agrees with the Administrative
Agent that from and after the date of this Security Agreement and until the
termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Administrative
Agent's written request and at the expense of the Grantor, the Grantor
will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the
Administrative Agent reasonably may deem desirable in order to perfect
and protect any Lien granted or purported to be granted hereby or to
enable the Administrative Agent to exercise and enforce its rights and
remedies hereunder with respect to the Collateral. Without limiting the
generality of the foregoing, the Grantor will: (i) upon the occurrence
and during the continuance of an Event of Default, at the request of the
Administrative Agent, mark conspicuously each item of chattel paper
included in the Collateral and each related contract and each of its
records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Administrative Agent, indicating that such
document, chattel paper, related contract or Collateral is subject to
the security interest granted hereby; (ii) if any Collateral shall be
evidenced by a promissory note or other instrument (other than checks or
drafts received in the ordinary course of the Grantor's business),
deliver and pledge to the Administrative Agent hereunder such note or
instrument duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Administrative Agent; and (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices as the Administrative Agent may request, as may
be necessary or desirable, in order to perfect and preserve the security
interest granted or purported to be granted hereby. The Grantor hereby
authorizes the Administrative Agent to file any such financing or
continuation
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statements without the signature of the Grantor to the extent permitted
by applicable law. The Grantor hereby agrees that a carbon,
photographic, photostatic or other reproduction of this Security
Agreement or of a financing statement is sufficient as a financing
statement to the extent permitted by applicable law.
(b) The Grantor shall keep the Equipment and Inventory (other
than Inventory and Equipment sold in accordance with the terms of the
Credit Agreement, Equipment being repaired or serviced, Inventory in
transit or in the possession and control of subcontractors of the
Grantor and vehicles) at the places specified in SCHEDULE 1 hereto and
deliver written notice to the Administrative Agent at least 30 days
prior to establishing any other location at which it reasonably expects
to maintain Inventory and/or Equipment (it being understood and agreed
that all action required by SECTION 5(A) hereof shall have been taken in
the relevant jurisdiction with respect to all such Equipment and/or
Inventory prior to the establishment of any such location). Upon the
establishment of any such location, and after notice thereof to the
Administrative Agent as required in the preceding sentence, SCHEDULE 1
hereto shall be deemed amended to add such location thereto without
further action by the Administrative Agent or the Grantor and the
Grantor hereby authorizes the Administrative Agent to substitute a new
SCHEDULE 1 hereto to reflect such additional location(s).
(c) The Grantor will keep and maintain at the Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Administrative Agent, including,
without limitation, a record of all payments received and all credits
granted with respect to such Collateral and a record of the
Administrative Agent's security interest in the Collateral. Upon the
occurrence and during the continuance of an Event of Default, the
Grantor shall, for the Administrative Agent's further security, deliver
and turn over to the Administrative Agent or the Administrative Agent's
designated representatives at any time upon three (3) Business Days'
notice from the Administrative Agent or the Administrative Agent's
designated representative, copies of any such books and records
(including, without limitation, any and all computer tapes, programs and
source codes relating to the Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the
Administrative Agent under any Account comprising part of the
Collateral, the Grantor will save, indemnify and keep the Administrative
Agent, each Lender and each Issuing Bank harmless from and against all
expense, loss or damages suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the
obligor thereunder, arising out of a breach by the Grantor of any
obligation or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligor or its
successors from the Grantor, and all such obligations of the Grantor
shall be and shall remain enforceable against and only against the
Grantor and shall not be enforceable against the Administrative Agent,
any Lender or any Issuing Bank; PROVIDED, HOWEVER, the Grantor shall
have no obligation to the Administrative Agent with respect to the
matters indemnified pursuant to this subsection (d) resulting from the
willful misconduct or gross negligence of the Administrative Agent, any
Lender or an Issuing Bank as determined
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in a final non-appealable judgment by a court of competent jurisdiction.
(e) The Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend
the right, title and interest of the Administrative Agent in and to the
Grantor's rights to such Collateral, including, without limitation, the
proceeds and products thereof, against the claims and demands of all
Persons whatsoever other than claims secured by Liens permitted under
SECTION 9.03 of the Credit Agreement.
(f) Upon the occurrence and during the continuance of an Event
of Default, the Grantor will not, without the Administrative Agent's
prior written consent, except in the ordinary course of business and for
amounts which are not material to the Barneys Group, taken as a whole in
the aggregate, (i) grant any extension of the time of payment of any of
the Collateral or compromise, compound or settle the same for less than
the full amount thereof; (ii) release, wholly or partly, any Person
liable for the payment thereof; or (iii) allow any credit or discount
whatsoever thereon other than trade discounts granted in the ordinary
course of business.
(g) The Grantor will advise the Administrative Agent promptly,
in reasonable detail, of (i) any material Lien or claim made by or
asserted against any or all of the Collateral, and (ii) the occurrence
of any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the Liens with respect to such
Collateral created hereunder.
6. COLLECTIONS. Except as otherwise provided in this SECTION 6, the
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to the Grantor under the Accounts. In connection with such
collections, the Grantor may take (and, after the occurrence and during the
continuation of an Event of Default, at the Administrative Agent's direction,
must take) such action as the Grantor or, after the occurrence and during the
continuation an Event of Default, the Administrative Agent may deem necessary or
advisable to enforce collection of the Accounts; PROVIDED, HOWEVER, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to require the Grantor to notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to the Administrative Agent and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the Grantor
thereunder directly to the Administrative Agent and, upon such notification and
at the expense of the Grantor, to enforce collection of any such Accounts, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Grantor might have done. After receipt by
the Grantor of the notice from the Administrative Agent referred to in the
proviso to the preceding sentence, all amounts and proceeds (including
instruments) received by the Grantor in respect of the Accounts shall be
received in trust for the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Administrative
Agent in the same form as so received (with any necessary endorsement) to be
applied to the
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Obligations in accordance with the Credit Agreement (including, without
limitation, SECTION 3.02(B)(II) thereof).
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies provided for in the Credit
Agreement and all the rights and remedies of a secured party under the Uniform
Commercial Code, and all other applicable law as in effect in any relevant
jurisdiction. In addition, the Administrative Agent may also:
(i) require the Grantor to, and the Grantor hereby agrees that
it will at its expense and upon request of the Administrative Agent,
promptly assemble all, or such part, of the Collateral as directed by
the Administrative Agent and make such Collateral available to the
Administrative Agent at a place designated by the Administrative Agent,
which place shall be reasonably convenient to the Administrative Agent,
whether at the premises of the Grantor or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Grantor related thereto are or may be located and,
without charge or liability to the Administrative Agent, seize and
remove such Collateral and such books and records from such premises, or
remain upon such premises and use the same for the purpose of enforcing
any and all rights and remedies of the Administrative Agent under this
Security Agreement, the Credit Agreement or any of the other Loan
Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of
all or any part of the Collateral in one or more parcels, at public or
private sale or sales, at any exchange, broker's board or at any of the
Administrative Agent's offices or elsewhere, at such prices as the
Administrative Agent may deem best, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable; PROVIDED, HOWEVER, that the Grantor shall not
be credited with the net proceeds of any such credit sale, future
delivery or lease of the Collateral until the cash proceeds thereof are
actually received by the Administrative Agent. The Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten (10)
Business Days' notice, or such longer period as may be required by law,
to the Grantor of the time and place of any public sale, or the time
after which any private sale is to be made, shall constitute reasonable
notification. No notification required by law need be given to the
Grantor if the Grantor has signed, after the occurrence of an Event of
Default, a statement renouncing any right to notification of sale or
other intended disposition. The Administrative Agent shall not be
obligated to make any sale of any of the Collateral
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regardless of notice of sale having been given. The Administrative Agent
may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. The
Administrative Agent, any Lender and any of the Issuing Banks shall have
the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity
of redemption in the Grantor, which right or equity is hereby expressly
waived and released. In the event of a sale of any Collateral, or any
part thereof, to a Lender, an Issuing Bank, or the Administrative Agent
upon the occurrence and during the continuance of an Event of Default,
such Lender, Issuing Bank, or the Administrative Agent shall not deduct
or offset from any part of the purchase price to be paid therefor any
indebtedness owing to it by the Grantor. Any and all proceeds received
by the Administrative Agent with respect to any sale of, collection from
or other realization upon all or any part of the Collateral, whether
consisting of monies, checks, notes, drafts, bills of exchange, money
orders or commercial paper of any kind whatsoever, shall be held by the
Administrative Agent and distributed by the Administrative Agent in
accordance with the Credit Agreement (including, without limitation,
SECTION 3.02(B)(II) thereof) and the Grantor shall remain liable for any
deficiency following the sale of the Collateral. Subject to the terms of
any applicable license agreement to which the Grantor is a party, the
Administrative Agent is hereby granted an irrevocable license or other
right to use, without charge, the Grantor's labels, copyrights, patents,
rights of use of any name, trade names, general intangibles, trademarks
and advertising matter, or any property of a similar nature, in
completing production of, advertising for sale and selling any
Collateral.
(b) To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands against the Administrative Agent, any Lender or any
Issuing Bank arising out of the repossession, retention or sale of the
Collateral, or any part or parts thereof, except any such claims, damages and
awards arising out of the gross negligence or willful misconduct of the
Administrative Agent.
(c) The Grantor recognizes that in the event the Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Security Agreement, no remedy at law will provide adequate relief to the
Administrative Agent and the Administrative Agent shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
(d) The rights and remedies provided under this Security Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law or equity.
8. VOTING RIGHTS. During the term of this Security Agreement, and except
as provided in this SECTION 8 below, the Grantor shall have the right to vote
the Investment Property on all corporate questions in a manner not inconsistent
with the terms of this Security Agreement, the Credit Agreement and the other
Loan Documents. After the occurrence and
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during the continuation of an Event of Default, the Administrative Agent shall,
at the Administrative Agent's option and following written notice from the
Administrative Agent to the Grantor, exercise all voting rights pertaining to
the Investment Property, including the right to take action by shareholder
consent.
9. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) The Grantor shall be entitled to receive and retain any and
all dividends, interest and distributions paid in respect of the
Collateral, notwithstanding such dividends, interest and distributions
being subject to the grant thereof pursuant to SECTION 1; PROVIDED,
HOWEVER, that any and all
(A) dividends, interest and distributions paid or
payable other than in cash with respect to, and instruments and
other property received, receivable or otherwise distributed
with respect to, or in exchange for, any of the Collateral;
(B) dividends and other distributions paid or payable in
cash with respect to any of the Collateral on account of a
partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus;
and
(C) cash paid, payable or otherwise distributed with
respect to principal of, or in redemption of, or in exchange
for, any of the Collateral;
shall be Collateral, and shall be forthwith delivered to the Administrative
Agent to hold, for the benefit of the Administrative Agent, the Lenders, the
Issuing Banks and the other Holders, as Collateral and shall, if received by the
Grantor, be received in trust for the Administrative Agent, for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks and the other Holders,
be segregated from the other property or funds of the Grantor, and be delivered
immediately to the Administrative Agent as Collateral in the same form as so
received (with any necessary endorsement); and
(ii) The Administrative Agent shall execute and deliver (or
cause to be executed and delivered) to the Grantor all such proxies and
other instruments as the Grantor may reasonably request for the purpose
of enabling the Grantor to receive the dividends or interest payments
which it is authorized to receive and retain pursuant to clause (i)
above.
(b) After the occurrence and during the continuation of an Event
of Default:
(i) All rights of the Grantor to receive the dividends, interest
payments and other distributions which it would otherwise be authorized
to receive and retain pursuant to SECTION 9(A)(I) hereof shall cease,
and all such rights shall thereupon become vested in the Administrative
Agent, for the benefit of the Administrative Agent, the Lenders, the
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Issuing Banks and the other Holders, which shall thereupon have the sole
right to receive and hold as Collateral such dividends, interest
payments and other distributions;
(ii) All dividends, interest payments and other distributions
which are received by the Grantor contrary to the provisions of clause
(i) of this SECTION 9(B) shall be received in trust for the
Administrative Agent, for the benefit of the Administrative Agent, the
Lenders, the Issuing Banks and the other Holders, shall be segregated
from other funds of the Grantor and shall be paid over immediately to
the Administrative Agent as Collateral in the same form as so received
(with any necessary endorsements);
(iii) The Grantor shall, upon the reasonable request of the
Administrative Agent, at the Grantor's expense, execute and deliver, and
cause the issuer of the Investment Property and its officers and
directors to execute and deliver, all such instruments and documents,
and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Administrative Agent, the Grantor or
its or their counsel, advisable to register the applicable Collateral
under the provisions of the Securities Act, and to exercise its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion
of the Administrative Agent, the Grantor or its or their counsel, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission
applicable thereto;
(iv) The Grantor shall, upon the reasonable request of the
Administrative Agent, at Grantor's expense, use its best efforts to
qualify the Collateral under state securities or "Blue Sky" laws and to
obtain all necessary governmental approvals for the sale of the
Collateral, as requested by the Administrative Agent;
(v) The Grantor shall, upon the reasonable request of the
Administrative Agent, at the Grantor's expense, cause the issuers of the
Investment Property to make available to the holders of its securities,
as soon as practicable, earnings statements which will satisfy the
provisions of Section 11(a) of the Securities Act; and
(vi) The Grantor shall, upon the reasonable request of the
Administrative Agent, at the Grantor's expense, do or cause to be done
all such other acts and things as may be necessary to make such sale of
the Collateral or any part thereof valid and binding and in compliance
with applicable law.
The Grantor will reimburse the Administrative Agent for all expenses incurred by
the Administrative Agent, including, without limitation, reasonable attorneys'
and accountants' fees and expenses in connection with the foregoing. Upon or at
any time after the occurrence and during the continuation of an Event of
Default, if the Administrative Agent determines that, prior
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to any public offering of any securities constituting part of the Collateral,
such securities should be registered under the Securities Act and/or registered
or qualified under any other federal or state law and such registration and/or
qualification is not practicable, then the Grantor agrees that it will be
commercially reasonable if a private sale, upon at least ten (10) Business Days'
notice to the Grantor, is arranged so as to avoid a public offering, even though
the sales price established and/or obtained at such private sale may be
substantially less than prices which could have been obtained for such security
on any market or exchange or in any other public sale.
10. THE ADMINISTRATIVE AGENT MAY PERFORM. If the Grantor fails to
perform any agreement contained herein, the Administrative Agent, upon written
notice to the Grantor if practicable, may itself perform, or cause performance
of, such agreement, and the expenses of the Administrative Agent incurred in
connection therewith shall constitute an Obligation payable by the Grantor on
demand.
11. THE ADMINISTRATIVE AGENT'S DUTY OF CARE. The Administrative Agent
shall not be liable for any acts, omissions, errors of judgment or mistakes of
fact or law including, without limitation, acts, omissions, errors or mistakes
with respect to the Collateral, except for those arising out of or in connection
with the Administrative Agent's (i) gross negligence or willful misconduct, or
(ii) failure to use reasonable care with respect to the safe custody of the
Collateral in the Administrative Agent's possession. Without limiting the
generality of the foregoing, the Administrative Agent shall be under no
obligation to take any steps necessary to preserve rights in the Collateral
against any other parties but may do so at its option. All expenses incurred in
connection therewith shall be for the sole account of the Grantor, and shall
constitute part of the Liabilities secured hereby.
12. MARSHALLING, PAYMENTS SET ASIDE; ADMINISTRATIVE AGENT APPOINTED
ATTORNEY-IN-FACT. The Administrative Agent shall be under no obligation to
marshal any assets in favor of the Grantor or against or in payment of any or
all of the Liabilities. To the extent that the Grantor makes a payment or
payments to the Administrative Agent or the Administrative Agent receives any
pay ment or proceeds of the Collateral for the benefit of the Administrative
Agent, any Lender, any Issuing Bank or any other Holder, which payment(s) or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any party under any bankruptcy law, state or federal law, common law
or equitable cause, then, to the extent of such payment or proceeds received,
the Liabilities or any part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by the Administrative Agent.
The Grantor agrees, upon the request of the Administrative Agent and
promptly following such request, to take any action and execute any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes of this Security Agreement. The Grantor hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or Administrative Agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of the Grantor, or in
its own name, from time to time in the Administrative Agent's discretion upon
the occurrence and during the
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<PAGE>
continuance of an Event of Default, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes hereof and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right on behalf
of the Grantor, without notice to or assent by the Grantor, to the extent
permitted by applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under
or in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Administrative Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account
of the Grantor, at any time or from time to time, all acts and things
which the Administrative Agent deems necessary to protect or preserve
the Collateral and to realize upon the Collateral.
13. SEVERABILITY. If any provision of this Security Agreement is held to
be prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
14. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended, and no
consent to any departure by the Grantor herefrom shall be effective, except by
or pursuant to an instrument in writing which (i) is duly executed by the
Grantor (if the Grantor is adversely affected by such amendment) and the
Administrative Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Administrative Agent of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right or
remedy which the Administrative Agent would otherwise have on any future
occasion. No failure to exercise or delay in exercising any right, power or
privilege under this Security Agreement on the part of the Administrative Agent
shall operate as a waiver thereof; and no single or partial exercise of any
right, power or privilege
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under this Security Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
15. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security Agreement
shall be binding upon the Grantor and its successors and assign(s), and shall
inure to the benefit of the Administrative Agent, the Lenders, the Issuing Banks
and the other Holders, and their respective successors and assigns. Nothing set
forth herein or in any other Loan Document is intended or shall be construed to
give any other Person any right, remedy or claim under, to or in respect of this
Security Agreement, the Credit Agreement or any other Loan Document or any
Collateral. The Grantor's successors shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Grantor.
16. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL. (a)
The security interest granted by the Grantor under this Security Agreement shall
terminate against all the Collateral upon final payment in full in cash of the
Obligations and termination of the Commitments. Upon such termination and at the
written request of the Grantor or its successors or assigns, and at the cost and
expense of the Grantor or its successors or assigns, the Administrative Agent
shall execute in a timely manner a satisfaction of this Security Agreement and
such instruments, documents or agreements as are necessary or desirable to
terminate and remove of record any documents constituting public notice of this
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to the Grantor, all property, including
all monies, instruments and securities of the Grantor then held by the
Administrative Agent or any agent, bailee or nominee of the Administrative
Agent.
(b) Notwithstanding anything in this Security Agreement to the contrary,
the Grantor may, to the extent permitted by SECTION 9.02 of the Credit
Agreement, sell, assign, transfer or otherwise dispose of any Collateral. In
addition, the Collateral shall be subject to release in accordance with SECTION
12.09(C) of the Credit Agreement (such Collateral and the Collateral referred to
in the immediately preceding sentence being the "Released Collateral"). The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release and upon
the request of the Grantor, the Administrative Agent shall execute and deliver
such instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the Administrative Agent shall not be
required to execute any such documents on terms which, in the Administrative
Agent's opinion, would expose the Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Liabilities or any Liens on (or obligations of
the Grantor in respect of) all interests retained by the Grantor, including
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
17. THE ADMINISTRATIVE AGENT'S EXERCISE OF RIGHTS AND REMEDIES UPON THE
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OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent may, and upon the written direction of the Requisite
Lenders shall, exercise any of the rights and remedies provided in this Security
Agreement, the Credit Agreement and any of the other Loan Documents.
18. NOTICES. Any notice, demand, request or any other communication
required or desired to be served, given or delivered hereunder shall be in
writing and shall be served, given or delivered as provided in SECTION 13.08 of
the Credit Agreement.
19. SECTION HEADINGS. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
20. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS, WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
21. FURTHER INDEMNIFICATION. The Grantor agrees to pay, and to save the
Administrative Agent, each Lender and each Issuing Bank harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and
all excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Security Agreement.
22. COUNTERPARTS. This Security Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Grantor agrees
that the terms of SECTION 13.17 of the Credit Agreement with respect to consent
to jurisdiction and service of process shall apply equally to this Security
Agreement. The Administrative Agent shall have the right to proceed against the
Grantor or its personal property in a court in any location to enable the
Administrative Agent to obtain personal jurisdiction over the Grantor, to
realize on the Collateral or any other security for the Liabilities or to
enforce a judgment or other court order entered in favor of the Administrative
Agent.
24. WAIVER OF BOND. The Grantor waives the posting of any bond otherwise
required of the Administrative Agent in connection with any judicial process or
proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Administrative Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Security
Agreement or any other agreement or document between the Administrative Agent
and the Grantor.
25. ADVICE OF COUNSEL. The Grantor represents and warrants to the
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Administrative Agent, the Lenders and the Issuing Banks that it has discussed
this Security Agreement and, specifically, the provisions of SECTIONS 20, 23, 24
and 27 hereof, with the Grantor's attorneys.
26. FURTHER ASSURANCES. The Grantor agrees that at any time and from
time to time, at the expense of the Grantor, the Grantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
27. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE ADMINISTRATIVE
AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND THE GRANTOR
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS SECURITY
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECURITY AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
28. MERGER. This Security Agreement, taken together with all the other
Loan Documents, embodies the entire agreement and understanding, between the
Grantor and the Administrative Agent, any Lender or any Issuing Banks and
supersedes all prior agreements and understandings, written and oral, relating
to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
BNY LICENSING CORP.
By /s/ Edward Lambert
---------------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
CITICORP USA, INC., as Administrative Agent
By /s/ Brenda Cotsen
---------------------------------------
Name: Brenda Cotsen
Title: Vice President
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Exhibit 10.18
SUBORDINATED NOTE
$22,500,000.00 New York, New York
January 28, 1999
FOR VALUE RECEIVED, the undersigned, BARNEY'S, INC., a New York
corporation ("Company"), hereby PROMISES TO PAY to ISETAN OF AMERICA INC., a
Delaware corporation ("Isetan"), or its registered assigns, at 660 Madison
Avenue, 10th Floor, New York, New York 10021, or at such other place as the
holder (Isetan and any other holders being hereinafter referred to collectively
as "Holder") of this Note (the "Note") may designate from time to time in
writing, in lawful money of the United States of America and in immediately
available funds, the principal amount of TWENTY TWO MILLION FIVE HUNDRED
THOUSAND DOLLARS ($22,500,000) on the fifth anniversary of the date hereof (the
"Maturity Date"), together with interest on the unpaid principal amount of this
Note outstanding from time to time from the date hereof, at the rate provided
for herein. Any payments hereunder shall be subject to any applicable government
withholding.
1. INTEREST. (a) Company shall pay interest semi-annually to
Holder in arrears on February 15 and August 15 of each year, commencing on
August 15, 1999, and on the Maturity Date (each, an "Interest Payment Date"), at
a rate equal to ten percent (10%) per annum, based on a year of 360 days for the
actual number of days elapsed, and based on the amounts outstanding from time to
time under this Note; PROVIDED, HOWEVER, that interest payable on each of the
first four scheduled Interest Payment Dates shall either be paid in cash or, if
a majority of the independent directors (I.E., those directors who are not
affiliates of Bay Harbour Management L.C., Whippoorwill Associates, Inc., Isetan
or any other Affiliates (as defined in the Plan referred to below) of Company,
nor employees of Company) determine, with respect to any of such interest
payments, that it would be in the best interests of Company, based on all
factors deemed by them to be relevant (including, without limitation, Company's
cash flow, availability under the Credit Agreement (as defined below), scheduled
fixed payment obligations, and business plan requirements), then such interest
payment(s) ("Accrued Interest") shall accrue and be deemed added to the
principal amount due under this Note as of such Interest Payment Date. Prior to
any such election taking effect, Company shall provide Holder with a
<PAGE>
certificate, signed by an officer of Company, certifying (i) that such election
has occurred, (ii) that the independent directors approving such election are
independent as defined above, and (iii) the resolutions of the Board of
Directors of Company authorizing such election. In the event that Company fails
to provide Holder with such certificate prior to the Interest Payment Date for
any interest payment with respect to which Company has made an election, such
interest payment shall be due and payable in cash on such Interest Payment Date.
Interest on any overdue principal and (to the extent permitted by law) any
overdue interest shall be paid or accrued, as the case may be, from the due date
thereof (whether by acceleration or otherwise) at a rate of twelve percent (12%)
per annum.
(b) If any payment on this Note becomes due and payable on a day
other than a business day, the maturity thereof shall be extended to the next
succeeding business day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. All
references in this Note to "business day" shall mean any day other than a
Saturday, Sunday or any day on which banking institutions in New York City are
required or authorized by law or by local proclamation to close.
2. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Company shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, this Note when the same
becomes due and payable or declared due and payable in the case of principal or
5 days after such due date in the case of interest and other amounts.
(b) Any representation or statement made or deemed made by Company
in this Note, or by Barneys New York, Inc. ("BNY") in the Guarantee, dated as of
the date hereof and in favor of Isetan (as it may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, the "Guarantee"), shall prove to be incorrect or untrue when made
in any material respect.
(c) Any indebtedness for borrowed money or the deferred purchase
price of property, other than trade credit
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<PAGE>
incurred in the ordinary course of business, of Company, BNY or any of their
significant subsidiaries (as defined in Regulation S-X of the Securities and
Exchange Commission) in an aggregate principal amount of at least $1,000,000
(or, in the case of an overadvance under the Credit Agreement (as defined
below), of an amount not to exceed $7,000,000 which remains outstanding for a
period of ten business days) shall not be paid when due or be declared to be due
and payable prior to its stated maturity or Company or BNY shall be dissolved.
(d) A case or proceeding shall have been commenced against
Company, BNY or any of their significant subsidiaries in a court having
competent jurisdiction seeking a decree or order in respect of Company, BNY or
any of their significant subsidiaries (i) under title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Company or BNY, any of their significant subsidiaries or of any substantial part
of its or their properties, or (iii) ordering the winding-up or liquidation of
the affairs of Company, BNY, or any of their significant subsidiaries and such
case or proceeding shall remain undismissed or unstayed for sixty (60)
consecutive days or such court shall enter a decree or order granting the relief
sought in such case or proceeding.
(e) Company, BNY or any of their significant subsidiaries shall
(i) file a petition seeking relief under title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Company, BNY or any
of their significant subsidiaries or of any substantial part of their respective
properties, (iii) fail generally to pay its debts as such debts become due, or
admit in writing its inability to pay its debts or make a general assignment for
the benefit of creditors, or (iv) take any corporate action in furtherance of
any such action.
(f) Any governmental authority or any court at the instance
thereof shall take possession of any
3
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substantial part of the property of, or assume control over the affairs or
operations of, Company, BNY or any of their significant subsidiaries.
(g) Failure by Company or BNY to perform or observe any other
covenant or agreement contained in this Note or the Guarantee, and such failure
remains unremedied for a period of thirty (30) days after written notice thereof
shall have been given to Company by Holder.
In the case of an Event of Default described in clauses (d) or (e)
above, the unpaid balance of this Note and all interest accrued thereon and any
accrued and unpaid fees and expenses due and payable hereunder shall
automatically (without any action on the part of Holder and without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived)
forthwith become due and payable, and, in the case of any other Event of
Default, then and in any such event, and at any time thereafter, if such or any
other Event of Default shall then be continuing, Holder may by notice to Company
declare this Note to be due and payable, whereupon the maturity of the then
unpaid balance of this Note shall be accelerated and the same, and all interest
accrued thereon and any accrued and unpaid fees and expenses due and payable
hereunder, shall forthwith become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived.
Notwithstanding any other rights Holder may have under any applicable law and
hereunder, Company agrees that upon the occurrence and continuance of any Event
of Default, Holder shall have the right (but not the obligation) to apply
(including by way of setoff) any of the property of Company held by Holder or
thereafter coming into Holder's possession (including account balances) to a
reduction of the obligations of Company under this Note.
3. SUBORDINATION.
(a) NOTE SUBORDINATED TO SENIOR DEBT. Company covenants and
agrees, and Holder by its acceptance hereof likewise covenants and agrees, that
all payments of the principal of and interest on this Note and all expenses,
reimbursements and other amounts owing under this Note (collectively the
"Subordinated Debt") shall be subordinated in accordance with the provisions of
this Section 3 to the prior payment in full of all Senior Debt of Company. For
purposes of this Note, the term "Senior Debt" shall mean, collectively (i) the
Obligations (as defined in the Credit
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Agreement dated on or about the date hereof (the "Exit Facility")) among the
Company and certain of its affiliates, the financial institutions party thereto
(the "Lenders") and Citicorp USA, Inc., as agent for the Lenders (the
"Administrative Agent"), and all renewals, extensions, refundings and
refinancings thereof (the "Credit Agreement"), (ii) other indebtedness used for
general corporate purposes of Company and its subsidiaries designated as Senior
Debt, provided that the aggregate outstanding principal amount of the
indebtedness referred to in clauses (i) and (ii) above does not exceed
$150,000,000, and (iii) all premium, if any, interest (including, without
limitation, interest accruing at the rate provided for in the documents
evidencing such Senior Debt after the commencement of any proceedings of the
type referred to in Section 2(d) or 2(e) hereof, whether or not an allowed claim
in such proceeding) on the loans and other extensions of credit referred to in
clauses (i) and (ii), and all expenses, fees (including, without limitation,
attorneys fees), reimbursements, indemnities and other amounts owing pursuant to
the indebtedness referred to in clauses (i) and (ii).
(b) Upon any payment or distribution of assets of any kind or
character, whether in cash, property or securities, to creditors in any
bankruptcy, insolvency, liquidation or similar proceeding with respect to
Company, all amounts due or to become due under or with respect to all Senior
Debt shall first be paid in full, in cash, before any payment is made on account
of the Subordinated Debt. Upon any dissolution, winding-up, liquidation or
reorganization of Company, any payment or distribution of assets of Company of
any kind or character, whether in cash, property or securities, to which any
holder of Subordinated Debt would be entitled, except for the provisions hereof,
shall be paid by Company or other person making such payment or distribution, or
by the holders of the Subordinated Debt if received by them, directly to the
Administrative Agent (until the Credit Agreement has been terminated and then,
in such event, to holders of Senior Debt (pro rata on the basis of the
respective principal amount of Senior Debt held by them)), for application to
the payment of Senior Debt to the extent necessary to pay the Senior Debt in
full after giving effect to any substantially concurrent payment in cash to the
holders of such Senior Debt.
(c) No payment shall be made on account of Subordinated Debt if,
at the time of such payment or
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<PAGE>
immediately after giving effect thereto: (i) a default has occurred in the
payment of any Senior Debt under any document or instrument governing or
evidencing such Senior Debt beyond the applicable grace period (a "Payment
Default") or (ii) a default (other than a Payment Default) has occurred and the
Administrative Agent (until Holder has received notice from the Administrative
Agent that the Credit Agreement has been terminated and then, in such event, any
holder of Senior Debt) has given written notice of such default (the "Default
Notice") to Holder and in either case, such Payment Default or other default, as
the case may be, shall not have been cured or waived in writing; PROVIDED,
HOWEVER, that payments on account of Subordinated Debt may be made hereunder
after the 150th day following the giving of the applicable Default Notice unless
a Payment Default has occurred and is continuing at such time. Only one such 150
day period may commence within any 360 consecutive day period.
(d) In the event that any holder of Subordinated Debt receives
payment of any portion of the Subordinated Debt at a time when such payment is
prohibited hereunder, such payment shall be held by such holder of Subordinated
Debt in trust for the benefit of the holders of Senior Debt, and shall be paid
over forthwith and delivered to the Administrative Agent (until Holder has
received notice from the Administrative Agent that the Credit Agreement has been
terminated and then, in such event, to the holders of Senior Debt remaining
unpaid) for application to the payment of the Senior Debt remaining unpaid to
the extent necessary to pay the Senior Debt in full after giving effect to any
substantially concurrent payment in cash to the holders of the Senior Debt.
Reference in this Section 3 to payment in full means payment in full in cash.
(e) No remedy may be exercised by any holder of Subordinated Debt
in connection with this Note until such holder has given to the Administrative
Agent (until the Credit Agreement has been terminated and then, in such event,
to each holder of Senior Debt that has provided Holder with its address for
notice purposes) 10 business days prior written notice of its intention to
exercise such remedy.
