EMPLOYMENT AGREEMENT
EXHIBIT
10.1
THIS
EMPLOYMENT AGREEMENT (“Agreement”), dated as of April 12, 2010 (the “Execution
Date”), between STERLING JEWELERS, INC., a Delaware corporation (the “Company”),
and XXXXXX X. XXXXXX (the “Executive”).
W I T N E
S S E T H :
WHEREAS,
the Company is a wholly-owned subsidiary of Signet Jewelers
Limited (“Signet”); and
WHEREAS,
the Company desires to engage the services of the Executive in the capacity of
Chief Financial Officer designate of Signet from the Start Date (as hereinafter
defined) until June 25, 2010, and Chief Financial Officer of Signet as of June
26, 2010, and the Executive desires to provide services in such capacity to
Signet, on the terms and subject to the conditions set forth in this
Agreement;
NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment and
Term.
(a) The
Company hereby employs the Executive, and the Executive hereby accepts
employment by the Company, in the capacities and on the terms and subject to the
conditions set forth herein from April 15, 2010 (the “Start Date”) until the
date on which the Executive sustains a Termination of Employment (the “Term of
Employment”). For purposes of this Agreement, (i) “Termination of
Employment” shall mean the Executive’s “separation from service” with the
Company, Signet and any entity required to be aggregated with the Company and/or
Signet under Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and Treasury Regulation Section 1.409A-1(h), applied by using the
default rules contained therein, including, but not limited to, the default
rules contained in Treasury Regulation Section 1.409A-1(h)(3), and through
incorporation of the following rules: (A) the employment relationship is treated
as continuing intact while the Executive is on military leave, sick leave, or
other bona fide leave of absence if the period of such leave does not exceed six
months, or if longer, so long as the Executive retains a right to reemployment
with the Company, Signet and/or any entity required to be aggregated with
Company or Signet under Treasury Regulation Section 1.409A-1(h)(3); (B) a leave
of absence constitutes a bona fide leave of absence only if there is a
reasonable expectation that the Executive will return to perform services for
the Company, Signet and/or any entity required to be aggregated with Company or
Signet under Treasury Regulation Section 1.409A-1(h)(3); and (C) if the period
of leave exceeds six months and the Executive does not retain a right to
reemployment, the Executive’s Termination of Employment date shall be deemed to
be the first date immediately following such six-month period; (ii) the
“Performance Period” shall mean the performance period or words of similar
import contained in the
LTIP (as
hereinafter defined); (iii) the “Proration Factor” shall be, (A) in the case of
an Annual Bonus (as hereinafter defined), the quotient obtained by dividing the
number of business days worked during the applicable Fiscal Year of Signet in
which the Termination of Employment occurs by the number of business days in
such Fiscal Year, and (B) in the case of a Long Term Bonus (as hereinafter
defined), the quotient obtained by dividing the number of business days worked
during the Performance Period within which the Termination of Employment occurs
by the total number of business days comprising the Performance Period; and (iv)
the Fiscal Year as of the date hereof means the approximately year-long period
ending on the Saturday closest to January 31.
