Exhibit 1
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of January 8, 2001 (this
"Agreement"), among Bay Harbour Management L.C. for its managed accounts ("Bay
Harbour"), Whippoorwill Associates, Inc. as agent and/or general partner for its
discretionary accounts and as investment advisor to Whippoorwill/Barney's
Obligations Trust - 1996 ("Whippoorwill" and, together with Bay Harbour, the
"Initial Stockholders"), and ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively with his heirs and
testamentary assigns, "▇▇▇▇▇", and ▇▇▇▇▇ together with the Initial Stockholders
being referred to as the "Stockholders").
W I T N E S S E T H :
WHEREAS, each of the Initial Stockholders presently owns shares of
Common Stock, $.01 par value (the "Common Stock"), of Barneys New York, Inc., a
Delaware corporation ("Barneys"); and
WHEREAS, pursuant to an employment agreement (the "Employment
Agreement") of even date herewith between Barneys and Socol, ▇▇▇▇▇ has been or
will be granted options to purchase shares of Common Stock; and
WHEREAS, the Stockholders wish to provide for certain arrangements
with respect to the shares of Common Stock now owned or to be acquired in the
future by any of them;
NOW, THEREFORE, in consideration of the agreements, premises and
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Disposition of Common Stock.
(a) Restriction on Transfer of Shares. Each Initial Stockholder
agrees that, except in a transaction (or transactions) permitted by the first
sentence of Section 1(b) below or contemplated by Section 2 below, such Initial
Stockholder shall not, during the term of this Agreement, without the written
consent of Socol, either directly or indirectly, transfer, sell, assign,
mortgage, hypothecate, pledge, create a security interest in or lien upon,
encumber, donate, contribute, place in trust (including a voting trust), or
otherwise voluntarily or involuntarily dispose of (each, a "Transfer") any
shares of Common Stock held by such Stockholder.
(b) Permitted Dispositions. Each Initial Stockholder shall, without
regard to the provisions of Sections 2 and 3 hereof, be entitled to, upon not
less than 5 Business Days' written notice to each other Stockholder, (i)
directly or indirectly Transfer all or any portion of its shares of Common Stock
to any Affiliate of such Initial Stockholder or to the other Initial Stockholder
or any of its Affiliates, (ii) in connection with the liquidation, partial
liquidation, winding up or termination of any account for which it is agent,
general partner or investment advisor in accordance with the terms of such
account or pursuant to a direction by the holder or holders of such account,
either (A) directly or indirectly Transfer all the shares of Common Stock
allocable to such account to the beneficiaries thereof, or (B) sell any or all
the shares of Common Stock allocable to such account to a third party, and (iii)
in connection with a request for redemption or partial redemption by any account
(or the holder or holders of such account) for which it is agent, general
partner or investment advisor, either (A) directly or indirectly Transfer that
portion of the shares of Common Stock allocable to such account to the
beneficiaries thereof, or (B) sell any or all the shares of Common Stock
allocable to such account to a third party, in each case, to the extent
necessary to satisfy such request; provided, however, that any redemption made
pursuant to clause (iii) may only be made to the extent such Initial Stockholder
is unable to satisfy such request for redemption by Transferring securities
other than shares of Common Stock, using commercially reasonable efforts
consistent with such Initial Stockholder's investment diversification policies
consistently applied in good faith; and provided further, however, that any
Transfer or sale of shares of Common Stock pursuant to clauses (ii) or (iii)
above (other than distributions in kind pursuant to clauses (ii)(A) or (iii)(A)
above) shall not be made without compliance with Sections 2 or 3 hereof to the
extent any such Transfer or sale would result in a Change of Control of Barneys,
as such term is defined in the Employment Agreement. No distributions in kind
pursuant to clauses (ii)(A) or (iii)(A) above may be made to any person or
entity who, as a result of such distribution in kind, would (x) cause the
Stockholders and their respective Affiliates to beneficially own, in the
aggregate, less than 40% of the Voting Stock (as defined in the Employment
Agreement) of the Company, and (y) become the beneficial owner of more than the
Voting Stock of the Company beneficially owned, directly or indirectly, by the
Stockholders and their respective Affiliates. As used in this Agreement, the
terms "beneficially own" and "beneficial owner" are used as defined in Rule
13d-3 of the Securities Exchange Act of 1934, as amended. In addition, each
Initial Stockholder shall be entitled to, without regard to the provisions of
Section 2 hereof, (A) sell or offer to sell all or any portion of its shares of
Common Stock pursuant to a public offering (a "Public Offering") registered
under the Securities Act of 1933, as amended (the "Securities Act"), and (B)
publicly sell or offer to sell all or any portion of its shares of Common Stock
pursuant to Rule 144 of the Securities Act (other than paragraph (h) thereof)
provided that Barneys is a reporting company pursuant to the Securities Exchange
Act of 1934, as amended. As used in this Agreement, the term (i) "Affiliate"
means, with respect to any person or entity, any other person or entity that,
within the meaning of Rule 12b-2 promulgated under the Securities Exchange Act
of 1934, as amended, "controls," is "controlled by" or is under "common control
with" such person or entity, and (ii) "Business Day" means any day other than a
Saturday, a Sunday, or any other day on which banking institutions in New York
City are required or authorized to close by law or executive order.
