================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for the Use of
[X] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
BARNEYS NEW YORK, INC.
--------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
BARNEYS NEW YORK, INC.
575 FIFTH AVENUE
NEW YORK, NY 10017
(212) 339-7300
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 27, 2000
- --------------------------------------------------------------------------------
TO THE STOCKHOLDERS OF
BARNEYS NEW YORK, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of Barneys
New York, Inc. (the "Company") will be held at the offices of the Company,
located at 1201 Valley Brook Avenue, Lyndhurst, New Jersey, on Thursday, June
27, 2000 at 10:00 A.M. local time (the "Annual Meeting"), for the following
purposes:
1. To elect ten members of the Board of Directors, each to serve until
the next Annual Meeting of stockholders and until their respective
successors are elected and qualified or until their earlier
resignation or removal.
2. To consider and act upon a proposal to approve the Company's
Employee Stock Option Plan.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending February 3,
2001.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The accompanying Proxy Statement contains further information with respect
to these matters.
Only stockholders of record on the books of the Company at the close of
business on May 15, 2000 will be entitled to notice of, and to vote at, the
meeting. The stock transfer books will not be closed. See the "Miscellaneous"
section of the accompanying Proxy Statement as to the place where the list of
stockholders may be examined.
Stockholders are cordially invited to attend the meeting in person. Whether
or not you plan to be present at the Annual Meeting, please sign, date and
return the enclosed Proxy to ensure that your shares are voted. A return
envelope, which requires no postage, if mailed in the United States, is enclosed
for your convenience.
By Order of the Board of Directors
/s/ Marc H. Perlowitz
Marc H. Perlowitz
Secretary
May 22, 2000
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PLEASE MAIL YOUR PROXY . . . NOW!
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IMPORTANT
WE HOPE THAT YOU CAN ATTEND THIS MEETING IN PERSON,
BUT IF YOU CANNOT DO SO PLEASE MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY.
---------------------------------------------------
<PAGE>
BARNEYS NEW YORK, INC.
575 FIFTH AVENUE
NEW YORK, NY 10017
(212) 339-7300
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 27, 2000
This statement is furnished to stockholders of Barneys New York, Inc. (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Stockholders of
the Company to be held at 1201 Valley Brook Avenue, Lyndhurst, NJ, 07071 on June
27, 2000, at 10:00 A.M. Stockholders of record at the close of business on May
15, 2000 will be entitled to notice of and to vote at such meeting and at all
adjournments thereof.
Stockholders who execute proxies may revoke them at any time before they are
voted by giving written notice of such revocation to the Secretary of the
Company. When a proxy is received, properly executed, prior to the meeting, the
shares represented thereby will be voted at the meeting in accordance with the
terms thereof.
The complete mailing address of the Company's principal executive offices is
575 Fifth Avenue, New York, New York 10017. The approximate date on which this
Proxy Statement and the form of Proxy were first sent or given to the
stockholders of the Company was May 22, 2000. The Annual Report of the Company
for the year ended January 29, 2000, including audited financial statements, has
been sent to each stockholder.
Votes will be tabulated by American Stock Transfer & Trust Company, the
transfer agent and registrar for the Common Stock, and the results will be
certified by one or more inspectors of election who are required to resolve
impartially any interpretive questions as to the conduct of the vote (the
"Inspectors of Election"). In tabulating votes, a record will be made of the
number of shares voted for each nominee or other matter voted upon, the number
of shares with respect to which authority to vote for that nominee or such other
matter has been withheld, and the number of shares held of record by
broker-dealers and present at the Annual Meeting but not voting.
All shares of Common Stock represented by properly executed proxies in the
accompanying form will be voted at the Annual Meeting in accordance with the
instructions indicated thereon unless such proxies previously have been revoked.
If any such proxies do not contain voting instructions, the shares of Common
Stock represented by such proxies will be voted FOR PROPOSALS 1, 2 AND 3 and in
accordance with Item 4. The Board of Directors is not aware of any business to
be brought before the Annual Meeting other than as indicated in the accompanying
notice, but it is intended that, as to any other such business properly coming
before the Annual Meeting, votes may be cast pursuant to such proxies in
accordance with the judgment of the persons acting thereunder.
1
<PAGE>
VOTING RIGHTS
On May 15, 2000, there were outstanding and entitled to vote 13,076,266
shares of Common Stock. Stockholders are entitled to one vote, exercisable in
person or by proxy, for each share of Common Stock held on the record date of
May 15, 2000. The holders of a majority of the outstanding shares of Common
Stock entitled to vote at the meeting shall constitute a quorum.
At the record date, more than 5% of the Company's outstanding voting
securities was beneficially owned by each of the persons named in the following
table, and, other than as to Isetan Company Limited, is based upon information
furnished to the Company by such entities in Schedules 13D.
<TABLE>
<CAPTION>
Name And Address Of Amount And Nature Of Percent
Title Of Class Beneficial Owner Beneficial Ownership Of Class
------------------ ---------------------------------------- -------------------------- --------
<S> <C> <C> <C>
Common Stock Whippoorwill Associates, Inc., 5,536,3911 40.2%
on behalf of its Discretionary Accounts
11 Martine Avenue
White Plains, New York 10606
Common Stock Bay Harbour Management L.C. 5,549,7012 40.3%
on behalf of its Managed Accounts
885 Third Avenue, 34th Floor
New York, New York 10022
Common Stock Isetan Company Limited 1,200,7853 9.0%
14-1 Shinjuku 3-Chome
Shinjuku-ku, Tokyo
Japan 160-0022
Common Stock Shelley F. Greenhaus 5,541,3914 40.2%
c/o Whippoorwill Associates, Inc.
Common Stock Allen I. Questrom 804,4585 5.8%
c/o Barneys New York, Inc.
575 Fifth Avenue
New York, NY 10017
Common Stock David A. Strumwasser 5,541,3914 40.2%
c/o Whippoorwill Associates, Inc.
Common Stock Douglas P. Teitelbaum 5,554,7016 40.3%
c/o Bay Harbour Management L.C.
885 Third Avenue, 34th Floor
New York, New York 10022
Common Stock Steven A. Van Dyke 5,554,7016 40.3%
c/o Bay Harbour Management L.C.
777 South Harbour Island Blvd.
Tampa, Florida 33602
Common Stock Shelby S. Werner 5,541,3914 40.2%
c/o Whippoorwill Associates, Inc.
</TABLE>
- ---------------------
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 294,230 shares of Common Stock issuable to Whippoorwill
pursuant to warrants originally issued by the Company in connection with the
reorganization of the Company's subsidiary, Barney's, Inc. (the
"Reorganization") ("Unsecured Creditor Warrants"). In addition, Bay Harbour and
Whippoorwill have entered into a stockholders' agreement (the "Stockholders
Agreement") with respect to their ownership in, and the voting of the capital
stock of, the Company. The number of shares indicated as being beneficially
owned by Whippoorwill (x) does not include the shares of Common Stock held by
Bay Harbour which are the subject of the stockholders Agreement and with respect
2
<PAGE>
to which Whippoorwill disclaims beneficial ownership and (y) includes 402,229
shares of Common Stock beneficially owned by Allen I. Questrom ("Mr. Questrom")
which are the subject of a stockholders agreement dated as of February 1, 2000,
pursuant to which Mr. Questrom agreed to vote such shares at the direction of
Whippoorwill.
2 All of such shares are owned directly by (i) BHB LLC, of which Bay Harbour is
the manager, or (ii) certain of Bay Harbour's managed accounts. Includes an
aggregate of 286,549 shares of Common Stock issuable to Bay Harbour pursuant to
its Unsecured Creditors Warrants. 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, the Company. The number of shares indicated
as being beneficially owned by Bay Harbour (x) does not include the shares of
Common Stock held by Whippoorwill which are the subject of the Stockholders
Agreement and with respect to which Bay Harbour disclaims beneficial ownership
and (y) includes 402,229 shares of Common Stock beneficially owned by Mr.
Questrom which are the subject of a stockholders agreement dated as of February
1, 2000, pursuant to which Mr. Questrom agreed to vote such shares at the
direction of Bay Harbour.
3 Includes 287,724 shares of Common Stock issuable to Isetan upon exercise of a
warrant issued to Isetan in connection with the Reorganization
4 Includes all shares of 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 5,000
shares of Common Stock 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 "Director Option Plan").
5 Represents the vested portion of shares of Common Stock issuable upon exercise
of an option granted to Mr. Questrom pursuant to his employment agreement.
6 Includes all shares of Common Stock beneficially owned by Bay Harbour. Messrs.
Teitelbaum and Van Dyke are principals of Bay Harbour. Also includes 5,000
shares of Common Stock issuable pursuant to options granted to each of Messrs.