(b) The
Company may terminate the Executive’s employment hereunder without Cause (as
hereinafter defined) at any time by notifying the Executive in
writing. In the event the Company terminates the Executive’s
employment without Cause, the Company shall have no further obligations
hereunder except to (i) pay the Executive his Base Salary (as defined in Section
3 below) through such date of Termination of Employment in accordance with the
standard payroll practices of the Company; (ii) pay the Executive for any Annual
Bonus (as defined in Section 3 below) (which Annual Bonus shall be paid to the
Executive in a single lump sum during the period commencing on the 15th of
April and ending on the 31st of
May immediately following the end of the applicable Fiscal Year of Signet
coinciding with or ending immediately prior to the Termination of Employment)
and/or Long Term Bonus (as defined in Section 3 below) (which amount shall be
paid in accordance with the terms of the long term incentive plan(s) for
executive officers of the Company or Signet, as applicable (the “LTIP”), then in
effect, as approved by the Compensation Committee of Signet or its designee)
that has been earned under the applicable plan or arrangement by Executive for a
completed applicable Fiscal Year (or, in the case of the Long Term Bonus, a
completed applicable Performance Period) ending immediately prior to the
effective date of the Executive’s Termination of Employment but which remain
unpaid as of the date of such Termination of Employment; (iii) pay the Executive
the pro-rata portion, based upon the applicable Proration Factor, of the Annual
Bonus for the Fiscal Year of Signet in which the Termination of Employment
occurs earned as of such date of Termination of Employment (which Annual Bonus
shall be determined based on actual performance and shall be paid to the
Executive in a single lump sum during the period commencing on the 15th of
April and ending on the 31st of
May following the end of the Fiscal Year of Signet coinciding with or
immediately following the date of the Termination of Employment); (iv) pay the
Executive the pro-rata portion, based upon the applicable Proration Factor, of
the Long Term Bonus for the Performance Period in which the Termination of
Employment occurs earned as of such date of Termination of Employment (which
amount shall be determined based on actual performance and paid following the
close of such Performance Period in accordance with the terms of the LTIP, as
approved by the Compensation Committee of Signet or its designee); (v) pay the
Executive for any vacation days for the vacation year (currently based on a
12-month period ending October 31) in which the Termination of Employment occurs
earned but not used by the Executive as of the date of Termination of Employment
(“Unused Vacation Days”) in a single lump sum in accordance with standard
payroll practices of the Company no later than the second pay date following the
Termination of Employment; (vi) continue to pay to the Executive his Base
Salary in effect on the date of the Executive’s Termination of
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Employment
for twelve (12) months following such date, in accordance with the Company’s
standard payroll practices of the Company, with each such payment hereby
designated a separate payment for purposes of Section 409A of the Code and with
the first payment being made in accordance with the provisions of Section 4(f)
below; and (vii) provide the Executive any other accrued but unpaid benefits to
which the Executive is entitled under Sections 3(b), (c), (d), and (f) hereof in
accordance with the terms and conditions of the applicable plan or
policy. The Executive shall continue to have the obligations provided
for in Sections 7 and 8 hereof. For purposes of this Agreement, a
termination of employment without Cause shall not include any termination of
employment set forth in Section 4 hereof.
(c) The
Executive’s employment may also be terminated by the Executive for any reason,
other than as provided in Section 4, at any time upon 90 days’ prior written
notice to the Company. Upon such termination, the Company shall have
no further obligations hereunder except to (i) pay the Executive his Base Salary
(as defined in Section 3 below) through such date of Termination of Employment
in accordance with the standard payroll practices of the Company; (ii) pay the
Executive for any Annual Bonus (as defined in Section 3 below) (which Annual
Bonus shall be paid to the Executive in a single lump sum during the period
commencing on the 15th of
April and ending on the 31st of
May immediately following the end of the applicable Fiscal Year of Signet
coinciding with or ending immediately prior to the Termination of Employment)
and/or Long Term Bonus (as defined in Section 3 below) (which amount shall be
paid in accordance with the terms of the LTIP, then in effect, as approved by
the Compensation Committee of Signet or its designee) that has been earned under
the applicable plan or arrangement by Executive for a completed applicable
Fiscal Year (or, in the case of the Long Term Bonus, a completed applicable
Performance Period) ending immediately prior to the effective date of the
Executive’s Termination of Employment but which remain unpaid as of the date of
such Termination of Employment; (iii) pay the Executive for any Unused Vacation
Days in a single lump sum in accordance with standard payroll practices of the
Company no later than the second pay date following the Termination of
Employment; and (iv) provide the Executive any other accrued but unpaid benefits
to which the Executive is entitled under Sections 3(b), (c), (d), and (f) hereof
in accordance with the terms and conditions of the applicable plan or policy.
The Executive shall continue to have the obligations provided in Sections 7 and
8 hereof.