(f) No right of any holder of Senior Debt to enforce the
subordination provisions provided in this Section 3 shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of Company
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<PAGE>
or by any noncompliance by Company with terms, provisions and covenants of this
Note or any other agreement regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. Without in any way limiting the
generality of the foregoing paragraph, the holders of Senior Debt, or any of
them, may, at any time and from time to time, without the consent of or notice
to Holder, without incurring any liabilities to Holder and without impairing or
releasing the subordination and other benefits provided in this Note or the
obligations of Holder to the holders of Senior Debt, even if any right of
reimbursement or subrogation or other right or remedy of Holder is affected,
impaired or extinguished thereby, do any of the following:
(i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase
(subject to the $150,000,000 indebtedness limitation set forth in the
definition of "Senior Debt") or alter, the terms of any Senior Debt, any
security therefor or guaranty thereof or any liability of any obligor
thereon to such holder, or any liability incurred directly or indirectly
in respect thereof or otherwise amend, renew, exchange, extend, modify,
increase (subject to the $150,000,000 indebtedness limitation set forth in
the definition of "Senior Debt") or supplement in any manner any Senior
Debt or any instrument evidencing or securing the same;
(ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(iii) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability in any
manner or order; and
(iv) fail to take or to record or otherwise perfect, for any reason
or for no reason, any lien or security interest securing Senior Debt by
whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or
7
<PAGE>
any guarantor or any other person, elect any remedy and otherwise deal
freely with any obligor and any security for the Senior Debt or any
liability of any obligor to such holder or any liability incurred directly
or indirectly in respect thereof.
(g) The provisions of this Section 3 may not be amended, modified
or supplemented without the consent of the Administrative Agent (until Holder
has received notice from the Administrative Agent that the Credit Agreement has
been terminated and then, in such event, without the consent of the holders of a
majority of the Senior Debt then outstanding).
(h) Upon the payment in full of all Senior Debt, Holder shall be
subrogated to the extent of the payments or distributions made to the holders
of, or otherwise applied to payment of, the Senior Debt pursuant to the
provisions of this Section 3 until this Note shall be paid in full; and for
purposes of such subrogation, no payments or distributions to holders of Senior
Debt of any cash, property or securities to which Holder would be entitled
except for the provisions of this Section 3, and no payment over pursuant to the
provisions of this Section 3 to holders of Senior Debt by Holder, shall, as
between Company, its creditors other than holders of Senior Debt and Holder, be
deemed to be payment by Company to or on account of Senior Debt, it being
understood that the provisions of this Section 3 are solely for the purpose of
defining the relative rights of the holders of Senior Debt, on the one hand, and
Holder, on the other hand.
(i) If any payment or distribution to which Holder would otherwise
have been entitled but for the provisions of this Section 3 shall have been
applied, pursuant to the provisions of this Section 3, to the payment of Senior
Debt, then and in such case, Holder shall be entitled to receive from the
holders of Senior Debt any payments or distributions received by such holders of
Senior Debt in excess of the amount sufficient to pay all Senior Debt in full in
cash.
(j) Nothing contained in this Note is intended to or shall impair,
as between Company and Holder, the obligations of Company, which are absolute
and unconditional, to pay to Holder the principal of (premium, if any), and
interest on, this Note as and when the same shall become due and payable in
accordance with its terms,
8
<PAGE>
or is intended to or shall affect the relative rights of Holder and creditors of
Company other than the holders of Senior Debt, and except as otherwise provided
in Section 3, nothing herein shall prevent Holder from exercising all remedies
otherwise permitted by applicable law upon the occurrence of an Event of Default
under this Note. The failure to make a payment on account of principal of, or
interest on, this Note by reason of any provision of this Section 3 shall not be
construed as preventing the occurrence of an Event of Default hereunder.
(k) Holder shall be entitled to all rights set forth in this
Section 3 with respect to any Senior Debt which may at any time be held by it,
to the same extent as any other holder of Senior Debt, and nothing in this Note
shall deprive Holder of any of its rights as such holder.
4. OPTIONAL PREPAYMENT. Company shall have the right at any time
or from time to time and without premium or penalty, to voluntarily prepay all
or any portion of this Note. Each prepayment shall be accompanied by the payment
of accrued and unpaid interest on the amount being prepaid, through the date of
prepayment.
5. REPRESENTATIONS AND WARRANTIES. Company represents and
warrants on the date hereof as follows:
(a) Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization having full
power and authority to conduct its business in each jurisdiction where it
presently conducts any material part of its business.
(b) The execution, delivery and performance by Company of this
Note are within the powers of Company, have been duly authorized by all
necessary action, have received all necessary governmental approvals and do not
contravene its organizational documents (if applicable) or any law, regulation
or contractual restriction binding on Company.
(c) This Note is the legal, valid and binding obligation of
Company and is enforceable against Company in accordance with its terms.
(d) No event has occurred and no condition exists which, upon or
at the time of execution and delivery of this Note would constitute an Event of
Default or would, with the
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<PAGE>
giving of notice or lapse of time, or both, constitute an Event of Default.
6. COVENANTS. Company covenants that until all obligations of
Company hereunder shall have been paid in full in cash, with accrued interest in
cash:
(a) Each of Company and BNY shall, and shall cause each of their
subsidiaries to, at all times do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence and the
governmental rights, licenses, permits, and franchises material to the conduct
of their respective businesses; comply with all laws, rules, regulations and
governmental orders (whether federal, state or local) applicable to the
operation of such businesses whether now in effect or hereafter enacted
(including, without limitation, all applicable laws, rules, regulations and
governmental orders relating to environmental protection and to public and
employee health and safety) the lack of compliance with which would have a
material adverse effect on the business, assets, operations, or condition,
financial or otherwise, of Company, BNY and their subsidiaries taken as a whole
or on the ability of Company to perform its obligations under this Note or BNY
under the Guarantee; take all actions which may be required to obtain, preserve,
renew and extend all licenses, permits, franchises and other authorizations
which are material to the operation of such businesses; and at all times
maintain, preserve and protect all property material to the conduct of such
businesses and keep such property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times, subject to normal wear and tear; PROVIDED, HOWEVER, that the
foregoing shall in no way preclude Company or BNY from liquidating, dissolving,
merging, selling or transferring any subsidiary of Company and/or any and all of
the assets thereof.
(b) Company shall furnish Holder, within one hundred twenty (120)
days after the close of each fiscal year, with audited consolidated financial
statements of BNY and its subsidiaries, certified by independent certified
public accountants as of the end of such period, including a balance sheet and
related statements of earnings and cash flows for such fiscal year, in each case
setting forth in
10
<PAGE>
comparative form the figures for the previous year prepared in accordance with
generally accepted accounting principles consistently applied during the period
involved.
(c) Company shall furnish Holder, within sixty (60) days after the
close of each of the first three fiscal quarters of each year, with unaudited
consolidated financial statements of BNY and its subsidiaries, including a
balance sheet and related statements of earnings and cash flows for such fiscal
quarter and for the portion of the fiscal year then ending, in each case
prepared in accordance with generally accepted accounting principles
consistently applied during the period involved.
(d) Company and BNY shall not, from the date hereof, voluntarily
create or incur, or suffer to be created or incurred, or assume, or permit to
exist, any mortgage, lien, pledge, charge or encumbrance of any kind (a "Lien")
upon any of its respective properties or assets whether now owned or hereafter
acquired except for Liens (i) securing Senior Debt, (ii) which are Permitted
Encumbrances (as defined below), (iii) incurred in connection with the purchase
of property useful in the business of the Company or BNY, which Lien is created
when such property is purchased by the Company or BNY, as the case may be, and
which Lien does not extend to property other than such purchased property
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit, bankers' acceptances, whether or not
matured, and obligations to trade creditors incurred in the ordinary course of
business), (iv) on real property or leases of real property, and (v) securing
the promissory notes issued to the Equipment Lessors pursuant to and as defined
in Company's Second Amended Joint Plan of Reorganization dated November 13, 1998
(the "Plan").
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental charges not yet due and
payable; (b) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Company or BNY is a party as lessee made in the ordinary course of business; (d)
deposits securing statutory obligations of Company or BNY; (e) inchoate and
unperfected workers', mechanics', suppliers' or similar liens arising in the
ordinary course
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<PAGE>
of business; (f) carriers', warehousemen's or other similar possessory liens
arising in the ordinary course of business; (g) deposits securing, or in lieu
of, surety, appeal or customs bonds in proceedings to which Company or BNY is a
party; (h) any attachment or judgment lien; and (i) zoning restrictions,
easements, licenses, or other restrictions on the use of any real estate or
other minor irregularities in title (including leasehold title) thereto, so long
as the same do not materially impair the use, value, or marketability of such
real estate.
(e) Company and BNY shall not enter into or be a party to any
transaction with any person or entity that, directly or indirectly, beneficially
owns or controls ten percent (10%) or more of the voting stock of BNY (an
"Affiliate"), except upon fair and reasonable terms that are no less favorable
to Company or BNY than would be obtained in a comparable arm's-length
transaction with a person or entity not an Affiliate.
(f) Company shall not sell, lease, transfer or assign to any
person or otherwise dispose of (whether in one transaction or a series of
related transactions) all or substantially all of its assets (whether now owned
or hereafter acquired).
(g) Except as expressly permitted by the Exit Facility, Company
shall not pay or make (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of Capital Stock (as defined in
the Exit Facility) of Company or BNY now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of
Company or BNY now or hereafter outstanding, and (iii) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
Capital Stock of Company or BNY now or hereafter outstanding.
7. SUCCESSORS AND ASSIGNS. (a) This Note shall inure to the
benefit of Isetan and its successors and registered assigns. Isetan and any
other Holder may assign to any party all or any part of, or any interest
(undivided or divided) in, its rights and benefits herein, and to the extent of
that assignment such assignee shall have the same
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<PAGE>
rights and benefits against Company as it would have had if such assignee were
Isetan. Company will make payment in accordance with the terms of this Note to
the registered Holder listed on the books and records of Company. This Note and
the provisions hereof are binding upon successors of Company.
(b) Neither this Note nor any obligation hereunder shall be
assigned by Company to any person or entity and any attempted assignment shall
be null and void.
8. EXPENSES. The Company agrees to pay any and all reasonable
expenses (including, without limitation, reasonable legal fees and expenses)
incurred by Holder in connection with enforcement of this Note or the collection
of any sums due to Holder hereunder.
9. PRESENTMENT AND DEMAND. Demand, presentment, protest and
notice of nonpayment and protest are hereby waived by Company.
10. AMENDMENT AND NON-WAIVER. (a) This Note may not be amended
except by an agreement in writing signed by Company and the Holder hereof.
(b) To the extent permitted by law, no failure to exercise and no
delay on the part of Holder in exercising any power or right in connection with
this Note or available at law or in equity, shall operate as a waiver thereof,
and no single or partial exercise of any such rights or power, or any
abandonment or discontinuance of steps to enforce such a right or power, shall
preclude any other or further exercise thereof or the exercise of any other
right or power. No course of dealing among any Holder, Company or any other
person or entity shall operate as a waiver of any right of any Holder. No
modification or waiver of any provision of this Note and no consent to any
departure therefrom shall in any event be effective unless in writing and signed
by the party against whom enforcement thereof is to be sought, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.
11. NOTICES. Except as otherwise provided herein, any notice,
demand, request, consent, approval, declaration, delivery or other communication
(including, without limitation, any registration of successors or permitted
assigns) hereunder to be made pursuant to the
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<PAGE>
provisions of this Note shall be sufficiently given or made if in writing and
either delivered in person with receipt acknowledged or sent by registered or
certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to Isetan at
Isetan of America Inc.
660 Madison Avenue, 10th Floor
New York, New York 10021
Attn: Toshiaki Nakagawa
Telecopy No: (212) 767-0122
with a copy to:
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Attn: Yasuo Okamoto, Esq.
Telecopy No: (212) 299-6760
(b) If to Company at
Barney's, Inc.
575 Fifth Avenue
New York, New York 10017
Attn: Marc H. Perlowitz, Esq.
Telecopy No.: (212) 450-8480
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) business days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration, delivery or other communication
to the person designated above to receive a copy shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, delivery or other communication.
14
<PAGE>
12. SUBMISSION TO JURISDICTION; JURY WAIVER. (a) Company, Isetan
and any other Holder hereby irrevocably submit to the jurisdiction of any New
York State or Federal court sitting in New York City, and they hereby
irrevocably agree that any action may be heard and determined in such New York
State court or in such Federal court. Company, Isetan and any other Holder
hereby irrevocably waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of any action in any
jurisdiction. Company, Isetan and any other Holder hereby irrevocably agree that
the summons and complaint or any other process in any action in any jurisdiction
may be served by mailing in accordance with the provision set forth in Section
11. Company, Isetan and any other Holder may also be served in any other manner
permitted by law, in which event their time to respond shall be the time
provided by law.
(b) EACH OF COMPANY, ISETAN AND ANY OTHER HOLDER HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OBLIGATIONS UNDER THIS NOTE.
13. GOVERNING LAW. This Note shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
agreements made and to be wholly performed in such State and without giving
effect to the conflict of laws principles thereof.
14. PAYMENTS IN CASH. All payments hereunder shall be made by
Company in cash in lawful currency of the United States of America.
[signature page follows]
15
<PAGE>
BARNEY'S, INC.
By: /s/ Edward Lambert
----------------------------
Edward Lambert
Executive Vice President
and Chief Financial Officer
16
<PAGE>
Exhibit 10.19
GUARANTEE BY BARNEYS NEW YORK, INC.
THIS GUARANTEE (the "GUARANTEE") dated as of January 28, 1999 is made by
BARNEYS NEW YORK, INC., (the "GUARANTOR"), a Delaware corporation having its
office at 575 Fifth Avenue, New York, New York 10001, in favor of ISETAN OF
AMERICA INC. ("ISETAN").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Barney's, Inc. (the "COMPANY") issued that certain Subordinated
Note dated January 28, 1999 in the amount of TWENTY TWO MILLION FIVE HUNDRED
THOUSAND DOLLARS ($22,500,000.00) in favor of Isetan (the "NOTE") in accordance
with the terms of the Second Amended Joint Plan of Reorganization of the Company
(the "Plan") dated November 13, 1998, as amended, and filed with the United
States Bankruptcy Court for the Southern District of New York (the "BANKRUPTCY
COURT"); and
WHEREAS, the Guarantor owns all of the shares of stock of the Company
and will derive indirect benefit from the Note;
WHEREAS, to induce Isetan to accept the Plan, the Guarantor has agreed
to guarantee to Isetan the payment and performance of the terms and provisions
of the Note;
NOW, THEREFORE, the Guarantor does agree with, and for the benefit of,
Isetan as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms shall have the meaning ascribed to them in the Note.
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<PAGE>
ARTICLE II
GUARANTEE
SECTION 2.1. GUARANTEE OF NOTE PAYMENTS. The Guarantor hereby
unconditionally and irrevocably guarantees the due and punctual payment to
Holder, and its successors, endorsees, transferees and assigns, of the full
amount of the principal, interest and all other sums due under the Note without
right of any setoff or counterclaim. The obligations guaranteed by this Section
2.1 are herein called the "PAYMENT OBLIGATIONS."
SECTION 2.2. PAYMENT OF ENFORCEMENT COSTS. The Guarantor also hereby
agrees to pay on demand to Holder as and when incurred all reasonable costs and
expenses of enforcing this Guarantee, including but not limited to court costs
and reasonable attorneys' fees and disbursements. The obligations under this
Section 2.2 are hereinafter referred to as the "ENFORCEMENT COST OBLIGATIONS".
SECTION 2.3. NON-IMPAIRMENT OF GUARANTEE. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee shall in no way be
released, diminished, reduced, affected or impaired by reason of the happening
from time to time of any of the following events, any of which may be done or
occur without the necessity of any notice to or further consent of the Guarantor
(all of which are hereby expressly waived by the Guarantor):
(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by, to the fullest extent permitted by law, the
Company or by any other party to the Note or any other guarantor, surety,
endorser, letter of credit bank or other obligor of any of the Payment
Obligations or any agreement, covenant, term or condition in the Note to be
performed or observed by such party;
(b) The extension of the time for the payment of all or any portion of
the Payment Obligations or the extension of time for the performance of any
Payment Obligations or any other obligation under the Note;
(c) The renewal, supplementation, modification, rearrangement or
amendment (whether material or otherwise) of any of the Note or any of the
obligations of the Company or any other party to the Note;
-2-
<PAGE>
(d) Any failure, omission, delay, neglect, refusal or lack of diligence
on the part of Holder to enforce, assert or exercise any right, privilege, power
or remedy conferred on Holder in the Note or any action on the part of Holder
granting indulgence, adjustment, forbearance or extension of any kind;
(e) The release, surrender, exchange, subordination or loss of any
security under the Note or the release, modification, amendment, waiver or
failure or refusal to enforce any pledge, security device, letter of credit,
insurance agreement, bond or similar agreement or any guarantee, surety or
indemnity agreement whatsoever;
(f) The release, modification, waiver or failure to enforce any right,
benefit, privilege or interest under any contract or agreement of any kind under
which the rights of the Company have been collaterally or absolutely transferred
or assigned, or a security interest in which has been granted, to Holder as
direct or indirect security for payment of any of the Payment Obligations or for
performance of any obligations to Holder pursuant to the Note;
(g) The death, legal incapacity, disability, voluntary or involuntary
liquidation, dissolution, sale of any collateral, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Company, the Guarantor, or their
respective affiliates, any other surety for Company or any of the assets of
Company or Guarantor;
(h) Any invalidity of, or defect or deficiency in, the Note or any
related papers, to the fullest extent permitted by law, including without
limitation the unenforceability of any or all of the provisions of any of the
Note or any related papers, or any failure to acquire, perfect or maintain
perfection of any lien on or security interest in any collateral securing
payment of the Payment Obligations, or any portion thereof, or performance of
the Company's obligations thereunder;
(i) The settlement or compromise of any obligation guaranteed hereby or
hereby incurred;
-3-
<PAGE>
(j) The taking or accepting of any other security or guarantee for the
payment or performance of any of the Note, the Payment Obligations, the
Enforcement Cost Obligations, or any of the other obligations of the Company
under the Note;
(k) Any failure of Holder to notify Guarantor of any renewal, extension
or assignment of the Note or any part thereof, or the release of any security,
or of any other action taken or refrained from being taken by Holder against the
Company, or of any new agreement between Holder and the Company, it being
understood that Holder shall not be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Note; or
(l) any other event, action or circumstance that would, in the absence
of this subparagraph (l), result in the release or discharge of the Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in this Guarantee.
SECTION 2.4. WAIVERS BY GUARANTOR. The Guarantor hereby waives
marshaling of assets and liabilities, any requirement that assets be sold in any
particular order, notice of acceptance of this Guarantee and of any liability to
which it applies or may apply, presentment, demand for payment, protest, notice
of nonpayment, notice of dishonor, notice of the taking of any other action by
Holder and all other notices and demands.
SECTION 2.5. GUARANTEE OF PAYMENT AND PERFORMANCE. This is a guarantee
of payment and performance of the Payment Obligations and not merely a guarantee
of collection, and the Guarantor waives any right to require that any action be
brought against the Company or that Holder be required to exhaust any of its
rights, benefits or privileges under the Note; PROVIDED, HOWEVER, that nothing
contained herein shall be construed to prevent Holder from exercising and
enforcing any right, benefit or privilege which Holder may have under this
Guarantee or the Note from time to time, and at any time, it being agreed that
the Guarantor's obligations hereunder are, and shall be, absolute, independent
and unconditional under any and all circumstances. Should Holder seek to enforce
the obligations of the Guarantor by action in any court, the Guarantor waives
any necessity, substantive or procedural, that a judgment previously be rendered
against the Company
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<PAGE>
or that the Company or any other person or entity be joined in such action or
that a separate action be brought against the Company or any other person or
entity. The obligations of the Guarantor hereunder are several from those of the
Company or any other person or entity, and are primary obligations concerning
which the Guarantor is the principal obligor. All waivers herein contained shall
be without prejudice to the right of Holder at its option to proceed against the
Company or any other person, whether by separate action or by joinder. The
Guarantor agrees that this Guarantee shall not be discharged except by payment
in full of all Payment Obligations and all Enforcement Cost Obligations.
SECTION 2.6. RELIANCE UPON GUARANTEE. All extensions of credit and
financial accommodations heretofore or hereafter made by Holder to the Company
under the Note shall be conclusively presumed to have been made in reliance upon
the giving of this Guarantee.
SECTION 2.7. REINSTATEMENT. This Guarantee shall continue to be
effective, or shall be reinstated, if at any time payment, or any part thereof,
of any of the Payment Obligations is rescinded or must otherwise be returned by
Holder for any reason whatsoever (including, but not limited to, the bankruptcy,
insolvency, dissolution, liquidation or reorganization of the Company or any
other person), all as though such payment had not been received by Holder.
SECTION 2.8. LIMITS ON SUBROGATION. No payment by the Guarantor pursuant
to any provision of this Guarantee or other satisfaction of the Guarantor's
liability under this Guarantee shall entitle the Guarantor, by subrogation or
otherwise, to any right or remedy against the Company until after the payment in
full of the Payment Obligations and the Enforcement Cost Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Guarantor hereby represents and warrants as follows:
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<PAGE>
SECTION 3.1. The Guarantor is duly organized, validly existing and in
good standing under the laws of the State of Delaware, having full power and
authority to conduct its business in each jurisdiction where it presently
conducts any material part of its business.
SECTION 3.2. The execution, delivery and performance by the Guarantor of
this Guarantee are within the powers of the Guarantor, have been duly authorized
by all necessary action, have received all necessary governmental approvals, and
do not contravene its organizational documents, or any law, regulation or
contractual restriction binding on the Guarantor.
SECTION 3.3. This Guarantee is the legal, valid and binding obligation
of the Guarantor and is enforceable against the Guarantor in accordance with it
terms.
SECTION 3.4. No event has occurred and no condition exists which, upon
or at the time of execution and delivery of the Guarantee would constitute an
Event of Default or would, with the giving of notice or lapse of time, or both,
constitute an Event of Default.
SECTION 3.5. The execution, delivery and performance by the Guarantor of
this Guarantee does not and will not require (a) any consent of any other person
or entity or (b) any consent, license, permit, authorization or other approval
of, any giving of notice to, any exemption by, any registration, declaration or
filing with, or any taking of any other action in respect of, any court,
arbitrator, administrative agency or other governmental authority, the failure
of which would materially and adversely affect the Guarantor's performance of
its obligations hereunder, other than the approval of the Bankruptcy Court and
other consents which have been obtained.
ARTICLE IV
COVENANTS
The Guarantor hereby covenants and agrees that it will comply
with all covenants which, under the terms of the Note, are applicable to it.
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<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; TERMINATION OF
GUARANTEE. The representations, covenants and agreements herein set forth shall
continue and survive until termination of this Guarantee. Upon the maturity date
of the Note, or upon payment in full of all Payment Obligations and all
Enforcement Cost Obligations, if later, this Guarantee shall terminate and be of
no further force and effect.
SECTION 5.2. SUCCESSOR AND ASSIGNS. This Guarantee shall inure to the
benefit of Isetan, any other Holder and their respective successors, endorsees,
transferees and assigns. Isetan and any other Holder may assign to any party all
or any part of, or any interest (undivided or divided) in its rights and
benefits herein, and to the extent of that assignment such assignee shall have
the same rights and benefits against the Guarantor as it would have had if such
assignee were Isetan. This Guarantee and the provisions hereof are binding upon
successors of the Guarantor. Neither this Guarantee nor any obligation hereunder
shall be assigned by the Guarantor to any person or entity and any attempted
assignment shall be null and void.
SECTION 5.3. NOTICES. Except as otherwise provided herein, any notice,
demand, request, consent, approval, declaration, delivery or other communication
hereunder to be made pursuant to the provisions of this Guarantee shall be
sufficiently given or made if in writing and either delivered in person with
receipt acknowledged, or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy answerback,
addressed as follows:
(i) If to Isetan at
Isetan of America Inc.
660 Madison Avenue, 10th Floor
New York, New York 10021
Attn: Toshiaki Nakagawa
Telecopy No: (212) 767-0122
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<PAGE>
with a copy to:
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Attn: Yasuo Okamoto, Esq.
Telecopy No: (212) 299-6760
(ii) If to Company at
Barney's, Inc.
575 Fifth Avenue
New York, New York 10001
Attn: Marc H. Perlowitz, Esq.
Telecopy No.: (212) 450-8480
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or telecopied and confirmed by telecopy
answerback, or three (3) business days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration, delivery or other communication
to the persons designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, delivery or other communication.
SECTION 5.4. EXPENSES. The Guarantor agrees to pay any and all
reasonable expenses (including reasonable legal fees and expenses) incurred by
Holder in connection with the enforcement of this Guarantee or the collection of
any sums due to Holder hereunder.
SECTION 5.5. PARTIAL INVALIDITY. Holder and the Guarantor intend this
Guarantee to comply with all applicable laws and to be a binding, legal and
enforceable contract which shall be liberally construed so as to carry out their
intent as expressed in this Guarantee. Without limiting the generality of the
immediately preceding sentence, if any provision of this Guarantee is held to be
illegal, invalid or unenforceable under present or future
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<PAGE>
laws effective during the term of this Guarantee, the legality, validity and
enforceability of the other provisions of this Guarantee shall not be affected
thereby.
SECTION 5.6. WAIVERS AND AMENDMENTS; CUMULATIVE REMEDIES. Holder shall
not be obligated to exercise any right, power or privilege under this Guarantee,
and no failure to exercise and no delay in exercising, on the part of Holder,
any such right, power or privilege under this Guarantee shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right, power or
privilege. No notice to or demand on the Guarantor shall be deemed to be a
waiver of Holder's right to take further action without notice or demand as
provided herein. No waiver shall be applicable except in the specific instance
for which given or shall in any way impair Holder's rights or the Guarantor's
liability in any other respect or at any other time, nor in any event shall any
modification or waiver of any provision of this Guarantee be effective unless in
writing and signed on behalf of Holder and, as to any modification, Guarantor.
The rights and remedies provided in this Guarantee are cumulative and are not
exclusive of any other right or remedy provided by law, in equity or under any
other agreement or instrument.
SECTION 5.7. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED IN SUCH STATE WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 5.8. SUBMISSION TO JURISDICTION. The Guarantor hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York, and the Guarantor hereby irrevocably agrees that any action
may be heard and determined in such New York State court or in such Federal
court. The Guarantor hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action in any jurisdiction. The Guarantor hereby irrevocably agrees that
the summons and complaint or any other process in any action in any jurisdiction
may be served by mailing in accordance with the provision set forth in Section
5.3. The Guarantor may also be served in any other manner permitted by law, in
which event its time to respond shall be the time provided by law.
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<PAGE>
SECTION 5.9. SUBORDINATION. The obligations of the Guarantor under this
Guarantee shall be subordinated to the prior payment in full of all Senior Debt
as and to the extent such Senior Debt is guaranteed by the Guarantor, to the
same extent as the payments of the principal of and interest on the Note are
subordinated as provided in Section 3 of the Note.
SECTION 5.10. JURY WAIVER. GUARANTOR AND, BY ITS ACCEPTANCE HEREOF,
HOLDER, EACH IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OBLIGATIONS UNDER
THIS GUARANTEE.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guarantee as of the
day and year first above written.
BARNEYS NEW YORK, INC.
By: /s/ Edward Lambert
----------------------------------
Edward Lambert
Executive Vice President
and Chief Financial Officer
<PAGE>
Exhibit 10.20
SUBORDINATED NOTE
$34,232,500.00 New York, New York
January 28, 1999
FOR VALUE RECEIVED, the undersigned, BARNEY'S, INC., a New York
corporation ("Company"), hereby PROMISES TO PAY to BI-Equipment Lessors, LLC, a
California limited liability corporation ("Payee"), or its registered assigns,
at c/o Oaktree Capital Management, LLC, 333 South Grand Avenue, 28th Floor, Los
Angeles, California 90071, or at such other place as the holder (Payee and any
other holders being hereinafter referred to collectively as "Holder") of this
Note (the "Note") may designate from time to time in writing, in lawful money of
the United States of America and in immediately available funds, the principal
amount of $34,232,500.00 on the fifth anniversary of the date hereof (the
"Maturity Date"), together with interest on the unpaid principal amount of this
Note outstanding from time to time from the date hereof, at the rate provided
for herein. Any payments hereunder shall be subject to any applicable government
withholding.
1. INTEREST. (a) Company shall pay interest semi-annually to
Holder in arrears on February 15 and August 15 of each year, commencing on
February 15, 1999, and on the Maturity Date (each, an "Interest Payment Date"),
at a rate equal to eleven and one-half percent (11.5%) per annum, based on a
year of 360 days for the actual number of days elapsed, and based on the amounts
outstanding from time to time under this Note. Interest on any overdue principal
and (to the extent permitted by law) any overdue interest shall be paid or
accrued, as the case may be, from the due date thereof (whether by acceleration
or otherwise) at a rate of thirteen and one-half percent (13.5%) per annum.
(b) If any payment on this Note becomes due and payable on a day
other than a business day, the maturity thereof shall be extended to the next
succeeding business day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. All
references in this Note to "business day" shall mean any day other than a
Saturday, Sunday or any day on which banking institutions in New York City are
required or authorized by law or by local proclamation to close.
<PAGE>
2. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Company shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, this Note when the same
becomes due and payable or declared due and payable in the case of principal or
5 days after such due date in the case of interest and other amounts.
(b) Any representation or statement made or deemed made by Company
in this Note, or by Barneys New York, Inc. ("BNY") in the Guarantee, dated as of
the date hereof and in favor of Payee (as it may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, the "Guarantee"), shall prove to be incorrect or untrue when made
in any material respect.
(c) Any indebtedness for borrowed money or the deferred purchase
price of property, other than trade credit incurred in the ordinary course of
business, of Company, BNY or any of their significant subsidiaries (as defined
in Regulation S-X of the Securities and Exchange Commission) in an aggregate
principal amount of at least $1,000,000 (or, in the case of an overadvance under
the Credit Agreement (as defined below), of an amount not to exceed $7,000,000
which remains outstanding for a period of ten business days) shall not be paid
when due or be declared to be due and payable prior to its stated maturity or
Company or BNY shall be dissolved.
(d) A case or proceeding shall have been commenced against
Company, BNY or any of their significant subsidiaries in a court having
competent jurisdiction seeking a decree or order in respect of Company, BNY or
any of their significant subsidiaries (i) under title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Company or BNY, any of their significant subsidiaries or of any substantial part
of its or their properties, or (iii) ordering the winding-up or liquidation of
the affairs of Company, BNY, or any of their significant subsidiaries and such
case or proceeding shall remain undismissed or unstayed for sixty (60)
consecutive days or
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<PAGE>
such court shall enter a decree or order granting the relief sought in such case
or proceeding.
(e) Company, BNY or any of their significant subsidiaries shall
(i) file a petition seeking relief under title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Company, BNY or any
of their significant subsidiaries or of any substantial part of their respective
properties, (iii) fail generally to pay its debts as such debts become due, or
admit in writing its inability to pay its debts or make a general assignment for
the benefit of creditors, or (iv) take any corporate action in furtherance of
any such action.
(f) Any governmental authority or any court at the instance
thereof shall take possession of any substantial part of the property of, or
assume control over the affairs or operations of, Company, BNY or any of their
significant subsidiaries.
(g) Failure by Company or BNY to perform or observe any other
covenant or agreement contained in this Note or the Guarantee, and such failure
remains unremedied for a period of thirty (30) days after written notice thereof
shall have been given to Company by Holder.
In the case of an Event of Default described in clauses (d) or (e)
above, the unpaid balance of this Note and all interest accrued thereon and any
accrued and unpaid fees and expenses due and payable hereunder shall
automatically (without any action on the part of Holder and without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived)
forthwith become due and payable, and, in the case of any other Event of
Default, then and in any such event, and at any time thereafter, if such or any
other Event of Default shall then be continuing Holder may by notice to Company,
declare this Note to be due and payable, whereupon the maturity of the then
unpaid balance of this Note shall be accelerated and the same, and all interest
accrued thereon and any accrued and unpaid fees and expenses due and payable
hereunder, shall forthwith become due and payable without presentment,
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<PAGE>
demand, protest or notice of any kind, all of which are hereby expressly waived.
Notwithstanding any other rights Holder may have under any applicable law and
hereunder, Company agrees that upon the occurrence and continuance of any Event
of Default, Holder shall have the right (but not the obligation) to apply
(including by way of setoff) any of the property of Company held by Holder or
thereafter coming into Holder's possession (including account balances) to a
reduction of the obligations of Company under this Note.