Teitelbaum and Van Dyke under the Director 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 elections of
directors) with the Common Stock, together as a single class. The Barneys
Employees Stock Plan Trust (whose address is c/o Barneys New York, Inc., 575
Fifth Avenue, New York, New York 10017) owns 15,000 shares (75%) of Preferred
Stock, and Harry G. Wagner, an individual (whose address is 1609 New York
Avenue, Huntington Station, NY 11746), owns 5,000 shares (25%) of Preferred
Stock.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of May 15, 2000, the number of shares of
Common Stock of the Company beneficially owned by each director of the Company,
each nominee for director, each executive officer named in the Summary
Compensation Table below, and by all directors and executive officers of the
Company as a group. Except as otherwise indicated all shares are owned directly.
<TABLE>
<CAPTION>
Amount And Nature Of Percent
Name Or Group Beneficial Ownership(1) Of Class
- ------------- -------------------- --------
<S> <C> <C>
Shelley F. Greenhaus............................... 5,541,391 (2) 40.2%
John Halpern....................................... 5,000 (3),(4) *
Yasuo Okamoto...................................... 5,000 (3) *
Allen I. Questrom.................................. 804,458 (2) 5.8%
Carl Spielvogel.................................... 5,000 (3) *
David A. Strumwasser............................... 5,541,391 (2) 40.2%
Robert J. Tarr, Jr................................. 5,000 (3) *
Douglas A. Teitelbaum.............................. 5,554,701 (2) 40.3%
Steven A. VanDyke.................................. 5,554,701 (2) 40.3%
Shelby S. Werner................................... 5,541,391 (2) 40.2%
Judith Collinson................................... -- --
Thomas Kalenderian................................. -- --
Michael Celestino.................................. -- --
Marc H. Perlowitz.................................. -- --
Directors and Executives Officers as a group 11,131,092 76.7%
consisting of 14 persons...........................
</TABLE>
* Less than 1%.
- ------------------------------
1 The information as to securities owned by directors, nominees and executive
officers was furnished to the Company by such directors, nominees and executive
officers, including as to certain directors pursuant to Schedules 13D.
2 See footnotes under "Voting Rights" above.
3 Represents shares of Common Stock issuable upon exercise of an option granted
to non-employee directors under the Director Option Plan.
4 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 Common
Stock owned by BHB LLC.
4
<PAGE>
1. ELECTION OF DIRECTORS
Ten directors are to be elected at the Annual Meeting to hold office until
the Annual Meeting in 2002 and until their successors are elected and qualified.
The nominees recommended by the Board of Directors of the Company are listed
below. Should the nominees become unable to serve or otherwise be unavailable
for election, it is intended that persons named in the Proxy will vote for the
election of such persons as the Board of Directors may recommend in the place of
such nominee. The Board of Directors knows of no reason why the nominees might
be unable to serve or otherwise be unavailable for election. All of the nominees
are presently members of the Board of Directors.
Directors are elected by a plurality of the shares present in person or
represented by proxy at the Annual Meeting. Unless authority to vote for the
nominees for director is withheld, it is the intention of the persons named in
the accompanying Proxy to vote for the election of the nominees named below.
The following table sets forth certain information with respect to the
nominees.
<TABLE>
<CAPTION>
AGE (AT BECAME
NAME JANUARY 29, 2000) PRINCIPAL OCCUPATION DIRECTOR
---- ----------------- -------------------- --------
<S> <C> <C> <C>
Allen I. Questrom............... 59 Allen I. Questrom became Chairman of the Board, 1999
President and Chief Executive Officer of the Company
effective 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.
Shelley F. Greenhaus............ 46 Shelley F. Greenhaus is a principal of Whippoorwill 1999
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.
5
<PAGE>
John Halpern.................... 52 John Halpern is a partner of Halpern, Denny & 1999
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................... 51 Yasuo Okamoto is a member of the law firm of Hughes, 1999
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 Board of Directors of
Nikon Americas, Inc. From 1990 to 1997, Mr. Okamoto
was a Lecturer at the Boston University School of
Law. Mr. Okamoto was elected to the Board of
Directors as a designee of Isetan pursuant to an
agreement among Isetan, Bay Harbour, Whippoorwill
and the Company. See "Agreements with Executive
Officers and Related Transactions - Isetan."
Carl Spielvogel................. 70 Carl Spielvogel is the Chairman and Chief Executive 1999
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 company from 1979 to 1995. Earlier, he
was Vice Chairman of the Interpublic Group of
Companies, Inc. Mr. Spielvogel is a member of the
Boards of Directors of Hasbro, Inc., Data
Broadcasting Inc. and CBS Marketwatch.com, Inc.
David A. Strumwasser............ 47 David A. Strumwasser is a principal of Whippoorwill, 1999
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.
Robert J. Tarr, Jr.............. 56 Robert J. Tarr, Jr. is Chairman, Chief Executive 1999
Officer and President of HomeRuns.com, Inc., an
online home grocery delivery service company, and
has served in such capacities since February, 2000.
From January 1997 through February, 2000, he was 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
6
<PAGE>
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........... 34 Douglas P. Teitelbaum joined Bay Harbour Management 1999
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 Swifty Serv
Corp. and Planet Hollywood, Inc.
Steven A. Van Dyke.............. 40 Steven A. Van Dyke joined Bay Harbour (and its 1999
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 and Swifty
Serve Corp.
Shelby S. Werner................ 54 Shelby S. Werner is a principal of Whippoorwill, and 1999
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.
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.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual
compensation for services in all capacities to the Company for the twelve months
ended January 29, 2000, January 30, 1999 and January 30, 1998 of the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company.
ANNUAL COMPENSATION
-------------------
NAME AND TWELVE MONTHS OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION ENDED JANUARY SALARY BONUS COMPENSATION(1) COMPENSATION(2)
------------------ ------------- ------ ----- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Allen I. Questrom 2000(3)
Chairman, President and
Chief Executive Officer
Thomas C. Shull 2000 $ 180,000 $ 283,140 $ 0 $ 331,056
President and Chief 1999 485,000 115,000 0 0
Executive Officer4 1998 220,000 0 0 0
Thomas Kalenderian 2000 380,332 52,419 0 13,310
Executive Vice 1999 343,384 73,256 0 13,310
President-Men's 1998 295,547 72,373 0 13,260
Merchandising
Judith Collinson 2000 370,432 57,500 0 12,530
Executive Vice 1999 306,612 72,863 0 12,530
President - Women's 1998 215,204 39,758 0 11,147
Merchandising
Michael Celestino 2000 349,300 29,000 0 13,310
Executive Vice 1999 274,401 73,900 0 13,260
President -- Stores and 1998 277,319 79,449 0 12,510
Operations
Marc H. Perlowitz 2000 319,101 75,938 0 13,670
Executive Vice President 1999 286,381 87,663 0 13,260
General Counsel and 1998 236,600 63,955 0 12,510
Human Resources and
Secretary
Michael Tymash5 2000 387,811 88,438 0 17,925
Executive Vice 1999 307,411 87,114 0 13,310
President - Stores and 1998 264,057 73,258 0 12,448
Operations (through
January 18, 2000)
</TABLE>
1 Other Annual Compensation includes auto, auto insurance, parking and clothing
allowances.
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). For Thomas C. Shull, All Other
Compensation also includes his allocation of payments made to Meridian
subsequent to Mr. Shull's resignation as required by the terms of the Company's
agreement with Meridian Ventures, Inc. ("Meridian"). In the case of Michael
Tymash, All Other Compensation also includes severance paid through January 29,
2000.
8
<PAGE>
3 Allen Questrom became Chairman, President and Chief Executive Officer of the
Company as of May 5, 1999. Mr. Questrom did not receive any cash compensation
for the fiscal year ended January 29, 2000. For his compensation arrangement,
see "Agreements with Executive Officers".
4 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 and Related Transactions -
Meridian Agreement" below. Mr. Shull resigned as director, President and Chief
Executive Officer effective May 5, 1999
5 Michael Tymash resigned effective January 18, 2000.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information concerning options granted during
the twelve months ended January 29, 2000 to the named executive.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR ($/SHARE) DATE VALUE(1)
- ---- ------- ----------- --------- ---- --------
<S> <C> <C> <C> <C> <C>
Allen I. Questrom..... 802,464 100.00% $8.68 May 5, 2007 $2,736,402
1,518,512 100.00% $4.34 May 5, 2007 $9,171,812
</TABLE>
1 Computed by using standard option valuation under the Black-Scholes method,
assuming (i) exercise prices of $8.68 and $4.34, respectively, per share; (ii) a
market price of $8.68 per share (based on the price determined in connection
with the Company's Plan of Reorganization); (iii) no dividends; (iv) an expected
volatility of 0.00%; (v) a risk free rate of return of 6.34%; and (vi) an
exercise date for all options of May 5, 2007.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT FISCAL
SHARES AT FISCAL YEAR-END YEAR-END ($)/
ACQUIRED ON VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME EXERCISE # REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)1
- ---- ------------ ------------ --------------------- --------------------
<S> <C> <C> <C> <C>
Allen I. Questrom........ 0 0 200,616 (E)/ $314,967 (E)/
2,120,360 (U) $9,919,307 (U)
</TABLE>
1 Computed by multiplying the number, in each case, of shares which are
exercisable and unexercisable by the difference between the market price of
$10.25 at January 29, 2000, as determined by the Company's Board of Directors,
and the weighted average exercise price of the options.