2. Duties. During
the Term of Employment, the Executive shall serve as Chief Financial Officer
designate of Signet until June 25, 2010, and Chief Financial Officer of Signet
as of June 26, 2010. The Executive shall report to the Chief
Executive Officer of Signet. The Executive shall serve Signet
faithfully and to the best of his ability in such capacities, as determined in
good faith by the Chief Executive Officer of Signet, devoting substantially all
of his business time, attention, knowledge, energy and skills to such
employment, provided, however, that, if
elected, the Executive shall also serve during any part of the Term of
Employment as any other officer or a director of the Company, Signet or any of
their subsidiaries, without any compensation therefor other than as specified in
this Agreement. Service on boards of directors or similar boards
shall be governed by the Company policy applicable to executive
officers.
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3. Compensation and
Benefits. As full and complete compensation to the Executive
for his execution and delivery of this Agreement and performance of the services
required hereunder, the Company shall pay, grant or provide to the Executive
during the Term of Employment, and the Executive agrees to accept:
(a) (i)
a starting base salary, payable in accordance with the Company’s standard
payroll practices applicable to executive officers, of $650,000 per annum, to be
reviewed annually by the Compensation Committee of Signet, on or about April
1st of
each year, for possible salary increases in accordance with the practices of
Signet for reviewing executive compensation (“Base Salary”); (ii) an annual
bonus (the “Annual Bonus”) of up to 120% of Base Salary, in accordance with the
annual bonus plan then in effect for executive officers of Signet, as approved
by the Compensation Committee of Signet or its designee, which Annual Bonus
shall be paid in a single lump sum during the period commencing on the 15th of
April and ending on the 31st of
May following the end of the applicable Fiscal Year of Signet, with the first
such Annual Bonus being paid in respect of the Fiscal Year of Signet beginning
on January 31, 2010 and ending on January 29, 2011, without proration in any
manner to account for the Start Date occurring after January 31, 2010; and (iii)
a long term incentive bonus with a target of 115% of Base Salary to be comprised
of cash and/or equity-based awards (as determined in the sole discretion of the
Compensation Committee of Signet, consistent with substantially similar awards
granted to other executive officers), to be paid upon the conclusion of the
Performance Period in accordance with the LTIP then in effect as approved by the
Compensation Committee of Signet or its designee (the “Long Term
Bonus”). For avoidance of doubt, the initial Long Term Bonus shall be
granted on or about the date of the first meeting of Signet’s Board of Directors
coinciding with or immediately following the Start Date, for the Fiscal Year of
Signet commencing on January 31, 2010 and ending on January 29, 2011, and if the
Compensation Committee of Signet so approves, a Long Term Bonus shall be granted
annually for each subsequent Performance Period. The initial Long
Term Bonus shall not be prorated in any manner to account for the Start Date
occurring after January 31, 2010.
(b) Medical/dental,
long-term and short-term disability and life insurance benefits made available
generally from time to time to executive officers of the Company;
(c) Such
deferred compensation benefits as may be made available generally from time to
time to executive officers of the Company upon the authorization and approval of
the Compensation Committee of Signet or its designee;
(d) An
amount equal to $2,792 per month for automobile benefits, in lieu of the
provision of or reimbursement of costs related to an automobile;
(e) Five
weeks paid vacation per year or such greater amount as provided for in the
policies and procedures of the Company as in effect from time to time for its
executive officers, which vacation shall be earned in accordance with such
policies and procedures; and
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(f) Such
other perquisites and benefits as may be made available generally from time to
time by the Company to executive officers of the Company.
No
reimbursement or in-kind benefits provided under this Section 3 in respect of
one taxable year shall affect the amounts payable in any other taxable year or
shall be subject to liquidation or exchange for another benefit. Any
reimbursements made to the Executive pursuant to this Agreement or otherwise
shall be paid no later than the last day of the year following the year in which
the expense was incurred.
