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EXHIBIT 10.22
EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 17th day of March,
1997 by and between Marks Bros. Jewelers, Inc., a Delaware corporation, and
Xxxxx X. Xxxxx ("Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive as its
Executive Vice President - Store Operations, and the Executive desires to accept
such employment, upon the conditions set forth herein;
WHEREAS, in this capacity Executive will be a key employee of
the Company and his services and knowledge are valuable to the Company;
WHEREAS, the Board (as defined in Section 1) has determined
that it is in the best interests of the Company and its stockholders to secure
Executive's continued services, and to encourage Executive's full attention and
dedication to the Company, the Board has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein contained, the Company and Executive
hereby agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause means (1) the commission by Executive of a felony
involving moral turpitude or (2) any material breach of any statutory or common
law duty to the Company or any subsidiary involving wilful malfeasance.
(c) "Change in Control" means:
(1) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 25% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock") or (ii)
the combined voting power of the
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then outstanding securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change in
Control: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of a conversion or exchange privilege in
respect of outstanding convertible or exchangeable securities), (B) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, (C) any
acquisition by an Exempt Person, or (D) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation involving the Company, if,
immediately after such reorganization, merger or consolidation, each of the
conditions described in clauses (i), (ii) and (iii) of subsection (3) of this
Section (1)(c) shall be satisfied;
(2) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided, however, that any individual who becomes a
director of the Company subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by the vote
of at least a majority of the directors then comprising the Incumbent Board
shall be deemed to have been a member of the Incumbent Board; and provided
further, that no individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall be deemed to have been a member
of the Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation unless, in any such case, immediately
after such reorganization, merger or consolidation, (i) more than 60% of the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 60% of the combined voting
power of the then outstanding securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals or entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation and in substantially the same
proportions relative to each other as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be, (ii) no
Person (other than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation resulting from such
reorganization, merger or consolidation (or any corporation controlled by the
Company) and any Person which beneficially owned, immediately prior to such
reorganization,
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merger or consolidation, directly or indirectly, 25% or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 25% or more of the then
outstanding shares of common stock of such corporation or 25% or more of the
combined voting power of the then outstanding securities of such corporation
entitled to vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the
Board providing for such reorganization, merger or consolidation; or
(4) approval by the stockholders of the Company of (i) a plan
of complete liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company other than
to a corporation with respect to which, immediately after such sale or other
disposition, (A) more than 60% of the then outstanding shares of common stock
thereof and more than 60% of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such sale or other disposition and in
substantially the same proportions relative to each other as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (other than the Company, any employee benefit plan (or related
trust) sponsored or maintained by the Company or such corporation (or any
corporation controlled by the Company) and any Person which beneficially owned,
immediately prior to such sale or other disposition, directly or indirectly, 25%
or more of the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of the then outstanding shares of common stock thereof
or 25% or more of the combined voting power of the then outstanding securities
thereof entitled to vote generally in the election of directors and (C) at least
a majority of the members of the board of directors thereof were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Company" means Marks Bros. Jewelers, Inc., a Delaware
corporation.
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(f) "Date of Termination" means (1) the effective date on
which Executive's employment by the Company terminates as specified in a prior
written notice by the Company or Executive, as the case may be, to the other,
delivered pursuant to Section 12 or (2) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(g) "Exempt Person" means each of Xxxx X. Xxxxxxxx, Xxxx X.
Xxxxxxxxxx, Xxxxxxx X. Xxxxxxxx and any Affiliate (as such term is defined in
Rule 12b-1 under the Securities Exchange Act of 1934, as in effect on the date
hereof, "Affiliate") thereof.