9
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for establishing and reviewing the
salaries, compensation plans and other remuneration of the officers of the
Company. The principal objectives of the Company's executive compensation are to
(i) compensate competitively its executive officers, (ii) attract and retain
individuals important to the success of the Company, (iii) provide incentives
that will motivate those executives and (iv) reward the Company's executives for
achieving the business objectives of the Company over both the short and long
terms.
In each fiscal year, the Committee considers the recommendations of the
Chief Executive Officer, which is supported by data generated by the Company's
Human Resources Department for each component of compensation of the Company's
executive officers. The Committee reviews those recommendations and then
approves them or makes such modifications as it deems appropriate.
COMPENSATION PHILOSOPHY: The Company's compensation program applicable to
all the executive officers is based on three primary elements:
o Base salary compensation
o Annual bonus incentive compensation
o Long term incentive compensation
The Company's executives receive no other form of compensation other than
customary benefits.
BASE SALARY COMPENSATION: The base salaries for the executive officers are
determined based upon the responsibilities of the position, the experience level
of the individual and the competitive conditions within the industry. The
Company and the Compensation Committee consider the compensation paid to
executive officers of comparable companies in the retail industry. When
adjusting those salaries for individual executive officers in 2000, the
Compensation Committee considered the financial performance of the Company in
1999, the performance of the individual executive officer, any changed duties
and responsibilities and the base salaries paid to individuals in comparable
positions in other retail companies.
ANNUAL BONUS INCENTIVE COMPENSATION: Prior to the end of fiscal 1999, the
Compensation Committee and the Board of Directors approved the 2000 Employee
Bonus Plan in which all executive officers other than the CEO are participants.
The plan provides for a maximum bonus based on a percentage of an individual's
salary reflecting his or her level within the Company. The amount of that
maximum bonus payable to each participant is based on satisfaction of a
combination of company and individual or business unit performance criteria.
LONG TERM INCENTIVE COMPENSATION: Both the Company's management and the
Compensation Committee believe that significant stock ownership in the Company
links the economic interest of stockholders and management and, therefore, is a
major incentive for management. The Company's long term incentive plan is
designed to provide the recipient with a proprietary interest in the growth and
performance of the Company and the value of its shares. The Compensation
Committee recommends grants of stock options to executive officers in accordance
with the terms of the Employee Stock Option Plan. Those terms are discussed
below in this Proxy Statement. All executive officers are participants in the
Employee Stock Option Plan other than Mr. Questrom who has been granted stock
options pursuant to the terms of his employment agreement. The participants in
the Employee Stock Option Plan and the level of participation are determined by
the Stock Option Committee, consisting of David Strumwasser, Robert Tarr, Jr.
and Douglas Teitelbaum.
CEO COMPENSATION: Mr. Questrom was elected Chairman, President and Chief
Executive Officer of the Company in May of 1999. The terms of his employment
agreement are discussed in the Executive Compensation section of this Proxy
Statement. The Compensation Committee believes that the compensation provided in
that agreement is comparable in value to the prevailing competitive marketplace
for companies similarly situated.
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits a
publicly-held corporation's deduction for compensation paid to certain executive
officers in excess of $1 million per executive per taxable year, unless the
compensation qualifies as "performance based" compensation. If approved by the
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stockholders, the Company believes that the options granted under the proposed
Executive Stock Option Plan at a time when the Stock Option Committee consists
only of outside directors (within the meaning of Section 162(m) of the Code)
should qualify for this exemption. As of today, annual cash compensation to be
received by any executive officer has been far below the $1 million threshold.
With respect to the stock options granted to Mr. Questrom and discussed below in
Agreements With Executive Officers, the options granted at $8.68 per share have
received the requisite stockholder approval for purposes of Section 162(m) and
the Company believes they qualify for the exemption under 162(m). However, the
options granted at $4.34 per share will not qualify for the exemption.
Compensation Committee:
David Strumwasser
Robert J. Tarr, Jr.
Douglas Teitelbaum
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. In addition to the foregoing amounts, Robert J. Tarr, Jr. is paid
$25,000 annually for serving as Vice Chairman of the Board of Directors and
$5,000 annually for serving as Chairman of the Company's Internet Committee. Mr.
Tarr also receives $5,000 with respect to each meeting of the Internet Committee
in lieu of the per meeting amount set forth above. Non-employee directors also
participate in the Company's Stock Option Plan for Non-Employee Directors (the
"Director Option Plan"). Pursuant to the Director Option Plan, each Eligible
Director (as defined in the Director Option Plan) is granted an option to
purchase 5,000 shares of 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 Common Stock on the date of grant. The options granted
under the Director 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 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 Common Stock at an exercise price of $8.68 per share,
one-half of which vested on issuance, and one-half of which vested on March 11,
2000.
AGREEMENTS WITH EXECUTIVE OFFICERS
AND RELATED TRANSACTIONS
Meridian Agreement. Pursuant to an agreement dated as of August 1, 1998,
among the Company, Thomas C. Shull and Meridian Ventures, Inc., a venture
management firm ("Meridian"), as amended (the "Meridian Agreement"), Meridian
received payments from the Company for consulting services provided by Mr. Shull
and two additional consultants, Edward Lambert and Paul Jen. Pursuant to the
Meridian Agreement, Mr. Shull served as President and Chief Executive Officer
until May 5, 1999, and Mr. Lambert served as Chief Financial Officer of the
Company and its affiliates until May 28, 1999. In addition, Paul Jen served as
Vice President-Marketing until May 1999. The services provided under the
Meridian Agreement consisted of providing the services of these three
individuals in such capacities. In consideration of these services, Meridian
received 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 expenses of the three individuals. In addition, Meridian received
a $100,000 performance bonus on February 1, 1999, and in consideration of
Meridian's efforts during the transition to management of the reorganized
Company, Meridian received payments totaling $465,000 covering the period
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February 1999 through May 1999. The Meridian Agreement terminated on May 31,
1999. Mr. Shull resigned as President and Chief Executive Officer on May 5,
1999, upon the appointment of Allen I. Questrom to those positions. Mr. Lambert
resigned as Chief Financial Officer effective May 28, 1999.
Upon termination of the Meridian Agreement on May 31, 1999, Meridian was
entitled to a 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, commencing on
the first day of the ninth month following termination, subject to mitigation
based on any other compensation received for the services of Mr. Shull and the
two other consultants during that period and (iii) payment of all earned and
accrued vacation pay, not to exceed $85,000. All amounts due to Meridian
pursuant to the terms of the Meridian Agreement have been paid by the Company.
Agreement With Allen Questrom. Pursuant to an agreement between the Company
and Allen I. Questrom effective as of May 5, 1999 and dated February 1, 2000,
Mr. Questrom serves as Chairman of the Board of Directors, President and Chief
Executive Officer of the Company 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
the Company's 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 the Company 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 the Company, 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 the Company's
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.
The Company also granted Mr. Questrom certain registration rights with
respect to his shares of 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 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. The ESP covers all salaried employees but does not include
Mr. Questrom. The severance benefits under the ESP are triggered by either (a)
an involuntary termination of employment for any reason other than for cause or
(b) a voluntary termination as a result of either (i) a substantial diminution
of the employee's responsibilities and duties, or (ii) a substantial reduction
in salary, in either case within 12 months of certain events constituting a
change in control of the Company. The amount of severance payable depends on a
participant's position and the number of years of service, ranging from one week
to one month for each year of service. The severance payments range from a
minimum of a two weeks salary to a maximum of 18 months salary. For some
employees, severance is subject to mitigation for amounts payable during the
severance period from other employment. For a period of two (2) years following
January 28, 1999, the terms of the Company's existing ESP will not be terminated
or amended by the Company in a manner that is adverse to the employees covered.
401(k) and Money Purchase Plan. All employees of the Company except for
certain employees covered by specific collective bargaining agreements, are
eligible to participate in the Company's 401(k) savings plan as well as in the
Company's Money Purchase Plan. Pursuant to the terms of the 401(k) Plan,
eligible participating employees may elect to contribute between 1% and 13% of
their annual compensation up to the annual dollar limits set by the Internal
Revenue Service. The Company will match 50% of the first 6% of the participant's
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elective contributions resulting in a maximum of 3% of total compensation. With
respect to the Money Purchase Plan, contributions to that plan are made 100% by
the Company in an amount of 5% of a participant's eligible compensation for the
year in question subject to a specified cap.