3. SUBORDINATION.
(a) NOTE SUBORDINATED TO SENIOR DEBT. Company covenants and
agrees, and Holder by its acceptance hereof likewise covenants and agrees, that
all payments of the principal of and interest on this Note and all expenses,
reimbursements and other amounts owing under this Note (collectively the
"Subordinated Debt") shall be subordinated in accordance with the provisions of
this Section 3 to the prior payment in full of all Senior Debt of Company. For
purposes of this Note, the term "Senior Debt" shall mean, collectively (i) the
Obligations (as defined in the Credit Agreement dated on or about the date
hereof (the "Exit Facility")) among the Company and certain of its affiliates,
the financial institutions party thereto (the "Lenders") and Citicorp USA, Inc.,
as agent for the Lenders (the "Administrative Agent"), and all renewals,
extensions, refundings and refinancings thereof (the "Credit Agreement"), (ii)
other indebtedness used for general corporate purposes of Company and its
subsidiaries designated as Senior Debt, provided that the aggregate outstanding
principal amount of the indebtedness referred to in clauses (i) and (ii) above
does not exceed $150,000,000, and (iii) all premium, if any, interest
(including, without limitation, interest accruing at the rate provided for in
the documents evidencing such Senior Debt after the commencement of any
proceedings of the type referred to in Section 2(d) or 2(e) hereof, whether or
not an allowed claim in such proceeding) on the loans and other extensions of
credit referred to in clauses (i) and (ii), and all reasonable expenses,
reasonable fees (including, without limitation, reasonable attorneys fees),
reimbursements, indemnities and other amounts owing pursuant to the indebtedness
referred to in clauses (i) and (ii).
(b) Upon any payment or distribution of assets of any kind or
character, whether in cash, property or securities, to creditors in any
bankruptcy, insolvency,
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liquidation or similar proceeding with respect to Company, all amounts due or to
become due under or with respect to all Senior Debt shall first be paid in full,
in cash, before any payment is made on account of the Subordinated Debt. Upon
any dissolution, winding-up, liquidation or reorganization of Company, any
payment or distribution of assets of Company of any kind or character, whether
in cash, property or securities, to which any holder of Subordinated Debt would
be entitled, except for the provisions hereof, shall be paid by Company or other
person making such payment or distribution, or by the holders of the
Subordinated Debt if received by them, directly to the Administrative Agent
(until the Credit Agreement has been terminated and then, in such event, to
holders of Senior Debt (pro rata on the basis of the respective principal amount
of Senior Debt held by them)), for application to the payment of Senior Debt to
the extent necessary to pay the Senior Debt in full after giving effect to any
substantially concurrent payment in cash to the holders of such Senior Debt. For
purposes of this Section 3(b), the words "payment or distribution of assets of
any kind or character, whether in cash, property or securities" shall not be
deemed to include payment or distribution of shares of capital stock of Company
or securities of Company provided for by a plan of reorganization or of any
other corporation provided for by such plan of reorganization provided that such
stock or securities (i) are subordinated in right of payment to all then
outstanding Senior Debt to substantially the same extent as the Subordinated
Debt is so subordinated as provided herein and (ii) have other terms and
conditions that are no more onerous than the terms and conditions contained
herein and are not adverse to the interests of the holders of the Senior Debt.
(c) No payment shall be made on account of Subordinated Debt if,
at the time of such payment or immediately after giving effect thereto: (i) a
default has occurred in the payment of any Senior Debt under any document or
instrument governing or evidencing such Senior Debt beyond the applicable grace
period (a "Payment Default") or (ii) a default (other than a Payment Default)
has occurred and the Administrative Agent (until Holder has received notice from
the Administrative Agent that the Credit Agreement has been terminated and then,
in such event, any holder of Senior Debt) has given written notice of such
default (the "Default Notice") to Holder and in either case, such Payment
Default or other default, as the case may be, shall not have been cured or
waived in writing;
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PROVIDED, HOWEVER, that payments on account of Subordinated Debt may be made
hereunder after the 150th day following the giving of the applicable Default
Notice unless a Payment Default has occurred and is continuing at such time.
Only one such 150 day period may commence within any 360 consecutive day period.
(d) In the event that any holder of Subordinated Debt receives
payment of any portion of the Subordinated Debt at a time when such payment is
prohibited hereunder, such payment shall be held by such holder of Subordinated
Debt in trust for the benefit of the holders of Senior Debt, and shall be paid
over forthwith and delivered to the Administrative Agent (until Holder has
received notice from the Administrative Agent that the Credit Agreement has been
terminated and then, in such event, to the holders of Senior Debt remaining
unpaid) for application to the payment of the Senior Debt remaining unpaid to
the extent necessary to pay the Senior Debt in full after giving effect to any
substantially concurrent payment in cash to the holders of the Senior Debt.
Reference in this Section 3 to payment in full means payment in full in cash.
(e) No remedy may be exercised by any holder of Subordinated Debt
in connection with this Note until such holder has given to the Administrative
Agent (until the Credit Agreement has been terminated and then, in such event,
to each holder of Senior Debt that has provided Holder with its address for
notice purposes) 10 business days prior written notice of its intention to
exercise such remedy. Notwithstanding the foregoing sentence, in the event that
Holder gives such notice and prior to the expiration of such applicable 10
business day period, the Holder receives (i) cash in an amount that equals
accrued interest (calculated in accordance with the provisions of this Note) on
the principal amount of Subordinated Debt outstanding at the time for a period
beginning with the date such notice is given and ending ninety days thereafter
(the "Extended Period"), (ii) evidence, in form and substance reasonably
acceptable to Holder, that the premiums for insurance (as required pursuant to
the terms of this Note) on the collateral securing this Note have been paid for
the Extended Period and (iii) evidence, in form and substance reasonably
acceptable to Holder, that the Company has reserved or made other appropriate
provision for the real estate taxes payable by the Company for the Extended
Period pursuant to the real estate leases with respect to those locations where
any collateral securing this Note is
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<PAGE>
located, then during the Extended Period Holder shall not exercise any remedy in
connection with this Note.
(f) No right of any holder of Senior Debt to enforce the
subordination provisions provided in this Section 3 shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of Company or
by any noncompliance by Company with terms, provisions and covenants of this
Note or any other agreement regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. Without in any way limiting the
generality of the foregoing paragraph, the holders of Senior Debt, or any of
them, may, at any time and from time to time, without the consent of or notice
to Holder, without incurring any liabilities to Holder and without impairing or
releasing the subordination and other benefits provided in this Note or the
obligations of Holder to the holders of Senior Debt, even if any right of
reimbursement or subrogation or other right or remedy of Holder is affected,
impaired or extinguished thereby, do any of the following:
(i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase
(subject to the $150,000,000 indebtedness limitation set forth in the
definition of "Senior Debt") or alter, the terms of any Senior Debt, any
security therefor or guaranty thereof or any liability of any obligor
thereon to such holder, or any liability incurred directly or indirectly
in respect thereof or otherwise amend, renew, exchange, extend, modify,
increase (subject to the $150,000,000 indebtedness limitation set forth in
the definition of "Senior Debt") or supplement in any manner any Senior
Debt or any instrument evidencing or securing the same;
(ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(iii) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and
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<PAGE>
however realized to any liability in any manner or order; and
(iv) fail to take or to record or otherwise perfect, for any reason
or for no reason, any lien or security interest securing Senior Debt by
whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or any guarantor or any other person,
elect any remedy and otherwise deal freely with any obligor and any
security for the Senior Debt or any liability of any obligor to such
holder or any liability incurred directly or indirectly in respect
thereof.
(g) The provisions of this Section 3 may not be amended, modified
or supplemented without the consent of the Administrative Agent (until Holder
has received notice from the Administrative Agent that the Credit Agreement has
been terminated and then, in such event, without the consent of the holders of a
majority of the Senior Debt then outstanding).
(h) Upon the payment in full of all Senior Debt, Holder shall be
subrogated to the extent of the payments or distributions made to the holders
of, or otherwise applied to payment of, the Senior Debt pursuant to the
provisions of this Section 3 until this Note shall be paid in full; and for
purposes of such subrogation, no payments or distributions to holders of Senior
Debt of any cash, property or securities to which Holder would be entitled
except for the provisions of this Section 3, and no payment over pursuant to the
provisions of this Section 3 to holders of Senior Debt by Holder, shall, as
between Company, its creditors other than holders of Senior Debt and Holder, be
deemed to be payment by Company to or on account of Senior Debt, it being
understood that the provisions of this Section 3 are solely for the purpose of
defining the relative rights of the holders of Senior Debt, on the one hand, and
Holder, on the other hand.
(i) If any payment or distribution to which Holder would otherwise
have been entitled but for the provisions of this Section 3 shall have been
applied, pursuant to the provisions of this Section 3, to the payment of Senior
Debt, then and in such case, Holder shall be entitled to receive from the
holders of Senior Debt any payments or distributions received by such holders of
Senior
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Debt in excess of the amount sufficient to pay all Senior Debt in full in cash.
(j) Nothing contained in this Note is intended to or shall impair,
as between Company and Holder, the obligations of Company, which are absolute
and unconditional, to pay to Holder the principal of (premium, if any), and
interest on, this Note as and when the same shall become due and payable in
accordance with its terms, or is intended to or shall affect the relative rights
of Holder and creditors of Company other than the holders of Senior Debt, and
except as otherwise provided in Section 3, nothing herein shall prevent Holder
from exercising all remedies otherwise permitted by applicable law upon the
occurrence of an Event of Default under this Note. The failure to make a payment
on account of principal of, or interest on, this Note by reason of any provision
of this Section 3 shall not be construed as preventing the occurrence of an
Event of Default hereunder.
(k) Holder shall be entitled to all rights set forth in this
Section 3 with respect to any Senior Debt which may at any time be held by it,
to the same extent as any other holder of Senior Debt, and nothing in this Note
shall deprive Holder of any of its rights as such holder.
(l) Notwithstanding anything to the contrary in this Note or
otherwise, Holder may retain and apply against outstanding Subordinated Debt at
any time and from time to time any and all proceeds and distributions it
receives in respect of any collateral securing such Subordinated Debt.
4. OPTIONAL PREPAYMENT. Company shall have the right at any time
or from time to time and without premium or penalty, to voluntarily prepay all
or any portion of this Note. Each prepayment shall be accompanied by the payment
of accrued and unpaid interest on the amount being prepaid, through the date of
prepayment.
5. REPRESENTATIONS AND WARRANTIES. Company represents and
warrants on the date hereof as follows:
(a) Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization having full
power and authority to conduct its business in each jurisdiction where it
presently conducts any material part of its business.
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(b) The execution, delivery and performance by Company of this
Note are within the powers of Company, have been duly authorized by all
necessary action, have received all necessary governmental approvals and do not
contravene its organizational documents (if applicable) or any law, regulation
or contractual restriction binding on Company.
(c) This Note is the legal, valid and binding obligation of
Company and is enforceable against Company in accordance with its terms.
(d) No event has occurred and no condition exists which, upon or
at the time of execution and delivery of this Note would constitute an Event of
Default or would, with the giving of notice or lapse of time, or both,
constitute an Event of Default.
6. COVENANTS. Company covenants that until all obligations of
Company hereunder shall have been paid in full in cash, with accrued interest in
cash:
(a) Each of Company and BNY shall, and shall cause each of their
subsidiaries to, at all times do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence and the
governmental rights, licenses, permits, and franchises material to the conduct
of their respective businesses; comply with all laws, rules, regulations and
governmental orders (whether federal, state or local) applicable to the
operation of such businesses whether now in effect or hereafter enacted
(including, without limitation, all applicable laws, rules, regulations and
governmental orders relating to environmental protection and to public and
employee health and safety) the lack of compliance with which would have a
material adverse effect on the business, assets, operations, or condition,
financial or otherwise, of Company, BNY and their subsidiaries taken as a whole
or on the ability of Company to perform its obligations under this Note or BNY
under the Guarantee; take all actions which may be required to obtain, preserve,
renew and extend all licenses, permits, franchises and other authorizations
which are material to the operation of such businesses; and at all times
maintain, preserve and protect all property material to the conduct of such
businesses and keep such property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in
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connection therewith may be properly conducted at all times, subject to normal
wear and tear; PROVIDED, HOWEVER, that the foregoing shall in no way preclude
Company or BNY from liquidating, dissolving, merging, selling or transferring
any subsidiary of Company and/or any and all of the assets thereof.
(b) Company shall furnish Holder, within one hundred twenty (120)
days after the close of each fiscal year, with audited consolidated financial
statements of BNY and its subsidiaries, certified by independent certified
public accountants as of the end of such period, including a balance sheet and
related statements of earnings and cash flows for such fiscal year, in each case
setting forth in comparative form the figures for the previous year prepared in
accordance with generally accepted accounting principles consistently applied
during the period involved.
(c) Company shall furnish Holder, within sixty (60) days after the
close of each of the first three fiscal quarters of each year, with unaudited
consolidated financial statements of BNY and its subsidiaries, including a
balance sheet and related statements of earnings and cash flows for such fiscal
quarter and for the portion of the fiscal year then ending, in each case
prepared in accordance with generally accepted accounting principles
consistently applied during the period involved.
(d) Company and BNY shall not, from the date hereof, voluntarily
create or incur, or suffer to be created or incurred, or assume, or permit to
exist, any mortgage, lien, pledge, charge or encumbrance of any kind (a "Lien")
upon any of its respective properties or assets whether now owned or hereafter
acquired except for Liens (i) securing Senior Debt, (ii) which are Permitted
Encumbrances (as defined below), (iii) incurred in connection with the purchase
of property useful in the business of the Company or BNY, which Lien is created
when such property is purchased by the Company or BNY, as the case may be, and
which Lien does not extend to property other than such purchased property
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit, bankers' acceptances, whether or not
matured, and obligations to trade creditors incurred in the ordinary course of
business), (iv) on real property or leases of real property, and (v) securing
this Note and all the other notes issued to the Equipment Lessors pursuant to
and as defined in Company's Second Amended Joint
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Plan of Reorganization dated November 13, 1998 (the "Plan") (collectively, the
"FF&E Liens"); PROVIDED that notwithstanding anything in this Note or otherwise
to the contrary, Company and BNY shall not, from the date hereof, voluntarily
create or incur, or suffer to be created or incurred, or assume, or permit to
exist any Lien (other than the FF&E Liens) against any of the assets or property
secured by the FF&E Liens.
"Permitted Encumbrances" shall mean the following encumbrances: (a)
Liens for taxes or assessments or other governmental charges not yet due and
payable; (b) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Company or BNY is a party as lessee made in the ordinary course of business; (d)
deposits securing statutory obligations of Company or BNY; (e) inchoate and
unperfected workers', mechanics', suppliers' or similar liens arising in the
ordinary course of business; (f) carriers', warehousemen's or other similar
possessory liens arising in the ordinary course of business; (g) deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to which
Company or BNY is a party; (h) any attachment or judgment lien; and (i) zoning
restrictions, easements, licenses, or other restrictions on the use of any real
estate or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real estate.
(e) Company and BNY shall not enter into or be a party to any
transaction with any person or entity that, directly or indirectly, beneficially
owns or controls ten percent (10%) or more of the voting stock of BNY (an
"Affiliate"), except upon fair and reasonable terms that are no less favorable
to Company or BNY than would be obtained in a comparable arm's-length
transaction with a person or entity not an Affiliate.
(f) Company shall not sell, lease, transfer or assign to any
person or otherwise dispose of (whether in one transaction or a series of
related transactions) all or substantially all of its assets (whether now owned
or hereafter acquired).
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(g) Except as expressly permitted by the Exit Facility, Company
shall not pay or make (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of Capital Stock (as defined in
the Exit Facility) of Company or BNY now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of
Company or BNY now or hereafter outstanding, and (iii) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
Capital Stock of Company or BNY now or hereafter outstanding.
7. SUCCESSORS AND ASSIGNS. (a) This Note shall inure to the
benefit of Payee and its successors and registered assigns. Payee and any other
Holder may assign or transfer to any party (including, without limitation,
members of Payee) all or any part of, or any interest (undivided or divided) in,
its rights and benefits herein, and to the extent of that assignment such
assignee shall have the same rights and benefits against Company as it would
have had if such assignee were Payee. Company will make payment in accordance
with the terms of this Note to the registered Holder listed on the books and
records of Company. This Note and the provisions hereof are binding upon
successors of Company. This Note may be sub-divided in order to effectuate the
foregoing. The Company will take all actions, including the issuance of one or
more replacement Notes (as defined below) to effectuate the foregoing.
(b) Neither this Note nor any obligation hereunder shall be
assigned by Company to any person or entity and any attempted assignment shall
be null and void.
8. EXPENSES. The Company agrees to pay any and all reasonable
expenses (including, without limitation, reasonable legal fees and expenses)
incurred by Holder in connection with enforcement of this Note or the collection
of any sums due to Holder hereunder.
9. PRESENTMENT AND DEMAND. Demand, presentment, protest and
notice of nonpayment and protest are hereby waived by Company.
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10. AMENDMENT AND NON-WAIVER. (a) This Note may not be amended
except by an agreement in writing signed by Company and the Holder hereof;
PROVIDED, HOWEVER, that, in the event this Note is sub-divided in accordance
with Section 7(a) above, this Note and any such Note issued in connection with
such sub-division (collectively, the "Notes") may be amended, modified or waived
by an agreement in writing signed by Company and the holders of not less than a
majority in aggregate principal amount outstanding of all such Notes.
Notwithstanding the foregoing, any amendment, modification or waiver with
respect to any of the following provisions hereof shall be effective as to a
particular Note only by a written agreement, signed by the holder thereof: (i)
reducing the principal of, rate or amount of interest on, such Note, (ii)
postponing any date on which any payment of principal of, or interest on, such
Note would otherwise be due, (iii) releasing all or a substantial portion of the
collateral securing such note, or (iv) amending this Section 10.
(b) To the extent permitted by law, no failure to exercise and no
delay on the part of Holder in exercising any power or right in connection with
this Note or available at law or in equity, shall operate as a waiver thereof,
and no single or partial exercise of any such rights or power, or any
abandonment or discontinuance of steps to enforce such a right or power, shall
preclude any other or further exercise thereof or the exercise of any other
right or power. No course of dealing among any Holder, Company or any other
person or entity shall operate as a waiver of any right of any Holder. No
modification or waiver of any provision of this Note and no consent to any
departure therefrom shall in any event be effective unless in writing and signed
by the party against whom enforcement thereof is to be sought, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.
11. NOTICES. Except as otherwise provided herein, any notice,
demand, request, consent, approval, declaration, delivery or other communication
(including, without limitation, any registration of successors or permitted
assigns) hereunder to be made pursuant to the provisions of this Note shall be
sufficiently given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy answerback,
addressed as follows:
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(a) If to Payee at
BI-Equipment Lessors, LLC
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attn: General Counsel
Telecopy No: (213) 830-8522
(b) If to Company at
Barney's, Inc.
575 Fifth Avenue
New York, New York 10017
Attn: Marc H. Perlowitz, Esq.
Telecopy No.: (212) 450-8480
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) business days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration, delivery or other communication
to the person designated above to receive a copy shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration, delivery or other communication.
12. SUBMISSION TO JURISDICTION; JURY WAIVER. (a) Company, Payee
and any other Holder hereby irrevocably submit to the jurisdiction of any New
York State or Federal court sitting in New York City, and they hereby
irrevocably agree that any action may be heard and determined in such New York
State court or in such Federal court. Company, Payee and any other Holder hereby
irrevocably waive, to the fullest extent they may effectively do so, the defense
of an inconvenient forum to the maintenance of any action in any jurisdiction.
Company, Payee and any other Holder hereby irrevocably agree that the summons
and complaint or any other process in any action in any jurisdiction may be
served by mailing in accordance with the provision set forth in Section 11.
Company, Payee and any other Holder may also
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<PAGE>
be served in any other manner permitted by law, in which event their time to
respond shall be the time provided by law.
(b) EACH OF COMPANY, PAYEE AND ANY OTHER HOLDER HEREBY IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO ANY OBLIGATIONS UNDER THIS NOTE.
13. GOVERNING LAW. This Note shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
agreements made and to be wholly performed in such State and without giving
effect to the conflict of laws principles thereof.
14. PAYMENTS IN CASH. All payments hereunder shall be made by
Company in cash in lawful currency of the United States of America.
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BARNEY'S, INC.
By: /s/ Edward Lambert
-------------------------------
Name: Edward Lambert
Title: Executive VP and CFO
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Exhibit 10.21
GUARANTEE BY BARNEYS NEW YORK, INC.
THIS GUARANTEE (the "GUARANTEE") dated as of January 28, 1999 is made by
BARNEYS NEW YORK, INC., (the "GUARANTOR"), a Delaware corporation having its
office at 575 Fifth Avenue, New York, New York 10001, in favor of BI
Equipment Lessors, LLC, a California limited liability corporation
("GUARANTIED PARTY").
W I T N E S S E T H:
WHEREAS, Barney's, Inc. (the "COMPANY") issued that certain Subordinated
Note dated January 28, 1999 in the principal amount of $34,232,500.00 in
favor of the Guarantied Party (the "NOTE") in accordance with the terms of
the Second Amended Joint Plan of Reorganization of the Company (the "Plan")
dated November 13, 1998, as amended, and filed with the United States
Bankruptcy Court for the Southern District of New York (the "BANKRUPTCY
COURT"); and
WHEREAS, the Guarantor owns all of the shares of stock of the Company and
will derive indirect benefit from the Note;
WHEREAS, to induce the Guarantied Party to accept the Plan, the Guarantor
has agreed to guarantee to the Guarantied Party the payment and performance
of the terms and provisions of the Note;
NOW, THEREFORE, the Guarantor does agree with, and for the benefit of,
the Guarantied Party as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms shall have the meaning ascribed to them in the Note.
<PAGE>
ARTICLE II
GUARANTEE
SECTION 2.1. GUARANTEE OF NOTE PAYMENTS. The Guarantor hereby
irrevocably, absolutely and unconditionally guarantees to the Guarantied
Party and its successors, endorsees, transferees and assigns the due and
punctual payment in full in cash of (i) the principal of, premium, if any,
and interest, if any, on, and any other amounts due under, the Note when and
as the same shall become due and payable (whether at stated maturity or by
required or optional prepayment or by acceleration or otherwise) and (ii) any
other sums or amounts which may become due under, or in connection with, the
terms and provisions of the Note or this Guarantee, without right of any
setoff or counterclaim. All such obligations described in this Section 2.1
are herein called the "PAYMENT OBLIGATIONS."
SECTION 2.2. PAYMENT OF ENFORCEMENT COSTS. The Guarantor also hereby
agrees to pay on demand to Holder as and when incurred all reasonable costs
and expenses of enforcing this Guarantee, including but not limited to court
costs and reasonable attorneys' fees and disbursements. The obligations under
this Section 2.2 are hereinafter referred to as the "ENFORCEMENT COST
OBLIGATIONS".
SECTION 2.3. NON-IMPAIRMENT OF GUARANTEE. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee shall in no way
be released, diminished, reduced, affected or impaired by reason of the
happening from time to time of any of the following events, any of which may
be done or occur without the necessity of any notice to or further consent of
the Guarantor (all of which are hereby expressly waived by the Guarantor):
(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by, to the fullest extent permitted by law, the
Company or by any other party to the Note or any other guarantor, surety,
endorser, letter of credit bank or other obligor of any of the Payment
Obligations or any agreement, covenant, term or condition in the Note to be
performed or observed by such party;
(b) The extension of the time for the payment of all or any portion of
the Payment Obligations or the
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extension of time for the performance of any Payment Obligations or any other
obligation under the Note;
(c) The renewal, supplementation, modification, rearrangement or
amendment (whether material or otherwise) of any of the Note or any of the
obligations of the Company or any other party to the Note;
(d) Any failure, omission, delay, neglect, refusal or lack of diligence
on the part of Holder to enforce, assert or exercise any right, privilege,
power or remedy conferred on Holder in the Note or any action on the part of
Holder granting indulgence, adjustment, forbearance or extension of any kind;
(e) The release, surrender, exchange, subordination or loss of any
security under the Note or the release, modification, amendment, waiver or
failure or refusal to enforce any pledge, security device, letter of credit,
insurance agreement, bond or similar agreement or any guarantee, surety or
indemnity agreement whatsoever;
(f) The release, modification, waiver or failure to enforce any right,
benefit, privilege or interest under any contract or agreement of any kind
under which the rights of the Company have been collaterally or absolutely
transferred or assigned, or a security interest in which has been granted, to
Holder as direct or indirect security for payment of any of the Payment
Obligations or for performance of any obligations to Holder pursuant to the
Note;
(g) The death, legal incapacity, disability, voluntary or involuntary
liquidation, dissolution, sale of any collateral, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Company, the Guarantor,
or their respective affiliates, any other surety for Company or any of the
assets of the Company or Guarantor;
(h) Any invalidity of, or defect or deficiency in, the Note or any
related papers, to the fullest extent permitted by law, including without
limitation the unenforceability of any or all of the provisions of any of the
Note or any related papers, or any failure to acquire, perfect or maintain
perfection of any lien on or security interest in any collateral securing
payment of the Payment
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Obligations, or any portion thereof, or performance of the Company's
obligations thereunder;
(i) The settlement or compromise of any obligation guaranteed hereby or
hereby incurred;
(j) The taking or accepting of any other security or guarantee for the
payment or performance of any of the Note, the Payment Obligations, the
Enforcement Cost Obligations, or any of the other obligations of the Company
under the Note;
(k) Any failure of Holder to notify Guarantor of any renewal, extension
or assignment of the Note or any part thereof, or the release of any
security, or of any other action taken or refrained from being taken by
Holder against the Company, or of any new agreement between Holder and the
Company, it being understood that Holders shall not be required to give
Guarantor any notice of any kind under any circumstances whatsoever with
respect to or in connection with the Note; or
(l) Any other event, action or circumstance that would, in absence of
this subparagraph (l), result in the release or discharge of the Guarantor
from the performance or observance of any obligation, covenant or agreement
contained in this Guarantee.
SECTION 2.4. WAIVERS BY GUARANTOR. The Guarantor hereby waives (a)
marshaling of assets and liabilities, any requirement that assets be sold in
any particular order, notice of acceptance of this Guarantee and of any
liability to which it applies or may apply, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of the taking of any
other action by Holder and all other notices and demands and (b) all
suretyship defenses and all defenses based upon the impairment of suretyship
status.
SECTION 2.5. GUARANTEE OF PAYMENT AND PERFORMANCE. This is an
absolute, present and continuing guarantee of payment and performance of the
Payment Obligations and not a guarantee of collection, and the Guarantor
waives any right to require that any action be brought against the Company or
that Holder be required to exhaust any of its rights, benefits or privileges
under the Note or any security given therefor; PROVIDED, HOWEVER, that
nothing contained herein shall be construed to prevent
4
<PAGE>
Holder from exercising and enforcing any right, benefit or privilege which
Holder may have under this Guarantee or the Note from time to time, and at
any time, it being agreed that the Guarantor's obligations hereunder are, and
shall be, absolute, independent and unconditional under any and all
circumstances. Should Holder seek to enforce the obligations of the Guarantor
by action in any court, the Guarantor waives any necessity, substantive or
procedural, that a judgment previously be rendered against the Company or
that the Company or any other person or entity be joined in such action or
that a separate action be brought against the Company or any other person or
entity. The obligations of the Guarantor hereunder are several from those of
the Company or any other person or entity, and are primary obligations
concerning which the Guarantor is the principal obligor. All waivers herein
contained shall be without prejudice to the right of Holder at its option to
proceed against the Company or any other person, whether by separate action
or by joinder. The Guarantor agrees that this Guarantee shall not be
discharged except by payment in full in cash of all Payment Obligations and
all Enforcement Cost Obligations.
In the event that the Company or any other person liable shall fail so
to pay any of the Payment Obligations or Enforcement Cost Obligations, the
Guarantor agrees to pay the same when due to Holder or its designees, without
demand, presentment, protest or notice of any kind, in lawful money of the
United States of America, at the place for payment specified in the Note.
Each default in payment of principal of, premium, if any, or interest, if
any, on any of the Payment Obligations or Enforcement Cost Obligations shall
give rise to a separate cause of action hereunder and separate suits may be
brought hereunder as each cause of action arises. The Guarantor hereby
agrees that the Note may make reference to this Guarantee.
The Guarantor hereby agrees to pay and to indemnify and save Holder
harmless from and against any damage, loss, cost or expense (including
reasonable fees and expenses of attorneys) which Holder may incur or be
subject to as a consequence, direct or indirect, of (i) any breach by
Guarantor or the Company of any warranty, covenant, term or condition in, or
the occurrence of any default under, this Guarantee, or the Note, together
with all expenses resulting from the compromise or defense of any claims or
liabilities arising as a result of any such breach or default, and (ii) any
legal action commenced to challenge
5
<PAGE>
the validity of this Guarantee, the Note, or any of the Payment Obligations
or Enforcement Cost Obligations.
SECTION 2.6. RELIANCE UPON GUARANTEE. All extensions of credit and
financial accommodations heretofore or hereafter made by Holder to the
Company under the Note shall be conclusively presumed to have been in
reliance upon the giving of this Guarantee.
SECTION 2.7. REINSTATEMENT. This Guarantee shall continue to be
effective, or shall be reinstated, if at any time payment, or any part
thereof, of any of the Payment Obligations or Enforcement Cost Obligations is
rescinded or must otherwise be returned by Holder for any reason whatsoever
(including, but not limited to, the bankruptcy, insolvency, dissolution,
liquidation or reorganization of the Company or any other person), all as
though such payment had not been received by Holder.
SECTION 2.8. LIMITS ON SUBROGATION. No payment by the Guarantor
pursuant to any provision of this Guarantee or other satisfaction of the
Guarantor's liability under this Guarantee shall entitle the Guarantor, by
subrogation or otherwise, to any right or remedy against the Company until
after the payment in full in cash of the Payment Obligations and the
Enforcement Cost Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Guarantor hereby represents and warrants as follows:
SECTION 3.1. The Guarantor is duly organized, validly existing and in
good standing under the laws of the State of Delaware, having full power and
authority to conduct its business in each jurisdiction where it presently
conducts any material part of its business.
SECTION 3.2. The execution, delivery and performance by the guarantor
of this Guarantee are within the powers of the Guarantor, have been duly
authorized by all necessary action, have received all necessary governmental
approvals, and do not contravene its organizational documents, or any law,
regulation or
6
<PAGE>
contractual restriction binding on the Guarantor.
SECTION 3.3. This Guarantee is the legal, valid and binding obligation
of the Guarantor and is enforceable against the Guarantor in accordance with
it terms.
SECTION 3.4. No event has occurred and no condition exists which, upon
or at the time of execution and delivery of the Guarantee would constitute an
Event of Default or would, with the giving of notice or lapse of time, or
both, constitute an Event of Default.
SECTION 3.5. The execution, delivery and performance by the Guarantor
of this Guarantee does not and will not require (a) any consent of any other
person or entity or (b) any consent, license, permit, authorization or other
approval of, any giving of notice to, any exemption by, any registration,
declaration or filing with, or any taking of any other action in respect of,
any court, arbitrator, administrative agency or other governmental authority,
the failure of which would materially and adversely affect the Guarantor's
performance of its obligations hereunder, other than the approval of the
Bankruptcy Court and other consents which have been obtained.
ARTICLE IV
COVENANTS
The Guarantor hereby covenants and agrees that it will comply with all
covenants which, under the terms of the Note, are applicable to it.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; TERMINATION OF
GUARANTEE. The representations, covenants and agreements herein set forth
shall continue and survive until termination of this Guarantee. Upon the
maturity date of the Note, or upon payment in full in cash of all Payment
Obligations and all Enforcement Cost
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<PAGE>
Obligations, if later, this Guarantee shall terminate and be of no further
force and effect.
SECTION 5.2. SUCCESSOR AND ASSIGNS. This Guarantee shall inure to the
benefit of the Guarantied Party, any other Holder and their respective
successors, endorsees, transferees and assigns. The Guarantied Party and any
other Holder may assign to any party all or any part of, or any interest
(undivided or divided) in its rights and benefits herein, and to the extent
of that assignment such assignee shall have the same rights and benefits
against the Guarantor as it would have had if such assignee were the
Guarantied Party. This Guarantee and the provisions hereof are binding upon
successors of the Guarantor. Neither this Guarantee nor any obligation
hereunder shall be assigned by the Guarantor to any person or entity and any
attempted assignment shall be null and void.