(h) "Good Reason" means, without Executive's express written
consent, the occurrence of any of the following events:
(1) any of (i) the assignment to Executive of any
duties materially lower in responsibility than Executive's
responsibilities with the Company as of the date Executive commences
employment with the Company or, if a Change in Control has occurred,
immediately prior to such Change in Control, (ii) a change in
Executive's reporting responsibilities, titles or offices with the
Company as in effect on the date of this Agreement or, if a Change in
Control has occurred, immediately prior to such Change in Control or
(iii) any removal or involuntary termination of Executive from the
Company otherwise than as expressly permitted by this Agreement or any
failure to re-elect Executive to any position with the Company held by
Executive on the date of this Agreement or, if a Change in Control has
occurred, immediately prior to such Change in Control;
(2) a reduction by the Company in Executive's rate of
annual base salary as in effect on the date of this Agreement or, if a
Change in Control has occurred, immediately prior to such Change in
Control or as the same may be increased from time to time thereafter;
(3) any requirement of the Company that Executive (i)
be based anywhere other than at the facility where the Executive is
located on the date of this Agreement (or a new headquarters facility
within a 30-mile radius of the Company's current headquarters) or (ii)
travel on Company business to an extent substantially more burdensome
than the travel obligations of Executive immediately prior to the date
hereof or, if a Change in Control has occurred, immediately prior to
such Change in Control;
(4) the failure of the Company to (i) continue in
effect any employee benefit plan or compensation plan in which
Executive is participating as of the commencement of employment or, if
a Change in Control has occurred,
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prior to such Change in Control, unless Executive is permitted to
participate in other plans providing Executive with substantially
comparable benefits in the aggregate, or the taking of any action by
the Company which would adversely affect Executive's participation in
or materially reduce Executive's benefits under any such plan, (ii)
provide Executive and Executive's dependents welfare benefits
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) in accordance
with the most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for Executive
immediately prior to the date of this Agreement or, if a Change in
Control has occurred, prior to such Change in Control or, if more
favorable to Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies, (iii) provide fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect for Executive immediately prior to
the date of this Agreement or, if a Change in Control has occurred,
prior to such Change in Control or, if more favorable to Executive, as
in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies, (iv) provide an
office or offices of a size and with furnishings and other
appointments, together with personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to
Executive by the Company and its affiliated companies immediately prior
to the date of this Agreement or, if a Change in Control has occurred,
prior to such Change in Control or, if more favorable to Executive, as
provided generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies, (v) provide
Executive with paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect for Executive immediately prior to
the date of this Agreement or, if a Change in Control has occurred,
prior to such Change in Control or, if more favorable to Executive, as
in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies, or (vi)
reimburse Executive promptly for all reasonable employment expenses
incurred by Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect for Executive immediately prior to the date of this Agreement
or, if a Change in Control has occurred, prior to such Change in
Control, or if more favorable to Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies; or
(5) the failure of the Company to obtain the
assumption agreement from any successor as contemplated in Section
11(b).
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For purposes of this Agreement, any good faith determination
of Good Reason made by Executive shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive shall not constitute Good Reason.
(i) "Nonqualifying Termination" means a termination of
Executive's employment (1) by the Company for Cause, (2) by Executive for any
reason other than a Good Reason, (3) as a result of Executive's death or (4) by
the Company due to Executive's absence from his duties with the Company on a
full-time basis for at least 180 consecutive days as a result of Executive's
incapacity due to physical or mental illness; provided, however, that a
termination of Executive's employment for any reason whatsoever during the
"Window Period" (hereinafter defined) shall not constitute a Nonqualifying
Termination.
(j) "Termination Period" means the period of time beginning
with the date hereof and ending on the earliest to occur of (1) Executive's 70th
birthday, (2) Executive's death and (3) three years following a Change in
Control.
(k) "Window Period" means the 30-day period commencing six
months after the date of a Change in Control.
2. Position; Responsibilities. The Company shall employ
Executive initially as its Executive Vice President -- Store Operations,
commencing March 17, 1997 (the "Commencement Date"). Executive shall perform
such executive and administrative duties as the chief executive officer of the
Company (the "Company CEO") or Board may assign to Executive from time to time.
While an employee of the Company Executive shall perform faithfully the duties
assigned Executive to the best of Executive's abilities and devote Executive's
full and undivided business time and attention to the transaction of the
Company's business and not engage in any other business activities except with
the approval of the Company CEO. The Company or Executive may terminate
Executive's employment at any time.
3. Compensation; Options. (a) Base Salary. As compensation
for Executive's services hereunder, the Company shall pay to Executive salary at
an annual rate of $200,000 or such higher salary as may be established by the
Company from time to time.
(b) Bonus. Executive shall be entitled to participate in the
Company's Management Bonus Plan or other bonus plan made available to elected
officers of the Company generally. For the Company's fiscal year ending January
31, 1998 Executive
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shall receive a cash bonus as a percentage of salary paid equal to the
percentage of salary paid to the Company CEO.