Registration Rights Agreement. On January 28, 1999, the Company entered into
a Registration Rights Agreement (the "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.
Stock Purchase Agreement. Pursuant to a Stock Purchase Agreement (the "Stock
Purchase Agreement"), which gave holders of general unsecured claims against
Barney's, Inc. rights to purchase shares of the Company prior to the
Reorganization, Bay Harbour and Whippoorwill received an option to purchase up
to an aggregate of 576,122 shares of Common Stock. On November 12, 1999, each of
Bay Harbour and Whippoorwill notified the Company of its intention to exercise
the option in full. The closing of the exercise occurred on November 19, 1999.
In addition, Bay Harbour and Whippoorwill backstopped the offering of the
subscription rights for the stock issued pursuant to the Stock Purchase
Agreement. 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 Reorganization.
Isetan. In connection with the Reorganization, the Company entered into
various agreements and arrangements with Isetan and certain of its affiliates.
In connection with the consummation of the plan of reorganization, (x) each of
Whippoorwill and Bay Harbour have agreed, for a period of five years from
January 29, 1999, to vote, or cause to be voted, all shares of Common Stock held
by it in favor of the election of one director designated by Isetan to the
Company's Board of Directors, and (y) the Company has agreed to cause such
designee to be elected to the Board of Directors of the Company. Yasuo Okamoto
is the director designated by Isetan. In addition, the Company may designate one
individual to attend all meetings of the Company's Board of Directors in a
non-voting observer capacity.
Equipment Lessors. Whippoorwill owns a beneficial interest of approximately
25% of a holder of a note issued to one of the Company's prior equipment lessors
in connection with the Reorganization, which note is in an aggregate principal
amount of $34,232,500.
ADDITIONAL INFORMATION
There is no current public trading market for the Common Stock.
The Board of Directors of the Company met eight times during the fiscal year
ended January 29, 2000. Among its standing committees, the Company has an Audit
Committee and a Compensation Committee.
AUDIT COMMITTEE: The Audit Committee consists of two directors independent
of management and free of any relationship that, in the opinion of the Board of
Directors, would interfere with the exercise of independent judgment as a
committee member. The Audit Committee recommends the selection of the Company's
independent auditors, periodically reviews the adequacy of the Company's
internal financial controls, reviews with the Company's independent auditors the
annual audit, and periodically reviews the terms of material transactions
between the Company and its affiliates and subsidiaries. The Audit Committee
currently consists of Messrs. Robert J. Tarr, Jr. as its chairman, and Carl
Spielvogel. The Audit Committee met five times in fiscal 1999.
COMPENSATION COMMITTEE: The Compensation Committee consists of three
directors, and its function includes management compensation matters. The
Compensation Committee currently consists of David Strumwasser, Robert Tarr, Jr.
and Douglas Teitelbaum.
There are no family relationships between any nominee, director or executive
officer of the Company.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Common Stock is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Section 16(a) of the
Exchange Act requires that each director and executive officer of the Company
and each person owning more than 10% of the Common Stock report his or its
initial ownership of the Common Stock and any subsequent changes in that
ownership to the Commission. The Company is required to disclose in this Proxy
Statement any late filings of such reports with respect to the most recent
fiscal year.
Based solely upon a review of copies of forms furnished to the Company or
written representations from certain reporting persons that no Form 5 filings
were required, the Company believes that during fiscal 1999, all such Section
16(a) filing requirements were timely satisfied.
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2. APPROVAL OF THE EMPLOYEE STOCK OPTION PLAN
GENERAL
The Board of Directors of the Company and its Compensation Committee have
approved the Company's Employee Stock Option Plan (the "Plan"), subject to
stockholder approval. The purpose of the Plan is to provide certain key
employees of the Company and its subsidiaries an opportunity to acquire an
ownership interest in the Company and thereby create in such employees an
increased interest in and greater concern for the welfare of the Company, to
retain their continued employment, and to secure and retain the services of
persons capable of filling key positions with the Company and its subsidiaries.
Pursuant to the Plan, the Company may grant options with respect to an aggregate
of up to 654,000 shares of Common Stock, with no individual optionee to receive
in excess of 196,200 shares of Common Stock upon exercise of options granted
under the Plan. Options granted pursuant to the Plan may be either incentive
stock options ("ISOs") or non-qualified stock options ("NQSOs"). Shares of
Common Stock subject to options may be either authorized and unissued shares, or
previously issued shares acquired or to be acquired by the Company and held in
its treasury. The following summary of the Plan is not intended to be complete
and is qualified in its entirety by reference to the Plan, which is attached as
Exhibit A to this Proxy Statement. All options heretofore granted pursuant to
the Plan are subject to stockholder approval of the Plan.
SUMMARY OF THE PLAN
Administration. The Plan is administered by a stock option committee of the
Board of Directors of the Company, which is comprised of "non-employee
directors" within the meaning of Rule 16b-3 under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (the "Option
Committee"). The members of the Committee are David A. Strumwasser, Robert J.
Tarr, Jr. and Douglas P. Teitelbaum. Any or all powers and functions of the
Committee may be exercised at any time and from time to time by the Board of
Directors or an executive committee of the Board of Directors (the "Executive
Committee"), provided in the case of the Executive Committee that all of its
members are "non-employee directors" within the meaning of Rule 16b-3.
(References in this discussion to the "Committee" include the Option Committee,
the Board of Directors and the Executive Committee to the extent any of the
foregoing administers the Plan.) The authority of the Committee includes, among
other things, determining the persons to whom options are granted, the timing of
any grants, the number of shares subject to each option, the period of
exercisability, the designation of options as ISOs or NQSOs and the other terms
and provisions thereof.
Eligibility. Options may be granted only to salaried key employees of the
Company or any subsidiary or parent corporation of the Company now existing or
subsequently formed or acquired, except members of the Option Committee and
Allen I. Questrom.
Grant, Terms and Conditions of Options. The Company will not receive any
monetary consideration for granting options.
The exercise price for each share subject to an option will be an amount
that the Committee determines, in its good faith judgment, to be not less than
100% of the fair market value of the Common Stock on the date the option is
granted. In the case of ISOs, however, the exercise price per share of ISOs
granted to any holder of capital stock of the Company (or any subsidiary or
parent corporation) representing 10% or more of the voting power of the Company
(or any subsidiary or parent corporation ) will be in an amount that the
Committee determines, in its good faith judgement, to be not less than 110% of
the fair market value of the Common Stock on the date the ISO is granted.
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Under the Plan, fair market value per share means:
(1) if the shares are listed on a national securities exchange or
reported on the NASDAQ Stock Market ("NASDAQ"), the last reported sale price
per share on such exchange or such system on the date the option is granted
or, if the shares are not traded or reported on such date, then on the
closest preceding date on which such shares were traded or reported; or
(2) if the shares are not listed on a national securities exchange or
reported on NASDAQ but are quoted in the over-the-counter market, the
average of the closing bid and ask quotations in such market for such shares
on the date the option is granted or, if there are no such quotations on
such date, then on the closest preceding date on which such quotations are
available; provided, however, that if, in the judgment of the Board of
Directors, there is not a regular, active public market for the shares, fair
market value per share shall be determined by the Board of Directors in its
good faith judgement. The determination by the Board of Directors of fair
market value will be conclusive and binding.
Payment for shares purchased upon the exercise of options may be in cash or,
to the extent permitted by the Committee in its discretion and by applicable
law, with other shares of Common Stock or an executed promissory note on such
terms and conditions as the Committee shall determine.
Options granted under the Plan are exercisable at such times, in such
amounts and during such period or periods as the Committee may determine at the
date the option is granted, which period or periods will end, at the discretion
of the Committee, not more than ten years after the date of grant and, in the
case of a person who at the date of grant owns capital stock of the Company (or
any subsidiary or parent corporation) representing 10% or more of the voting
power of the Company (or any subsidiary or parent corporation), are not
exercisable after five years from the date of grant. Except as otherwise
provided under the Internal Revenue Code of 1986, as amended (the "Code"), to
the extent that the aggregate fair market value of shares subject to ISOs (under
any plan of the Company or any subsidiary or parent corporation of the Company)
exercisable for the first time in any calendar year exceeds $100,000, such
excess will be treated as NQSOs.
In addition, the Committee has the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, the right to exercise any
option granted under the Plan.
In the event of retirement, termination by the Company of employment with or
without cause, termination of employment by an optionee with or without good
reason or upon death or disability, special rules will apply regarding the
exercisability of options.