SECTION 5.3. NOTICES. Except as otherwise provided herein, any notice,
demand, request, consent, approval, declaration, delivery or other
communication hereunder to be made pursuant to the provisions of this
Guarantee shall be sufficiently given or made if in writing and either
delivered in person with receipt acknowledged, or sent by registered or
certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
If to the Guarantied Party:
BI-Equipment Lessor, LLC
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: General Counsel
Telecopy: (213) 830-8522
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52 Street
New York, New York 10021
Attention: Chaim J. Fortgang
Telecopy: (212) 403-2000
8
<PAGE>
If to Guarantor:
Barneys New York, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: General Counsel
Telecopy: (212) 450-8480
or at such other address as may be substituted by notice by Holder given as
herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, or telecopied and
confirmed by telecopy answerback, or three (3) business days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration, delivery or other communication to the persons designated above
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration, delivery or other
communication.
SECTION 5.4. EXPENSES. The Guarantor agrees to pay any and all
reasonable expenses (including reasonable legal fees and expenses) incurred by
Holder in connection with the enforcement of this Guarantee or the collection
of any sums due to Holder hereunder.
SECTION 5.5. PARTIAL INVALIDITY. Holder and the Guarantor intend
this Guarantee to comply with all applicable laws and to be a binding, legal
and enforceable contract which shall be liberally construed so as to carry
out their intent as expressed in this Guarantee. Without limiting the
generality of the immediately preceding sentence, if any provision of this
Guarantee is held to be illegal, invalid or unenforceable under present or
future laws effective during the term of this Guarantee, the legality,
validity and enforceability of the other provisions of this Guarantee shall
not be affected thereby.
SECTION 5.6. WAIVERS AND AMENDMENTS; CUMULATIVE REMEDIES. Holder
shall not be obligated to exercise any right, power or privilege under this
Guarantee, and no failure to exercise and no delay in exercising, on the part
of Holder, any such right, power or privilege under this
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Guarantee shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise or
the exercise of any other right, power or privilege. No notice to or demand
on the Guarantor shall be deemed to be a waiver of Holder's right to take
further action without notice or demand as provided herein. No waiver shall
be applicable except in the specific instance for which given or shall in any
way impair Holder's rights or the Guarantor's liability in any other respect
or at any other time, nor in any event shall any modification or waiver of
any provision of this Guarantee be effective unless in writing and signed on
behalf of Holder and, as to any modification, Guarantor. The rights and
remedies provided in this Guarantee are cumulative and are not exclusive of
any other right or remedy provided by law, in equity or under any other
agreement or instrument.
SECTION 5.7. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED IN SUCH STATE
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 5.8. SUBMISSION TO JURISDICTION. The Guarantor hereby
irrevocably submits to the jurisdiction of any New York State or Federal
court sitting in New York, and the Guarantor hereby irrevocably agrees that
any action may be heard and determined in such New York State court or in
such Federal court. The Guarantor hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action in any jurisdiction. The Guarantor hereby
irrevocably agrees that the summons and complaint or any other process in any
action in any jurisdiction may be served by mailing in accordance with the
provision set forth in Section 5.3. The Guarantor may also be served in any
other manner permitted by law, in which event its time to respond shall be
the time provided by law.
SECTION 5.9. SUBORDINATION. The obligations of the Guarantor under
this Guarantee shall be subordinated to the prior payment in full of all
Senior Debt as and to the extent such Senior Debt is guaranteed by the
Guarantor, to the same extent as the payments of the principal of and
interest on the Note are subordinated as provided in Section 3 of the Note.
SECTION 5.10. JURY WAIVER. GUARANTOR AND, BY ITS
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ACCEPTANCE HEREOF, HOLDER, EACH IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY
OBLIGATIONS UNDER THIS GUARANTEE.
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IN WITNESS WHEREOF, the Guarantor has executed this Guarantee as of
the day and year first above written.
BARNEYS NEW YORK, INC.
By: /s/ Edward Lambert
-------------------------------
Edward Lambert
Executive Vice President
and Chief Financial Officer
<PAGE>
Exhibit 10.22
================================================================================
SECURITY AGREEMENT
MADE BY
BARNEY'S, INC.
IN FAVOR OF
BI-EQUIPMENT LESSORS, LLC, AS COLLATERAL AGENT
DATED AS OF
JANUARY 28, 1999
================================================================================
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of January 28, 1999, made by Barney's, Inc.
(the "COMPANY"), in favor of BI-Equipment Lessors, LLC ("BI-Equipment"), as
collateral agent for itself and for the holders from time to time of the
Promissory Note referred to below (in such capacity, the "SECURED PARTY ").
W I T N E S S E T H :
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WHEREAS, contemporaneously with its entry into this Security Agreement,
the Company will issue to BI-Equipment a secured subordinated promissory note in
substantially the form annexed hereto as Exhibit A (such promissory note,
together with any replacement or sub-divided promissory notes issued by the
Company from time to time pursuant thereto, are referred to collectively herein
as the "PROMISSORY NOTE") pursuant to the Second Amended Joint Plan of
Reorganization for the Debtors Proposed by Whippoorwill Associates, Inc., Bay
Harbour Management L.C. and the Official Committee of Unsecured Creditors (the
"PLAN") in the Chapter 11 reorganization cases commenced by the Company and
certain of its affiliates, Case Nos. 96 B 40113 (JLG), currently pending in the
United States Bankruptcy Court for the Southern District of New York.
WHEREAS, it is a condition precedent to confirmation of the Plan that
this Security Agreement shall have been executed and delivered to the Secured
Party.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound,
the parties hereto agree as follows:
1. DEFINED TERMS. The following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Equipment and Proceeds; and the following terms shall have
the following meanings:
"CODE" means the Uniform Commercial Code as from time to time in effect
in the State of New York.
"COLLATERAL" shall have the meaning assigned to it in Section 2 of this
Security Agreement.
"DEFAULT" means any of the events specified in Section 2 of the
Promissory Note, whether or not any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been satisfied.
"EQUIPMENT LEASE AGREEMENTS" means the agreements listed or described on
Schedule A.
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"EVENT OF DEFAULT" means any of the events specified in Section 2 of the
Promissory Note.
"FINANCING STATEMENTS" means the collective reference to the Uniform
Commercial Code financing statements to be filed (i) locally and centrally with
respect to the applicable real properties to perfect the Secured Party's
security interest in fixtures and personal property located therein and (ii) at
the appropriate filing offices to perfect the Secured Party's security interest
in the Collateral subject to this Security Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to any
government.
"LIEN" means any mortgage, pledge, hypothecation, security interest,
encumbrance, charge or lien (statutory or otherwise) or assignment, deposit
arrangement or other preferential arrangement in respect of an interest in
property intended to secure, support or otherwise assure payment of an
obligation (including any conditional sale or other title retention agreement
and any lease having substantially the same economic effect as any of the
foregoing).
"OBLIGATIONS" means the unpaid principal amount of, and interest on
(including, without limitation, interest accruing after the maturity of the
Promissory Note and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other obligations
and liabilities of the Company to the Secured Party, whether direct or indirect,
absolute or contingent, liquidated or unliquidated, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Promissory Note and/or this Security Agreement or any other document
made, delivered or given in connection therewith or herewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of counsel
to the Secured Party that are required to be paid by the Company pursuant to the
terms of the Promissory Note and/or this Security Agreement) or otherwise.
"PERSON" means any individual, partnership, firm, corporation,
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.
"PROMISSORY NOTE DOCUMENTS" means the collective reference to (i) the
Promissory Note, (ii) this Security Agreement, (iii) the Financing Statements
and (v) all other agreements, instruments or contracts by which any of the
Obligations shall be evidenced or under or in respect of which the Secured Party
or any of the nominees, agents or representatives of the Secured Party shall
have any rights or interests as security for the payment or performance of all
or any part of the Obligations.
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"REQUIREMENT OF LAW" means as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"SECURITY AGREEMENT" means this Security Agreement, as amended,
restated, supplemented or otherwise modified from time to time.
"SCHEDULE A" means Schedule A to this Security Agreement.
"SCHEDULE B" means Schedule B to this Security Agreement.
"SCHEDULE C" means Schedule C to this Security Agreement.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Company hereby grants to the
Secured Party a continuing security interest in all of the following property
now owned or, with respect to clause (ii) below, at any time hereafter acquired
by the Company, or in which the Company now has or, with respect to clause (ii)
below, at any time in the future may acquire, any right, title or interest
(collectively, the "COLLATERAL"):
(i) all furniture, fixtures and Equipment referred to in the Equipment
Lease Agreements, including, without limitation, the schedules to the Equipment
Lease Agreements; and
(ii) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing, including Proceeds which constitute property of
the types described in clause (i) and, to the extent not otherwise included, all
payments under insurance policies (whether or not the Secured Party is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Collateral.
3. SECURITY INTEREST ABSOLUTE. All rights and security interests of the
Secured Party hereunder, and all obligations of the Company hereunder, shall be
absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of the Promissory Note or any
other Promissory Note Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other amendment or waiver
of, or any consent to any departure from, the Promissory Note or any other
Promissory Note Document;
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(c) any exchange or release of, or any non-perfection of any security
interest in, any of the Collateral or any other collateral for the Obligations,
or any release, amendment or waiver of, or consent to any departure from, any
guaranty for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Company or any security interest granted
hereunder other than payment of the Obligations to the extent any such payment
has not been returned to the Company, its successors, transferees or assigns.
4. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants that:
(a) TITLE; NO OTHER LIENS. Except for the Lien granted to the
Secured Party pursuant to this Security Agreement, the Company owns each
item of its Collateral free and clear of any and all Liens or claims of
others. No security agreement, financing statement or other public
notice with respect to all or any part of the Collateral is on file or
of record in any public office, except such as may have been filed in
favor of the Secured Party, pursuant to this Security Agreement or as
may be permitted pursuant to the Promissory Note.
(b) PERFECTED FIRST PRIORITY LIENS. The Liens granted pursuant
to this Security Agreement constitute valid and, upon filing of the
Financing Statements, perfected Liens on the Collateral in favor of the
Secured Party, which are prior to all other Liens on the Collateral
created by the Company and in existence on the date hereof, and which
are enforceable as such against all creditors of and purchasers from the
Company and against any owner or purchaser of the real property where
any of the Collateral is located and any present or future creditor
obtaining a Lien on such real property.
(c) LOCATION. Furniture, fixtures and Equipment constituting
Collateral is kept at the locations listed on Schedule B.
(d) POWER AND AUTHORITY; AUTHORIZATION. The Company has the
corporate power and authority and the legal right to execute and
deliver, to perform its obligations under, and to grant the Lien on the
Collateral pursuant to, this Security Agreement and has taken all
necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Lien on the Collateral pursuant to,
this Security Agreement.
5. COVENANTS. The Company covenants and agrees with the Secured Party
that, from and after the date of this Security Agreement until the Obligations
are paid in full:
(a) FURTHER DOCUMENTATION. At any time and from time to time,
upon the written request of the Secured Party, and at the sole expense
of the Company, the Company will promptly and duly execute and deliver
such further instruments and documents and take such further action as
the Secured Party may reasonably request for the purpose of obtaining or
preserving the full benefits of this Security Agreement and of
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the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to the Liens
created hereby. The Company also hereby authorizes the Secured Party to
file any such financing or continuation statement without the signature
of the Company to the extent permitted by applicable law with respect to
the Collateral. A carbon, photographic or other reproduction of this
Security Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
(b) INDEMNIFICATION. The Company agrees to pay, and to save the
Secured Party harmless from, any and all liabilities, costs and expenses
(including, without limitation, reasonable legal fees and expenses) (i)
with respect to, or resulting from, any delay in paying, any and all
excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay in complying with any Requirement of Law
applicable to any of the Collateral or (iii) in connection with any of
the transactions contemplated by this Security Agreement.
(c) MAINTENANCE OF RECORDS. The Company will keep and maintain
at its own cost and expense satisfactory and complete records of the
Collateral. The Company will mark its books and records pertaining to
the Collateral to evidence this Security Agreement and the security
interests granted hereby. For the Secured Party's further security, the
Secured Party shall have a security interest in all of the Company's
books and records pertaining to the Collateral.
(d) RIGHT OF INSPECTION. The Secured Party shall upon reasonable
advanced written notice at all times have full and free access during
normal business hours to all the books, correspondence and records of
the Company relating to the Collateral and its representatives may
examine the same, take extracts therefrom and make photocopies thereof,
and the Company agrees to render to the Secured Party, at the Secured
Party's cost and expense or, if an Event of Default has occurred and is
continuing, at the Company's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. The
Secured Party and its representatives shall upon reasonable advanced
written notice also have the right during normal business hours to enter
into and upon any premises where any of the Collateral is located for
the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
(e) COMPLIANCE WITH LAWS, ETC. The Company will comply in all
material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of the Company's
business; PROVIDED, however, that the Company may contest any
Requirement of Law in any reasonable manner which shall not, in the sole
reasonable opinion of the Secured Party, adversely affect the Secured
Party's rights or the priority of their Liens on the Collateral.
(f) PAYMENT OF OBLIGATIONS. The Company will pay promptly when
due all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in
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respect of its income or profits therefrom, as well as all claims of any
kind (including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such
charge need be paid if (i) the validity thereof is being contested in
good faith by appropriate proceedings, (ii) such proceedings do not
involve any material danger of the sale, forfeiture or loss of any of
the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Company's books in accordance with
GAAP.
(g) LIMITATION ON LIENS ON COLLATERAL. The Company will not
create, incur or permit to exist, will defend the Collateral against,
and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Liens created hereby, and
will defend the right, title and interest of the Secured Party in and to
any of the Collateral against the claims and demands of all Persons
whomsoever.
(h) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. Unless the
Secured Party otherwise agrees in writing, the Company will not sell,
transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except, so long as no Event of
Default has occurred and is continuing, the disposition in the ordinary
course of business of items of the Collateral which have become worn out
or obsolete or are no longer used or useful in the Company's business.
Without limiting the foregoing, the Company shall promptly turn over to
the Secured Party any and all proceeds arising in connection with the
sale, transfer, lease or other disposition of any Collateral, which
proceeds shall be applied by the Secured Party:
(i) FIRST, to the repayment of the reasonable costs and
expenses of such sale, transfer, lease or other disposition
incurred by the Secured Party, including, without limitation,
reasonable legal fees and expenses;
(ii) SECOND, to pay accrued and unpaid interest in
respect of the Promissory Note;
(iii) THIRD, to repay principal outstanding in respect
of the Promissory Note;
(iv) FOURTH, to the repayment of any other Obligations;
(v) FINALLY, after the indefeasible payment in full in
cash of all Obligations, distributed to the Company, or to
whomsoever may be lawfully entitled to receive the same as a
court of competent jurisdiction may direct.
(i) MAINTENANCE OF EQUIPMENT. The Company will maintain each
item of the Collateral in good operating condition, ordinary wear and
tear and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose.
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(j) MAINTENANCE OF INSURANCE. The Company will maintain (at its
own expense), with financially sound and reputable companies, insurance
policies (i) insuring the Collateral against loss by fire, explosion,
theft and such other casualties as may be reasonably satisfactory to the
Secured Party and (ii) insuring the Company and the Secured Party
against liability for personal injury and property damage relating to
such Collateral, such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the Secured Party,
with losses payable to the Company and the Secured Party named as an
additional insured. All such insurance shall (i) contain a breach of
warranty clause in favor of the Secured Party, (ii) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt
by the Secured Party of written notice thereof, (iii) name the Secured
Party as an additional insured party and (iv) be reasonably satisfactory
in all other respects to the Secured Party. The Company shall deliver to
the Secured Party a certificate of insurance with respect to such
insurance during the month of January in each calendar year commencing
with January 1999 and such supplemental reports with respect thereto as
the Secured Party may from time to time reasonably request.
(k) FURTHER IDENTIFICATION OF COLLATERAL. The Company will
furnish to the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports
in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail.
(l) NOTICES. The Company will advise the Secured Party promptly,
in reasonable detail, at its addresses set forth in the Promissory Note,
(i) of any Lien (other than Liens created hereby) on, or claim asserted
against, any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the Liens created
hereunder.
(m) CHANGES IN LOCATIONS, NAME, ETC. The Company will not (i)
change the location of its chief executive office/chief place of
business from that specified on Schedule C or remove its books and
records from the location specified in Schedule C, (ii) permit any of
the furniture, fixtures or Equipment constituting Collateral to be kept
at a location other than those listed on Schedule B or (iii) change its
name, identity or corporate structure to such an extent that any
financing statement filed by the Secured Party in connection with this
Security Agreement would become seriously misleading, in each case,
without giving the Secured Party at least 30 days prior written notice
thereof.
6. THE SECURED PARTY'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Company hereby irrevocably constitutes and appoints the
Secured Party and any officer or agent thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Company and in the name of the Company
or in its own name, from time to time in the Secured Party's discretion, for the
purpose of carrying out the terms of this Security Agreement, to take
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any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Security Agreement, and, without limiting the generality of the foregoing,
the Company hereby gives the Secured Party the power and right, on behalf of the
Company, without notice to or assent by the Company, to do the following:
(i) upon the occurrence and during the continuance of any Event
of Default, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Security Agreement and to pay
all or any part of the premiums therefor and the costs thereof; and
(ii) upon the occurrence and during the continuance of any Event
of Default, (A) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(B) to commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of
any Collateral; (C) to defend any suit, action or proceeding brought
against the Company with respect to any Collateral; (D) to settle,
compromise or adjust any suit, action or proceeding described in clause
(C) above and, in connection therewith, to give such discharges or
releases as the Secured Party may deem appropriate; and (E) generally,
to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Secured Party were the absolute owner thereof for all
purposes, and to do, at the Secured Party's option and the Company's
expense, at any time, or from time to time, all acts and things which
the Secured Party deems necessary to protect, preserve or realize upon
the Collateral and the Secured Party's Liens thereon and to effect the
intent of this Security Agreement, all as fully and effectively as the
Company might do.
The Company hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable, but may only be exercised by the Secured
Party upon the occurrence and during the continuance of an Event of Default.
(b) OTHER POWERS. The Company also authorizes the Secured Party, at any
time and from time to time, to execute, in connection with the sale provided for
in Section 9 hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) NO DUTY ON THE SECURED PARTY'S PART. The powers conferred on the
Secured Party hereunder are solely to protect the Secured Party's interests in
the Collateral and shall not impose any duty upon the Secured Party to exercise
any such powers. The Secured Party shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
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7. PERFORMANCE BY THE SECURED PARTY OF THE COMPANY'S OBLIGATIONS. If the
Company fails to perform or comply with any of its agreements contained herein
and the Secured Party, as provided for by the terms of this Security Agreement,
shall itself perform or comply, or otherwise cause performance or compliance,
with such agreement, the expenses of the Secured Party incurred in connection
with such performance or compliance, together with interest thereon at a rate
per annum of 13.5%, shall be payable by the Company to the Secured Party on
demand and shall constitute Obligations secured hereby.
8. PROCEEDS. It is agreed that if an Event of Default shall occur and be
continuing (a) all Proceeds received by the Company consisting of cash, checks
and other near-cash items shall be held by the Company in trust for the Secured
Party, segregated from other funds of the Company, and shall, forthwith upon
receipt by the Company, be turned over to the Secured Party in the exact form
received by the Company (duly indorsed by the Company to the Secured Party, if
required), and (b) any and all Proceeds (including, without limitation, Proceeds
arising under or pursuant to Section 9 hereof) received by the Secured Party
(whether from the Company or otherwise) may, in the sole discretion of the
Secured Party, be held by the Secured Party as collateral security for, and/or
then or at any time thereafter may be applied by the Secured Party against, the
Obligations (whether matured or unmatured), such application to be in such order
as the Secured Party shall elect. Any balance of such Proceeds remaining after
the Obligations shall have been paid in full shall be paid over to the Company
or to whomsoever may be lawfully entitled to receive the same.
9. REMEDIES. If an Event of Default shall occur and be continuing, the
Secured Party may exercise, in addition to all other rights and remedies granted
to it in this Security Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the Code. Without limiting the generality of the
foregoing, the Secured Party, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Company or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Secured Party shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Company, which right or equity is hereby waived
or released. The Company further agrees, at the Secured Party's request, to
assemble the Collateral and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at the Company's
premises or elsewhere. The Secured Party shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to
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the Collateral or the rights of the Secured Party hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Secured Party may
elect, and only after such application and after the payment by the Secured
Party of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Secured Party account for
the surplus, if any, to the Company. To the extent permitted by applicable law,
the Company waives all claims, damages and demands it may acquire against the
Secured Party arising out of the exercise by the Secured Party of any rights
hereunder, except with respect to any such rights exercised by the Secured Party
with gross negligence or willful misconduct. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. The Company shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Secured Party to collect such deficiency.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL. The
Secured Party's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Secured
Party deals with similar property for its own account. Neither the Secured
Party, nor any of its directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon all or any part of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any collateral upon the request of the Company or
otherwise.
11. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. PARAGRAPH HEADINGS. The paragraph headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
14. CONSTRUCTION. Unless the context of this Security Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Security Agreement as a whole and not to any particular provision of
this Security Agreement, and section and clause references are to this Security
Agreement unless otherwise specified herein.
15. NO WAIVER; CUMULATIVE REMEDIES. The Secured Party shall not by any
act (except by a written instrument pursuant to Section 16 hereof), delay,
indulgence, omission or
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otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Secured Party
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
16. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS; GOVERNING LAW. None
of the terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument signed by the
Company and the Secured Party. This Security Agreement shall be binding upon the
successors and assigns of the Company and shall inure to the benefit of the
Secured Party and its successors and assigns; PROVIDED, HOWEVER, that the
Company may not assign this Security Agreement or any rights or obligations
hereunder without the prior written consent of the Secured Party. This Security
Agreement shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York without regard to principles of
conflicts of law.
17. NOTICES. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Promissory Note and shall be effective (a) in the case of mail, 2 days after
deposit in the postal system, first class postage pre-paid and (b) in the case
of telex or facsimile notices, when sent. The Company may change its address and
transmission number by written notice to the Secured Party, and the Secured
Party may change its address and transmission number by written notice to the
Company.
18. AGENCY. The Company and the Secured Party acknowledge and agree that
the Secured Party shall act as collateral agent with respect to the Collateral
on behalf of the holders from time to time of the Promissory Note.
19. REAL PROPERTY. This Security Agreement shall not create or be filed
as a lien, which by its terms, encumbers or purports to encumber the real
property in which the goods, machinery, equipment, appliances or other personal
property covered hereby are to be located or installed.
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IN WITNESS WHEREOF, the parties have caused this Security Agreement to
be duly executed and delivered as of the date first above written.
BARNEY'S, INC.
By /s/ Thomas C. Shull
----------------------------------
Title: President
Name: Thomas C. Shull
BI-EQUIPMENT LESSORS, LLC,
AS COLLATERAL AGENT
By /s/ Patricia Wachtell
----------------------------------
Title: Vice President
By /s/ Kenneth Liang
----------------------------------
Title: Vice President
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Exhibit 10.23
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "AGREEMENT"), dated as of January 28,
1999, made by and between BARNEY'S, INC., a corporation organized under the laws
of the State of New York with an office at 575 Fifth Avenue, New York, New York
10017 (hereinafter referred to as "TRADEMARK OWNER"), BNY LICENSING CORP. a
corporation organized under the laws of the State of Delaware with an office at
575 Fifth Avenue, New York, New York 10017 (hereinafter referred to as
"LICENSOR"), and BARNEYS JAPAN CO., LTD., a corporation organized under the laws
of Japan, with principal offices at 15-16 Shinjuku 3-Chome, Shinjuku-ku, Tokyo
160 Japan (hereinafter referred to as "LICENSEE").
W I T N E S S E T H :
WHEREAS, Trademark Owner operates retail stores under the name
"BARNEYS NEW YORK", which stores sell men's, women's and children's wearing
apparel, shoes and accessories, cosmetics, jewelry, china, glassware, linens,
stationery and gift items and furniture, among other items, under the "BARNEYS
NEW YORK" name and under other brand names; and
WHEREAS, the Trademark Owner has granted to Licensor the right and
authority to grant licenses to use the "BARNEYS NEW YORK" name in certain Asian
countries, including Japan and Singapore, in connection with the operation of
retail stores and the manufacture, sale and distribution of merchandise under
the "BARNEYS NEW YORK" name (hereinafter referred to as the "BASIC LICENSE
AGREEMENT"); and
<PAGE>
WHEREAS, an Operating License Agreement (hereinafter referred to as
the "ORIGINAL AGREEMENT") dated September 19, 1989, was entered into by and
between Licensor and ISETAN COMPANY LIMITED (hereinafter referred to as
"ISETAN"), pursuant to which Licensor granted to Isetan the exclusive right and
license to use the trademark and tradename "BARNEYS NEW YORK" in specified ways
within a licensed territory as defined in the Original Agreement; and
WHEREAS, the Original Agreement was assigned by Isetan to Licensee,
pursuant to the provisions of subparagraph 12(e) of the Original Agreement, as
of June 1, 1990; and
WHEREAS, Trademark Owner, Licensor and certain related entities filed
voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York on January
10, 1996, in the proceedings entitled IN RE BARNEY'S, INC. ET AL., Case Nos.
96-B-40113 through 40133 (JLG) (hereinafter referred to as the "CHAPTER 11
PROCEEDINGS"); and
WHEREAS, a plan of reorganization (hereinafter referred to as the
"PLAN OF REORGANIZATION") in the Chapter 11 Proceedings was confirmed on
December 21, 1998, in accordance with the Bankruptcy Code, pursuant to which all
of the assets, property and rights of BNY Licensing Corp. and Barney's, Inc.,
including their rights of ownership of the trademark, service mark and trade
name "BARNEYS NEW YORK," vested in Trademark Owner or Licensor (as applicable)
and which authorized Trademark Owner and Licensor to enter into this Agreement;
and
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WHEREAS, pursuant to the Plan of Reorganization and Section 365(n) of
the Bankruptcy Code, 11 U.S.C. Section 365(n), Licensor will be deemed to have
rejected the Original Agreement; and
WHEREAS, Licensor desires to continue the license relationship with
Licensee as contemplated in the Original Agreement, subject to certain
modifications; and
WHEREAS, Licensor wishes to grant to Licensee, and Licensee wishes to
obtain from Licensor, the right to use the "BARNEYS NEW YORK" name and mark in
Japan and, for a limited purpose, in Singapore, in connection with the operation
of retail stores and the manufacture, sale and distribution of merchandise under
the "BARNEYS NEW YORK" name and mark.
NOW, THEREFORE, in consideration of the mutual terms, agreements and
conditions herein contained, and for other good and valuable consideration, the
parties hereby agree as follows:
1. REJECTION AND TERMINATION OF ORIGINAL AGREEMENT. Pursuant to the
Plan of Reorganization and Section 365(n) of the Bankruptcy Code, 11 U.S.C.
Section 365(n), Licensor will be deemed to have rejected the Original
Agreement. Licensor and Licensee hereby terminate all terms, conditions and
obligations of the Original Agreement.
2. GRANT OF LICENSE. (a) Subject to the conditions hereinafter set
forth, Licensor hereby grants to Licensee, for the term of this Agreement, the
exclusive right and license in the country of Japan (hereinafter referred to as
the "LICENSED TERRITORY") to operate retail stores (hereinafter referred to as
the "FREE-STANDING STORES") and
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departments within retail stores (hereinafter referred to as the "IN-STORE
SHOPS") under the tradename "BARNEYS NEW YORK" and to operate a single in-store
shop located in an Isetan store in Singapore (hereinafter referred to as the
"LICENSED DEPARTMENT") (such free-standing stores and in-store shops, and the
Licensed Department are hereinafter referred to as the "RETAIL LOCATIONS") and
to manufacture, sell and distribute (at wholesale and at retail) in, to and
through the Retail Locations, Licensed Products (as defined below) and to use
the mark "BARNEYS NEW YORK" (the tradename, trademark and service mark "BARNEYS
NEW YORK" in English and/or Japanese are hereinafter referred to as the
"LICENSED MARK") on and in connection with the Licensed Products and the
manufacture, sale and distribution thereof, to sublicense said rights in the
Licensed Territory pursuant to paragraph 13 hereof (subject to the
qualifications set forth therein), and to use the Licensed Mark as part of
Licensee's corporate name (the right to so use the Licensed Mark shall be
limited to Licensee and shall not be granted to any sublicensee). It is
understood by the parties that the manufacturing right hereby granted shall not
be limited to the Licensed Territory; however, the selling and distributing
rights shall be expressly limited to the Licensed Territory and the Licensed
Department.
(b) Licensee's uses of the Licensed Mark shall be designed to result
in the attribution to the Licensed Mark of, and the Licensed Mark shall be
promoted to represent, the qualities for which Trademark Owner's Division One
stores (as listed in Exhibit A and hereinafter referred to as the "BARNEYS
STORES") are known. Licensee shall exert its best efforts to maintain and
enhance these qualities in the Retail Locations
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and in the products which are or are caused to be designed, manufactured and/or
distributed for the purpose of, and under, this Agreement, or sold in the Retail
Locations.
(c) As used herein, the term "Retail Location" may include, in
addition to retail stores, outlet stores, warehouse sales, catalog, mail order,
or other operations (hereinafter referred to as the "ADDITIONAL USES") conducted
under or using the Licensed Mark which involve the sale of merchandise to the
public, PROVIDED, HOWEVER, that Licensee's use of the Licensed Mark in
connection with any such Additional Uses shall have been approved pursuant to
paragraph 5 hereof and shall be consistent with all the terms and conditions of
this Agreement.
(d) The parties will set forth and agree upon, in good faith, an
Internet use policy, which shall contain standards and guidelines for, and set
forth the extent and limitation of, Licensee's use of the Licensed Marks on the
Internet, prior to any such use by Licensee.
3. THE LICENSED PRODUCTS. As used in this Agreement the "LICENSED
PRODUCTS" shall mean the products listed on Exhibit B hereto which may from time
to time be revised upon mutual agreement and which are manufactured, sold and/or
distributed by Licensee under or in conjunction with the Licensed Mark or are
sold and/or distributed by Licensee from a Retail Location (whether or not such
products bear the Licensed Mark). Licensed Products which carry only a
designer's or manufacturer's label or such a label in conjunction with a label
bearing the Licensed Mark are referred to herein as "BRANDED PRODUCTS."
Licensed Products which carry only a label bearing the Licensed Mark, or which
carry no label, are referred to herein as "PRIVATE LABEL
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PRODUCTS." A label bearing the Licensed Mark shall be added to all Branded
Products unless it is not practical to do so.
4. TERM. The initial term (hereinafter referred to as the "BASE
TERM") of this Agreement shall continue until December 31, 2015, unless sooner
terminated in accordance with the provisions of this Agreement. Licensee shall
have the right, at the end of the Base Term and the first and second Extended
Terms (if any) to renew this Agreement for an optional ten (10) year term (each
term hereinafter referred to as an "EXTENDED TERM"), on the condition that at
the end of the then effective term, (i) there is no outstanding material breach
by Licensee, (ii) in addition to the existing free-standing Retail Locations in
Shinjuku and Yokohama (hereinafter referred to as the "EXISTING STORES"),
stores, Licensee shall have opened prior to the end of the Base Term one (1) or
more free-standing stores which shall be substantially equivalent in size to, or
larger than, the Licensee's existing store in Shinjuku; (iii) Licensee shall
have maintained two (2) free-standing stores comparable to the Existing Stores
unless agreed to by the parties; (iv) the parties shall have agreed upon the
Annual Minimum Net Sales (as defined below) which shall be maintained for each
Extended Term; (v) not later than six (6) months prior to the scheduled
commencement date of such renewal term, the parties shall have agreed upon a
royalty rate and schedule of Annual Minimum Royalties (as defined below) or
other performance criteria and related issues applicable for each Extended Term,
and (vi) Licensee and Isetan shall have met a net worth or other financial test
as reasonably agreed among the parties (it being agreed that in the
determination of such test Isetan shall not be obligated to disclose any
non-public information to Licensor or Trademark Owner).
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5. OPERATION AND OPENING OF RETAIL LOCATIONS: ADDITIONAL USES.
(a) Licensor and Licensee recognize and confirm that the Existing
Stores were opened pursuant to the Original Agreement. Pursuant to paragraph 2
of this Agreement, Licensee agrees to use its best efforts to continuously
operate such Existing Stores under the Licensed Mark throughout the term of this
Agreement. Pursuant to paragraph 2 of this Agreement, Licensee shall have the
right to open additional Retail Locations or to relocate the Existing Stores to
stores with at least comparable sizes and locations to those of the Existing
Stores and in accordance with the specifications set forth in Exhibit C.