(c) Condition Precedent to Certain Permitted Dispositions. In the
event of any disposition pursuant to Section 1(b)(i) hereof, the transferee (and
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all subsequent transferees permitted pursuant to Section 1(b)(i)) shall be bound
and obligated by, and shall be entitled to the rights and benefits afforded to
the Stockholders under the terms and provisions of, this Agreement. As a
condition precedent to any disposition by any Initial Stockholder of shares of
Common Stock permitted pursuant to Section 1(b)(i) above, each purchaser,
transferee or donee (other than a Stockholder who is already a party hereto)
shall agree in writing to be bound by all of the provisions and conditions of
this Agreement applicable to the transferor and shall become a Stockholder
hereunder, and no such purchaser, transferee or donee shall be permitted to
effect any transfer, sale or exchange of shares of Common Stock which the
Stockholders are not permitted to make under this Agreement.
2. Tag-Along Right.
(a) No Initial Stockholder shall Transfer any Common Stock, in a
single transaction or related series of transactions, to any third party unless
the Transfer is a bona fide sale to a party which is not an Affiliate of Barneys
or any Stockholder which was negotiated on an arms-length basis, and the terms
and conditions of such sale, (the "Third Party Disposition") to such third party
shall contain an offer to Socol to include in such Third Party Disposition such
number of shares of Common Stock as is determined in accordance with Section
2(b) below. At least 5 Business Days prior to effecting any Third Party
Disposition, such Initial Stockholder (the "Selling Stockholder") shall promptly
cause the terms and conditions of the Third Party Disposition to be reduced to a
reasonably detailed writing (which writing shall identify the third party
purchaser and shall include the offer to Socol to purchase or otherwise acquire
his shares of Common Stock, according to the terms and subject to the conditions
of this Section 2), and shall deliver, or cause the third party to deliver,
written notice (the "Notice") of the terms of such Third Party Disposition to
Socol. The Notice shall be accompanied by a true and correct copy of the
agreement, if any, embodying the terms and conditions of the proposed Third
Party Disposition or such written summary thereof if there is no agreement. At
any time after receipt of the Notice (but in no event later than 5 Business Days
after receipt), Socol may accept the offer included in the Notice for up to such
number of his shares of Common Stock, as determined in accordance with the
provisions of Section 2(b) below, by furnishing irrevocable written notice of
such acceptance to the Selling Stockholder and to the third party. It is
understood, however, that Socol shall not be required to sell his shares if the
Third Party Disposition is not consummated by the Selling Stockholder. If either
Initial Stockholder is considering a possible Third Party Disposition pursuant
to which Socol would have rights under this Section 2, such Initial Stockholder
agrees that, as soon as reasonably possible after its receipt of an offer or
proposal (other than ordinary broker inquiries) relating to such potential Third
Party Disposition, it will forward information relating thereto to Socol. The
Initial Stockholders further agree to discuss with and, to the extent in writing
and requested by ▇▇▇▇▇, provide copies of their assessments and evaluations of
such potential Third Party Disposition to Socol. ▇▇▇▇▇ agrees that he will not
effectuate any sale of his shares of Common Stock to such potential purchaser
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other than in accordance with the provisions of this Section 2, unless the
Initial Stockholders elect not to proceed with such Third Party Disposition.