Options may not be transferred except by will or the law of descent or
distribution. Options are only exercisable during the lifetime of a holder by
such holder.
In the event of a "change in control" of the Company, all then outstanding
options shall immediately become exercisable. The Committee, in its sole
discretion, may determine that, upon the occurrence of a "change in control,"
each option outstanding under the Plan 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 in cash or other property, or
any combination thereof, equal to the excess of the aggregate fair market value
at the time of such transaction of the shares subject to such option over the
aggregate exercise price therefor. The foregoing provision does not apply to
options granted to officers subject to Section 16 (a) of the Exchange Act within
six months prior to a change-in-control, unless an exemption from liability
under Section 16 (b) of the Exchange Act is otherwise available.
Effect of Change in Common Stock. In the event of any change in the Common
Stock through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company, an adjustment
will be made to (i) each outstanding option so that such option thereafter is
exercisable for such securities, cash and/or property as would have been
received had such option been exercised in full immediately prior to such
transaction and been exchanged in such transaction, (ii) the number of shares
subject to the Plan and (iii) the limit in the maximum number of shares subject
to options under the Plan. An adjustment will be made successively each time any
such change occurs.
Amendment or Termination. The Board of Directors of the Company may at any
time amend or terminate the Plan, provided that no such action affects or
impairs the rights of an optionee under any previously granted option.
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Notwithstanding the foregoing, without the approval of the Company's
stockholders, no amendment or change may be made (a) increasing the total number
of shares of Common Stock reserved for options under the plan (other than an
increase resulting from an adjustment), (b) reducing the exercise price of any
ISO, (c) modifying the provisions of the plan relating to eligibility or (d)
materially increasing the benefits accruing to participants under the plan.
The Board of Directors recommends a vote FOR the approval of the adoption of
the Plan. A favorable vote of a majority of the shares present at the meeting in
person or by proxy is required for approval.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The statements in the following paragraphs are based on federal income tax
law and interpretational authorities as of the date of this Proxy Statement,
which are subject to change at any time. The law is technical and complex and
the statements represent only a general summary of some of the applicable
provisions.
Incentive Options
ISOs under the Plan are intended to meet the definitional requirements of
Section 422(b) of the Code for an "incentive stock option."
Under the Code, the grantee of an ISO generally is not subject to regular
income tax upon the receipt or exercise of such ISO (except that the alternative
minimum tax may apply). If after exercising an ISO, an employee disposes of the
shares of Common Stock so acquired after the longer of two years from the date
of grant or one year from the date of transfer of shares of Common Stock
pursuant to the exercise of such ISO (the "applicable holding period"), the
employee will normally recognize a long-term capital gain or loss equal to the
excess, if any, of the amount received for the shares of Common Stock over the
aggregate exercise price for such shares. If, however, an employee does not hold
the shares of Common Stock so acquired for the applicable holding period, the
disposition is normally a "disqualifying disposition," and the employee would
recognize income in the year of the disqualifying disposition equal to the
excess of the amount received for the shares of Common Stock over the aggregate
exercise price for such shares. Of that income, the portion equal to the excess
of the fair market value of the shares at the time the ISO was exercised over
the exercise price will be ordinary income and the balance, if any, will be
long-term or short-term capital gain depending on whether the holding period for
the shares of Common Stock exceeded one year and provided that the employee held
such shares as a capital asset at such time.
If, in a disqualifying disposition, the employee sells the shares of Common
Stock at a price that is below the fair market value of the shares of Common
Stock at the time the ISO was exercised, the amount of ordinary income will be
limited to the amount by which the amount realized on the sale exceeds the
exercise price.
An employee who exercises an ISO by delivering shares previously acquired
pursuant to the exercise of an ISO is treated as making a "disqualifying
disposition" of such shares if the employee delivers such shares before the
expiration of the applicable holding period with respect to such shares. Upon
the exercise of an ISO with previously acquired shares as to which no
disqualifying disposition occurs, it would appear that the employee would not
recognize again or loss with respect to such previously acquire shares.
A deduction will not be allowed to the Company for federal income tax
purposes with respect to the grant or exercise of an ISO or the disposition,
after the applicable holding period, of the shares of Common Stock acquired upon
exercise of an ISO. In the event of a disqualifying disposition, a federal
income tax deduction will be allowed to the Company in an amount equal to the
ordinary income to be recognized by the optionee, provided that such amount
constitutes an ordinary and necessary business expense to the Company, is
reasonable and the Company satisfies its withholding obligation, if any, with
respect to such income.
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Non-Qualified Options
A NQSO is an option that does not qualify as an "incentive stock option"
under Section 422(b) of the Code. An individual who receives a NQSO will not
recognize any taxable income upon the grant of such NQSO. Generally, upon
exercise of a NQSO, an individual will be treated as having received ordinary
income in an amount equal to the excess of the fair market value of the shares
of Common Stock at the time of exercise over the aggregate exercise price for
such shares.
Any optionee who is an officer of the Company or a beneficial owner of more
than ten percent (10%) of any class of registered equity securities of the
Company should consult with his or her tax advisor as to whether, as a result of
Section 16 (b) of the Exchange Act and the rules and regulations thereunder that
are related thereto, the timing of income recognition is deferred for any period
following the exercise of a NQSO (i.e., the "Deferral Period"). If there is a
Deferral Period, absent a written election (pursuant to Section 83 (c) of the
Code) filed with the Internal Revenue Service within 30 days after the date of
transfer of the shares of Common Stock pursuant to the exercise of the option to
include in income, as of the transfer date, the excess (on such date) of the
fair market value of such shares of Common Stock over their exercise price,
recognition of income by the individual will be deferred until the expiration of
the Deferral Period, if any.
The ordinary income recognized with respect to the transfer of shares of
Common Stock or receipt of cash upon exercise of a NQSO under the Plan will be
subject to both wage withholding and employment taxes. In addition to the
customary methods of satisfying the withholding tax liabilities that arise upon
the exercise of a NQSO, an individual may satisfy the liability in whole or in
part by directing its Company to withhold shares of Common Stock from those that
would otherwise be issuable to the individual or by tendering other shares of
Common Stock owned by the individual. The withheld shares of Common Stock and
other tendered shares will be valued at their fair market value. Individuals
who, by virtue of their positions with the Company, are subject to Section 16(b)
of the Exchange Act may elect this method of satisfying the withholding
obligation only during certain restricted periods.
An individual's tax basis in the shares of Common Stock received on exercise
of a NQSO will be equal to the amount of any cash paid on exercise, plus the
amount of ordinary income recognized by such individual as a result of the
receipt of such shares of Common Stock. The holding period for such shares would
begin just after the transfer of shares of Common Stock or, in the case of an
officer or beneficial owner of more than 10% of any class of registered equity
securities of the Company who does not elect to be taxed as of the exercise
date, just after the expiration of the Deferral Period, if any. A deduction for
federal income tax purposes will be allowed to the Company in an amount equal to
the ordinary income taxable to the individual, provided that such amount
constitutes an ordinary and necessary business expense, is reasonable and the
Company satisfies its withholding obligation with respect to such income.
If an individual exercises a NQSO by delivering shares to the Company, other
than shares previously acquired pursuant to the exercise of an ISO which is
treated as a "disqualifying disposition" as described above, the individual will
not recognize gain or loss with respect to the exchange of such shares, even if
their then fair market value is different from the individual's tax basis. The
individual, however, will be taxed as described above with respect to the
exercise of the NQSO as if he or she had paid the exercise price in cash, and
the Company likewise generally will be entitled to an equivalent tax deduction.
So long as the individual receives a separate identifiable stock certificate
therefor, the tax basis and the holding period for that number of shares of
Common Stock received on such exercise will be equal to the tax basis and
include the holding period of those shares surrendered. The individual's tax
basis and holding period for the additional shares received on exercise of a
NQSO paid for, in whole or in part, with shares will be the same as if the
individual had exercised the NQSO solely for cash.
Change in Control
As described above, upon a "change in control" of the Company, all the then
outstanding options shall immediately become exercisable. In general, if the
total amount of payments to optionees that are contingent upon a "change of
control" of the Company (as defined in Section 280G of the Code), including
payments upon the exercise of options under the Plan that vest upon a "change in
control," equals or exceeds three times the recipient's "base amount"
(generally, such recipient's average annual compensation for the five years
preceding the change in control), then, subject to certain exceptions, the
payments may be treated as "parachute payments" under the Code, in which case a
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portion of such payments would be non-deductible to the Company and the
recipient would be subject to a 20% excise tax on such portion of the payments.