(c) Benefits. Executive shall be entitled to all fringe
benefits made available to elected officers of the Company generally (currently
including vacation days, health benefits, life insurance coverage, automobile
benefits and reimbursement of expenses) from time to time.
(d) Options. (i) Executive shall be granted stock options
under on or more of the Company's stock option plans effective as of
the Commencement Date for 100,000 shares of the Company's common stock
at an exercise price per share equal to the closing sale price of such
common stock on the Nasdaq National Market on the Commencement Date
(the "Exercise Price"). Such options (the "Options") shall vest 25% per
year on each of the first, second, third and fourth anniversaries of
such Commencement Date. Options for the ISO Number of shares of the
Company's common stock shall be incentive stock options for purposes of
Section 422 of the Code; provided that, if the Company's stockholders
do not approve the Company's 1997 Long-Term Incentive Plan (the "1997
Plan") within the time required under Code for incentive stock option
treatment, any of such Options granted under the 1997 Plan shall be
nonqualified options. All of the Options other than those that are
incentive stock options shall be nonqualified stock options. The ISO
Number shall be 400,000, divided by the Exercise Price, and then,
unless such resulting number is evenly divisible by four, rounded to
the nearest lower whole number that is evenly divisible by 4.
(ii) If Executive exercises all or any portion of the Options
at a time or in a manner which results in all or any portion of the
compensation relating thereto for Federal income tax purposes to be
nondeductible pursuant to Section 162(m) of the Code or any successor
provision, Executive shall pay the Company, concurrently with and as a
condition to the exercise of such Options, an amount in cash equal to
40% of such nondeductible compensation. Furthermore, if any time
Executive disposes of any shares acquired pursuant to the Options at a
time or in a manner which results in any portion of the compensation
relating to the Options to be so nondeductible, Executive shall
immediately pay the Company an amount in cash equal to 40% of such
nondeductible compensation.
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4. Payments Upon Termination of Employment.
(a) If during the Termination Period the employment of
Executive shall terminate, other than by reason of a Nonqualifying Termination,
then the Company shall pay to Executive (or Executive's beneficiary or estate)
within 30 days following the Date of Termination, as compensation for services
rendered to the Company:
(1) a lump sum cash amount equal to the sum of (i)
Executive's full annual base salary from the Company and its affiliated
companies through the Date of Termination, to the extent not
theretofore paid, (ii) Executive's annual bonus in an amount at least
equal to the higher of (x) one-half of the maximum bonus the Executive
could earn during the fiscal year during which such Change in Control
occurs and (y) the average of the Executive's annual bonus (annualized
for any fiscal year consisting of less than 12 full months) with
respect to which bonus paid or payable, including by reason of any
deferral, to Executive by the Company and its affiliated companies in
respect of the two fiscal years of the Company (or such portion thereof
during which Executive performed services for the Company if Executive
shall have been employed by the Company for less than such two fiscal
year period) immediately preceding the fiscal year in which the Change
in Control occurs, multiplied by a fraction, the numerator of which is
the number of days in the fiscal year in which the Change in Control
occurs through the Date of Termination and the denominator of which is
365 or 366, as applicable, and (iii) any compensation previously
deferred by Executive (together with any interest and earnings thereon)
and any accrued vacation pay, in each case to the extent not
theretofore paid; plus
(2) a lump-sum cash amount (subject to any applicable
payroll or other taxes required to be withheld pursuant to Section 4)
in an amount equal to (i) 2.5 times (1.5 times if a Change in Control
has not occurred) Executive's highest annual base salary from the
Company and its affiliated companies in effect during the 12-month
period prior to the Date of Termination plus (ii) 2.5 times ([1.5 times
if a Change in Control has not occurred) Executive's highest annualized
(for any fiscal year consisting of less than 12 full months or with
respect to which Executive has been employed by the Company for less
than 12 full months), bonus paid or payable, including by reason of any
deferral, to Executive by the Company and its affiliated companies in
respect of the five fiscal years of the Company (or such portion
thereof during which Executive performed services for the Company if
Executive shall have been employed by the Company for less than such
five fiscal year period) immediately preceding the fiscal year in which
the Change in Control occurs, provided, however, that in the event
there are fewer than 30 whole months (18 whole months if a Change in
Control has not occurred) remaining from the Date of Termination to the
date of
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Executive's 70th birthday, the amount calculated in accordance with
this Section 3(a)(2) shall be reduced by multiplying such amount by a
fraction the numerator of which is the number of months, including a
partial month (with a partial month being expressed as a fraction the
numerator of which is the number of days remaining in such month and
the denominator of which is the number of days in such month), so
remaining and the denominator of which is 30 (18 if a Change in Control
has not occurred); provided further, that any amount paid pursuant to
this Section 3(a)(2) shall be paid in lieu of any other amount of
severance relating to salary or bonus continuation to be received by
Executive upon termination of employment of Executive under any
severance plan, policy or arrangement of the Company.