(b) In the event that Socol elects to accept the offer included in
the Notice described in Section 2(a) above, Socol shall have the right to sell,
transfer or otherwise dispose of such number of his shares of Common Stock
pursuant to, and upon consummation of, the Third Party Disposition which is
equal to the product of (X) the total number of shares of Common Stock owned by
him and (Y) a fraction, the numerator of which shall equal the total number of
shares of Common Stock to be sold by the Initial Stockholders to the third
party, and the denominator of which shall equal the total number of shares of
Common Stock owned by all the Initial Stockholders. If the third party purchaser
is not willing to purchase such additional shares, the number of shares to be
sold by the Selling Stockholder and Socol shall be proportionately reduced.
(c) The purchase of shares of Common Stock pursuant to this Section 2
shall be made on the same terms (including, without limitation, the per share
consideration and method of payment, and the date of sale, transfer or other
disposition), and subject to the same conditions, if any, as are provided to the
Selling Stockholder and stated in the Notice.
(d) Upon the consummation of the disposition of shares of Common
Stock to the third party pursuant to the Third Party Disposition, the Selling
Stockholder shall (i) cause the third party to remit directly to Socol the sales
price of its shares of Common Stock disposed of pursuant thereto, and (ii)
furnish such other evidence of the completion and time of completion of such
disposition and the terms thereof as may reasonably be requested by Socol.
(e) If ▇▇▇▇▇ has not delivered to the Selling Stockholder and to the
third party written notice of his acceptance of the offer contained in the
Notice within 5 Business Days after the receipt of such Notice, he shall be
deemed to have waived any and all rights pursuant to this Section 2 with respect
to the disposition of his shares of Common Stock described in the Notice, and
the Selling Stockholder shall have 30 days (calculated from the first day next
succeeding the expiration of the 5 Business Day acceptance period described
above), in which to complete the disposition of the aggregate amount of shares
of Common Stock described in the Notice to the third party identified in the
Notice, on terms not more favorable to the Selling Stockholder than those which
were set forth in the Notice. If Socol has delivered irrevocable written notice
of acceptance as described in the preceding sentence and, if after 30 days
following receipt of the Notice, the Selling Stockholder and the third party
shall not have completed the disposition of shares of Common Stock to be sold in
connection therewith in accordance with the terms of the Third Party
Disposition, all the restrictions on the disposition of shares of Common Stock
contained in this Section 2 shall again be in force and effect and Socol shall
no longer be required to effectuate such sale.
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3. Drag-Along Sales.
(a) If the Initial Stockholders elect to Transfer at least
seventy-five percent (75%) of their shares of Common Stock in a bona-fide
arm's-length transaction to any third party which is not an Affiliate of Barneys
or any Stockholder (the "Purchaser") other than pursuant to Section 1(b) hereof,
then, at the election of both of the Initial Stockholders, Socol shall be
required to sell (a "Drag Along Sale") that number of shares of Common Stock
equal to the product of (x) a fraction, the numerator of which equals the number
of shares of Common Stock to be Transferred by the Initial Stockholders pursuant
to this Section 3(a), and the denominator of which equals the total number of
shares owned by the Initial Stockholders at the time of such election, and (y)
the number of shares of Common Stock then held by Socol ("Drag Along Shares"),
for the same consideration, and on the same terms and conditions, upon which the
Initial Stockholders propose to dispose of their shares of Common Stock;
provided, however, that Socol shall have no obligation pursuant to this Section
3 unless (x) upon the consummation of the Drag Along Sale, Socol shall receive
the same forms and amounts of consideration per share as the Initial
Stockholders and their Affiliates, or if any Initial Stockholder or any of their
Affiliates are given an option as to the form and amount of consideration to be
received per share, Socol shall be given the same option and (y) no Initial
Stockholder or any of their Affiliates shall receive any other form of
disproportionate benefit in connection with such Drag Along Sale. If either
Initial Stockholder is considering a possible Transfer pursuant to which Socol
would have a Drag Along Sale obligation under this Section 3, such Initial
Stockholder agrees that, as soon as reasonably possible after its receipt of an
offer or proposal (other than ordinary broker inquiries), relating to such
potential Transfer, it will forward information relating thereto to Socol. The
Initial Stockholders further agree to discuss with and, to the extent in
writing, provide copies of their assessments and evaluations of such potential
Transfer to Socol. ▇▇▇▇▇ agrees that he will not effectuate any sale of his
shares of Common Stock to such potential purchaser other than in accordance with
the provisions of this Section 3, unless the Initial Stockholders elect not to
proceed with such Transfer.