4. Termination.
(a) Disability. In
the event of any physical or mental disability during the Term of Employment
which renders the Executive incapable of performing the services required of him
for any period or periods aggregating six months during any twelve-month period
(“Disability”), the Company shall have the right, upon thirty (30) days advance
written notice to the Executive (which notice may be given prior to and subject
to the occurrence of a Disability), to terminate the Executive’s employment
hereunder. Upon such Termination of Employment, the Company shall
have no further obligations hereunder, except to (i) pay the Executive his Base
Salary through such date of Termination of Employment in accordance with the
standard payroll practices of the Company; (ii) pay the Executive for any Annual
Bonus (which Annual Bonus shall be paid to the Executive in a single lump sum
during the period commencing on the 15th of
April and ending on the 31st of
May immediately following the end of the applicable Fiscal Year of Signet
coinciding with or ending immediately prior to the Termination of Employment)
and/or Long Term Bonus (which amount shall be paid in accordance with the terms
of the LTIP then in effect, as approved by the Compensation Committee of Signet
or its designee) that has been earned under the applicable plan or arrangement
by Executive for a completed applicable Fiscal Year (or, in the case of the Long
Term Bonus, a completed applicable Performance Period) ending immediately prior
to the effective date of the Executive’s Termination of Employment but which
remain unpaid as of the date of such Termination of Employment; (iii) pay the
Executive the pro-rata portion, based upon the applicable Proration Factor, of
the Annual Bonus for the Fiscal Year of Signet in which the Termination of
Employment occurs earned as of such date of Termination of Employment (which
Annual Bonus shall be determined based on actual performance and shall be paid
to the Executive in a single lump sum during the period commencing on the
15th of
April and ending on the 31st of
May following the end of the Fiscal Year of Signet coinciding with or
immediately following the date of the Termination of Employment); (iv) pay the
Executive for any Unused Vacation Days in a single lump sum in accordance with
standard payroll practices of the Company no later than the second pay date
following the Termination of Employment; and (v) provide the Executive any other
accrued but unpaid benefits to which the Executive is entitled under Sections
3(b), (c), (d), and (f) hereof in accordance with the terms and conditions of
the applicable plan or policy. For purposes of this Section 4(a), the
Executive’s Disability shall be determined in accordance with any long-term
disability plan of or applicable to the Company that is then in effect, or if no
such plan exists, in accordance with a medical examination performed by a
physician selected by the Executive (provided that the Company shall have the
right to consent to the selection of such physician, which consent
5
shall not
be unreasonably withheld). The Executive shall continue to have the
obligations provided in Sections 7 and 8 hereof.
(b) Death. In
the event of the Executive’s death during the Term of Employment, the Term of
Employment shall terminate immediately and the Company shall have no further
obligations hereunder, except to (i) pay the Executive’s estate the Executive’s
Base Salary through such date of Termination of Employment in accordance with
the standard payroll practices of the Company; (ii) pay the Executive’s estate
for any Annual Bonus (which Annual Bonus shall be paid to the Executive’s estate
in a single lump sum during the period commencing on the 15th of
April and ending on the 31st of
May immediately following the end of the applicable Fiscal Year of Signet
coinciding with or ending immediately prior to the Termination of Employment)
and/or Long Term Bonus (which amount shall be paid in accordance with the terms
of the LTIP then in effect, as approved by the Compensation Committee of Signet
or its designee) that has been earned under the applicable plan or arrangement
by Executive for a completed applicable Fiscal Year (or, in the case of the Long
Term Bonus, a completed applicable Performance Period) ending prior to the
effective date of the Executive’s Termination of Employment but which remain
unpaid as of the date of such Termination of Employment; (iii) pay the
Executive’s estate the pro-rata portion, based upon the applicable Proration
Factor, of the Annual Bonus for the Fiscal Year of Signet in which the
Termination of Employment occurs earned as of such date of Termination of
Employment (which Annual Bonus shall be determined based on actual performance
and shall be paid to the Executive’s estate in a single lump sum during the
period commencing on the 15th of
April and ending on the 31st of
May following the end of the Fiscal Year of Signet coinciding with or
immediately following the date of the Termination of Employment); (iv) pay the
Executive’s estate for any Unused Vacation Days in a single lump sum in
accordance with standard payroll practices of the Company no later than the
second pay date following the Termination of Employment; (v) pay to the
Executive’s estate his Base Salary in effect on the date of the Executive’s
Termination of Employment for six (6) months following such date, in accordance
with the Company’s standard payroll practices, with each such payment hereby
designated a separate payment for purposes of Section 409A of the Code and with
the first payment being made in accordance with the provisions of Section 4(f)
below; and (vi) provide the Executive’s estate with any other accrued but unpaid
benefits to which the Executive is entitled under Sections 3(b), (c), (d), and
(f) hereof in accordance with the terms and conditions of the applicable plan or
policy.