(b) For a period of 2.5 years (18 months if a Change in
Control has not occurred) commencing on the Date of Termination, the Company
shall continue to keep in full force and effect all policies of medical,
accident, disability and life insurance with respect to Executive and his
dependents with the same level of coverage, upon the same terms and otherwise to
the same extent as such policies shall have been in effect immediately prior to
the Date of Termination or, if more favorable to Executive, as provided
generally with respect to other peer executives of the Company and its
affiliated companies, and the Company and Executive shall share the costs of the
continuation of such insurance coverage in the same proportion as such costs
were shared immediately prior to the Date of Termination.
(c) If during the Termination Period the employment of
Executive shall terminate by reason of a Nonqualifying Termination, then the
Company shall pay to Executive within 30 days following the Date of Termination,
a cash amount equal to the sum of (1) Executive's full annual base salary from
the Company through the Date of Termination, to the extent not theretofore paid
and (2) any compensation previously deferred by Executive (together with any
interest and earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid.
5. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment, benefit or distribution by the Company or its
affiliated companies to or for the benefit of Executive (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 3) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code, or any successor provision, or any interest or
penalties are incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by
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Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 5(c), all
determinations required to be made under this Section 5, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company's public accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the receipt of notice from Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 5, shall be paid by the Company to Executive within
five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by Executive, it shall
furnish Executive with a written opinion that failure to report the Excise Tax
on Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made, including subsequent interest and penalties ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 5(c) and Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which Executive gives such
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notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(1) give the Company any information reasonably requested by
the Company relating to such claim,
(2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and provided
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to
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settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced
by the Company pursuant to Section 5(c), Executive becomes entitled to receive,
and receives, any refund with respect to such claim, Executive shall (subject to
the Company's complying with the requirements of Section 5(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 5(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
6. Withholding Taxes. The Company may withhold from all
payments due to Executive (or his beneficiary or estate) hereunder all taxes
which, by applicable federal, state, local or other law, the Company is required
to withhold therefrom.
7. Reimbursement of Expenses. If any contest or dispute shall
arise under this Agreement involving termination of Executive's employment with
the Company (which shall be deemed to include, without limitation, issues
relating to Executive's stock options) or involving the failure or refusal of
the Company to perform fully in accordance with the terms hereof, the Company
shall reimburse Executive, on a current basis, for all legal fees and expenses,
if any, incurred by Executive in connection with such contest or dispute,
together with interest in an amount equal to the base rate of The First National
Bank of Boston from time to time in effect, but in no event higher than the
maximum legal rate permissible under applicable law, such interest to accrue
from the date the Company receives Executive's statement for such fees and
expenses through the date of payment thereof; provided, however, that in the
event the resolution of any such contest or dispute includes a finding denying,
in total, Executive's claims in such contest or dispute, Executive shall be
required to reimburse the Company, over a period of 12 months from the date of
such resolution, for all sums advanced to Executive pursuant to this Section 7;
provided, further, that no such reimbursement shall be required if Executive had
a reasonable basis for the position taken by Executive with respect to such
claims.
8. Termination of Agreement. This Agreement shall be effective
on the date hereof and shall terminate upon the first to occur of (i)
Executive's 70th birthday and (ii) Executive's death.
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9. Scope of Agreement. Nothing in this Agreement shall be
deemed to entitle Executive to continued employment with the Company or its
subsidiaries.