CERTAIN LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
With certain exceptions, Section 162(m) of the Code limits the Company's
deduction for compensation paid to certain executive officers in excess of $1
million per executive per taxable year (including any deduction with respect to
the exercise of a NQSO or the disqualifying disposition of stock purchased
pursuant to an ISO). This limitation would not apply to options granted under
the Plan if stockholder approval is obtained.
3. APPOINTMENT OF AUDITORS
It is proposed that the stockholders ratify the appointment of Ernst & Young
LLP as independent auditors of the Company for the fiscal year ending February
3, 2001. Ernst & Young LLP have been the independent auditors of the Company
since 1996. It is expected that a representative of Ernst & Young LLP will be
present at the Annual Meeting with the opportunity to make a statement if he
desires to do so and will be available to respond to appropriate questions.
The Board of Directors recommends that the accompanying Proxy be voted in
favor of such appointment. A favorable vote of a majority of the shares present
at the meeting in person or by proxy is required for approval.
MISCELLANEOUS
The Board of Directors knows of no business to come before the meeting other
than as stated in the Notice of Annual Meeting of Stockholders. Should any
business other than that set forth in said Notice properly come before the
meeting, it is the intention of the persons named in the accompanying Proxy to
vote said Proxy in accordance with their judgment on such matters.
A list of the Company's stockholders as of the record date for the meeting
will be available for examination by any stockholder, for purposes germane to
the meeting, during ordinary business hours, for ten days prior to the date of
the meeting at the offices of the Company in Lyndhurst, New Jersey where the
meeting is being held.
All shares represented by the accompanying Proxy given prior to the meeting
will be voted in the manner specified therein. Proxy cards returned without
specification will be voted in accordance with the recommendation of the Board
of Directors. The shares of stockholders who have properly withheld authority to
vote for the nominees proposed by the Board of Directors (including broker
non-votes) will not be counted toward achieving a plurality. As to any matters
which may come before the meeting other than those specified above, the Proxy
holders will be entitled to exercise discretionary authority. The holders of a
majority of the outstanding shares of Common Stock present in person or
represented by proxy will constitute a quorum at the Annual Meeting.
For purposes of this meeting, except for the election of directors, which
requires a plurality vote, the affirmative vote of the majority of shares
present in person or represented by proxy at the meeting for a particular matter
is required for the matter to be deemed an act of the stockholders. With respect
to abstentions, the shares are considered present at the meeting for the
particular matter, but since they are not affirmative votes for the matter, they
will have the same effect as votes against the matter. With respect to broker
non-votes, the shares are not considered present at the meeting for the
particular matter as to which the broker withheld its vote. Consequently, broker
non-votes are not counted in respect of the matter, but they do have the
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practical effect of reducing the number of affirmative votes required to achieve
a majority for such matter by reducing the total number of shares from which the
majority is calculated.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be present at the next Annual Meeting
of Stockholders must be received by the Company no later than January 22, 2001
to be considered for inclusion in the Company's Proxy Statement and form of
Proxy relating to that meeting. Such proposals should be addressed to Marc H.
Perlowitz, Secretary, Barneys New York, Inc., 575 Fifth Avenue, New York, NY
10017.
EXPENSES OF SOLICITATION
The Company will bear the cost of the solicitation of Proxies. In addition
to the use of the mails, proxies may be solicited by the executive employees and
directors of the Company personally, by telephone or by telecopy. The Company
has retained The Altman Group to assist in the solicitation of proxies for a fee
of $6,000, plus reimbursement of out-of-pocket expenses. Brokers, nominees,
fiduciaries and other custodians will be requested to forward soliciting
material to the beneficial owners of shares and will be reimbursed for their
expenses.
BARNEYS NEW YORK, INC. WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JANUARY 29, 2000, WITHOUT EXHIBITS, WITHOUT CHARGE TO EACH
PERSON WHO FORWARDS A WRITTEN REQUEST THEREFOR, INCLUDING A REPRESENTATION THAT
SUCH PERSON WAS A BENEFICIAL HOLDER OF COMMON STOCK OF BARNEYS NEW YORK, INC. ON
MAY 15, 2000, TO MARC H. PERLOWITZ, SECRETARY, BARNEYS NEW YORK, INC., 575 FIFTH
AVENUE, NEW YORK, NY, 10017.
Dated: May 22, 2000 By Order of the Board of Directors
/s/ Marc H. Perlowitz
Marc H. Perlowitz
Secretary
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Exhibit A
---------
BARNEYS NEW YORK, INC.
EMPLOYEE STOCK OPTION PLAN
<PAGE>
1. Purposes...........................................................1
2. Stock Subject to the Plan..........................................1
3. Administration.....................................................1
4. Eligibility........................................................2
5. Option Price and Payment...........................................2
6. Terms of Options and Limitations on the Right of Exercise..........3
7. Termination of Employment..........................................4
8. Exercise of Options................................................6
9. Use of Proceeds....................................................6
10. Non-Transferability of Options.....................................6
11. Adjustment of Shares; Effect of Certain Transactions...............6
12. Right to Terminate Employment......................................7
13. Purchase for Investment............................................7
14. Issuance of Stock Certificates; Legends; Payment of Expenses.......7
15. Withholding Taxes..................................................8
16. Listing of Shares and Related Matters..............................8
17. Amendment of the Plan..............................................8
18. Termination or Suspension of the Plan..............................9
19. Savings Provision..................................................9
20. Governing Law......................................................9
21. Partial Invalidity.................................................9
22. Effective Date.....................................................9
<PAGE>
BARNEYS NEW YORK, INC.
EMPLOYEE STOCK OPTION PLAN
1. Purposes
Barneys New York, Inc., a Delaware corporation (the "Company"), wishes to
provide certain of its key employees and certain key employees of any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired who are responsible for the continued growth of the Company
an opportunity to acquire a proprietary interest in the Company, and thereby
create in such key employees an increased interest in and a greater concern for
the welfare of the Company and its subsidiaries.
The Company, by means of the Plan, seeks to retain the services of persons
now holding key positions and also to secure and retain the services of persons
capable of filling such positions.
The stock options ("Options") offered pursuant to this Employee Stock Option
Plan (the "Plan") are a matter of separate inducement and are not in lieu of any
salary or other compensation for the services of any key employee.
The Options granted under the Plan are intended to be either incentive stock
options ("Incentive Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or options that do not meet the
requirements for Incentive Options ("Non-Qualified Options"). The Company makes
no warranty, however, as to the qualification of any Option as an Incentive
Option.
2. Stock Subject to the Plan
Options granted under the Plan shall be exercisable for shares of common
stock, $.01 par value per share, of the Company ("Common Stock"). The total
number of shares of Common Stock of the Company authorized for issuance upon the
exercise of Options under the Plan (the "Shares") shall not exceed, in the
aggregate, 654,000 Shares, with no individual optionee to receive in excess of
196,200 Shares upon exercise of Options granted under the Plan, subject to
adjustment in accordance with Section 11 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.
Except as provided in Sections 18 and 22 hereof, the Company may, from time
to time during the period beginning on March 8, 2000 (the "Effective Date") and
ending on March 8, 2010 (the "Termination Date"), grant to certain key employees
of the Company, or certain key employees of any subsidiary corporation or parent
corporation of the Company, Incentive Options and/or Non-Qualified Options under
the terms hereinafter set forth.
As used in the Plan, the term "parent corporation" and "subsidiary
corporation" shall mean a corporation within the definitions of such terms
contained in Sections 424(e) and 424(f) of the Code, respectively.
3. Administration
The board of directors of the Company (the "Board of Directors") shall
designate from among its members a stock option committee, which may also be any
other committee of the Board of Directors (the "Committee"), to administer the
Plan. The Committee shall consist of no fewer than two (2) members of the Board
of Directors, each of whom shall be a "non-employee director" within the meaning
of Rule 16b-3 (or any successor rule or regulation) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). A majority of
the members of the Committee shall constitute a quorum and the act of a majority
of the members of the Committee shall be the act of the Committee. Any member of
the Committee may be removed at any time either with or without cause by
resolution adopted by the Board of Directors and any vacancy on the Committee at
any time may be filled by resolution adopted by the Board of Directors.
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Any and all powers and functions of the Committee may be exercised at any
time and from time to time by the Board of Directors or an executive committee
of the Board of Directors (the "Executive Committee"; references below to the
Committee shall be deemed to include references to the Board of Directors and
the Executive Committee, except as the context otherwise requires); provided,
however, that all of the members of the Board of Directors or the Executive
Committee, as the case may be, shall be "non-employee directors" within the
meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under
the Exchange Act.
Subject to the express provisions of the Plan, the Committee shall have the
authority, in its sole discretion, to determine the key employees to whom
Options shall be granted, the time when such persons shall be granted Options,
the number of Shares which shall be subject to each Option, the purchase price
of each Share which shall be subject to each Option, the period(s) during which
such Options shall be exercisable (whether in whole or part), and the other
terms and provisions thereof (which need not be identical). In determining the
key employees to whom Options shall be granted and the number of Shares for
which Options are to be granted to each key employee, the Committee shall give
due consideration to the length of service, performance, the amount of earnings
and the responsibilities and duties of such person.