(c) Cause. The
Company shall have the right to terminate the Executive’s employment under this
Agreement for Cause (as hereinafter defined), effective upon the giving of
notice (or such later date as shall be specified in such notice), and the
Company shall have no further obligations hereunder, except to (i) pay the
Executive his Base Salary through such date of Termination of Employment in
accordance with the standard payroll practices of the Company; (ii) pay the
Executive for any Annual Bonus (which Annual Bonus shall be paid to the
Executive in a single lump sum during the period commencing on the 15th of
April and ending on the 31st of
May immediately following the end of the applicable Fiscal Year of Signet
coinciding with or ending immediately prior to the Termination of Employment)
and/or Long Term Bonus (which amount shall
6
be paid
in accordance with the terms of the LTIP then in effect, as approved by the
Compensation Committee of Signet or its designee) that has been earned under the
applicable plan or arrangement by Executive for a completed applicable Fiscal
Year (or, in the case of the Long Term Bonus, a completed applicable Performance
Period) ending prior to the effective date of the Executive’s Termination of
Employment but which remain unpaid as of the date of such Termination of
Employment; (iii) pay the Executive for any Unused Vacation Days in a single
lump sum in accordance with standard payroll practices of the Company no later
than the second pay date following the Termination of Employment; and (iv)
provide the Executive any other accrued but unpaid benefits to which the
Executive is entitled under Sections 3(b), (c), (d), and (f) hereof in
accordance with the terms and conditions of the applicable plan or
policy. The Executive shall continue to have the obligations provided
in Sections 7 and 8.
For
purposes of this Agreement, “Cause” means: (i) fraud, embezzlement,
gross insubordination or any act of moral turpitude or misconduct, in each case,
on the part of the Executive which materially adversely affects the business or
reputation of Signet or the Company; (ii) conviction of or the entry of a plea
of nolo contendere by the
Executive for any felony; or (iii) (A) a material breach by the Executive of his
duties, responsibilities or obligations under this Agreement that is not
corrected within thirty (30) days following written notice thereof to the
Executive by the Company or (B) the willful failure or refusal by the Executive
to perform and discharge a specific lawful directive issued to Executive by
Signet’s Board of Directors or Chief Executive Officer within a reasonable
period of time, not to be less than two (2) business days, following written
notice thereof to the Executive by the Company.
(d) Constructive Termination;
Change of Control. If there is a Constructive Termination (as
hereinafter defined) of the Executive, the Executive shall have the right by
written notice to the Company within sixty (60) days following such Constructive
Termination (except in the case of Section 4(e)(i), where written notice shall
be required during the specified period) to terminate his employment hereunder,
in which event the Company shall have no further obligations under this
Agreement hereunder except to (i) pay the Executive his Base Salary through such
date of Termination of Employment in accordance with the standard payroll
practices of the Company; (ii) pay the Executive for any Annual Bonus (which
Annual Bonus shall be paid to the Executive in a single lump sum during the
period commencing on the 15th of
April and ending on the 31st of
May immediately following the end of the applicable Fiscal Year of Signet
coinciding with or ending immediately prior to the Termination of Employment)
and/or Long Term Bonus (which amount shall be paid in accordance with the terms
of the LTIP, then in effect, as approved by the Compensation Committee of Signet
or its designee) that has been earned under the applicable plan or arrangement
by Executive for a completed applicable Fiscal Year (or, in the case of the Long
Term Bonus, a completed applicable Performance Period) ending prior to the
effective date of the Executive’s Termination of Employment but which remain
unpaid as of the date of such Termination of Employment; (iii) pay the Executive
the pro-rata portion, based upon the applicable Proration Factor, of the Annual
Bonus for the Fiscal Year of Signet in which the Termination of Employment
occurs earned as of such date of Termination of Employment (which Annual Bonus
shall be determined based on actual performance and
7
shall be
paid to the Executive in a single lump sum during the period commencing on the
15th of