(b) The Initial Stockholders shall deliver to Socol written notice
(the "Drag Along Notice") of any sale to be made pursuant to Section 3(a), which
notice shall set forth the consideration to be paid by the Purchaser for each
share of Common Stock, the number of shares of Common Stock to be Transferred by
each Initial Stockholder, and the other terms and conditions, if any, of such
transaction. Within five (5) Business Days after the date of such notice, Socol
shall promptly deliver to the Initial Stockholders a limited power-of-attorney
authorizing the Initial Stockholders to dispose of such Drag Along Shares to the
Purchaser and to execute all other documents required to be executed in
connection with such transaction. Pending consummation of the Drag Along Sale,
the Initial Stockholders shall promptly notify Socol of any changes in the
proposed timing for the Drag Along Sale and any other material developments in
connection therewith.
(c) If, within thirty (30) days after receipt of the Drag Along
Notice by Socol, no sale of the shares of Common Stock owned by the Initial
Stockholders in accordance with the provisions of this Section 3 shall have been
completed, (i) the Initial Stockholders shall promptly return to Socol any
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certificates or documents previously delivered by Socol to the Initial
Stockholders, and (ii) all of the provisions of this Section 3 shall again be in
full force and effect.
(d) Simultaneously with the consummation of the sale of shares of
Common Stock pursuant to this Section 3, the Initial Stockholders shall cause
the Purchaser to remit directly to Socol the consideration with respect to the
Drag Along Shares and shall furnish such other evidence of the completion and
time of completion of such sale and the terms and conditions, if any, thereof as
may reasonably be requested by Socol. The Initial Stockholders shall be
primarily liable to Socol for the full amount of such consideration to the
extent that such consideration is received by the Initial Stockholders.
4. Voting. On each matter submitted to a vote of the stockholders of
Barneys, Socol agrees that he shall vote, direct the vote of, or furnish a
consent with respect to, 50% of all shares of Common Stock owned by him in the
manner directed by Bay Harbour, and 50% of all shares of Common Stock owned by
him in the manner directed by Whippoorwill. Such direction shall in each case be
given by Bay Harbour or Whippoorwill, as the case may be, by the delivery of
notice to Socol in advance of the vote on each such matter. The provisions of
this Section 4 shall terminate on the earlier of (i) the later of January 31,
2003 or the expiration date of the Stockholders Agreement, dated as of November
13, 1998, between Bay Harbour and Whippoorwill, as the same may be amended,
restated, supplemented, modified or extended from time to time (the "Initial
Stockholders Agreement"), and (ii) a Change of Control (as such term is defined
in the Employment Agreement). The Initial Stockholders agree to vote all of
their shares of Common Stock in favor of an amendment to Barneys Stock Option
Plan to increase the number of authorized shares required in connection with the
options granted to Socol pursuant to the Employment Agreement.