Subject to the express provisions of the Plan, the Committee also shall have
the authority to construe the Plan and the Options granted hereunder, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the Options (which need not be identical)
and to make all other determinations necessary or advisable for administering
the Plan. The Committee also shall have the authority to require, in its
discretion, as a condition of the granting of any such Option, that the employee
agree that in the event of termination of employment of such employee, other
than as a result of dismissal without cause or Termination For Good Reason (as
defined in Section 7 herein), such employee will not, for a period to be fixed
at the time of the grant of the Option, enter into any other employment or
participate directly or indirectly in any other business or enterprise which is
competitive with the business of the Company or any subsidiary corporation or
parent corporation of the Company, or enter into any employment in which such
employee will be called upon to utilize special knowledge obtained through
employment with the Company or any subsidiary corporation or parent corporation
thereof. Any officer of the Company or any subsidiary corporation or parent
corporation who is subject to the reporting requirements of Section 16(a) of the
Exchange Act (or any successor provision) shall not be entitled to sell or
otherwise dispose of any Shares acquired upon the exercise of any Option for a
period of six (6) months from the date such Option was granted.
Any determination of the Committee on the matters referred to in this
Section 3 shall be conclusive.
The Committee may employ such legal or other counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely upon
any opinion or computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company or such subsidiary corporation or parent
corporation of the Company whose employees have benefited from the Plan, as
determined by the Committee. No member or former member of the Board of
Directors, the Executive Committee or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Options granted hereunder.
4. Eligibility
Options may be granted only to salaried key employees of the Company or any
subsidiary corporation or parent corporation of the Company now existing or
hereafter formed or acquired, except members of the Committee and Allen I.
Questrom.
The Plan does not create a right in any person to participate in, or be
granted options under, the Plan.
5. Option Price and Payment
The price for each Share purchasable under any Option granted hereunder
shall be determined by the Committee in its good faith judgment, but shall not
be less than one hundred percent (100%) of the "fair market value" (as defined
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below) per Share at the date the Option is granted; provided, however, that in
the case of an Incentive Option granted to a key employee who, at the time such
Option is granted, owns shares of the Company or any subsidiary corporation or
parent corporation representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any subsidiary
corporation or parent corporation, the purchase price for each Share shall be
not less than one hundred ten percent (110%) of the fair market value per Share
at the date the Option is granted. In determining the stock ownership of a key
employee for any purpose under the Plan, the rules of Section 424(d) of the Code
shall be applied, and the Committee may rely on representations of fact made to
it by the key employee and believed by it to be true.
For purposes of the Plan, "fair market value," 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; provided, however, that in lieu of cash, the
holder of an Option may to the extent permitted by the Committee in its
discretion and applicable law, exercise an Option (a) in whole or in part, by
delivering to the Company shares of Common Stock of the Company (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, the
fair market value of the shares of Common Stock so delivered to be determined as
of the date immediately preceding the date of exercise, or as otherwise may be
required to comply with or conform to the requirements of any applicable law or
regulations, or (b) in part, by delivering to the Company an executed promissory
note on such terms and conditions as the Committee shall determine in its sole
discretion; provided, however, that the principal amount of such note shall not
exceed ninety percent (90%) (or such other percentage as would be required to
comply with applicable margin regulations) of the aggregate purchase price of
the Shares then being purchased pursuant to the exercise of such Option.
6. Terms of Options and Limitations on the Right of Exercise
Any Option granted hereunder shall be exercisable at such times, in such
amounts and during such period or periods as the Committee shall determine at
the date of the grant of such Option, which period or periods shall end, at the
discretion of the Committee, not more than ten (10) years after the date of the
grant of such Option. Notwithstanding the immediately preceding sentence, in the
case of an Incentive Option granted to a person who, at the time such Incentive
Option is granted, owns stock of the Company or any subsidiary corporation or
parent corporation of the Company representing more than ten percent (10%) of
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the total combined voting power of all classes of stock of the Company or of any
subsidiary corporation or parent corporation of the Company, such Incentive
Option shall not be exercisable after the expiration of five (5) years from the
date such Incentive Option is granted.
The Committee shall have the right to accelerate, in whole or in part, from
time to time, conditionally or unconditionally, rights to exercise any Option
granted hereunder. 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.
Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock for which Incentive Options (under all
stock option plans of the Company and of any parent corporation or subsidiary
corporation of the Company) are exercisable for the first time by an employee
during any calendar year exceeds one hundred thousand dollars ($100,000), such
Options shall be treated as Non-Qualified Options. For purposes of this
limitation, (a) the fair market value of stock is determined as of the time the
Option is granted, and (b) the limitation will be applied by taking into account
Options in the order in which they were granted.
In no event shall an Option granted hereunder be exercised for a fraction of
a Share or for less than one hundred (100) 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.
7. Termination of Employment
Upon termination of employment of any key employee with the Company and all
subsidiary corporations and parent corporations of the Company, any Option
previously granted to such employee, unless otherwise specified by the Committee
in the Option shall, to the extent not theretofore exercised, terminate and
become null and void; provided, however, that:
A. if any key employee shall die while in
the employ of such corporation or during either the one (1)
year or six (6) month period, whichever is applicable,
specified in clauses (B) and (C) below, any Option granted
hereunder, unless otherwise specified by the Committee in
the Option, shall be exercisable for any or all of such
number of Shares that such employee is entitled to exercise
at the time of death, by the legal representative of such
employee or such person who acquired such Option by bequest
or inheritance or by reason of the death of such employee,
at any time up to and including one (1) year after the date
of death;
B. if the employment of any key employee
shall terminate by reason of such employee's disability (as
described in Section 22(e)(3) of the Code), any Option
granted hereunder, unless otherwise specified by the
Committee in the Option, shall be exercisable for any or
all of such number of Shares that such employee is entitled
to exercise at the effective date of termination of
employment by reason of disability, at any time up to and
including one (1) year after the effective date of such
termination of employment;
C. if the employment of any key employee
shall terminate (i) by reason of the employee's retirement
(at such age or upon such conditions as shall be specified
by the Committee), (ii) by the key employee for "good
reason" (only if such employee is party to a written
employment agreement with the Company or any subsidiary
corporation or parent corporation which expressly provides
for termination by the key employee for "good reason," and
such employee validly terminates his or her employment for
"good reason," as such term is defined in the agreement
("Termination For Good Reason")), or (iii) by the employer
other than for cause (as defined below), such Option,
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unless otherwise specified by the Committee in the Option,
shall be exercisable for any or all of such number of
Shares that such employee is entitled to exercise at the
effective date of termination of employment, at any time up
to and including six (6) months after the effective date of
such termination of employment; and
D. if the employment of any employee shall
terminate by any reason other than that provided for in
clauses (A), (B) or (C) above, such Option, unless
otherwise specified by the Committee in such Option shall,
to the extent not theretofore exercised, become null and
void upon the earlier of (i) the date notice of such
termination is provided to such employee or (ii) the
effective date of such termination of employment.
None of the events described above shall extend the period of exercisability
of the Option beyond the expiration date thereof. If an Option granted hereunder
shall be exercised by the legal representative of a deceased grantee or by a
person who acquired an Option granted hereunder by bequest or inheritance or by
reason of the death of any employee or former employee, 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.
For purposes of the Plan, the term "for cause" shall mean (a) with respect
to an employee who is a party to a written employment agreement with, or,
alternatively, participates in a compensation or benefit plan (other than the
Plan) of, the Company or a subsidiary corporation or parent corporation of the
Company, which agreement or plan contains a definition of "for cause" or "cause"
(or words of like import) for purposes of termination of employment or services
thereunder by the Company or such subsidiary corporation or parent corporation
of the Company, "for cause" or "cause" as defined therein (if an employee is
both party to an employment agreement and participates in such a plan, the
definition contained in such employment agreement shall control); or (b) in all
other cases, as determined by the Committee or the Board of Directors, in its
reasonable discretion, including, without limitation, (i) the willful act or
omission of the employee that causes or may cause material damage to the Company
or a subsidiary corporation or parent corporation of the Company; (ii) the
commission by an employee of an act of fraud in the performance of such
employee's duties on behalf of the Company or a subsidiary corporation or parent
corporation of the Company; (iii) conviction of the employee for commission of a
felony in connection with the performance of his duties on behalf of the Company
or a subsidiary corporation or parent corporation of the Company; (iv) the
continuing failure of an employee to perform the duties of such employee to the
Company or a subsidiary corporation or parent corporation of the Company that
has not been cured within 15 days after written notice thereof has been given to
the employee by the Committee; or (v) breach of any material employment or other
policy of the Company or, if applicable, of a subsidiary corporation or parent
corporation.
For purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and a corporation if, at the time of determination,
the individual was an "employee" of such corporation for purposes of Section
422(a) of the Code. If an individual is on leave of absence taken with the
consent of the corporation by which such individual was employed, or is on
active military service, and is determined to be an "employee" for purposes of
the exercise of an Option, such individual shall not be entitled to exercise
such Option during such period and while the employment is treated as continuing
intact unless such individual shall have obtained the prior written consent of
such corporation, which consent shall be signed by the chairman of the board of
directors, the president, an executive vice-president or other duly authorized
officer of such corporation.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an employee from employment by the Company to employment by a
subsidiary corporation or a parent corporation of the Company or (ii) the
transfer of an employee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.
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8. Exercise of Options
Subject to the limitations on exercise referred to in Sections 6 and 7
hereof, Options granted under the Plan shall be exercised by the optionee as to
all or part of the Shares covered thereby by giving written notice of exercise
to the Corporate Secretary of the Company at the principal business office of
the Company, specifying the number of Shares to be purchased 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 13, 14 and 15 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.
9. 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.
10. 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
the holder, only by such holder; provided, however, the Committee may permit, in
its sole discretion, and upon terms and conditions satisfactory to it, an option
to be transferred to a trust established by the holder for the principal benefit
of the holder and surviving members of the holder's immediate family. 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.
11. Adjustment of Shares; Effect of Certain Transactions
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 Committee shall make any further
adjustment to the maximum number of Shares which may be acquired under the Plan
pursuant to the exercise of Options, the maximum number of Shares for which
Options may be granted to any one employee 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 Committee as to these matters shall be conclusive and binding on the
optionee; provided, however, that (a) each such adjustment with respect to an
Incentive Option shall comply with the rules of Section 424(a) of the Code (or
any successor provision) and (b) in no event shall any adjustment be made which
would render any Incentive Option granted hereunder other than an "incentive
stock option" as defined in Section 422 of the Code.
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
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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, 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.
The Committee, in its sole discretion, may determine that, upon the
occurrence of a transaction described in 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 cash,
in one or more of the kinds of property payable in such transaction, or in a
combination thereof, as the Committee in its discretion shall determine. 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.
12. Right to Terminate Employment
The Plan shall not impose any obligation on the Company or on any subsidiary
corporation or parent corporation thereof to continue the employment of any
holder of an Option and it shall not impose any obligation on the part of any
holder of an Option to remain in the employ of the Company or of any subsidiary
corporation or parent corporation thereof.
13. Purchase for Investment
Except as hereinafter provided, the Committee may require the holder of an
Option granted hereunder, as a condition of 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 Committee, in
which such holder (1) 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 (2) 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 may contain a legend to the effect that registration
rights had not been granted with respect to such Shares.
14. 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 Committee,
in its sole discretion, determines to be necessary or appropriate to (a) prevent
a violation of, or to comply with the procedures for an exemption from, the
registration requirements of the Securities Act, (b) implement the provisions of
the Plan and any agreement between the Company and the optionee or grantee with
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respect to such Shares or (c) permit the Company to determine the occurrence of
a disqualifying disposition, as described in Section 421(b) of the Code, of
Shares transferred upon exercise of an Incentive Option granted under the Plan.
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 which 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.
15. Withholding Taxes
The Company may require an employee exercising a Non-Qualified Option or
disposing of Shares acquired under an Incentive Option in a disqualifying
disposition (within the meaning of Section 421(b) of the Code), to reimburse the
corporation which employs such employee for any taxes required by any
governmental authority to be withheld and paid by such corporation in connection
therewith, and such corporation shall have the right to withhold the amount of
such taxes from any other sums due or to become due from such corporation to
such employee upon such terms and conditions as the Committee shall prescribe.
Such corporation may also, in its discretion, hold the stock certificate to
which such employee is entitled upon the exercise of an Option as security for
the payment of such withholding tax liability or retain Shares issuable upon
such exercise having a fair market value at the date of exercise (as determined
under Section 5) equal to the amount to be withheld; provided, however, that the
Company shall not be authorized to retain Shares without the prior written
consent of such employee if such retention would subject such employee to
liability under Section 16(b) of the Exchange Act..
A holder of a Non-Qualified Option may elect to satisfy all or part of the
holder's related personal tax liabilities (an "Election") by (a) directing the
Company to withhold from Shares issuable in the related exercise either a
specified number of Shares or Shares having a specified value (in each case not
in excess of the related personal tax liabilities), (b) tendering other shares
of the Company's Common Stock owned by the holder or (c) combining any or all of
the foregoing Elections in any fashion. An Election shall be irrevocable. The
withheld Shares and other shares of Common Stock tendered in payment shall be
valued at their fair market value (as determined under Section 5). The Committee
may disapprove of any Election, suspend or terminate the right to make Elections
or provide that the right to make Elections shall not apply to particular Shares
or exercises. The Committee may impose any additional conditions or restrictions
on the right to make an Election as it shall deem appropriate.
The Committee may prescribe such rules as it determines with respect to
employees subject to the reporting requirements of Section 16(a) of the Exchange
Act to effect such tax withholding.
16. Listing of Shares and Related Matters
If at any time the Committee 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 Committee.
17. Amendment of the Plan
The Board of Directors may, from time to time, amend the Plan, provided that
no amendment shall be made, without the approval of the stockholders of the
Company, that will (a) increase the total number of Shares reserved for Options
under the Plan (other than an increase resulting from an adjustment provided for
in Section 11 hereof), (b) reduce the exercise price of any Incentive Option
granted hereunder, (c) modify the provisions of the Plan relating to
eligibility, or (d) materially increase the benefits accruing to participants
under the Plan. The Committee shall be authorized to amend the Plan and the
Options granted thereunder to permit the Incentive Options granted thereunder to
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qualify as "incentive stock options" within the meaning of Section 422 of the
Code and the Treasury Regulations 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.
18. Termination or Suspension of the Plan
The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated under Section 22 or by action of the Board of
Directors, shall terminate at the close of business on the Termination Date.
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
power of the Committee to construe and administer any Options under Section 3
that are granted prior to the termination or suspension of the Plan shall
continue after such termination or during such suspension.
19. Savings Provision
With respect to persons subject to Section 16 of the Exchange Act,
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 Committee fails to so
comply, it shall be deemed null and void to the extent permitted by law and
deemed advisable by the Committee.
20. 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 obtaining.
21. Partial Invalidity
The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.
22. Effective Date
The Plan shall become effective at 5:00 P.M., New York City time, on the
Effective Date; provided, however, that if the Plan is not approved by a vote of
the stockholders of the Company at an annual meeting or any special meeting
within twelve (12) months after the Effective Date, the Plan and any Options
granted thereunder shall be null and void.
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PLEASE MARK, SIGN, DATE AND MAIL YOUR
PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE!
BARNEYS NEW YORK, INC.
JUNE 27, 2000
Please Detach and Mail in the Envelope Provided
<TABLE>
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD
1. Election of [ ] [ ] Nominees: Allen I. Questrom
directors. Shelley F. Greenhaus
John Halpern
Yasuo Okamoto
Carl Spielvogel
FOR, except vote withheld from the following David A. Strumwasser
nominees: Robert J. Tarr, Jr.
Douglas P. Teitelbaum
Steven A. Van Dyke
Shelby S. Werner
FOR AGAINST ABSTAIN
2. To consider and act upon a proposal to approve the Company's Employee Stock [ ] [ ] [ ]
Option Plan.
3. To ratify the appointment of Ernst & Young LLP as independent auditors for [ ] [ ] [ ]
the Company for the fiscal year ending February 3, 2001.
4. In their discretion, to act upon such other matters as may properly come
before the meeting or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S) (if held jointly) DATE: , 2000
------------------------------------------------------- ---------
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC. SHOULD SO INDICATE WHEN SIGNING, GIVING FULL
TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL CORPORATE NAME BY
AUTHORIZED OFFICER. IF SHARES ARE HELD IN THE NAMES OF TWO OR MORE PERSONS, ALL
SHOULD SIGN.
</TABLE>
<PAGE>
BARNEYS NEW YORK, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS-JUNE 27, 2000
The undersigned hereby appoints Marc H. Perlowitz and Steven M. Feldman or
either of them, attorneys and proxies with full power of substitution in each of
them, in the name, place and stead of the undersigned to vote as proxy all the
stock of the undersigned in Barneys New York, Inc.
The shares represented by this proxy will be voted for proposals 1 through 3 and
in accordance with item 4 if no instruction to the contrary is indicated, or if
no instruction is given.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