April and ending on the 31st of
May following the end of the Fiscal Year of Signet coinciding with or
immediately following the date of the Termination of Employment); (iv) pay the
Executive the pro-rata portion, based upon the applicable Proration Factor, of
the Long Term Bonus for the Performance Period in which the Termination of
Employment occurs earned as of such date of Termination of Employment (which
amount shall be determined based on actual performance and paid following the
close of such Performance Period in accordance with the terms of the LTIP, as
approved by the Compensation Committee of Signet or its designee); (v) pay the
Executive for any Unused Vacation Days in a single lump sum in accordance with
standard payroll practices of the Company no later than the second pay date
following the Termination of Employment; (vi) continue to pay to the
Executive his Base Salary in effect on the date of the Executive’s Termination
of Employment for twelve (12) months following such date (six (6) months in the
event of a Constructive Termination within the meaning of Section 4(e)(i)
below), in accordance with the Company’s standard payroll practices of the
Company, with each such payment hereby designated a separate payment for
purposes of Section 409A of the Code and with the first payment being made in
accordance with the provisions of Section 4(f) below; and (vii) provide the
Executive any other accrued but unpaid benefits to which the Executive is
entitled under Sections 3(b), (c), (d), and (f) hereof in accordance with the
terms and conditions of the applicable plan or policy. The Executive
shall continue to have the obligations provided in Sections 7 and 8 hereof
following any Termination of Employment.
(e) For purposes of this
Agreement:
“Constructive Termination” means the
occurrence of any of the following events during the Term of
Employment: (i) the Executive’s resignation for any reason between
May 1, 2011 and June 30, 2011; (ii) a material and adverse change in the
Executive’s position, responsibilities and/or duties for Signet (including,
without limitation, the removal of the Executive as Signet’s chief financial
officer after June 26, 2010 or a change in the Executive’s line of reporting
such that he no longer reports to Signet’s chief executive officer); (iii) a
material reduction of the Executive’s Base Salary, other than a reduction that
impacts substantially all of the named executive officers of the Company or
Signet, as applicable; or (iv) within one year following a “Change of Control”
(as defined below), (x) any material reduction in Executive’s compensatory
benefits (other than Base Salary) described in this Agreement (if such other
compensatory benefits are not replaced by similar compensatory benefits of
substantially equivalent economic value), other than a reduction that impacts
substantially all of the named executive officers of the Company or Signet, as
applicable; or (y) a material breach by the Company of its obligations to
Executive under this Agreement (other than any breach described in Section
4(e)(i), (ii) or (iii), which shall constitute a Constructive Termination
irrespective of the occurrence of a Change of Control), which breach remains
uncured for 30 days following notice thereof provided by Executive to the
Company.
“Change
of Control” shall mean the occurrence of any of the following events: (a) the
sale or disposition, in one transaction or a series of related transactions
of
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all or
substantially all of the assets of the Company to any person or group (such
terms within the meaning of Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended); (b) the sale or disposition of more than 50% of the
value or voting power of the capital stock of Signet or the Company to any
unrelated third party; or (c) the consummation of any merger or consolidation of
the Company or Signet with an unrelated third party (it being understood that a
capital reconstruction of Signet approved by the Board of Directors of Signet
would not constitute such a transaction) that results in a change in the Board
of Directors of Signet such that the individuals who constitute the Board of
Directors of Signet at any time within the twelve (12)-month period ending
immediately prior to such transaction (together with any new directors whose
election by such Board or nomination for election by the Company’s shareholders
was approved by a vote of at least a majority of the directors of the Company,
then still in office, who were directors at the beginning of the period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the resulting board of directors immediately
following the transaction.