10. Directors and Officers Liability Insurance;
Indemnification. The Company agrees that, notwithstanding a Termination of
Executive's employment with the Company, the Company shall, for at least three
years after the Date of Termination, use all reasonable efforts to have
Executive included as a named insured or otherwise covered for actions or
failures to act by Executive in his capacity as a director or officer of the
Company to at least the same extent as other executive officers or directors, as
the case may be, of the Company under any directors and officers liability
insurance policies maintained by the Company; provided that the additional cost
of providing coverage with a retroactive date including Executive's period of
service or with an extended reporting period or a combination of both does not
materially increase the cost of the Company's directors and officers insurance.
The Company agrees that it will not alter the indemnification provisions in its
charter or by-laws so as to give Executive less protection thereunder with
respect to periods during which Executive serves or served the Company as an
executive officer or other employee as is afforded other executive officers or
peer employees, as the case may be, with respect to periods during which they
serve the Company.
11. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred.
(b) The Company agrees that concurrently with any merger,
consolidation or transfer of assets referred to in paragraph (a) of this Section
11, it will cause any successor or transferee unconditionally to assume, by
written instrument delivered to Executive (or his beneficiary or estate), all of
the obligations of the Company hereunder. Failure of the Company to obtain such
assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall be a breach of this Agreement and shall entitle
Executive to compensation and other benefits from the Company in the same amount
and on the same terms as Executive would be entitled hereunder if Executive's
employment were terminated following a Change in Control other than by reason of
a Nonqualifying Termination. For purposes of implementing the foregoing, the
date on which any such merger, consolidation or transfer becomes effective shall
be deemed the Date of Termination.
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(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive shall die while any amounts would be payable to Executive hereunder
had Executive continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such
person or persons appointed in writing by Executive to receive such amounts or,
if no person is so appointed, to Executive's estate.
12. Notice. (a) For purposes of this Agreement, all notices
and other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed (1) if to the Executive, to 000 Xxx Xxxxx Xxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, and if to the Company, to Marks Bros. Jewelers,
Inc., 000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, attention: Secretary, or (2)
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
(b) A written notice of Executive's Date of Termination by the
Company or Executive, as the case may be, to the other, shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the termination date (which date shall be not
less than 15 days after the giving of such notice). The failure by Executive or
the Company to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company hereunder or preclude Executive or the Company from
asserting such fact or circumstance in enforcing Executive's or the Company's
rights hereunder.
13. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive or others. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and, such amounts shall not be reduced whether or not Executive
obtains other employment.
(b) If there shall be any dispute between the Company and
Executive in the event of any termination of Executive's employment (which shall
be deemed to include, without limitation, issues relating to Executive's
options), then, unless and until
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there is a final, nonappealable judgment by a court of competent jurisdiction
declaring that such termination was for Cause, that the determination by
Executive of the existence of Good Reason was not made in good faith, or that
the Company is not otherwise obligated to pay any amount or provide any benefit
to Executive and his dependents or other beneficiaries, as the case may be,
under paragraphs (a) and (b) of Section 5, the Company shall pay all amounts,
and provide all benefits, to Executive and his dependents or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to paragraphs (a) and (b) of Section 4 as though such
termination were by the Company without Cause or by Executive with Good Reason;
provided, however, that the Company shall not be required to pay any disputed
amounts pursuant to this paragraph except upon receipt of an undertaking by or
on behalf of Executive to repay all such amounts to which Executive is
ultimately adjudged by such court not to be entitled.
14. Governing Law; Validity. The interpretation, construction
and performance of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Illinois without
regard to the principle of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which other provisions
shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
16. Miscellaneous. No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by Executive and by a duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Failure by Executive or the Company to insist upon strict compliance with
any provision of this Agreement or to assert any right Executive or the Company
may have hereunder, including, without limitation, the right of Executive to
terminate employment for Good Reason, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement. The rights
of, and benefits payable to, Executive, his estate or his beneficiaries pursuant
to this Agreement are in addition to any rights of, or benefits payable to,
Executive, his estate or his beneficiaries under any other employee benefit plan
or compensation program of the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by a duly authorized officer of the Company and Executive has
executed this Agreement as of the day and year first above written.
MARKS BROS. JEWELERS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxx
Chairman, President and
Chief Executive Officer
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx
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