(b) Licensee may continue to operate the Licensed Department in the
currently existing Isetan store in Singapore. Upon prior written approval of
Licensor, which shall not be unreasonably withheld, taking into account all
relevant factors, including, without limitation, the size and location of any
proposed relocation, Licensee shall have the right to relocate or move the
Licensed Department to another location in Singapore.
(c) Trademark Owner, Licensor and Licensee recognize that it is in
their interest to increase sales under the Licensed Mark in a manner which will
ensure maintenance of the high standards of quality, taste and image symbolized
by the Licensed Mark. Licensor understands that Licensee is interested in using
the Licensed Mark in connection with sales through Additional Uses. Licensor
will cooperate with Licensee in good faith to consider and implement these
Additional Uses of the Licensed Mark by Licensee, including appropriate
standards of design, merchandise and service for such Additional Uses. Licensee
shall not implement any Additional Uses without the prior
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<PAGE>
written approval of Licensor. Licensee shall provide written notice to Licensor
of Licensee's desire to implement such Additional Uses and Licensor shall
respond in writing to Licensee's written notice within thirty (30) days of
receipt thereof. However, Licensee recognizes that it is Licensor's decision to
approve or disapprove of any of these Additional Uses if Licensor considers that
these Additional Uses are likely to be conducted or are being conducted in a
manner inconsistent with the high standards of quality, taste and image
symbolized by the Licensed Mark.
6. STANDARDS AND DESIGN OF RETAIL LOCATIONS. Licensee acknowledges
that the Licensed Mark is associated with a very high quality of retail store
design and that the Trademark Owner enjoys a reputation for the style and
quality of its stores. Licensee agrees and covenants that it will use its best
efforts to maintain and enhance such reputation in selection of Retail
Locations, and in the level of physical design, construction and appearance of
each Retail Location and the type and location of each department therein and in
the remodeling and renovation of each Retail Location so that the Retail
Location and each department therein will meet at least the standard of the
Barneys Stores, or such other standard as may be applicable to an Additional
Use. Licensor and Licensee shall mutually agree upon the location (such
agreement to be made either before or after selection and determination of the
location by Licensee) and the architectural and interior designs for all Retail
Locations and on the procedures for creating such designs.
7. ROYALTIES; OTHER PAYMENTS. (a) Licensee shall pay to Licensor
and to Isetan of America, Inc., or its designee (hereinafter referred to as
"IOA"), as applicable,
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<PAGE>
the following payments calculated on Net Sales (as hereinafter defined) of
Licensee and its sublicensee(s) made from Retail Locations:
(i) Licensee shall pay to Licensor a minimum royalty
(hereinafter referred to as the "ANNUAL MINIMUM ROYALTY") for each royalty year
(i.e., the twelve-month period ending each last day of the month of February)
during the Base Term equal to 0.25% of the Annual Minimum Net Sales as set forth
in Exhibit D. In addition, Licensee shall pay to IOA a payment for each royalty
year during the Base Term equal to 2.25% of the Annual Minimum Net Sales as set
forth in Exhibit D. During any Extended Terms, Licensee shall pay to Licensor
or IOA, as the case may be, an amount to be determined pursuant to paragraph
4(v).
(ii) Licensee shall pay to Licensor a percentage royalty
(hereinafter referred to as the "ANNUAL PERCENTAGE ROYALTY") for each royalty
year during the Base Term equal to 2.50% of actual Net Sales (as defined below)
in excess of the Annual Minimum Net Sales shown in Exhibit D from the Existing
Stores, one additional free-standing store and the Licensed Department
(hereinafter referred to as, collectively, the "CORE OPERATIONS"), plus 2.50% of
actual Net Sales (if any) generated by stores or approved sales activities other
than the Core Operations. During any Extended Terms, Licensee shall pay to
Licensor a percentage royalty to be determined pursuant to paragraph 4(v).
(iii) The term "NET SALES" means the entire amount charged,
whether wholly or partly for cash, on credit or otherwise, for all merchandise
sold, and all charges made for, at or from any Retail Location by Licensee or
anyone acting on Licensee's behalf or under any sublicense, sublease or
concession from Licensee in which case the
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<PAGE>
amount charged to the concessionaire should be the Net Sales (the amount of Net
Sales by any one acting under any sublease shall be the full retail price of the
merchandise sold by such person, but Net Sales shall not include the wholesale
price of merchandise sold to such person by Licensee), including without
limiting the generality of the foregoing, the amount allowed upon any
"trade-in", the cost of sale of any merchandise in exchange for any premium or
promotion and to the extent accounted for in the financial statements of
Licensee under generally accepted accounting principles in Japan. No deduction
shall be made for any uncollected or uncollectible credit accounts. Every
transaction on a deferred payment basis shall be treated as a sale for the full
price at the time such transaction is entered into, irrespective of the time for
payment or the time when title passes. The term "Net Sales" shall not include
(u) sales from any restaurant operated and/or services performed (such as sale
of tickets to concerts, sporting events and the like which are not related to
business activities of Trademark Owner, but Net Sales shall include sales from
alterations of merchandise and the like to the extent the same is accounted for
as sales of the Licensee excluding the case in which an outside manufacturer is
employed by the Licensee for this purpose) as part of any Retail Location, (v)
the amount of any cash or credit refund in fact made upon sales from a Retail
Location which were previously included in net gross sales, where the
merchandise sold or some part thereof is returned by the purchaser and accepted
by Licensee, (w) sales of fixtures or equipment after their use in the conduct
of Licensee's business at a Retail Location, or (x) the amount of any sales,
luxury, excise or consumption taxes on sales from a Retail Location, where such
taxes are both added to the selling price (or absorbed therein) and paid to the
taxing authorities by Licensee (but
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not by any vendor of Licensee). The wholesale price charged by Licensee or any
sublicensee for the sale of any Licensed Products to any Retail Location or to
any Affiliate of Licensor or Trademark Owner shall not be included in Net Sales,
but the sale of such Licensed Products at retail shall be included in Net Sales
at the full retail price thereof. If any taxing authority in Japan shall
increase the net sales reported by Licensee on any tax return and as a result
the net sales so increased are required to be restated by Chuo Audit Corporation
in accordance with generally accepted accounting principles in Japan, Licensee
shall notify Licensor promptly and pay additional Annual Percentage Royalty due
(calculated on a basis of the Net Sales after taking into account deductions
above stated) due at that time. In the event that retail sales to be included
in Net Sales are made in a currency other than Japanese yen, the amount of such
retail sales shall be converted to Japanese yen using the telegraphic transfer
selling rate quoted by The Bank of Tokyo-Mitsubishi, Ltd. in Tokyo on the last
business day of each month during which each such merchandise is sold.
(iv) All payments hereunder shall be made in Japanese Yen unless
Licensor or IOA shall notify Licensee in writing that such royalty payments
shall be made in a different currency. Any royalty payment made in a currency
other than Japanese Yen shall be converted from Japanese Yen to the currency of
payment using the telegraphic transfer selling rate quoted by The Bank of
Tokyo-Mitsubishi, Ltd. in Tokyo on the date on which remittance is actually made
by Licensee and any fees or costs associated with any such conversion shall be
borne by the party requesting such payment in other currency, either Licensor or
IOA as the case may be. All royalty payments hereunder shall be paid without
any set off, claim, counterclaim or delay whatsoever.
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(b) The royalties due hereunder shall be paid as follows:
(i) The Annual Minimum Royalty shall begin to accrue as of the
effective date of the Plan of Reorganization. The initial payment, to be made
on the last day of March, 1999, will be prorated for the number of days from the
effective date of the Plan of Reorganization to the last day of February, 1999,
and thereafter all payments shall be paid in equal quarterly installments
occurring on the last day of each June, September and December of the royalty
year and on the last day of March following the end of the royalty year
(hereinafter referred to as "PAYMENT DATES"), and shall be paid directly to
Licensor or IOA, as the case may be. The payments for the time period from
March 1, 2015 to December 31, 2015 shall be as set forth in Note 4 of
Exhibit D.
(ii) The Annual Percentage Royalty for each royalty year shall be
determined in the manner hereinafter set forth. On June 30 of each year,
beginning with June 30, 1999, Licensee shall submit to Licensor an annual report
of Net Sales for the royalty year ended the preceding last day of the month of
February, which report shall be in reasonable detail and shall be certified by
the appropriate senior financial officer of Licensee as having been prepared in
accordance with Licensee's internal regulations and with generally accepted
accounting principles in Japan. Any Annual Percentage Royalty shall become due
each June 30 and shall accompany the annual report of Net Sales. In the event
that Net Sales for the first six month period of any royalty year exceed Minimum
Net Sales of the relevant year in Exhibit D, Licensee shall pay Licensor the
Annual Percentage Royalty calculated on the Net Sales in excess of the Minimum
Net Sales, which shall become due December 31 of the same year. However, at the
time of submission of an annual report, the Annual Percentage Royalty for the
relevant whole
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royalty year shall be adjusted taking into account the Annual Percentage Royalty
paid in respect of such first six month period.
(iii) Licensee shall send to Licensor, on or before the 20th day
of each month, a sales report showing in reasonable detail, prepared in
accordance with Licensee's internal regulation, the Net Sales at or from the
Retail Locations for the preceding calendar month. Licensee shall keep and
shall require its sublessees, concessionaires and sublicensees, if any, to keep
at Licensee's or, as the case may be, their respective corporate offices,
complete and accurate books of account and records of, but not limited to, all
sales and other transactions from which Net Sales can be determined. Licensee
shall keep all pertinent original sales books and records which would normally
be required to be kept and examined by an independent accountant in accordance
with accepted auditing practices in performing an audit of Net Sales.
(iv) The acceptance by Licensor of payments of Annual Percentage
Royalty shall be without prejudice to Licensor's right to an examination of
Licensee's books and records of its Net Sales in order to verify the amount of
Licensee's Net Sales. At any reasonable time and upon five (5) days prior
written notice to Licensee, Licensor may cause a special audit to be made of
Licensee's business affairs and records relating to the Retail Locations for the
period covered by such statement. Except as provided below, the cost of such
audit shall be paid by Licensor. Any such special audit performed by a
certified public accountant selected by Licensor in accordance with generally
accepted accounting principles in Japan shall be binding upon the parties. If
it shall be determined as a result of such audit that there has been a
deficiency or, as the case may be, surplus in the payment of Annual Percentage
Royalty, then such deficiency or, as the
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case may be, surplus shall become immediately due and payable and shall be paid
immediately by Licensee or, as the case may be, Licensor to the other party,
respectively. If the aforementioned deficiency is in excess of three and a half
percent (3.5%) of the Annual Percentage Royalty theretofore computed and paid by
Licensee for the period covered by the audit, Licensee shall also pay to
Licensor the cost of the audit.
(c) Licensee shall make all reasonable and timely efforts to obtain
from the proper authorities in the Licensed Territory appropriate permits for
effecting remittance into the United States, filing such applications,
certificates, or other instruments as may be required to obtain all necessary
governmental approvals. Nevertheless, Licensee's obligation to make payments to
Licensor shall not depend in any way on Licensee's receipt in, or ability to
make remittance into, the United States of America of funds, from proceeds of
sales or otherwise; PROVIDED, HOWEVER, that Licensee shall not be required to
take any action in violation of Japanese laws but this provision shall not limit
Licensee's obligations under the immediately preceding sentence.
(d) Licensee shall withhold from each royalty payment payable
hereunder the appropriate amount of taxes due to the government(s) of the
Licensed Territory in respect of such royalty payments. Promptly upon receipt
thereof, Licensee shall forward to Licensor all receipts, tax returns and other
documents evidencing payment of such taxes.
(e) Trademark Owner, Licensor and Licensee shall each bear its own
costs of performance under this Agreement.
(f) Any financial, accounting, business or other information provided
by or on behalf of Licensee to Licensor, including without limitation
information contained
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in an annual or other report and information obtained by Licensor in the course
of or in connection with the audit pursuant to this paragraph 7, shall be kept
confidential, and shall not be disclosed to any third party or used for any
purpose other than as provided herein without the prior written consent of
Licensee, except as required by law or court order.
8. STANDARDS FOR LICENSED PRODUCTS. The quality standard, taste and
image of the Licensed Products shall be at least equal to that of the
merchandise offered for sale in the Barneys Stores, and Licensee shall not
display, offer for sale or sell any merchandise which does not meet such quality
standard, taste and image. In order to assure that such quality standard, taste
and image are maintained, prior to the selection of any specific products to be
offered for sale at the Retail Locations each season, Trademark Owner, Licensor
and Licensee shall consult, develop and implement a seasonal merchandising plan
for each product category which shall take account of special considerations
affecting merchandise selection within the Licensed Territory. To the extent
practicable, Trademark Owner, Licensor and Licensee shall coordinate buying
appointments. Trademark Owner, Licensor and Licensee shall work together to
develop and design Private Label Products. As much as practically possible,
Trademark Owner and Licensor shall review Licensee's product development and
samples during trips to Japan, on Licensee's trips to New York or on joint
buying trips. To the extent not so reviewed, Licensee will, to the extent
practically possible, furnish samples to Trademark Owner and Licensor. Samples
furnished by one party to another and returned by the receiving party shall be
at the expense of the furnishing party. Samples furnished by one party to
another and kept by the receiving party shall be at the expense of the
receiving
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party. The parties will, to the extent practicable, keep one another informed
regarding development of merchandising plans, arrangement, location and display
of merchandise within stores, development and sourcing of new products,
discontinuance of products or product lines, customer control and similar
matters so as to facilitate consistent and timely merchandise selection and
merchandising activities.
9. MARKETING AND ADVERTISING. (a) All uses of the Licensed Mark,
including without limitation, packaging, advertising, marketing and store
materials, labels, price tickets, hang tags, stationery, use on the Internet
(only after such Internet use policies are set forth pursuant to paragraph 2(d))
and in-store graphics, shall conform as nearly as practicably possible to the
uses thereof by the Trademark Owner after taking into consideration the
characteristics peculiar to each locality and shall be agreed upon in advance,
to the extent practically possible, between the parties. Variations required to
conform to legal requirements (e.g., labeling requirements) shall be permitted.
(b) Licensee shall develop a marketing, advertising and promotion
campaign for each season, after consultation, to the extent practically
possible, with the Trademark Owner's advertising department. The campaign
material concept shall be agreed upon in advance by Trademark Owner, Licensor
and Licensee prior to implementation and shall be consistent with and shall
maintain and enhance reputation and standard of Trademark Owner while taking
account of differing market conditions between the Licensed Territory and the
United States. Licensee agrees to expend on advertising and promotion such a
percentage of Net Sales as is reasonably necessary to promote the image of
Licensed Mark and Net Sales in the Licensed Territory. Promptly after any
advertisement shall first be run, Licensee shall send to Trademark Owner and
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Licensor a tear sheet (in the case of print advertising), a screen print out (in
the case of Internet advertising only after such Internet use policies are set
forth pursuant to paragraph 2(d)) or a video or audio tape (in the case of
television or radio advertising).
10. PERSONNEL, TRAINING AND OPERATIONAL POLICIES. Licensee shall
educate and train its employees so that the quality of customer service in the
Retail Locations meets in all respects the standard of the Barneys Stores.
Trademark Owner and Licensor shall provide reasonable information regarding the
appropriate customer service standards and methods sufficient to enable Licensee
to meet this obligation. In addition, Trademark Owner and Licensee shall
negotiate in good faith towards the execution of an agreement relating to the
training in the United States of employees of Licensee, Isetan or their
affiliates concerning the operation of the Retail Locations.
11. CONSULTATIONS. Trademark Owner and Licensor shall have the right
to cause their designated representative(s) to visit Licensee at Licensee's
offices in the Licensed Territory or at one or more Retail Locations to discuss
and review all aspects of the license herein granted, including without
limitation, the selection of Licensed Products and the merchandising, marketing,
and promotion of the Retail Locations. The timing of such visits shall be
selected upon mutual agreement between Trademark Owner, Licensor and Licensee.
Trademark Owner, Licensee and Licensor shall use their best efforts to meet in
Tokyo, New York or other mutually agreed-upon location during each season to
review the activities under this Agreement. The foregoing provisions of this
paragraph 11 shall also apply to sublicensees and concessionaires permitted
under subparagraphs 13(b) and 13(c).
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12. THE LICENSED MARK. (a) Trademark Owner has registered, or has
applied for the registration of, the Licensed Mark in the classes and
jurisdictions so indicated on Exhibit E. Any and all trademarks indicated on
Exhibit E as well as those trademarks to be registered or applied for
registration hereafter fall under the definition of "LICENSED MARK". Trademark
Owner represents and warrants and Licensee acknowledges that the Trademark Owner
has designated in the Licensed Territory Licensor as its agent for quality
control and has given Licensor sole rights to authorize the use of the Licensed
Mark in the Licensed Territory. The Trademark Owner and Licensor are entitled
to all of the rights to use the Licensed Mark regardless of whether such use
constitutes technical trademark use or some other kind of usage such as in a
corporate or commercial name, including without limitation, the right to
register or record the Licensed Mark in the Licensed Territory. The Trademark
Owner has granted to Licensor the further right to grant the license herein
granted. Trademark Owner and Licensor acknowledge that Licensee is duly granted
exclusive rights to use the Licensed Mark in Japan and in the Licensed
Department. Licensee shall not contest, deny or dispute the validity of such
registrations, or Licensor's and Trademark Owner's title thereto, and shall not
in any way, either directly or indirectly, encourage or assist others or permit
its sublicensees to do so, and shall not take or permit its sublicensees to take
any action of any kind inconsistent with Licensor's and Trademark Owner's
ownership of all such trademark rights, including, without limitation, applying
for, registering or acquiring a registration of the Licensed Mark in the
Licensed Territory. Nothing in this Agreement shall confer upon Licensee or any
sublicensee a proprietary interest of any sort in or to the Licensed Mark or
colorable simulations, abbreviations, combinations or
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derivations of the Licensed Mark. Furthermore, nothing in this Agreement shall
confer upon Licensee or any sublicensee any rights or interest of any kind in or
to the good will of Licensor or Trademark Owner (except as licensed hereunder)
or any of their other trademarks.
(b) Trademark Owner and Licensor represent and warrant that Trademark
Owner is the owner of the Licensed Mark and that neither Trademark Owner nor
Licensor has taken any action inconsistent with the rights granted hereunder.
Trademark Owner and Licensor assume no liability with respect to the status of,
or freedom from, infringement of the Licensed Mark in the Licensed Territory,
although Trademark Owner and Licensor have no present knowledge of any such
infringement. Trademark Owner and Licensor further represent and warrant that,
to either of their present knowledge, the use and exercise by Licensee of the
rights granted hereunder will not violate currently applicable laws or the
rights of third parties.
(c) Except as specifically provided below, Licensor shall have the
right, but shall not be obliged, to determine the means and manner of the
institution, maintenance and defense and disposition of any and all claims,
suits, controversies or proceedings arising out of or relating to challenges of
third party uses of the Licensed Marks in every jurisdiction throughout the
world, including, without limitation, the Licensed Territory. In each such
claim, suit, controversy and proceeding, Licensee agrees to render its fullest
cooperation and assistance, to the extent reasonably requested, to Licensor, and
Licensor shall have the right to assert such claim on behalf of itself and
Licensee, and to commence any action or proceeding in its own name or in the
name of both of them.
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(d) Licensee shall promptly notify Licensor in writing of attempts by
anyone to register, copy, use, infringe upon or imitate the Licensed Mark, or
any design features of the Licensed Products within the Licensed Territory which
come to Licensee's attention. Licensee shall not, however, institute any suit
or take any legal action on account of such claimed infringements or imitations,
except as provided below.
(e) If Licensee desires to assert a claim or to commence an action or
proceeding against a third party involving infringement of its (or Licensor's or
Trademark Owner's) rights to the Licensed Marks, Licensee shall give written
notice thereof to Licensor, together with the details of each such claim.
Licensor shall have the right, within thirty (30) days of receipt of such
notice, to elect to assert such claim or to initiate action or proceedings
against such third party. If Licensor elects not to assert such claim or
commence such action or proceeding within the applicable time period, Licensor
shall advise Licensee in writing whether Licensee is granted permission to
initiate such action or proceeding, such permission to be reasonably granted or
denied by Licensor. If, and only if, such request for permission is granted,
Licensee shall have the right to assert the claim or commence such action or
proceeding, provided that (i) no such claim, action or proceeding may be settled
in a manner which would involve any disposition other than the payment of money
damages without the prior written consent of Licensor; and (ii) Licensor and
Trademark Owner may thereafter participate through counsel of their own choosing
and at their own expense in any such claim, action or proceeding. If Licensee
asserts such a claim or commences such action or proceeding, Trademark Owner and
Licensor shall render their fullest cooperation and assistance to the extent
reasonably requested by Licensee and shall, to the extent required by law, be
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named a party, or parties, to such action or proceeding. Notwithstanding the
foregoing, if Licensee reasonably believes in good faith that immediate action
and injunctive relief are necessary to prevent irreparable injury, Licensee may
commence legal proceedings to obtain emergency injunctive relief against such
infringement. Licensee shall notify Licensor in writing as soon after the
commencement of any such proceedings as possible, and Licensor shall have the
right but not the obligation to assume the prosecution of such proceeding, or to
grant or deny permission to the Licensee to continue such proceeding, such
permission to be reasonably granted or dened. If Licensor shall elect to deny
such permission to Licensee, Licensee shall immediately cease such proceeding.
(f) The expense of any claim, action or proceeding involving the
Licensed Marks, including reasonable attorneys' fees and disbursements, shall be
borne solely by the party who undertakes the prosecution or defense of such
claim, action or proceeding.
(g) Any damages or other sums received by any of the parties in
connection with the prosecution of any claim, action or proceeding hereunder,
involving a third party, shall first be applied to the payment of the costs and
expenses thereof including reasonable attorneys' fees and disbursements. The
balance, if any, shall be allocated, in good faith by the parties, by percentage
of the overall award, according to damages or sums awarded as compensation for
lost revenue or awarded as compensation for other losses. Any damages or sums
awarded as compensation for lost revenue shall be allocated according to the
lost revenue, including royalties, of the respective parties resulting from the
infringement. Any damages or sums awarded as compensation for other losses
shall be divided evenly between the parties.
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(h) The parties agree that they will maintain the existing image of
the BARNEYS NEW YORK name and mark as representing leadership in high quality,
high fashion specialty retailing of men's and women's apparel and other
merchandise consistent with this image.
13. ASSIGNMENT AND SUBLICENSE. (a) Except as otherwise provided in
this paragraph 13, none of the parties hereto shall, without prior written
consent of the other parties hereto, (i) sublicense, assign or otherwise
transfer its rights or obligations under this Agreement, except to an Affiliate
provided that if a party assigns or otherwise transfers its rights or
obligations to an Affiliate, such assigning party shall provide to the other
parties an unconditional guaranty of performance of all of the obligations of
its Affiliate hereunder substantially in the form of the guaranty attached
hereto as Exhibit F; (ii) sublicense, assign or otherwise transfer the rights to
use the Licensed Mark herein granted or any part thereof in the Licensed
Territory; or (iii) authorize any other person, firm or corporation to use the
Licensed Mark or any trademarks, service marks or tradenames colorably or
confusingly similar thereto, or any abbreviations, combinations or derivations
thereof in the Licensed Territory. Notwithstanding the foregoing, Trademark
Owner and Licensor may assign their rights and obligations under this Agreement,
without Licensee's consent, in connection with the sale of all or substantially
all of the assets of Trademark Owner and Licensor or in connection with a merger
or consolidation in which Trademark Owner or Licensor is not the surviving
party, provided that such purchaser of the assets or such surviving entity, as
the case may be, shall assume all obligations of Trademark Owner and Licensor
hereunder and shall cause any parent company to execute a guaranty, similar to
that set forth in paragraph 13(d),
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whereby the guaranty executed by Barneys New York, Inc. and Trademark Owner,
pursuant to paragraph 13(d), shall terminate. This Agreement shall not prohibit
Trademark Owner from selling the Licensed Marks unrelated to a sale of
substantially all of its assets, without Licensee's consent; provided that
Trademark Owner and Licensor shall remain in a position to fulfill their
respective obligations under this Agreement, which shall continue for the term
of this Agreement. Notwithstanding the foregoing, Trademark Owner and Licensor
shall have the right to grant a lien on, or security interest in, this Agreement
and their rights herein; it being understood, however, that this shall not be
deemed to constitute a consent to an assignment in violation of this paragraph
13, whether by foreclosure, foreclosure sale or otherwise .
(b) Subject to the prior written approval of Licensor, Licensee shall
have the right to sublicense to other retail store operators of a very high
quality, the right to operate in-store Retail Locations. The request for such
approval shall include the identity of the sublicensee, the nature and the
location of the stores in which the Retail Locations are to be operated, the
location of the Retail Locations within each store, the proposed line of
merchandise, the type of merchandise and such other information as Licensor may
reasonably request. Licensee shall require each sublicensee to comply with all
of the provisions of this Agreement regarding the design of the Retail
Locations, the merchandising, marketing and operation thereof, the selection of
Licensed Products for sale therein and, including, without limitation, the
requirements of at least paragraph 17. No sublicensee shall have any right
other than to operate an in-store Retail Location in the store specified and to
sell approved Licensed Products in such Retail Locations.
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(c) Licensee (but not any sublicensee) shall have the right to grant
concessions to other operator(s) for the operation of departments within any
free-standing Retail Location operated by Licensee to the extent necessitated by
the retail business practice in Japan and consistent with the seasonal
merchandising plan developed by Licensor and Licensee pursuant to paragraph 9.
The merchandising, marketing and operation of such departments and the selection
of Licensed Products for sale therein shall at all times be under the direction
and control of Licensee and shall comply with all of the provisions of this
Agreement as if such departments were operated by Licensee.
(d) Upon execution of this Agreement, Licensor shall cause Barneys
New York, Inc. and Trademark Owner to execute an unconditional guaranty of the
performance of all of the obligations of Licensor hereunder in the form attached
hereto as Exhibit F.
(e) Upon execution of this Agreement, Licensee shall cause Isetan to
execute an unconditional guaranty of the performance of all of the obligations
of Licensee hereunder and the payment of all amounts required to be paid by
Licensee hereunder in the form attached hereto as Exhibit G, PROVIDED, HOWEVER,
that such guaranty shall continue until Licensee is no longer a subsidiary
company of Isetan if, and only if, the successor parent company to Licensee
executes a similar unconditional guaranty of Licensee's performance AND such
successor parent company has a credit rating equal to or superior to that of
Isetan. If Isetan or Licensee desires to effectuate an initial public offering
of the capital stock of Licensee, the parties will negotiate in good faith
whether the Isetan guaranty will be released and, if so, the mutually agreeable
terms
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for such release; it being understood however that Trademark Owner and Licensor
have no obligation to release the Isetan guaranty.
14. CONFIDENTIALITY. All information, plans, designs, specifications
and the like supplied by any of the parties hereto or their agents or
representatives to another party, its sublicensees or their respective agents or
representatives with respect to the design, merchandising, marketing or
operation of the Retail Locations or with respect to Licensed Products shall be
held in confidence, except as otherwise required by law or in connection with
any proceeding between the parties hereto relating to an alleged breach of this
Agreement, and shall be used only to further the operation of the Retail
Locations pursuant to this Agreement. The party receiving confidential
information shall take all necessary precautions to prevent all other parties
from obtaining access to such information, except to the extent necessary to
fulfill the purposes of this Agreement and for the purpose of this paragraph
Trademark Owner, Licensor and Licensee shall be deemed to include their
Affiliates respectively. Upon termination of this Agreement, each party shall
return to the other party all such information in its possession or in the
possession of its sublicensees or their respective agents or representatives,
and thereafter no party nor any sublicensee nor any of their respective agents
or representatives shall make use of any such information gained from the other
party prior to such termination. Any "Affiliate" of Trademark Owner, Licensor
or Licensee under this Agreement shall mean any person or entity which, directly
or indirectly, owns, is owned by or is under common ownership with, any other
person or entity to the extent of greater than fifty percent (50%) of the issued
and outstanding capital stock of Trademark Owner, Licensor or Licensee, as the
case may be.
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15. EXCLUSIVITY. (a) During the term of this Agreement, Trademark
Owner and Licensor jointly and severally agree that Trademark Owner, Licensor
and their respective Affiliates, licensees or sublicensees shall not (i)
directly or indirectly sell or distribute the Licensed Products and other
products similar or competitive thereto within the Licensed Territory without
the permission of Licensee or (ii) license the Licensed Mark for use in
connection with the operation of retail stores or on Licensed Products to any
other licensee in the Licensed Territory. Trademark Owner and Licensor shall
not be construed to be in breach of this subparagraph (a) by reason of its or
any of their Affiliates', licensees' or sublicensees' advertising on the
Internet for sales outside the Licensed Territory, or in magazines, newspapers
or trade papers, which may reach the Licensed Territory or by reason of
subsequent resales of the Licensed Products within the Licensed Territory by
customers of Trademark Owner and Licensor to whom sales were originally made
outside the Licensed Territory, unless Trademark Owner, Licensor or their
respective Affiliates, licensees or sublicensees were aware, or with reasonable
investigation should have been aware, that such customers intended to resell the
Licensed Products within the Licensed Territory. Trademark Owner and Licensor
shall have the right to produce Licensed Products within the Licensed Territory
for sale outside of the Licensed Territory, provided that Trademark Owner and
Licensor shall first consult in good faith with Licensee on the possibility of
establishing joint production and of wholesale distribution outside the Licensed
Territory for such Licensed Products.
(b) Licensee agrees that it shall not operate Retail Locations or
sell or distribute Licensed Products or directly or indirectly export, promote
or market Licensed Products outside of the Licensed Territory with the exception
of the Licensed Department
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without the permission of Licensor. Licensee shall not be construed to be in
breach of this subparagraph (b) by reason of its advertising on the Internet for
sales outside the Licensed Territory (only after such Internet use policies are
set forth pursuant to paragraph 2(d)), or in magazines, newspapers or trade
papers, which may reach beyond the Licensed Territory or by reason of subsequent
sales of Licensed Products outside the Licensed Territory by customers to whom
sales were originally made within the Licensed Territory unless Licensee or its
sublicensee was aware or, with reasonable investigation should have been aware,
that such customers intended to resell Licensed Products outside the Licensed
Territory.
16. DEFAULT. (a) An event of default shall be deemed to have
occurred under this Agreement if: (i) Licensee fails to make any royalty
payment due hereunder and such default continues for more than thirty (30) days
after notice from Licensor; (ii) any party defaults in the performance of any of
its obligations hereunder and such default is material and continues for more
than thirty (30) days after notice from another party; or (iii) a receiver,
trustee or liquidator (or other similar official) for Trademark Owner, Licensee,
Licensor or any guarantor of Licensee is appointed under the laws of any
jurisdiction and is consented to by such party or is not withdrawn within
seventy five (75) days, or such party is named as debtor in any proceeding under
any bankruptcy or similar law and such proceeding is either voluntary or is not
discharged within seventy five (75) days, or such party makes an assignment for
the benefit of creditors or admits in writing its inability to pay its debts
generally as they become due.
(b) Upon the occurrence and during the continuance of an event of
default, the aggrieved party or parties shall have the right to terminate this
Agreement by sending
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written notice of such termination to the other parties, specifying the
effective date of termination (hereinafter referred to as the "TERMINATION
DATE"). Such Termination Date shall be no less than sixty (60) days after the
date on which written notice of termination is sent. On such Termination Date,
this Agreement shall terminate as fully as if the Termination Date had been the
date set for the expiration of the term of this Agreement. Notwithstanding such
termination, in the event that this Agreement is terminated by Licensor pursuant
to this paragraph due to a breach by Licensee, Licensee shall continue to be
liable for, at Licensor's or IOA's election as the case may be, (i) the
payments, as and when due, of such entity's portion of the payments scheduled to
become due pursuant to paragraphs 7(a)(i) and 7(b)(i) from the Termination Date
to the stated expiration date of this Agreement, or (ii) the present value of
such payments, determined using a discount rate of four percent (4%) per annum.
(c) Failure to exercise any right or option hereunder, including any
right or option of termination, shall not constitute a waiver of such right or
option.