5. Equitable Relief. It is hereby acknowledged that irreparable harm
would occur in the event that any of the provisions of this Agreement were not
performed fully by the parties hereto in accordance with the terms specified
herein, and that monetary damages are an inadequate remedy for breach of this
Agreement because of the difficulty of ascertaining and quantifying the amount
of damage that will be suffered by the parties relying hereon in the event that
the undertakings and provisions contained in this Agreement were breached or
violated. Accordingly, each party hereto hereby agrees that each other party
hereto shall be entitled to an injunction or injunctions to restrain, enjoin and
prevent breaches of the undertakings and provisions hereof and to enforce
specifically the undertakings and provisions hereof in any court of the United
States or any state having jurisdiction over the matter; it being understood
that such remedies shall be in addition to, and not in lieu of, any other rights
and remedies available at law or in equity.
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6. Miscellaneous.
(a) Notices. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be made in
writing by personal-delivery, first-class mail (registered or certified, with
return receipt requested), telecopier (with "answer back" confirmation), or
overnight air courier guaranteeing next day delivery, to the address of such
party appearing under its or his name on Annex I hereto (or to such other
address as may be designated in writing by any party in accordance with this
Section 6(a)). Such notices or communications shall be effective and deemed
given upon delivery to said address.
(b) Complete Agreement; Amendment. This Agreement constitutes the
complete understanding of the parties with respect to its subject matter and
supersedes any other agreement or understanding relating thereto, other than the
Initial Stockholders Agreement. No amendment, change or modification of this
Agreement shall be valid, binding or enforceable, unless the same shall be in
writing and signed by each of the Stockholders.
(c) Termination. Other than as provided in Section 4 hereof, this
Agreement may be terminated (i) at any time by an instrument in writing signed
by each of the Stockholders, or (ii) by any Stockholder on the date on which the
Initial Stockholders, together with their Affiliates, hold, in the aggregate,
less than 10% of the Common Stock then outstanding.
(d) Waiver. No failure or delay on the part of any Stockholder in
exercising any right, power or privilege hereunder, and no course of dealing
among the Stockholders, shall operate as a waiver thereof nor shall any single
or partial exercise of any right, power or privilege hereunder preclude the
simultaneous or later exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights and remedies which any Stockholder would otherwise have.
(e) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute but one and the same instrument.
(f) Governing Law; Waivers. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York
without giving effect to the conflict of laws provisions thereof. Each of the
parties hereby submits to personal jurisdiction and waives any objection as to
venue in the federal or New York State courts located in the County of New York,
State of New York. Service of process on the parties in any action arising out
of or relating to this Agreement shall be effective if mailed to the parties in
accordance with Section 6(a) hereof. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights hereunder.
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(g) Benefit and Binding Effect. All of the terms and provisions of
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns including any permitted
transferee of their shares of Common Stock pursuant to Section 1(b)(i) hereof.
Notwithstanding anything to the contrary contained herein, none of
Whippoorwill's rights or obligations hereunder shall apply with respect to any
account which is in the process of liquidating, winding up or terminating, which
accounts own in the aggregate not more than approximately $4,600,000 in Common
Stock. References herein to a Stockholder shall include such Stockholder and any
of its successors and assigns pursuant hereto.
(h) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(i) After-Acquired Shares. All of the provisions of this Agreement
shall apply to all of the shares of capital stock of Barneys now owned either
directly or indirectly or which may be issued to or acquired by a Stockholder
either directly or indirectly in consequence of any additional issuance
(including, without limitation, by exercise of a right, option or warrant),
purchase, exchange, conversion or reclassification of stock, corporate
reorganization, or any other form of recapitalization, consolidation, merger,
stock split or stock dividend, or which are acquired either directly or
indirectly by a Stockholder in any other manner and for the purposes hereof the
term "Common Stock" shall include any and all such capital stock.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
BAY HARBOUR MANAGEMENT L.C., for its Managed Accounts
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Principal and Portfolio
Manager
WHIPPOORWILL ASSOCIATES, INC., as agent and/or general
partner for its discretionary accounts and as investment
advisor to Whippoorwill/Barney's Obligations Trust - 1996
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
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ANNEX I
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Stockholders
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If to Bay Harbour, to it at the following address:
Bay Harbour Management L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
If to Whippoorwill, to it at the following address:
Whippoorwill Associates, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
If to Socol, to him at the following address:
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any of the parties hereto shall have specified by
notice in writing to the others.
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