17. EFFECT OF TERMINATION. (a) Termination of this Agreement for
any reason shall not relieve Licensee of any and all of its obligations and
payments that accrued prior to the Termination Date, including, without
limitation, its obligation to pay to Licensor the Annual Percentage Royalty with
respect to the Net Sales having accrued prior to such termination. Licensee
and/or its sublicensee(s), as the case may be, shall have the right to complete
the manufacture of and sell such unsold Licensed Products in its possession at
the Termination Date for which royalties would be due during the twelve (12)
month period following the Termination Date of this Agreement and shall pay to
Licensor or IOA any royalty for such sales, pursuant to paragraph 7.
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(b) Except as provided in subparagraph 17(a), any sublicense granted
by Licensee shall terminate automatically upon the termination of this
Agreement.
(c) After the termination of this Agreement, each of Trademark Owner,
Licensor and Licensee shall have the right to engage in business with all
accounts and customers provided by Licensee or any sublicensee, or Licensor or
Trademark Owner, as the case may be, during the term of this Agreement, without
any liability or accountability to Licensee or such sublicensee, Licensor or
Trademark Owner, as the case may be.
(d) In the event of termination of this Agreement for any reason,
Licensee shall permit Licensor, its agents, attorneys, and accountants to
inspect its accounting records and books of account which are normally required
to be held for the specified period under Japanese law, and to investigate
generally all transactions of business carried on by it under and pursuant to
this Agreement, for a period of eighteen (18) months following such
termination. Licensee agrees not to destroy any of such records prior to the
expiration of said eighteen (18) months, PROVIDED, HOWEVER, that Licensee shall
not be required to retain such records for more than five (5) years beyond the
end of the royalty year to which they relate.
(e) Upon the termination of this Agreement in accordance with the
terms hereof, Licensee shall not have acquired and shall not claim any right to
use the Licensed Mark and Licensee agrees that, except as permitted in paragraph
17(a) hereof, it shall not thereafter use, adopt, apply for a registration of,
or acquire a registration of the Licensed Mark or any colorable simulation
thereof or any confusingly similar trademarks or tradenames or any
abbreviations, combinations or derivations thereof. Promptly after
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termination of this Agreement, Licensee shall change its corporate name to
remove any reference to the Licensed Mark or colorable simulation thereof or any
confusingly similar trademarks and tradenames or any abbreviations, combinations
or derivations thereof. In addition, if Licensee owns any application to
register, or registration of, the Licensed Marks, Licensee shall promptly
transfer such ownership to Licensor upon termination of this Agreement at no
cost to Licensor. Licensee shall, after termination of this Agreement, refrain
from using any distinctive features of labeling or design of (i) the Retail
Locations without such modifications resulting in losing such outstanding
distinctive features being effected (in the case of obsolescence which results
in the loss of such outstanding distinctive features, such modification being
deemed to have been made) or (ii) the Licensed Products theretofore employed in
carrying out the provisions of this Agreement, provided, however, that the
foregoing shall in no event prevent Licensee from using the then existing Retail
Locations for its retail operation or otherwise if they have been modified or
deemed to be modified as provided herein.
(f) Subject to paragraph 17(a), Licensee shall return or cause to be
returned all Licensed Products which are the property of Licensor then in its
possession. Trademark Owner and Licensor shall have the option to purchase at
cost any remaining Licensed Products.
(g) Subject to paragraphs 17(a) and 17(d) Licensee shall return,
cause to be returned or, at Licensor's direction, destroy all materials relating
to the Retail Locations which are the property of Trademark Owner or Licensor
then in its possession.
18. RELATIONSHIP OF THE PARTIES; INDEMNITY. This Agreement shall not
in any way be deemed or construed to establish any relationship between the
parties other
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than as licensor or licensee, and Licensee shall have no authority to bind or
obligate Trademark Owner or Licensor. Licensee further agrees to indemnify and
hold harmless Trademark Owner or Licensor, their agents and employees, from any
liability which may be imposed upon it or them by virtue of any representation,
agency, or breach of this Agreement made by or on the part of Licensee or any of
Licensee's agents or employees. Licensee further agrees to indemnify and hold
harmless Trademark Owner, Licensor, their agents and employees, from any
liability, claim or action, excluding actions relating to Licensee's use of
Licensed Mark, brought by a third party arising out of Licensee's operation and
maintenance of Retail Locations, including, without limitation, attorney's fees
and costs relating thereto. Trademark Owner and Licensor agree to indemnify and
hold harmless Licensee, its agents and employees, from any liability which may
be imposed upon it or them by virtue of any representation or breach of this
Agreement made by or on the part of Trademark Owner, Licensor or any of their
agents or employees.
19. ENGLISH TRANSLATIONS. All material information to be furnished
hereunder to Trademark Owner and Licensor by Licensee shall, if prepared in a
language other than English, be accompanied by an English translation thereof.
Except in the case of notices, Licensee may submit a summarized English
translation if the substance of the information is conveyed thereby.
20. CHOICE OF LAW; ARBITRATION. (a) This Agreement shall be deemed
to have been made in, and shall be governed by and construed in accordance with,
laws of Japan applicable to contracts made and to be performed in Japan.
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(b) All disputes, differences or claims, which the parties have not
been able to resolve by mutual agreement, arising out of or relating to this
Agreement, its performance or termination shall be settled and finally
determined by arbitration. Wherever under this Agreement any party is required
to give its consent or approval or the parties are required to reach mutual
agreement, the arbitration shall be limited to a determination whether the
parties are acting in good faith as required in paragraph 22, it being agreed
that the substantive matters to which the consents, approvals or mutual
agreements relate are within the special knowledge and ability of the parties
and are not within the jurisdiction of the arbitrators. Unless otherwise agreed
to by all of the parties, the following provisions shall apply to the
arbitration. The arbitration shall be conducted pursuant to the Japan-America
Trade Arbitration Agreement of September 16, 1952, by which each party hereto
agrees to be bound. Such arbitration (i) shall be held in Tokyo or New York, as
determined by the party which brings the arbitration proceeding; (ii) shall be
conducted in accordance with the rules of the country in which the arbitration
is held; (iii) shall be submitted under the applicable rules for expedited
procedures, with the intent that a final non-appealable award be made and in
effect no later than six (6) months after the initial submission; and (iv)
judgments upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
21. NOTICE. Any notice, payment, report or other communication
(hereinafter referred to as a "Notice") required or permitted by this Agreement,
unless otherwise provided for herein, shall be in writing, in English, sent by
registered or certified mail, by telecopy or personally delivered, and addressed
as follows:
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Trademark Owner 575 Fifth Avenue
and Licensor: New York, New York 10017
Attention: General Counsel
Telecopy No.: (212) 450-8480
with a copy to: WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Attention: Ted S. Waksman, Esq.
Telecopy No.: (212) 310-8007
Licensee: 15-16 Shinjuku 3-Chome
Shinjuku-ku, Tokyo 16
JAPAN
Attention: President Hidetoshi Yamaoka
Telecopy No.: 011-81-3-5269-1055
with a copy to: HUGHES, HUBBARD & REED LLP
One Battery Park Plaza
New York, New York 10004-1482
Attention: David Wiltenburg, Esq.
Telecopy No.: (212) 422-4726
unless another address for any party is substituted by written notice. All
Notices given hereunder shall be deemed to be given and received fifteen (15)
calendar days after the date of mailing thereof if sent by registered or
certified air mail or, if earlier, when actually received. All costs and
expenses incurred in sending notice shall be borne by the party dispatching such
notice.
22. MUTUAL COOPERATION. All actions required or permitted to be
taken by the parties hereunder shall be taken in good faith. At the request of
any party, the other parties shall execute such documents and agreements as may
be necessary to further confirm the terms and provisions hereof and the
intentions of the parties hereto. Whenever the party is required to make a
submission for another party's approval, such submission shall be made in a
timely fashion which will allow for proper review and execution of the matter
being submitted. Trademark Owner and Licensor shall cooperate
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together with Licensee whenever practical to minimize any duplication of the
performance of an obligation by Licensee pursuant to this Agreement, including
without limitation, such obligations under paragraphs 8, 9 and 11 hereof. The
parties have taken or shall promptly take such actions as may be required to
comply with applicable government regulations including the completion of all
required ministerial filings and registration required or permitted under
Japanese law.
23. AUTHORITY. Each of Trademark Owner, Licensor and Licensee
represents and warrants that it has due power and authority to execute, deliver
and perform its obligations in accordance with this Agreement, and that its
execution, delivery and performance will not violate currently applicable laws
or the rights of third parties.
24. ENTIRE AGREEMENT. This Agreement embodies the entire
understanding among the parties regarding the subject matter hereof, all prior
correspondence, conversations or memorandum being merged herein and replaced
hereby and being without effect hereon, and no change, alteration or
modification hereof may be made, except in writing, signed by the parties
hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
28 day of January, 1999.
Trademark Owner: BARNEY'S, INC.
By /s/ Thomas C. Shull
---------------------------------
Name: Thomas C. Shull
Title: President
Licensor: BNY LICENSING CORP.
By /s/ Thomas C. Shull
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Name: Thomas C. Shull
Title: President
Licensee: BARNEYS JAPAN CO., LTD.
By /s/ Hidetoshi Yamaoka
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Name: Hidetoshi Yamaoka
Title: President
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Exhibit 10.24
BARNEYS NEW YORK, INC.
STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
1. PURPOSES
Barneys New York, Inc., a Delaware corporation (the
"Company"), desires to attract and retain the services of outstanding
nonemployee directors by affording them an opportunity to acquire a proprietary
interest in the Company through awards of options ("Options") exercisable to
purchase shares of Common Stock (as defined below), and thus to create in such
directors an increased interest in and a greater concern for the welfare of the
Company and its subsidiaries.
The Options offered pursuant to this Barneys New York, Inc.
Stock Option Plan for Nonemployee Directors (the "Plan") are a matter of
separate inducement and are not in lieu of any other compensation for the
services of any director.
The Options granted under the Plan are intended to be options
that do not meet the requirements for incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
As used in the Plan, the term "parent corporation" and
"subsidiary corporation" shall mean a corporation coming within the definition
of such terms contained in Sections 424(e) and 424(f) of the Code, respectively.
2. STOCK SUBJECT TO THE PLAN
Options granted under the Plan shall be exercisable for shares
of the Company's common stock, par value $0.01 per share ("Common Stock").
The total number of shares of Common Stock authorized for
issuance under the Plan upon the exercise of Options (the "Shares"), shall not
exceed, in the aggregate, 300,000 of the currently authorized shares of Common
Stock of the Company, such number to be subject to adjustment in accordance with
Section 13 of the Plan.
Shares available for issuance under the Plan may be either
authorized but unissued Shares, Shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the extent that
Options granted under the Plan expire or terminate without having been
exercised, the Shares covered by such expired or terminated Options may again be
subject to an Option under the Plan.
3. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective at 5:00 p.m., New York City
time, on March 11, 1999 (the "Effective Date"). The Plan shall terminate at the
close of business
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on March 10, 2009 (the "Termination Date"), unless sooner terminated in
accordance with its terms.
4. ADMINISTRATION
The Plan shall be administered by the Board of Directors of
the Company (the "Board of Directors"), which may designate from among its
members a committee to exercise all power and authority of the Board of
Directors at any time and from time to time to administer the Plan. References
herein to the Board of Directors shall be deemed to include references to any
such committee, except as the context otherwise requires. Subject to the express
provisions of the Plan, the Board of Directors shall have authority to construe
the Plan and the Options granted hereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan and to make all other ministerial
determinations necessary or advisable for administering the Plan.
The determination of the Board of Directors on matters
referred to in this Section 4 shall be conclusive.
5. ELIGIBILITY
Each member of the Board of Directors who is not an employee
of the Company or any subsidiary corporation or parent corporation of the
Company or of a management company providing management services to the Company
shall be eligible to be granted Options under the Plan ("Eligible Directors").
6. OPTION GRANTS
On the Effective Date, each Eligible Director then in office
shall automatically be granted an Option to purchase 5,000 Shares (subject to
adjustment as provided in Section 13). Future Eligible Directors shall
automatically be granted an Option to purchase 5,000 Shares (subject to
adjustment as provided in Section 13) upon their initial appointment or election
to the Board of Directors. On the date of each annual meeting of stockholders of
the Company which takes place after the initial grant, each Eligible Director
may, at the discretion of the Board of Directors, be granted an Option to
purchase additional Shares (subject to adjustment as provided in Section 13),
provided such holder is an Eligible Director in office immediately following
such annual meeting. Each Option granted to an Eligible Director pursuant to the
Plan shall be evidenced by a written agreement between the Company and such
Eligible Director. Any Eligible Director entitled to receive an Option grant
pursuant to the Plan may elect to decline the Option.
7. OPTION PRICE AND PAYMENT
The price for each Share purchasable upon exercise of any
Option granted hereunder shall be an amount equal to the fair market value per
Share on the date of
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grant. For purposes of the Plan, fair market value per share with respect to any
date of determination, means:
(i) if the Shares are listed or admitted to trading on a
national securities exchange in the United States or
reported through the NASDAQ Stock Market ("NASDAQ"),
then the closing sale price on such exchange or NASDAQ
on such date or, if no trading occurred or quotations
were available on such date, then on the closest
preceding date on which the Shares were traded or
quoted; or
(ii) if not so listed or reported but a regular, active
public market for the Shares exists (as determined in
the sole discretion of the Board of Directors, whose
decision shall be conclusive and binding), then the
average of the closing bid and ask quotations per Share
in the over-the-counter market for such Shares in the
United States on such date or, if no such quotations are
available on such date, then on the closest date
preceding such date. For purposes of the foregoing, a
market in which trading is sporadic and the ask
quotations generally exceed the bid quotations by more
than 15% shall not be deemed to be a "regular, active
public market."
If the Board of Directors determines that a regular, active
public market does not exist for the Shares, the Board of Directors shall
determine the fair market value of the Shares in its good faith judgment based
on the total number of shares of Common Stock then outstanding, taking into
account all outstanding options, warrants, rights or other securities
exercisable or exchangeable for, or convertible into, shares of Common Stock.
Upon the exercise of an Option granted hereunder, the Company
shall cause the purchased Shares to be issued only when it shall have received
the full purchase price therefor in cash. In lieu of cash, the holder of an
Option may, to the extent permitted by applicable law, exercise an Option in
whole or in part, by delivering to the Company shares of Common Stock (in proper
form for transfer) owned by such holder having a fair market value equal to the
cash exercise price applicable to that portion of the Option being exercised by
the delivery of such shares. In lieu of the actual delivery to the Company of
such shares of Common Stock, the holder of an Option may exercise an Option by
providing the Company with a notarized statement attesting to the number of
shares of Common Stock owned which are intended to be exchanged and, if the
stock certificates representing such shares are held by the option holder, with
such certificate numbers, and upon receipt of such notarized statement and upon
verification of the existence of such shares, the Company shall cause to be
issued to the option holder only the number of incremental Shares to which the
option holder is entitled upon exercise of the Option. The fair market value per
Share of shares so delivered by the option holder to the Company shall be
determined as of the date immediately preceding the date on which
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the Option is exercised in accordance with this Section 7, or as may be required
in order to comply with or to conform to the requirements of any applicable laws
or regulations.
8. TERMS OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option granted to an Eligible Director shall be exercisable, on a
cumulative basis, for a period commencing on the date of grant and ending ten
(10) years after the date of grant of such Option as follows:
(a) up to one half of the total number of Shares subject to an Option
may be exercised as of the date of grant of an Option; and
(b) the balance of the total number of Shares subject to an Option may
be exercised as of the first anniversary of the date of grant of an Option,
provided such holder is an Eligible Director on such date.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
In no event shall an Option granted hereunder be exercised for a
fraction of a Share or for less than one hundred Shares (unless the number
purchased is the total balance for which the Option is then exercisable).
A person entitled to receive Shares upon the exercise of an Option shall
not have the rights of a stockholder with respect to such Shares until the date
of issuance of a stock certificate to him or her for such Shares; provided,
however, that until such stock certificate is issued, any holder of an Option
using previously acquired shares of Common Stock in payment of an option
exercise price shall continue to have the rights of a stockholder with respect
to such previously acquired shares of Common Stock.
Each Eligible Director shall agree not to sell or otherwise dispose of
Shares acquired pursuant to an Option for a period of six (6) months following
the date of grant of such Option.
9. TERMINATION OF DIRECTORSHIP
If an Eligible Director's service as a director of the Company is
terminated, any Option previously granted to such Eligible Director shall, to
the extent not theretofore exercised, terminate and become null and void;
provided, however, that:
(a) if an Eligible Director holding an outstanding Option dies,
including during either the seven (7) month or one (1) year period, whichever is
applicable, specified in clause (b) immediately below, such Option shall, to the
extent exercisable on the date of death and not theretofore exercised, remain
exercisable for one (1) year after such Eligible Director's death, by such
Eligible Director's legatee, distributee, guardian or legal or personal
representative; and
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(b) if the service of an Eligible Director holding an outstanding Option
is terminated by reason of (i) such Eligible Director's disability (as described
in Section 22(e)(3) of the Code), (ii) voluntary retirement from service as a
director of the Company or (iii) failure of the Company to nominate for
re-election such Eligible Director who is otherwise eligible, except if such
failure to nominate for re-election is due to any act of (A) fraud or
intentional misrepresentation or (B) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any subsidiary
corporation or parent corporation of the Company (in which case, such Option
shall terminate and no longer be exercisable), such Option shall, to the extent
exercisable on the date of such termination and not therefore exercised, remain
exercisable at any time up to and including (X) seven (7) months after the date
of such termination of service in the case of termination by reason of voluntary
retirement or failure of the Company to nominate for re-election such Eligible
Director who is otherwise eligible, subject to the above exceptions thereto
stated in this clause (b), and (Y) one (1) year after the date of termination of
service in the case of termination by reason of disability.
None of the events described above shall extend the period of
exercisability of an Option beyond the expiration date thereof. If an Option
granted hereunder shall be exercised by the legal representative of a deceased
Eligible Director or former Eligible Director, or by a person who acquired an
Option granted hereunder by bequest or inheritance or by reason of the death of
any Eligible Director or former Eligible Director, written notice of such
exercise shall be accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such legal representative or other person to
exercise such Option.
10. EXERCISE OF OPTIONS
Subject to the express provisions of the Plan, Options granted under the
Plan shall be exercised by the optionee as to all or part of the Shares covered
thereby by the giving of written notice of the exercise thereof to the Corporate
Secretary of the Company at the principal business office of the Company,
specifying the number of Shares to be purchased, the proposed form of payment
and specifying a business day not more than ten (10) days from the date such
notice is given for the payment of the purchase price against delivery of the
Shares being purchased. Subject to the terms of Sections 15, 16 and 17 hereof,
the Company shall cause certificates for the Shares so purchased to be delivered
at the principal business office of the Company, against payment of the full
purchase price, on the date specified in the notice of exercise.
11. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to the Options granted
hereunder are to be added to the general funds of the Company and used for its
general corporate purposes as the Board of Directors shall determine.
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12. NON-TRANSFERABILITY OF OPTIONS
An Option granted hereunder shall not be transferable, whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution, and any Option granted hereunder shall be exercisable, during the
lifetime of such holder, only by such holder. Except to the extent provided
above, Options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process.
13. ADJUSTMENT OF SHARES; CHANGE IN CONTROL
Notwithstanding any other provision contained herein, in the event of
any change in the Shares subject to the Plan or to any Option granted under the
Plan (through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off, combination of shares,
exchange of shares, or other like change in the capital structure of the
Company), an adjustment shall be made to each outstanding Option such that each
such Option shall thereafter be exercisable for such securities, cash and/or
other property as would have been received in respect of the Shares subject to
such Option had such Option been exercised in full immediately prior to such
change, and such an adjustment shall be made successively each time any such
change shall occur. The term "Shares" after any such change shall refer to the
securities, cash and/or property then receivable upon exercise of an Option. In
addition, in the event of any such change, the Board of Directors shall make any
further adjustment to the maximum number of Shares which may be acquired under
the Plan pursuant to the exercise of Options and the number of Shares and price
per Share subject to outstanding Options as shall be equitable to prevent
dilution or enlargement of rights under such Options, and the determination of
the Board of Directors as to these matters shall be conclusive and binding on
the optionee.
In the event of a "change in control" of the Company, all then
outstanding Options shall immediately become exercisable. For purposes of the
Plan, a "change in control" of the Company shall occur if (a) any person or
other entity (other than any of the Company's subsidiaries, Bay Harbour
Management L.C. and Whippoorwill Associates, Inc. and their affiliates),
including any person as defined in Section 13(d)(3) of the Exchange Act, becomes
the beneficial owner, as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of more than fifty percent (50%) of the total combined voting power
of all classes of capital stock of the Company normally entitled to vote for the
election of directors of the Company (the "Voting Stock"), (b) the Board of
Directors approves the sale of all or substantially all of the property or
assets of the Company, (c) the Board of Directors approves a consolidation or
merger of the Company with another corporation (other than with any of the
Company's subsidiaries), the consummation of which would result in the
stockholders of the Company immediately before the occurrence of the
consolidation or merger owning, in the aggregate, less than 50% of the Voting
Stock of the surviving entity, or (d) a change in the Board of Directors occurs
with the result that the members of the Board of Directors on the date hereof
(the "Incumbent Directors") no longer constitute a majority of such Board of
Directors,
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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.
Upon the occurrence of a transaction described in clauses (b) or (c) of
the preceding paragraph, each Option outstanding hereunder shall terminate
within a specified number of days after notice to the holder, and such holder
shall receive, with respect to each Share subject to such Option, an amount
equal to the excess of the fair market value of such Shares immediately prior to
the occurrence of such transaction over the exercise price per Share of such
Option; such amount shall be payable in the kinds of property payable in such
transaction. The provisions contained in the preceding sentence shall be
inapplicable to an Option granted within six (6) months before the occurrence of
a change in control if the holder of such Option is subject to the reporting
requirements of Section 16(a) of the Exchange Act and no exemption from
liability under Section 16(b) is otherwise available to such holder.
14. RIGHT TO TERMINATE SERVICE
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the service of
any Eligible Director holding Options and shall not impose any obligation on the
part of any Eligible Director holding Options to remain in the service of the
Company or of any subsidiary corporation or parent corporation thereof.
15. PURCHASE FOR INVESTMENT
Except as hereinafter provided, the Board of Directors may require the
holder of an Option granted hereunder, as a condition to exercise of such Option
in the event the Shares subject to such Option are not registered pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), and applicable state securities laws, to execute and
deliver to the Company a written statement, in form satisfactory to the Board of
Directors, in which such holder (a) represents and warrants that such holder is
purchasing or acquiring the Shares acquired thereunder for such holder's own
account, for investment only and not with a view to the resale or distribution
thereof in violation of any federal or state securities laws, and (b) agrees
that any subsequent resale or distribution of any of such Shares shall be made
only pursuant to either (i) an effective registration statement under the
Securities Act covering such Shares and under applicable state securities laws
or (ii) specific exemptions from the registration requirements of the Securities
Act and any applicable state securities laws, based on a written opinion of
counsel, in form and substance satisfactory to counsel for the Company, as to
the application thereto of any such exemptions.
Nothing herein shall be construed as requiring the Company to register
Shares subject to any Option under the Securities Act or any state securities
law and, to the extent deemed necessary by the Company, Shares issued upon
exercise of an Option
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may contain a legend to the effect that registration rights have not been
granted with respect to such Shares.
16. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
Upon any exercise of an Option granted hereunder and payment of the
purchase price therefor, a certificate or certificates representing the Shares
shall be issued by the Company in the name of the person exercising the Option
and shall be delivered to or upon the order of such person.
The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as the Board of
Directors, in its sole discretion, determines to be necessary or appropriate to
(a) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or (b) implement the provisions of the Plan
and any agreement between the Company and the optionee with respect to such
Shares.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, and fees
and expenses that may be necessitated by the filing or amending of a
registration statement under the Securities Act with respect to such Shares.
All Shares issued as provided herein shall be fully paid and
nonassessable to the extent permitted by law.
17. WITHHOLDING TAXES
The Company shall require an Eligible Director exercising an Option to
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold federal, state,
local or foreign income or other taxes. If the amount requested is not paid, the
Company shall have no obligation to issue, and the Eligible Director shall have
no right to receive, the Shares subject to such Option.
18. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Directors shall determine that the listing,
registration or qualification of the Shares subject to such Option on any
securities exchange or under any applicable law, or the consent or approval of
any governmental regulatory authority, is necessary or desirable as a condition
of, or in connection with, the granting of an Option, or the issuance of Shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors.
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19. AMENDMENT OF THE PLAN
The Board of Directors may, from time to time, amend the Plan; provided,
however, that (i) no amendment shall become effective without the approval of
the stockholders of the Company to the extent that stockholder approval is
required in order to comply with Rule 16b-3 (or any successor provision) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (ii)
no provision of the Plan addressing eligibility to participate in the Plan or
the amount, price or timing of Options to be granted under the Plan may be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules promulgated thereunder. The rights and obligations under any Option
granted before amendment of the Plan or any unexercised portion of such Option
shall not be adversely affected by amendment of the Plan or the Option without
the consent of the holder of such Option.
20. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
Options may not be granted while the Plan is suspended or after it is
terminated. Rights and obligations under any Option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option was granted. The
ministerial power of the Board of Directors to construe and administer any
Options under Section 4 that are granted prior to the termination or suspension
of the Plan shall continue after such termination or during such suspension.
21. SAVINGS PROVISION
With respect to all participants in the Plan, transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 (or any
successor provision) under the Exchange Act. To the extent any provision of the
Plan or action by the Board of Directors fails to so comply, it shall be deemed
null and void to the extent permitted by law and deemed advisable by the Board
of Directors.
22. GOVERNING LAW
The Plan, the Options granted hereunder and all related matters shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York from time to time in effect.
23. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be deemed
to affect the validity of any other provision.
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Exhibit 10.25
SERVICES AGREEMENT
This Agreement (the "Agreement") is made as of the first day of August,
1998 by and among: (i) Meridian Ventures, Inc., a Nevada corporation or any
successor corporation controlled by Thomas C. Shull, provided such successor
corporation is reasonably acceptable to the Debtor ("Meridian"), and Thomas C.
Shull ("Shull"), jointly and severally; and (ii) Barney's, Inc., a New York
corporation and its (wholly-owned and majority owned) subsidiaries which are
debtors and debtors in possession (collectively referred to as the "Debtor", the
"Corporation" or the "Company") in Case No. 96 B 40113 (the "Case"), now pending
before the United States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court").
1. PROVISION OF SERVICES. Meridian shall provide the services of Thomas
C. Shull and two additional consultants as provided below for the benefit of the
Debtor and affiliates of the Debtor which are debtors (the "Affiliates"). In
connection therewith, Mr. Shull shall serve as the President and Chief Executive
Officer (the "President/CEO") and as a member of the Debtor's executive
management committee (the "Executive Committee") and shall report to the Board
of Directors.
2. RESPONSIBILITIES; CORPORATE GOVERNANCE. (a) The President/CEO shall
act and serve during the term of this Agreement as the President and Chief
Executive Officer of the Debtor and Affiliates and shall report to the Debtor's
Board of Directors. The employment responsibilities of the President/CEO will
include those normally held by the president and chief executive officer of a
retail corporation of similar size and nature to the Company. The President/CEO
shall devote his full time efforts (which shall mean an average of 50 hours per
work week, excluding reasonable vacation, personal, sick time or deminimus
non-conflicting time for Meridian) in connection with his role as President,
Chief Executive Officer and member of the Executive Committee. All employees and
officers shall report directly or indirectly to the President/CEO, except those
holding the position of Chair (as defined below).
(b) The President/CEO shall have complete access to all business records
and employees of the Company.
(c) The President and CEO shall be a member of the Debtor's Executive
Committee, which consists of the following officers: Phyllis Pressman
(Chairperson of the Executive Committee); Robert L. Pressman (Co-Chairman of the
Board of Directors); Eugene Pressman (Co-Chairman of the Board of Directors);
Thomas C. Shull (President/CEO); John S. Dubel (Executive Vice President/CFO);
and Marc H. Perlowitz (Executive Vice President & General Counsel/Human
Resources). A quorum for Executive Committee meetings shall be set at three of
its members. All action by the Executive Committee and any changes in the
membership of the Executive Committee shall require a majority vote of the
quorum then in attendance provided such majority must include at least two out
of three members who do not hold the position of "Chair". The position of
"Chair" shall be deemed to mean the current Chairperson of the
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Executive Committee and the current Chairman or Co-Chairman of the Board of
Directors.
(d) (i) The Executive Committee and the President/CEO shall endeavor to
meet on a regular basis and as often as is necessary. Any member of the
Executive Committee may, upon 48 hours notice, schedule a meeting of the
Executive Committee. All meetings may be held in person and/or by telephone.
Notwithstanding anything in the Agreement to the contrary, all significant and
material decisions by any member of the Executive Committee shall be approved by
the Executive Committee prior to the implementation of such decisions.
Significant and material decisions shall include decisions that under corporate
law and custom would normally be delegated by a board of directors to a
corporate governance operating body similar to an executive committee of a
corporation equal in size to the Company. Significant and material decisions
shall include the following employment decisions (the "Employment Decisions"):
the hiring, firing, compensation and benefits of any employee or officer of the
Corporation holding the title of Senior Vice President or above, the General
Managers of each of the Madison Avenue, Beverly Hills and Chicago stores, and
any employee holding the title of General Merchandise Manager in the
merchandising group (collectively, "Senior Officers"). Upon the effective date
of a confirmed plan of reorganization, the Executive Committee shall be
disbanded and the new board of directors shall assume its responsibilities and
determine the internal governance mechanisms it believes are appropriate
provided until the new board of directors determines such internal governance
mechanisms, significant and material decisions shall be approved by the new
board.
(ii) The Executive Committee shall discuss all significant and material
store actions, including, without limitation, openings, closings of stores, and
material amendments to leases, before taking any action.
(iii) The Blackstone Group and/or other professionals as selected and
directed by the Board of Directors shall have the responsibility to the Company
for providing advice and counsel with respect to Investor (as hereinafter
defined) activities and shall report to the Board of Directors regarding their
activities and progress but shall also keep the President/CEO (who shall fully
participate in such activities) and the Executive Committee continually and
fully informed. The Board of Directors, any officer or member of the Executive
Committee shall advise the President/CEO on a timely basis of their knowledge of
all Investor (i) meetings that will be attended by a director or officer
representing the Company, and permit the President/CEO to attend if he so
requests, and (ii) activities. The President/CEO shall advise Blackstone of all
Investor activities. "Investor" shall mean (i) all activities, process,
decisions, communications, strategies, negotiations or agreements in connection
with any party making an investment in, or the restructuring of, the Corporation
as part of a recapitalization or plan of reorganization or (ii) any plan of
reorganization (including a debtor supported, creditor sponsored or third party
plan or any combination thereof) or restructuring process (including any aspect
involving the strategy or formation of a plan of reorganization). The Board of
Directors shall have final authority regarding any Investor decisions on behalf
of the Company.
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(iv) With regard to any significant and material matter with respect to
which the President/CEO shall have a material difference of opinion with the
Executive Committee and/or Board of Directors, the President/CEO shall have the
right to communicate with the Official Committee of Unsecured Creditors,
material stakeholders of the Debtor or the Debtor's debtor-in-possession
lenders; provided however, that prior to such communication the President/CEO
shall provide written notice of his intention to do so and detailing the issues
to the Board of Directors and to the Debtor's outside general counsel.
(v) In performing his services hereunder as President/CEO, Shull at all
times will be subject to and shall comply with his fiduciary responsibilities as
an officer of the Company to such parties as required by applicable state law
and the Bankruptcy Code.
(vi) The Board of Directors shall retain, discharge and direct all
professionals. Nothing contained in this Agreement shall in any way restrict the
powers of the Board of Directors of the Corporation under the laws of any
applicable jurisdictions, including the laws of the States of Delaware and New
York, including, but not limited to, the power to terminate the Agreement,
subject only to the contractual rights of Meridian and Shull to compensation,
any amounts due upon termination of this Agreement and indemnification
hereunder.
3. TERM. The term of this Agreement shall commence as of August 1, 1998
and shall terminate on July 31, 1999 but shall be subject to extension in the
event the parties enter into the Extension Agreement (as hereinafter defined).
4. COMPENSATION. (a) In consideration for providing the services of
Thomas C. Shull as President/CEO and certain consultants as provided herein
Meridian shall receive, in addition to the other consideration provided in this
Agreement, compensation at the rate of $95,000.00 per month payable in advance
during the first week of each month (the "Base Fee").
(b) The compensation payable to Meridian under this Agreement is in
consideration for the services of Thomas C. Shull and services provided by
Meridian of one full-time consultant and one 75% part-time senior consultant. It
is contemplated initially that the full time consultant shall be Paul Jen (who
shall continue in his current role as Vice President of Business Planning and
Marketing) and the 75% part-time consultant shall be Ed Lambert. The Debtor
shall not be obligated to provide Thomas C. Shull or any such consultant with
Meridian, and Meridian, Shull and Meridian on behalf of each other Meridian
employee serving hereunder as consultant, specifically declines any employee
benefits (for example, health, 401K, pension, or other benefits provided by the
Debtor to its employees etc.) under this Agreement. Notwithstanding the
foregoing, the Debtor will allow Shull and the Meridian consultants covered
under this Agreement to avail themselves of the Company's employee clothing
discount offered to other employees generally.
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<PAGE>
(c) The Debtor shall pay Meridian a flat fee of $9,500.00 per month
which represents 10% of the compensation in paragraph 4(a) and is deemed to
cover Meridian over-head (including legal and accounting), health care costs,
payroll costs, and other expenses (the "Flat Fee").
(d) The Debtor shall reimburse Meridian for the reasonable out-of-pocket
expenses of the President/CEO, full time consultant and part time consultant
which are incurred on behalf of the Debtor on appropriate business such as
travel, meals, communications and lodging other than the Lambert Transition
Expenses hereinafter defined. The Debtor shall also reimburse Meridian for the
reasonable travel, housing and occupancy expenses (including relocation expenses
for Ed Lambert and his family but excluding ordinary living expenses such as
utilities and groceries) for Ed Lambert (the "Lambert Transition Expenses").
Meridian shall submit invoices for such reimbursable expenses on a monthly
basis, and the Debtor shall process payment of the same upon receipt, provided
in no event shall the total reimbursement for Lambert Expenses exceed $10,000
per month (except for the following which will be reimbursed by the Debtor as
they occur:
(x) reasonable and customary lease deposits not to exceed $20,000
provided all deposits which are not used for the payment of
rent shall be returned to the Debtor at the conclusion of the
lease;
(y) reasonable and customary moving expenses occurring within 60
days of the commencement date of the Agreement and the
effective date of termination of this Agreement.)
(e) The Debtor shall provide a personal secretary to be recruited by
Thomas Shull in connection with his performance of duties as President/CEO. The
Debtor shall reimburse Meridian and Shull for their reasonable attorneys fees in
connection with the negotiation of this Agreement which total amount shall not
exceed $10,000. In addition to the above, the Debtor shall promptly reimburse
Meridian and Shull for their reasonable legal fees in the event that either of
them shall consult with their counsel in connection with their fiduciary
responsibilities to the Estate under the Agreement, provided that such fees
shall not without the prior written approval of the Executive Committee (which
shall not be unreasonably withheld) exceed $20,000 (except that such $20,000 cap
shall not limit the fees payable pursuant to paragraph 8 hereof).
(f) Meridian shall have the right to accept another engagement during
the term of this Agreement provided such engagement does not lessen the ability
of Meridian and Shull to perform its services hereunder or conflict with the
obligations of Meridian and Shull hereunder or present a conflict of interest
with respect to the Company.
5. PERFORMANCE BONUS. (a) No later than March 30, 1999, the Debtor shall
pay Meridian a performance bonus ("Performance Bonus") calculated and payable
for the fiscal six months ending in fiscal January, 1999 as soon as the Debtor's
publish such six months financial statements which shall have been reviewed by
the Debtor's
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<PAGE>
outside accountants. If the EBITDA for said six month period ("Period EBITDA")
exceeds the Debtor's plan for EBITDA for such period ("Plan EBITDA"), then
Meridian shall receive a performance Bonus of $100,000.
(b) Upon approval of this Agreement by the Bankruptcy Court, paragraph 5
of the Agreement among the Debtor, Meridian and Shull dated as of September 1,
1997 (the "1997 Agreement") shall be deleted in its entirety and replaced with
the following new paragraph 5:
"5. The Debtor shall pay to Meridian (a) a performance bonus of
$150,000 not later than August 31, 1998 and (b) an additional sum of
$150,000 within five days after the effective date of a plan of
reorganization which has been confirmed by the Bankruptcy Court provided
such plan has been confirmed not later than March 31, 1999.
6. TERMINATION. (a) The engagement of Meridian and Shull hereunder will
terminate if any of the following shall occur: (i) ten days after written notice
by the Debtor to Meridian and Shull with respect to any material breach by
Meridian or Shull of the terms of this Agreement or Willful Misconduct (as
hereinafter defined) committed by Meridian or Shull; (ii) ten days after written
notice by Meridian and Shull to Debtor if the Debtor is in material breach of
this Agreement; (iii) July 31, 1999; (iv) upon the death or permanent disability
of Shull; (v) upon entry of an order in the Case appointing a trustee in such
Case or upon entry of an order converting such Case to a case under Chapter 7 of
the Bankruptcy Code; (vi) if after a plan of reorganization is confirmed by the
Bankruptcy Court and management stock options are offered to employees but not
offered to Shull (who shall have the right to designate his interest in such
stock options with Meridian employees who are covered under this Agreement) in
connection with his role as President/CEO, taking into account the relative
relationship of the value of options offered to other senior officers, then
Meridian may terminate this Agreement on 30 days notice; (vii) if within 30 days
after the effective date of a plan of reorganization which has been confirmed by
the Bankruptcy Court, Shull is not duly elected as a member of the new board of
directors, then Meridian may terminate this Agreement on 30 days notice; (viii)
(x) within 60 days after the effective date of a plan of reorganization which
has been confirmed by the Bankruptcy Court, Meridian or the Company may
terminate this Agreement by sending written notice of same which shall be
effective 30 days after such notice or (y) thirty days after written notice by
Meridian and Shull to Debtor if Shull determines in his reasonable discretion
that he is unable to materially perform his duties under this Agreement due to
any action or failure to act on the part of the Debtor or (z) thirty days after
written notice by Meridian and Shull in the event either the Debtor or any
significant stakeholder retains an executive search firm or takes any direct
action to identify, hire or recruit a new President or CEO provided in the case
of (x) , (y) or (z) above the Company may elect to extend the thirty day periods
referred to therein to up to ninety days; or (ix) if by January 31, 1999 the
Company and Meridian shall not reach agreement regarding a performance bonus to
be paid to Meridian in connection with the six month period ending on fiscal
July, 1999, Meridian may terminate this Agreement on thirty (30) days notice.
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<PAGE>
(b) The parties agree that Meridian and Shull will have been unable to
pursue alternative, profitable opportunities in order to take on this
engagement, that Meridian and Shull would suffer substantial financial damage if
either party were to exercise its rights of termination hereunder, and that the
amount of damages to Meridian and Shull would be difficult, if not impossible,
to calculate accurately. Accordingly, the parties agree that if pursuant to this
paragraph 6, Meridian, Shull or the Debtor shall at any time cause this
Agreement to terminate or the Agreement shall otherwise terminate, then the
Debtor shall pay Meridian an amount as set forth below. In the event of the
termination of this Agreement as provided in paragraph 6(a), Meridian shall
receive hereunder the Base Fee, the Flat Fee and the Lambert Transition Expenses
through the end of the month in which the date of termination has occurred, plus
a termination payment as follows:
(A) If the termination is pursuant to paragraph 6(a)(i) above, the
amount due and owing to Meridian shall be $0;
(B) If the termination is pursuant to paragraph 6(a)(ii) above, Meridian
shall be entitled to receive (1) a payment equal to the total of the Base Fee
and Flat Fee (together, the "Payment Amount") for six months and (2) a payment
equal to the Payment Amount for six months less Mitigation (as hereinafter
defined);
(C) If the termination is pursuant to paragraph 6(a)(iii) above and (1)
this Agreement was not extended on or before June 30, 1999 for a term of at
least one year on equivalent or better terms and conditions for Skull and
Meridian as set forth herein (the "Extension Agreement") and (2) the Company
delivered to Meridian the Extension Agreement executed by the Company on or
before June 20, 1999, Meridian shall be entitled to receive a payment equal to
the Payment Amount for six months. Notwithstanding the above, should the parties
ultimately enter into the Extension Agreement, no amounts shall be payable by
the Company pursuant to this paragraph;
(D) If the termination is pursuant to paragraph 6(a)(iii) and this
Agreement was not extended on or before June 30, 1999 for a term of at least one
year on equivalent or better terms and conditions for Shull and Meridian as set
forth herein (the "Extension Agreement") due to the fact that the Company did
not deliver to Meridian the Extension Agreement on or before June 20, 1999,
Meridian shall be entitled to receive the following: (1) a payment equal to the
Payment Amount for six months and (2) a payment equal to the Payment Amount for
six months less Mitigation. Notwithstanding the above, should the parties
ultimately enter into the Extension Agreement, no amounts shall be payable by
the Company pursuant to this paragraph;
(E) If the termination is pursuant to paragraph 6(a)(iv), Meridian shall
be entitled to receive a payment equal to the Payment Amount for twelve months,
and
(F) If the termination is pursuant to paragraph 6(a)(v), (vi), (vii),
(viii) or (ix), Meridian shall be entitled to receive the following: (1) a
payment
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<PAGE>
equal to the Payment Amount for six months and (2) a payment equal to the
Payment Amount for six months less Mitigation.
(c) Any amounts payable to Meridian pursuant to this paragraph 6 which
are not subject to Mitigation shall be paid in a lump sum within five business
days after the termination date of this Agreement. Any amounts payable to
Meridian which are subject to Mitigation shall be payable over six months
(individually, a "Mitigation Month") in six equal monthly installments
commencing with the first day of the seventh full month following termination
date provided the amount of any such payments shall be offset by Mitigation, if
applicable. As used herein, "Mitigation" shall mean all compensation, salary,
fees and income payable and attributable by a third party for the services of
Thomas Shull, Ed Lambert and Paul Jen (the "Meridian Employees") as employees of
Meridian or to the Meridian Employees directly (whether or not employed by
Meridian) with respect to such services during each of the six Mitigation
Months. Mitigation will not apply to existing Meridian contracts heretofor
disclosed to the Debtor as set forth in that certain letter of Meridian to the
Debtor dated August 7, 1998. Meridian shall notify the Company on the last
business day of each Mitigation Month of the amount of Mitigation actually
received since the first day of such Mitigation Month and shall provide a
calculation of the amount due by the Company to Meridian for that Mitigation
Month payment taking into account the credit to the Company for Mitigation. The
Debtor shall pay any such invoices for a Mitigation Month payment within five
business days. In addition to the foregoing amounts, the amount due under
paragraph 5 (a) shall be due and payable in accordance with the terms hereof
(other than in connection with a termination pursuant to paragraph 6(a)(i)) on a
prorata basis should the effective date of termination occur prior to January
31, 1999. For purposes of the immediately prior sentence, "prorata basis" shall
be determined by multiplying the amount payable under paragraph 5(a) by a
fraction, the denominator of which is the number of days in the period
commencing August 1, 1998 and ending January 31, 1999 (the "Measuring Period")
and the numerator of which is the number of days that this Agreement was in
effect during the Measuring Period. The parties agree that the amounts
established hereunder are liquidated damages reasonable under the terms and
circumstances of this Agreement (but excluding amounts due under paragraph 8
which shall continue to survive the termination of this Agreement), the payment
of which shall fully satisfy and discharge any obligation of the Debtor to pay
(i) any further compensation and any performance bonus under Sections 4 and 5,
respectively, hereof and, (ii) any compensation for lost opportunity costs
incurred by Meridian or Shull as a result of either party entering into this
Agreement.
(d) In addition, upon termination of this Agreement for any reason, the
Debtor shall reimburse Meridian and Shull for all reimbursable expenses incurred
by either or both to the time of termination plus any remaining lease costs
through and including July 31, 1999 under contract for the Lambert Transition
Expenses provided (i) no such reimbursement of Lambert Transition Expenses shall
exceed $50,000 and (ii) no reimbursement of Lambert Transition Expenses shall be
required if
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<PAGE>
Ed Lambert is working in the New York/New Jersey/Connecticut tri-state area.
Meridian will use reasonable efforts to minimize any remaining lease costs.
7. INSURANCE. The Debtor shall maintain in force during the term of this
Agreement, directors' and officers' liability insurance ("D&O Insurance") with
limits not less than five million dollars ($5,000,000) on terms and conditions
currently provided for under the Debtor's existing insurance policy, and shall
use reasonable efforts to name Thomas C. Shull as an insured thereunder within
ten (10) days of this Agreement being approved by the Court.
8. INDEMNITY. If Meridian, Shull or any employee of Meridian who serve
as consultants to the Debtor ("Indemnitee") is threatened with or made a party
to, or called as a witness or deposed or subpoenaed in, any action, suit or
other legal, administrative or governmental proceeding or other legal process by
reason that Indemnitee is or was deemed a consultant, officer, employee or other
agent of the Debtor or any of its affiliates, the Debtor shall defend, indemnify
and hold Indemnitee harmless to the maximum extent allowed by applicable law
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, disbursements and expenses, including counsel fees
reasonably incurred by Indemnitee in connection therewith, to the extent the
same are not paid under the D&O Insurance ("Indemnified Liability" or
"Indemnified Liabilities"); provided however, that Indemnitee shall not be
entitled to indemnification hereunder to the extent any such liability,
obligation, loss, damage, penalty, action, judgment, suit, claim, disbursement
or expense results from the gross negligence, willful misconduct or criminal
conviction ("Willful Misconduct") of Indemnitee as determined by a court of
competent jurisdiction. Indemnitee represents and warrants that it or he has not
received notice of any claim which might constitute an Indemnified Liability
hereunder. Debtor represents that it has not received any notice of any claim
against Indemnitee that would constitute an Indemnitee Liability hereunder.
Payments under this indemnity in respect of indemnified settlements or judgments
shall be paid at the time of final settlement or final judgment (from which no
appeal may be taken), or in respect of counsel fees or costs of defense, which
shall be limited to one counsel for all Indemnitees, and shall be paid at the
time such fees or costs are incurred.
Indemnitee shall have the right to pay or compromise and adjust all
Indemnified Liabilities not manifestly without merit; provided, however, that as
to matters disposed of by a compromise payment by Indemnitee pursuant to a
consent decree or otherwise, no reimbursement, either for said payment or for
any other expenses in connection with the matter so disposed of, shall be
provided unless such compromise shall be approved by order of the Bankruptcy
Court on such notice as it may direct. Debtor shall have the right to pay or
compromise without Indemnitee's consent Indemnified Liabilities other than those
which arise from or are related to any criminal action, suit or proceeding.
Notwithstanding anything to the contrary contained in the preceding sentence,
Indemnitee's consent shall be required for any settlement which contains a
stipulation to, or admission or acknowledgment of, any liability or wrongdoing
on the part of Indemnitee.
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<PAGE>
The Debtor shall, on a timely basis, pay the expenses as they are
incurred by Indemnitee in investigating, preparing or defending any such
threatened action, suit or other proceeding in advance of the final disposition
of such action, suit or other proceeding, upon receipt of an undertaking from
Indemnitee to repay such payment upon the terms of the last sentence of this
paragraph. Such undertaking shall be accepted without reference to the financial
ability of the Indemnitee to make repayment. If Indemnitee shall be adjudicated
to be not entitled to indemnification under this paragraph 8 or if the matter
involved shall be disposed of by a compromise payment with respect to which
Indemnitee shall not be entitled to Indemnification under this paragraph 8, then
Indemnitee promptly shall reimburse the Debtor for such expenses or amounts
paid.
This paragraph 8 shall survive the termination of the Agreement.
9. CONFIDENTIALITY. Meridian and Shull shall at all times both during
its and his engagement hereunder and after termination thereof regard and
preserve as confidential all trade secrets and other confidential information
pertaining to the business of the Debtor that has been or may be obtained by
Meridian or Shull by reason of the performance of the terms of this Agreement.
Meridian and Shull agree that all documents, reports, manuals, drawings,
designs, tools, equipments, plans, proposals, marketing and sales plans,
customer lists, or materials made by the Debtor or coming into Meridian's or
Shull's possession by reason of its or his performance under this Agreement are
the property of the Debtor and shall not be used by Meridian or Shull in any way
prohibited by this Agreement. Except as expressly provided herein, or as
required by the terms of the credit agreement between the Lenders and the
Debtor, during the term of this Agreement and after termination thereof,
Meridian and/or Shull shall not deliver, reproduce, publish or in any way allow,
after due care, information describing any trade secrets or other confidential
documents or things to be delivered or used by any third party without specific
direction or written consent of the Debtor or in response to lawful process.
Immediately upon termination of this Agreement, Meridian and Shull shall
promptly deliver to the Debtor all documents, tools, equipment, drawings,
blueprints, manuals, material and significant or confidential letters and notes,
reports, price lists, customer lists and copies thereof, and all other materials
relating to the Debtor's business and which are in the possession or under the
control of Meridian or Shull. Confidential information as defined above shall
exclude information or materials that become generally available to the public
other than through disclosure by Meridian, Shull or any employee of Meridian in
violation of this Agreement. This paragraph 9 shall survive the termination of
this Agreement.
10. MISCELLANEOUS. (a) The Debtor shall use its reasonable best efforts
to obtain approval hereof by the Bankruptcy Court, which approval shall affirm
that this Agreement and the services of Meridian and Shull hereunder constitute
an administrative obligation under 11 U.S.C. Section 503(b) . This Agreement
shall be effective when it has been signed by the parties and approved by the
Bankruptcy Court, provided that the Debtor shall seek such approval NUNC PRO
TUNC as of the date of this Agreement, and further provided, that such approval
shall occur not later than September 1, 1998. Upon approval of this Agreement by
the Bankruptcy Court, this Agreement shall replace the
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<PAGE>
l997 Agreement except with respect to paragraph 5 thereof, as amended by this
Agreement, relating to the bonus payable to Meridian and such other provisions
as specifically survive termination. This Agreement shall be assumed as part of
any plan or reorganization which is confirmed by the United States Bankruptcy
Court. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
(b) In the event Shull is appointed to the new board of directors, Shull
shall resign if he is no longer Chief Executive Officer of the Company. This
paragraph 10(b) shall survive the termination of this Agreement.
11. MODIFICATION. This Agreement may only be modified by mutual
agreement provided that such modification, if material, is approved by the
Bankruptcy Court.
12. ASSIGNMENT. This Agreement is a personal service contract and may
not be assigned by either party.
13. NOTICES. All notices required or permitted by this Agreement shall
be in writing and shall be personally delivered or faxed to the parties at their
addresses set forth below or to such different addresses as such parties shall
direct by notice sent in accordance with this paragraph.
If to Thomas C. Shull and Meridian Ventures, Inc.:
1111 Third Avenue Tower
Suite 2500
Seattle, Washington 98101
Fax: 206-232-4734
Phone: 206-232-4735
with copies to:
John Paul Ketels, Esq.
Rogers & Wells
607 14th Street, N.W., 10th Floor
Washington, DC 20005
Fax: 202-434-0807
Phone: 202-434-0826
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<PAGE>
If to Debtor:
Marc H. Perlowitz, Esq.
Executive Vice President - General Counsel and
Human Resources
Barney's, Inc.
575 Fifth Avenue, 11th Floor
New York, NY 10017
Fax:212-450-8480
Phone: 212-450-8606
with a copy to:
John P. Campo, Esq.
LeBouef, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019
Fax:212-424-8500
Phone: 212-424-8896
14. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. ATTORNEYS' FEES. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or material misrepresentation in connection with any of the provisions
of the Agreement, the successful or prevailing party shall be entitled, in
addition to any other relief to which it may be entitled, to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding including
fees and costs incurred on appeal and in collecting any judgment, and the court
shall so provide in its judgment.
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<PAGE>
16. CONSENT TO JURISDICTION. The Debtor, Meridian and Shull each hereby
irrevocably consent to the jurisdiction of the Bankruptcy Court for all purposes
in connection with any action or proceeding which arises out of or relates to
this Agreement and agree that any action instituted under this Agreement shall
be brought only in such court and that such court shall have jurisdiction as
provided above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BARNEY'S, INC.
(acting as Officers and
attesting as members of the
Board of Directors)
By: /s/ Phyllis Pressman
------------------------------
Phyllis Pressman as its
Chairwoman of the
Executive Committee; Director
By: /s/ Robert L. Pressman
------------------------------
Robert L. Pressman as its
Co-Chairman of the
Board of Directors; Director
By: /s/ Eugene Pressman
------------------------------
Eugene Pressman as its
Co-Chairman of the
Board of Directors; Director
MERIDIAN VENTURES, INC.
By: /s/ Thomas C. Shull
------------------------------
Thomas C. Shull, President
/s/ Thomas C. Shull
-----------------------------------
Thomas C. Shull, as an individual
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<PAGE>
Exhibit 10.26
SERVICES AGREEMENT AMENDMENT
This Services Agreement Amendment is made as of January 28, 1999 by
and among (i) Meridian Ventures, Inc., a Nevada corporation or any successor
corporation controlled by Thomas C. Shull, provided such successor corporation
is reasonably acceptable to the Debtor ("Meridian"), and Thomas C. Shull
("Shull"), jointly and severally; and (ii) Barney's, Inc., a New York
corporation and its (wholly-owned and majority owned) subsidiaries which were
debtors and debtors in possession (collectively referred to as the "Company") in
Case No. 96 B 40113, pending before the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court"); and (iii) Barneys New
York, Inc., a Delaware corporation ("BNY"); provided, however, that this
Services Agreement Amendment shall be effective as to Meridian, Shull and the
Company whether or not executed by BNY.
WHEREAS, Meridian, Shull and the Company entered into a
Services Agreement as of the first day of August, 1998;
WHEREAS, as of December 21, 1998, the Bankruptcy Court
approved a plan of reorganization of the Company;
WHEREAS, the term of the Services Agreement terminates on July 31,
1999, subject to extension in the event the parties enter into an Extension
Agreement;
WHEREAS, paragraph 11 of the Services Agreement permits the parties
to modify the Services Agreement upon mutual agreement and approval of the
Bankruptcy Court, and the parties hereby desire to modify the Services
Agreement; and
WHEREAS, the Company hereby represents and warrants to Meridian and
Shull that Bankruptcy Court approval of this Services Agreement Amendment is not
required as a matter of law, and that this Services Agreement Amendment and the
obligations hereunder constitute valid, binding and fully enforceable
obligations of the Company to Meridian and Shull;
NOW, THEREFORE, effective as of the date hereof, the Services
Agreement is hereby amended as follows, and agreed to and ratified in full as so
amended:
1. Clause (ii) of the first paragraph of the Services Agreement (which
paragraph begins "This Agreement . . .") is amended in its entirety to
read as follows:
(ii) Barneys New York, Inc., a Delaware corporation ("BNY"); and
(iii) Barney's, Inc., a New York corporation and its (wholly-owned
and majority owned) subsidiaries which are or were debtors and
debtors in possession (collectively, and together with BNY, referred
to as the "Debtor", the "Corporation" or the "Company") in case No.
96 B 40113
<PAGE>
(the "Case"), now or heretofore pending before the United States
Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court").
2. Paragraph 2(a) of the Services Agreement is amended in its entirety, to
read as follows:
Shull shall act and serve during the term of this Agreement as the
sole President and Chief Executive Officer of the Debtor and
Affiliates and shall report to, and have direct access to each
member of, the Debtor's Board of Directors. The employment
responsibilities of the President/CEO will include those normally
held by the president and chief executive officer of a retail
corporation of similar size and nature to the Company. During the
term of this Agreement, there shall be no officer of the Company
with any comparable or superior titles, rights or responsibilities
to those of Shull, other than as may be provided by paragraph
2(e)(ii). The President/CEO shall devote his full time efforts
(which shall mean an average of 50 hours per work week, excluding
reasonable vacation, personal, sick time or deminimus
non-conflicting time for Meridian) in connection with his role as
President, Chief Executive Officer and member of the Executive
Committee (if any) or any comparable committee (if any). All
employees and officers shall report directly or indirectly to the
President/CEO. Without limiting the generality of the foregoing
provisions of this paragraph 2(a) (including the provisions relating
to the reporting relationship between the President/CEO and the
Board of Directors), it is expressly understood and agreed that (i)
the President/CEO shall have the sole right to manage and supervise,
and the sole responsibility for the management and supervision of,
all subordinate senior executives, officers, consultants, financial
advisors and managers of the Debtor and Affiliates, and members of
the Pressman family in their respective consulting capacities,
subject to the right of the Board of Directors reasonably to
supervise the President/CEO's exercise of such rights and
fulfillment of such responsibilities, and (ii) no member of the
Debtor's Board of Directors shall issue any directives to any
subordinates of the President/CEO without both the express prior
written consent of the President/CEO and the express authorization
of the Board of Directors acting as such, except that nothing in
this clause (ii) shall limit such rights as the Board of Directors
may otherwise have in its capacity as such to issue reasonable
directives to executive officers. The provisions of this paragraph 2
and of paragraph 1 shall apply jointly and severally with respect to
each of the companies comprising the Debtor.
3. Paragraph 2 of the Services Agreement is amended by deleting
sub-paragraphs (c) and (d)(i) through (iv) thereof in their entirety, and
inserting "[intentionally omitted]" in place thereof.
<PAGE>
4. Paragraph 2 of the Services Agreement is amended by adding a new
sub-paragraph (e) to the end thereof, to read as follows:
(e)(i) Meridian will reasonably assist Debtor in securing the
services of an individual to serve as Chief Merchant (or in such
other capacity as may be specified by the Company).
(ii) If a successor to Shull is selected by the Company, Shull
shall, for a period of not more than four weeks (but in no event
extending beyond May 31, 1999), reasonably assist in the transition
to the successor, and shall provide such assistance as the
President/CEO or as a consultant to the Company, in the discretion
of the Company, it being understood that, during such period of
assistance, the successor may assume the title of President/CEO or
otherwise accede to some or all of the rights and responsibilities
of Shull; provided that, for so long as Shull serves as
President/CEO, he shall have rights and responsibilities reasonably
commensurate with such title.
5. Paragraph 4(b) of the Services Agreement is amended by deleting the first
and second sentences and inserting the following in place thereof:
The compensation payable to Meridian under this Agreement is in
consideration for the services of Thomas C. Shull and services
provided by Meridian of two full time consultants. It is
contemplated that the full time consultants shall be Paul Jen (who
shall continue in his role as Vice President of Business Planning)
and Edward Lambert (who shall continue in his role as Chief
Financial Officer).
6. Paragraph 4(d) of the Services Agreement is amended by deleting ", full
time consultant and part time consultant" as it appears in the first
sentence, and inserting in place thereof "and full time consultants".
7. Paragraph 5(a) of the Services Agreement is amended in its entirety to
read as follows:
No later than February 1, 1999, the Debtor shall pay Meridian a
performance bonus in the amount of $100,000.
8. Paragraph 6(a)(i) of the Services Agreement is amended by the substitution
of the following for the final ";" thereof:
, which is not cured no later than five business days after
notice thereof by the Company;
9. Paragraph 6(a)(iii) of the Services Agreement is amended by substituting
"May 31, 1999" for "July 31, 1999", as the latter appears therein.
<PAGE>
10. Paragraph 6(a)(vi) of the Services Agreement is amended in its entirety to
read "[intentionally omitted]".
11. Paragraph 6(a) of the Services Agreement is amended by substituting the
following for clauses (viii) and (ix) thereof:
or (viii) 30 days after written notice by Meridian and Shull to
Debtor if Shull determines in his reasonable discretion that he is
unable materially to perform his duties under this Agreement due to
any action or failure to act on the part of the Debtor, provided the
Company may elect to extend such 30-day period to up to 90 days (it
being expressly agreed and understood that nothing in this paragraph
6(a)(viii) shall extend the term of this Agreement beyond May 31,
1999 without the consent of Meridian and Shull).
12. Paragraph 6(a) of the Services Agreement is amended by the addition of the
following to the end thereof:
Notwithstanding the foregoing, if Meridian and Shull give notice
under clause (ii) above for a material breach, the Company may
within five business days after such notice (x) terminate Meridian
under and in accordance with paragraph 6(d)(i), provided that the
Company within such period cures any and all breaches of any
obligations to make any payments or provide any benefits then or
theretofore due, in which case paragraph 6(b)(B) shall not apply
with respect to such breach, or (y) in the case of a breach
described in paragraph 6(f)(A), (B), (D), (E) or (H), cure any and
all breaches of any obligation to make any payments or provide any
benefits and cease the acts or omissions (or both) which constitute
such breach, in which case clause (ii) shall not apply with respect
to such breach.
13. Paragraph 6(b)(B) of the Services Agreement is amended by substituting the
following for sub-clauses (1) and (2) thereof, respectively:
(1) a payment equal to the total of the Base Fee and the Flat Fee
(together, the "Payment Amount") otherwise payable through May 31,
1999, (2) a payment equal to the Payment Amount for a period of 12
months, and (3) payment of all earned and accrued vacation pay (not
to exceed $85,000, which is the earned and accrued vacation pay as
of February 28, 1999);
14. Paragraph 6(b)(C) of the Services Agreement is amended in its entirety, to
read as follows:
(C) If the termination is pursuant to paragraph 6(a)(iii) above,
Meridian shall be entitled to receive (1) a payment equal to the
Payment
<PAGE>
Amount for a period of eight months, (2) a payment equal to the
Payment Amount for a period of four months (beginning immediately
after the completion of the payment period described in clause (1)
above), less Mitigation (as hereinafter defined), and (3) payment of
all earned and accrued vacation pay (not to exceed $85,000);
15. Each of clauses (D) and (F) of the third sentence of paragraph 6(b) of the
Services Agreement is amended by substituting the following for
sub-clauses (1) and (2) thereof, respectively:
(1) a payment equal to the Payment Amount for a period of eight
months, (2) a payment equal to the Payment Amount for a period of
four months (beginning immediately after the completion of the
payment period described in clause (1) above), less Mitigation (as
hereinafter defined), and (3) payment of all earned and accrued
vacation pay (not to exceed $85,000).
16. Paragraph 6(b)(E) of the Services Agreement is amended in its entirety, to
read as follows:
(E) If the termination is pursuant to paragraph 6(a)(iv), Meridian
shall be entitled to receive (1) a payment equal to the Payment
Amount for a period of 12 months, and (2) payment of all earned and
accrued vacation pay (not to exceed $85,000); and
17. Paragraph 6(c) of the Services Agreement is amended by substituting "four"
for "six", as the latter appears therein, and by substituting "ninth" for
"seventh", as the latter appears therein.
18. Paragraph 6(d) of the Services Agreement is amended by substituting "June
30, 1999" for "July 31, 1999", as the latter appears therein.
19. Paragraph 6 of the Services Agreement is amended by redesignating
sub-paragraph (d) as sub-paragraph (e), and by inserting a new
sub-paragraph (d), to read as follows:
(d) (i) If Meridian or Shull is terminated by the Company prior to
May 31, 1999, and such termination is for a reason not specified in
paragraph 6(a), Meridian shall be entitled to receive (1) a payment
equal to the Payment Amount otherwise payable through May 31, 1999,
(2) a payment equal to the Payment Amount for a period of eight
months, (3) a payment equal to the Payment Amount for a period of
four months (beginning immediately after the completion of the
payment period described in clause (1) above), less Mitigation, and
(4) payment of all earned and accrued vacation pay (not to exceed
$85,000), it being expressly understood that in such case, paragraph
6(b)(B) shall not apply.
<PAGE>
(ii) In consideration of Meridian's efforts during the
transition to successor Company management, including such efforts
as are contemplated by paragraph 2(e), Meridian shall receive an
unconditional severance payment of $105,000, payable during the
first week of February of 1999, and an unconditional severance
payment of $120,000 per month, payable in advance during the first
week of March, April and May of 1999. The severance amounts payable
under this paragraph 6(d)(ii) shall be in addition to, and not in
lieu of, any amounts payable under any other provision of this
Agreement and in addition to any amounts otherwise payable under any
plan, policy, program, agreement, arrangement or other commitment of
the Company, other than any severance plan or policy. For purposes
of calculating the amounts payable under paragraphs 6(b), 6(c) and
(6)(d)(i), each reference to the Base Fee shall continue to be
$95,000.
20. Paragraph 6 of Services Agreement is amended by adding a new sub-paragraph
(f) to the end thereof, to read as follows:
(f) For purposes of this paragraph 6, the Debtor shall be deemed to
be in "material breach" of this Agreement under the following
circumstances:
(A) the reduction of Shull's title, authority, duties or
responsibilities, or the assignment to the President/CEO of duties
inconsistent with Shull's positions with the Company as stated in
paragraph 2 hereof, other than as contemplated by paragraph
2(e)(ii);
(B) any other breach of paragraph 2;
(C) a reduction in the compensation payable under paragraph
4;
(D) the Company's failure to pay the President/CEO or
Meridian any amounts otherwise due hereunder or under any plan,
policy, program, agreement, arrangement or other commitment of the
Company in which he participates;
(E) the Board of Directors approval of or consent to any
action that Shull reasonably believes in good faith would have a
materially adverse effect on the existing fiscal year 1999 Business
Plan initiatives and financial goals taken as a whole;
(F) any failure of the Company to procure from any success
an agreement in form and substance reasonably satisfactory to
Meridian and Shull to perform this Agreement, or any other breach of
paragraph 12(b);
(G) any breach of paragraph l2(c); or
<PAGE>
(H) any other material breach by the Company of this
Agreement.
21. Paragraph 6 of the Services Agreement is amended by adding a new
sub-paragraph (g) to the end thereof, to read as follows:
(g) In the event Meridian and Shull are terminated under 6(a)(i) or
Meridian or Shull terminate their services in violation of the terms
hereof, the amount of the Base Fee and payment under 6(d)(ii) for
such month, in the aggregate, that Meridian and Shull shall be
permitted to retain shall be equal to (i) the aggregate amount of
the Base Fee and the amount of the payment under paragraph 6(d)(ii)
for the month, multiplied by (ii) a fraction (A) the numerator of
which is the number of days in such month through the effective date
of termination and (B) the denominator of which is the number of
days in such month, and the balance shall be refunded to the Company
within ten business days.
22. Paragraph 6 of the Services Agreement is amended by adding a new
sub-paragraph (h) to the end thereof, to read as follows:
(h) Notwithstanding any other provision hereof, if Shull's services
to the Company are terminated before May 31, 1999, and the
termination is not under paragraph 6(a)(i) or 6(a)(ii), then the
Company may elect to have Meridian continue to provide the services
of Edward Lambert ("Lambert") as Chief Financial Officer, if he is
then serving in such capacity, through May 31, 1999 or such earlier
date as the Company may elect on at least five business days'
notice, or such other date as may otherwise apply under paragraph
6(a) substituting "Lambert" for "Shull" as the latter appears
therein. If the Company makes such election:
(A) two months' of the Payment Amount otherwise to be paid
upon the termination of Shull's services shall not be paid upon such
cessation, but rather shall be paid upon the cessation of Lambert's
services if such cessation is for any reason other than as provided
in paragraph 6(a)(i) (and shall not be paid if such termination is
under paragraph 6(a)(i));
(B) in no event shall Lambert's acts or omissions constitute
a basis for termination under paragraph 6(a)(i) if Lambert in good
faith believes, after consulting with the Company's independent
accountants upon notice to the Company, that such acts or omissions
are appropriate under applicable accounting or related rules;
(C) and if Lambert ceases to provide services and paragraph
6(a)(ii) applies with respect to such cessation, any amounts arising
in connection with Shull's cessation of services which are then not
yet paid
<PAGE>
under paragraph 6(c) because they constitute Mitigation shall
thereupon immediately be paid in full; and
(D) all other provisions of this Agreement (including
without limitation, the provisions of paragraphs 6(b), 6(c) and
6(d)) shall apply with respect to the cessation of Shull's services
without regard to this paragraph 6(h), it being expressly agreed and
understood that under no circumstances whatsoever shall there be any
adverse effects on Meridian or Shull (other than as expressly set
forth under paragraph 6(h)(A)) that may arise by virtue of or
otherwise in connection with Lambert's continuing performance of
services, the manner in which Lambert performs continuing services
or any failure by Lambert to perform continuing services.
23. Paragraph 11 of the Services Agreement is amended in its entirety, to read
as follows:
11. MODIFICATION. This Agreement may only be modified in
writing by mutual agreement of the parties hereto.
24. Paragraph 12 of the Services Agreement is amended in its entirety, to read
as follows:
12. ASSIGNMENT; BARNEYS NEW YORK, INC. (a) This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the
Company, Meridian and Shull and their respective heirs, legal
representatives, successors and permitted assigns. Subject to
paragraph 12(b), this Agreement is a personal service contract and
may not be assigned by either party (except, in the case of Shull,
by will or by operation of laws of intestate succession).
(b) In the event of any sale, transfer or other disposition
of all or substantially all of the Company's assets or business,
whether by merger, consolidation or otherwise (including without
limitation any reorganization or other event or condition pursuant
to which one or more companies, whether newly formed or otherwise,
become direct or indirect parents of the Company), whether newly
formed or otherwise, the Company's obligations hereunder shall be
assigned to, and assumed by, the successor or successors of the
Company; provided that the Company shall, notwithstanding such
assignment and assumption, remain liable and otherwise responsible
for the fulfillment of the terms and conditions of this Agreement.
(c) As soon as practicable (but in no event more than 10
days) after January 28, 1999, the Company (exclusive, for purposes
of this
<PAGE>
paragraph 12(c), of BNY) shall procure BNY's execution of this
Agreement as a party hereto.
25. Paragraph 15 of the Services Agreement is amended to add the following to
the end thereof:
The Company shall pay all reasonable legal fees and expenses
incurred by Meridian or Shull in connection with the negotiation and
execution of the January 28, 1999 amendment of this Agreement
promptly, but in no event more than 10 business days, following
receipt of invoices therefor.
Except as amended hereby, the Services Agreement is hereby ratified and
confirmed in all respects and shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
BARNEY'S, INC.
By: /s/ Marc H. Perlowitz
-------------------------------------
Name: Marc H. Perlowitz
--------------------------------
Title: Executive VP
-------------------------------
BARNEYS NEW YORK, INC.
By: /s/ Marc H. Perlowitz
-------------------------------------
Name: Marc H. Perlowitz
--------------------------------
Title: Executive VP
-------------------------------
MERIDIAN VENTURES, INC.
By: /s/ Thomas C. Shull
------------------------------------
Thomas C. Shull, President
/s/ Thomas C. Shull
----------------------------------------
Thomas C. Shull, as an individual
<PAGE>
Exhibit 10.27
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of January 28, 1999, by and
among Barneys New York, Inc., a Delaware corporation ("Company"), and the
holders listed on the signature pages hereof (collectively, the "Holders").
W I T N E S S E T H :
WHEREAS, certain affiliates of Company are currently debtors in
certain cases under chapter 11 of Title 11 of the U.S. Code in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"),
which cases are being jointly administered as IN RE BARNEY'S INC., ET AL., Case
Nos. 96-B-40113 through 40133 (JLG); and
WHEREAS, pursuant to the Second Amended Joint Plan of Reorganization
dated November 13, 1998, as amended, and filed in the Bankruptcy Court (the
"Plan"), at the Effective Date (as defined in the Plan), each of the Holders
will receive shares of Common Stock, par value $.01 per share, of Company (the
"Shares") and/or options or warrants to acquire Shares; and
WHEREAS, the Plan provides for the entry by Company and the
Holders into this Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS. Unless otherwise defined herein, terms defined in
the Plan are used herein as therein defined, and the following
shall have (unless otherwise provided elsewhere in this
Registration Rights Agreement) the following respective
meanings (such meanings being equally applicable to both the
singular and plural form of the terms defined):
"Action" shall have the meaning set forth in Section 6(e).
"Affiliate", with respect to a Person, means any other Person which
directly or indirectly, through one or more intermediaries controls, is
controlled by, or is under common control with, such Person.
"Agreement" shall mean this Registration Rights Agreement, including
all amendments, modifications and supplements and any exhibits or schedules to
any of the foregoing, and shall refer to the Agreement as the same may be in
effect at the time such reference becomes operative.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Demanding Security Holders" shall have the meaning set forth in
Section 3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Holder" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Indemnified Party" shall have the meaning set forth in Section
6(e).
"Indemnifying Party" shall have the meaning set forth in Section
6(e).
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Person" shall mean any individual, partnership (general, limited or
limited liability), corporation, limited liability company, trust,
unincorporated organization or other legal entity, and a government or agency or
political subsidivision thereof.
"Registrable Securities" shall mean Shares beneficially owned by the
Holders at the Effective Date or at any time thereafter, including without
limitation, Shares resulting from the exercise of any options or warrants held
by a Holder. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such Registration Statement, (ii) such securities shall have been sold
pursuant to Rule 144 under the Securities Act, or (iii) such securities shall
have ceased to be outstanding. For purposes of this Agreement, references to
"beneficially owned" or "beneficial ownership" mean such ownership within the
meaning of Rule 13d-3 under the Exchange Act.
"Registration Statement" shall mean a registration statement of
Company as it may be amended or supplemented from time to time, including
without limitation, all exhibits, financial statements, schedules and
attachments thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Series 1 Holders" shall mean those Holders listed as Series 1
Holders on the signature pages hereto.
<PAGE>
"Series 2 Holders" shall mean those Holders listed as Series 2
Holders on the signature pages hereto.
"Short Form Registration Statement" shall have the meaning set forth
in Section 2.
2. REQUIRED REGISTRATION. After receipt of a written request from
one or more Series 1 Holders (as listed on the signature page hereof) or any
Affiliate thereof requesting that Company effect the registration under the
Securities Act of Registrable Securities representing at least an aggregate of
10% of the total of all Registrable Securities then held by such Series 1 Holder
and its Affiliates, and specifying the intended method or methods of disposition
thereof, Company shall promptly, but in no event later than fifteen (15)
Business Days following receipt of such request, notify all Holders in writing
of the receipt of such request and each such Holder, in lieu of exercising its
rights under Section 3, may elect (by written notice sent to Company within ten
(10) Business Days from the date of such Holder's receipt of the aforementioned
Company's notice) to have Registrable Securities belonging to such Holder
included in such registration thereof pursuant to this Section 2 (subject to the
penultimate sentence of Section 3). Thereupon Company shall, as expeditiously as
is possible, use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which Company has been so requested
to register by such Holders for sale, all to the extent required to permit the
disposition (in accordance with the intended method or methods thereof, as
aforesaid) of the Registrable Securities so registered; provided, however, that
Company shall not be required to effect more than two (2) registrations of any
Registrable Securities for each Series 1 Holder pursuant to this Section 2,
unless Company shall be eligible to file a Registration Statement on Form S-3
(or other comparable short form) under the Securities Act (a "Short Form
Registration Statement"), in which event there shall be no limit on the number
of such registrations pursuant to this Section 2.
3. INCIDENTAL REGISTRATION. If Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders, including
without limitation, the Series 1 Holders, (collectively, the "Demanding Security
Holders") a Registration Statement under the Securities Act on any form (other
than a Registration Statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type referred to in Rule 145
under the Securities Act or to employees of Company pursuant to any employee
benefit plan, respectively) for the general registration of Shares or other
equity securities of Company, or securities convertible into or exchangeable or
exercisable for Shares or such other equity securities, it will give written
notice of such proposed filing to all Holders (other than those Holders, if any,
who are Demanding Security Holders) at least thirty (30) days before the initial
filing with the Commission of such Registration Statement, which notice shall
set forth the number and type of securities proposed to be offered and a
description of the intended method of disposition of such securities. The notice
shall offer to include in such filing such number of Registrable Securities as
such Holders may request.
<PAGE>
Each Holder desiring to have Registrable Securities registered under
this Section 3 shall advise Company in writing within ten (10) Business Days
after the date of receipt of such offer from Company, setting forth the amount
of such Registrable Securities for which registration is requested. Company
shall thereupon include in such filing the number of shares of Registrable
Securities for which registration is so requested, subject to the next sentence,
and shall use its best efforts to effect registration under the Securities Act
of such Registrable Securities. If the managing underwriter of a proposed public
offering shall advise Company in writing that, in its opinion, the distribution
of the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by Company or such Demanding
Security Holder would materially and adversely affect the distribution of such
securities by Company or such Demanding Security Holder, then each Holder
participating in such registration shall reduce the amount of securities it
intended to distribute through such offering, pro rata on the basis of the
number of shares of Registrable Securities to be offered for the account of such
Holder. Except as otherwise provided in Section 5, all expenses of such
registration shall be borne by Company.
4. REGISTRATION PROCEDURES. If Company is required by the
provisions of Section 2 or 3 to use its best efforts to effect the registration
of any Registrable Securities under the Securities Act, Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof, but not
to exceed one hundred eighty (180) days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of one hundred eighty (180) days;
(c) furnish to any Holders participating in such
registration such number of copies of the Registration Statement as initially
filed with the Commission and of each pre-effective and post-effective amendment
or supplement thereto (in each case including at least one copy of all exhibits
thereto and all documents incorporated by reference therein) and of the
prospectus included therein, including the preliminary prospectus and any
summary prospectus, and any other prospectus filed under Rule 424 under the
Securities Act in connection with the disposition of any Registrable Securities
covered by such Registration Statement, and such other documents as such Holders
may reasonably request;
(d) use its best efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such other
securities or blue sky
<PAGE>
laws of such jurisdictions within the United States and Puerto Rico as each
Holder owning such Registrable Securities shall request (PROVIDED, HOWEVER, that
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified or
to file any general consent to service of process to effect such registration),
and do such other reasonable acts and things as may be required of it to enable
such Holder to consummate the disposition in such jurisdiction of the
Registrable Securities covered by such Registration Statement;
(e) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to Section 2, on the date that
such shares of Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date that the Registration Statement with
respect to such Registrable Securities becomes effective, (1) an opinion, dated
such date, of the independent counsel representing Company for the purposes of
such registration, addressed to the underwriters, if any, and if such
Registrable Securities are not being sold through underwriters, then to the
Holders making such request, in customary form and covering matters of the type
customarily covered in such legal opinions; and (2) a comfort letter dated such
date, from the independent certified public accountants who have issued an audit
report on Company's financial statements included or incorporated by reference
in the Registration Statement, addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through underwriters, then to the
Holder making such request and, if such accountants refuse to deliver such
letter to such Holder, then to Company in a customary form and covering matters
of the type customarily covered by such comfort letters and as the underwriters
or such Holder shall reasonably request. The opinion of counsel shall
additionally cover such other legal matters with respect to the registration in
respect of which such opinion is being given as such Holders may reasonably
request. Such letter from the independent certified public accountants shall
additionally cover such other financial matters (including information as to the
period ending not more than five (5) Business Days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as the Holders of a majority of the Registrable Securities being so
registered may reasonably request;
(f) enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities;
(g) use its commercially reasonable efforts to cause its
senior management to attend and make presentations regarding Company at all
meetings with prospective purchasers of Registrable Securities that are arranged
by any underwriter (provided that senior management has been given two (2) weeks
advance notice of the first of such meetings) in connection with any widely
distributed, underwritten offering of such Registrable Securities;
(h) use its best efforts to cause the Registrable Securities
covered by a Registration Statement to be listed on each national securities
exchange or the NASDAQ National Market, as applicable, on which Company's equity
securities are
<PAGE>
then listed at the time of the sale of such Registrable Securities pursuant to
such Registration Statement;
(i) notify the Holders participating in such registration,
at any time when a prospectus is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, such prospectus (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and as promptly as practicable prepare and furnish to the Holders
such number of copies of a supplement to or an amendment of such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; and
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than eighteen
(18) months after the effective date of the Registration Statement, an earnings
statement covering the period of at least twelve (12) months beginning with the
first full month after the effective date of such Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
It shall be a condition precedent to the obligation of Company to
take any action pursuant to this Agreement in respect of the Registrable
Securities which are to be registered at the request of any Holder that such
Holder shall furnish to Company such information regarding the Registrable
Securities held by such Holder and the intended method of disposition thereof as
Company shall reasonably request and as shall be required in connection with the
action taken by Company.
5. EXPENSES. All expenses incurred in complying with this
Agreement, including, without limitation, all Commission or stock exchange
registration and filing fees (including all expenses incident to filing with the
NASD), stock exchange listing fees, printing expenses, fees and disbursements of
counsel for Company, the reasonable fees and expenses of one counsel for the
selling Series 1 Holders (selected by those holding a majority of the Shares
being registered), fees of the Company's independent public accountants and the
expenses of any special audits incident to or required by any such registration,
and the expenses of complying with the securities or blue sky laws of any
jurisdiction pursuant to Section 4(d), shall be paid by Company, except that:
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more than one
hundred eighty (180) days after the effective date of such Registration
Statement because any Holder has not effected the disposition of the securities
requested to be registered shall be paid by such Holder; and
<PAGE>
(b) Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel for any
underwriter in respect of the Registrable Securities sold by a Holder owning
such Registrable Securities.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, Company shall
indemnify and hold harmless the Holder owning such Registrable Securities, such
Holder's Affiliates, directors, officers and agents, and each other Person
(including each underwriter) who participated in the offering of such
Registrable Securities and each other Person, if any, who controls such Holder
or such participating person within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Holder or any such Affiliate, director, officer, agent or participating person
or controlling person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in any Registration Statement under which such
Registrable Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse such Holder or such Affiliate, director,
officer, agent or participating person or controlling person for any legal or
any other expenses reasonably incurred by such Holder or such Affiliate,
director, officer, agent or participating person or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any actual or alleged untrue statement or actual or
alleged omission made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such Holder specifically for use
therein or (in the case of any registration pursuant to Section 2) so furnished
for such purposes by any underwriter. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such Holder
or such Affiliate, director, officer, agent or participating person or
controlling person, and shall survive the transfer of such Registrable
Securities by such Holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify
and hold harmless Company, its directors and officers and each other person, if
any, who controls Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which Company or
any such director or officer or any such person may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any Registration
<PAGE>
Statement under which Registrable Securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if in any such case
such statement or alleged statement or omission or alleged omission was made in
reliance on and in conformity with information in writing provided to Company by
such Holder specifically for use in such Registration Statement, preliminary
prospectus or final prospectus or any amendment or supplement thereto.
Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, no
Holder shall be required to indemnify any person pursuant to this Section 6 or
to contribute pursuant to paragraph (c) below in an amount in excess of the
amount of the aggregate net proceeds received by such Holder in connection with
any such registration under the Securities Act.
(c) If the indemnification provided for in this Section 6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 6, the
indemnifying party shall indemnify the indemnified party to the full extent
provided in Section 6(a) or 6(b) hereof, as applicable, without regard to the
relative fault of the indemnifying party or the indemnified party or any other
equitable consideration provided for in this Section 6(c).
<PAGE>
(d) The indemnification and contribution required by this
Section 6 shall be made by periodic payment of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expenses are incurred.
(e) The party seeking indemnification pursuant to this
Section 6 is referred to as the "Indemnified Party" and the party from whom
indemnification is sought under this Section 6 is referred to as the
"Indemnifying Party." The Indemnified Party shall give prompt written notice to
the Indemnifying Party of the commencement of any action or proceeding involving
a matter referred to in Section 6(a) or 6(b) (an "Action"), if an
indemnification claim in respect thereof is to be made against the Indemnifying
Party; provided, however, that the failure to give such prompt notice shall not
relieve the Indemnifying Party of its indemnity obligations hereunder with
respect to such Action, except to the extent that the Indemnifying Party is
materially prejudiced by such failure. The Indemnifying Party shall be entitled
to participate in and to assume the defense of such Action, with counsel
selected by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party; provided, however, that (i) the Indemnifying Party, within a
reasonable period of time after the giving of notice of such indemnification
claim by the Indemnified Party, (x) notifies the Indemnified Party of its
intention to assume such defense and (y) appoints such counsel, and (ii) the
Indemnifying Party may not, without the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
Action. If the Indemnifying Party so assumes the defense of any such Action, (A)
the Indemnifying Party shall pay all costs associated with, any damages awarded
in, and all expenses arising from the defense or settlement of such Action, and
(B) the Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement of such
Action, but the fees and expenses of such counsel shall be at the expense of the
Indemnified Party unless (x) the Indemnifying Party has agreed to pay such fees
and expenses, (y) the Indemnified Party has been advised by its counsel that
there are likely to be one or more defenses available to it which are different
from or additional to those available to the Indemnifying Party, and in any such
case that portion of the reasonable fees and expenses of such separate counsel
that are reasonably related to matters covered by the indemnity provided in this
Section 6 shall be paid by the Indemnifying Party, or (z) such counsel has been
selected by the Indemnified Party solely due to a conflict of interest which
exists between counsel selected by the Indemnifying Party and the Indemnified
Party. If the Indemnifying Party does not so assume the defense of such Action,
the Indemnified Party shall be entitled to exercise control of the defense,
compromise or settlement of such Action. No Indemnified Party shall settle or
compromise any Action for which it is entitled to indemnification under this
Agreement without the prior written consent of the Indemnifying Party (which
consent may not be unreasonably withheld or delayed). The other party shall
cooperate with the party assuming the defense, compromise or settlement of any
Action in accordance with this Agreement in any manner that such party
reasonably may request and the party assuming the defense, compromise or
settlement of any Action shall keep the other party fully informed in the
defense of such Action.
<PAGE>
7. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding
the other provisions of this Agreement:
(a) Company shall not be obligated to register the
Registrable Securities of any Holder if, in the opinion of counsel to Company
reasonably satisfactory to the Holder and its counsel (or, if the Holder has
engaged an investment banking firm, to such investment banking firm and its
counsel), the sale or other disposition of such Holder's Registrable Securities,
in the manner proposed by such Holder (or by such investment banking firm), may
be effected without registering such Registrable Securities under the Securities
Act; and
(b) Company shall not be obligated to register the
Registrable Securities of any Holder pursuant to Section 2 if Company has had a
Registration Statement, under which such Holder had a right to have its
Registrable Securities included pursuant to Section 2 or 3, declared effective
within six months prior to the date of the request pursuant to Section 2.
(c) Company shall have the right to delay the filing or
effectiveness of a Registration Statement required pursuant to Section 2 hereof
during one or more periods aggregating not more than sixty (60) days in any
twelve-month period in the event that (i) Company would, in accordance with the
advice of its counsel, be required to disclose in the prospectus information not
otherwise then required by law to be publicly disclosed and (ii) in the judgment
of Company's Board of Directors, there is a reasonable likelihood that such
disclosure, or any other action to be taken in connection with the prospectus,
would materially and adversely affect any existing or prospective material
business situation, transaction or negotiation or otherwise materially and
adversely affect Company.
8. UNDERWRITERS. (a) The managing underwriter or underwriters for
any offering of Registrable Securities to be registered pursuant to Section 2
shall be selected by the Series 1 Holders holding a majority of the Registrable
Securities being so registered and shall be reasonably acceptable to Company.
(b) If requested by the underwriters for any underwritten
registration pursuant to Section 2, Company shall enter into an underwriting
agreement with such underwriters for such offering, such agreement to be
reasonably satisfactory in form and substance to Company, the Series 1 Holders
participating in such registration and the underwriters and to contain such
representations and warranties by Company and such other terms as are
customarily contained in agreements of that type, including without limitation,
covenants to keep the Registration Statement current, indemnities and
contribution to the effect and to the extent provided in Section 6 hereof and
the provision of opinions of counsel and accountants' letters to the effect and
to the extent provided in Section 4(e) hereof. The Holders shall cooperate with
Company in the negotiation of the underwriting agreement and shall be parties to
such underwriting agreement.
(c) In connection with each registration pursuant to
Section 3, if Company or the Series 1 Holders, as the case may be, propose to
distribute any of their
<PAGE>
securities through one or more underwriters, Company or the Series 1 Holders, as
the case may be, shall, subject to the second paragraph of Section 3, arrange
for such underwriters to include all the Registrable Securities proposed to be
offered and sold by the Series 2 Holders with the other securities of the
Company or the Series 1 Holders to be distributed by such underwriters. The
Series 2 Holders shall be parties to the underwriting agreement between the
Company or the Series 1 Holders and such underwriters; provided, however, that
the Series 2 Holders may designate a minimum offering price and maximum
underwriting or selling discounts and commissions at which they have agreed to
sell their Registrable Securities.
(d) In each underwriting agreement referred to in Section
8(b) or 8(c) hereof, the Series 2 Holders, at their option, may require that any
or all of the representations and warranties by, and the other agreements on the
part of, Company or the Series 1 Holders, as the case may be, to and for the
benefit of such underwriters shall also be made to and for the benefit of the
Series 2 Holders, and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement shall be
conditions precedent to the obligations of the Series 2 Holders. The Series 2
Holders shall not be required to make any representations or warranties to or
agreements with Company, the Series 1 Holders or the underwriters other than
representations, warranties or agreements regarding the Series 2 Holders, their
Registrable Securities and their intended method or methods or distribution and
any other representation required by law, or to furnish any indemnity or
contribution to any Person which is broader than the indemnity and contribution
furnished by the Series 2 Holders in Section 6.
9. RESTRICTIONS ON SALE AFTER PUBLIC OFFERING. Except for
transfers made in transactions exempt from the registration requirements under
the Securities Act (other than Rule 144 thereunder), Company and each Holder
hereby agree not to offer, sell, contract to sell or otherwise dispose of any
Shares or other equity securities of Company, or securities convertible into or
exchangeable or exercisable for Shares or such other equity securities,
including without limitation, any sale pursuant to a brokerage transaction under
Rule 144 under the Securities Act, within one hundred eighty (180) days after
the date of any final prospectus relating to the public offering of Shares, if
underwritten, whether by Company or by any Holders, except pursuant to such
prospectus or with the written consent of the managing underwriter or
underwriters for such offering.
10. RULE 144. So long as Company has securities registered under
the Exchange Act, it shall take all actions reasonably necessary to enable the
Holders to sell Registrable Securities without registration under the Securities
Act within the limitations of the exemptions provided by (i) Rule 144 under the
Securities Act or (ii) any similar rule or regulation hereafter adopted by the
Commission, including, without limiting the generality of the foregoing, filing
on a timely basis all reports required to be filed by the Exchange Act. Upon
request of any Holder, Company shall deliver to such Holder a written statement
as to whether it has complied with such requirements.
<PAGE>
11. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders in this Agreement. Company has not
previously entered into any agreement with respect to any of its securities
granting any registration rights to any person.
(b) REMEDIES. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departure from the provisions hereof
may not be given unless Company has obtained the written consent of each initial
Series 1 Holder and initial Series 2 Holder affected thereby. To the extent
permitted by law, no failure to exercise, and no delay on the part of any Holder
in exercising, any power or right in connection with this Agreement, or
available at law or in equity, shall operate as a waiver thereof, and no single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, shall preclude any other
or further exercise thereof or the exercise of any other rights or powers. No
course of dealing among any Holder, Company or any other Person shall operate as
a waiver of any right of any Holder. Any written modification or waiver of any
provision of this Agreement shall be effective only in the specific instance and
for the purpose for which it is given.
(d) NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Agreement shall be deemed served and
received: (i) when delivered by hand to the recipient named below (or when
delivery is refused); (ii) on the date of delivery (or when delivery is refused)
as confirmed by the agency or firm making delivery (or attempting to make
delivery when delivery is refused) when the notice is delivered by private
overnight courier service, such as Federal Express; (iii) on the date delivered
(or the date delivery is refused) if sent via the United States Postal Service
when sent by either registered or certified mail, postage and postal charges
prepaid, return receipt requested; or (iv) if on a business day, on the date
sent via telecopy, provided such delivery is confirmed (via a fax confirmation
report). Notices shall be addressed by name and address to the recipient, as
follows:
(i) If to any Holder at its last known address in the United
States appearing on the books of Company maintained for such purpose.
<PAGE>
(ii) If to Company at
Barneys New York, Inc.
575 Fifth Avenue
New York, New York 10017
Attention: Marc H. Perlowitz, Esq.
Telecopier: 212-450-8480
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or five (5) Business Days after the same shall have been deposited in
the United States mail.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties hereto including any Person to whom Registrable Securities are
transferred.
(f) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW; JURISDICTION; JURY WAIVER. This Agreement
shall be governed by, construed and enforced in accordance with the laws of the
State of New York without giving effect to the conflict of laws provisions
thereof. Each of the parties hereby submits to personal jurisdiction and waives
any objection as to venue in the County of New York, State of New York. Service
of process on the parties in any action arising out of or relating to this
Agreement shall be effective if mailed to the parties in accordance with Section
11(d) hereof. The parties hereto waive all right to trial by jury in any action
or proceeding to enforce or defend any rights hereunder.
(h) SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
(i) ENTIRE AGREEMENT. This Agreement represents the complete
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof.
<PAGE>
(j) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Company and Holders have executed this Agreement
as of the date first above written.
BARNEYS NEW YORK, INC.
By: /s/ Edward Lambert
-----------------------------------------
Edward Lambert
Executive Vice President and Chief
Financial Officer
HOLDERS:
SERIES 1 HOLDERS:
BAY HARBOUR MANAGEMENT L.C.,
for its Managed Accounts
By: /s/ Douglas P. Teitelbaum
-----------------------------------------
Name: Douglas P. Teitelbaum
Title: Principal & Portfolio Manager
WHIPPOORWILL/BARNEYS
OBLIGATIONS TRUST - 1996
By: WHIPPOORWILL ASSOCIATES, INC., as
agent and/or general partner for its
discretionary accounts and as
investment advisor to Whippoorwill/
Barney's Obligations Trust - 1996
By: /s/ David Strumwasser
-----------------------------------------
Name: David Strumwasser
Title: Managing Director
SERIES 2 HOLDERS:
ISETAN OF AMERICA INC.
By: /s/ Toshiaki Nakagawa
-----------------------------------------
Name: Toshiaki Nakagawa
Title: President
<PAGE>
Exhibit 11
Earnings per common share is computed as net income (loss) divided by the
weighted average number of common shares outstanding. Earnings per common share
has not been included herein as the computation would not provide meaningful
results as the capital structure of Barneys New York, Inc. is not comparable to
that of Barney's, Inc. prior to the effectiveness of its plan of
reorganization.
<PAGE>
EXHIBIT 21
<TABLE>
<CAPTION>
Name State of Incorporation
- ---- ----------------------
<S> <C>
Barney's, Inc. New York
Barneys America, Inc.(1) Delaware
Barneys America (Chicago) Lease Corp.(2) Delaware
BNY Licensing Corp.(1) Delaware
PFP Fashions Inc.(1) New York
Barneys (CA) Lease Corp.(1) Delaware
Barneys (NY) Lease Corp.(1) Delaware
Basco All-American Sportswear Corp.(1) New York
</TABLE>
- ----------
(1) Subsidiary of Barney's, Inc.
(2) Subsidiary of Barneys America, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Barneys New York, Inc. and subsidiaries contained in the
accompanying Registration Statement on Form 10 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> JAN-30-1999 AUG-01-1998 AUG-02-1997
<PERIOD-END> JAN-30-1999 AUG-01-1998 AUG-02-1997
<CASH> 11,906 3,478 5,442
<SECURITIES> 0 0 0
<RECEIVABLES> 27,841 22,107 16,583
<ALLOWANCES> 0 0 0
<INVENTORY> 65,551 68,983 61,234
<CURRENT-ASSETS> 111,645 101,070 95,232
<PP&E> 51,356 152,865 151,425
<DEPRECIATION> 0 (38,226) (32,274)
<TOTAL-ASSETS> 343,954 217,043 216,246
<CURRENT-LIABILITIES> 70,581 133,319 114,675
<BONDS> 118,533 0 0
500 0 0
0 32,770 32,770
<COMMON> 125 171 171
<OTHER-SE> 154,215 (500,404) (480,451)
<TOTAL-LIABILITY-AND-EQUITY> 343,954 217,043 216,246
<SALES> 181,657 342,967 361,496
<TOTAL-REVENUES> 181,657 342,967 361,496
<CGS> 95,084 178,755 192,302
<TOTAL-COSTS> 171,356 334,906 376,526
<OTHER-EXPENSES> 14,128 15,970 72,207
<LOSS-PROVISION> 1,155 2,064 2,294
<INTEREST-EXPENSE> 4,758 11,967 7,674
<INCOME-PRETAX> (8,585) (19,876) (94,911)
<INCOME-TAX> 38 77 62
<INCOME-CONTINUING> 10,301 8,061 (15,030)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 302,285 0 0
<CHANGES> 0 0 0
<NET-INCOME> 293,662 (19,953) (94,973)
<EPS-BASIC> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