(f) Waiver and Release; Timing
of Payments. As a condition precedent to receiving any
payments under this Agreement (other than the Standard Entitlements, as
hereinafter defined) by reason of a Termination of Employment, the Executive
shall have executed and made irrevocable, within sixty (60) days following the
Executive’s Termination of Employment, a waiver and release in substantially the
form attached hereto as Exhibit A (subject to changes required by applicable law
for an effective general release of claims) (the “Release”). For
purposes of this Agreement, “Standard Entitlements” shall mean, as applicable,
as of the date of Termination of Employment, accrued but unpaid Base Salary,
accrued but unpaid Annual Bonus and Long Term Bonus that has been that has been
earned under the applicable plan or arrangement for a completed Fiscal Year or
Performance Period, as applicable, Unused Vacation, and accrued but unpaid
benefits to which the Executive is entitled under Sections 3(b), (c), (d), and
(f) hereof in accordance with the terms and conditions of the applicable plan or
policy. Notwithstanding anything contained herein to the contrary,
and subject to Section 16 and the execution of the Release pursuant to this
Section 4(f), the payments under this Agreement that are not Standard
Entitlements shall be payable as described in Sections 1 and 4, as applicable;
provided, that, the first
payment under Section 1(b)(vi), 4(b)(v) or 4(d)(vi), as applicable, shall be
made on the sixtieth (60th) day
following the date of the Executive’s Termination of Employment and any other
such payment that is so delayed until the sixtieth day shall include payment of
any amounts that would otherwise have become due during such sixty-day
period. Further, notwithstanding anything contained herein to the
contrary, the Executive shall not be required to waive any rights that he has
hereunder as a stockholder of the Company, Signet or any of their
subsidiaries.
5. Relocation
Expenses. The Company shall reimburse or pay on behalf of the
Executive the expenses listed below that are actually incurred by the Executive
from the Start Date until the earlier of June 30, 2011 or the Executive’s actual
relocation to Ohio, promptly upon presentation by the Executive to the Company
of written invoices, expense statements or such other written supporting
information as the
9
Company
may require, all in accordance with the Company’s Relocation Policy (the
“Relocation Policy”):
(a) the
cost of a temporary residence for the Executive in Ohio;
(b) the
cost of up to two trips per month for the Executive or his spouse between New
York and Ohio;
(c) the
closing costs on the acquisition of the Executive’s new home in Ohio;
and
(d) all
relocation and moving expenses of the Executive and the Executive’s family,
including the commission on the sale or rental of the Executive’s home in New
York.
In
addition, the Executive shall be entitled to an additional amount (the “Gross-up
Payment”) such that, after reduction for all federal, state and local income
taxes, if any, payable by the Executive in respect of the reimbursement by the
Company of an expense described in this Section 5 (each, a “Covered Expense”)
and the Gross-up Payment, the Executive shall retain an after-tax amount equal
to such Covered Expense. For purposes of this Section 5, the federal,
state and local income taxes payable by the Executive in respect of a
reimbursement by the Company to the Executive of a Covered Expense or Gross-up
Payment shall be determined utilizing the actual tax rates applicable to the
Executive in the state and locality of the Executive’s residence. Any
Gross-up Payment shall be made no later than the end of the calendar year next
following the calendar year in which the Executive remits the related
tax.
No
reimbursements or in-kind benefits provided under this Section 5 in respect of
one taxable year shall affect the amounts payable in any other taxable year or
shall be subject to liquidation or exchange for another benefit. Any
reimbursements made to the Executive pursuant to this Agreement or otherwise
shall be paid no later than the last day of the year following the year in which
the expense was incurred.
6. Resignation upon
Termination. Upon the termination of the Executive’s
employment hereunder for any reason, the Executive shall immediately be deemed
to resign, and shall resign, from all offices and directorships held by him in
the Company or any of its subsidiaries or affiliates and shall execute any and
all documents reasonably necessary to effect such resignations as requested by
the Company.
7. Confidentiality; Ownership
of Developments.
(a) During
the Term of Employment and for any time thereafter, the Executive shall keep
secret and retain in strictest confidence and not divulge, disclose, discuss,
copy or otherwise use or suffer to be used in any manner, except in connection
with the Business (as defined below) of the Company and of any of the
subsidiaries or affiliates of the Company, any trade secrets, confidential or
proprietary information and documents or materials owned, developed or possessed
by the Company or any of the subsidiaries or affiliates of the Company
pertaining to the Business of the Company or
10
any of
the subsidiaries or affiliates of the Company; provided that such
information referred to in this Section 7(a) shall not include information that
is or has become generally known to the public or the jewelry trade without
violation of this Section 7.
(b) The
Executive acknowledges that all developments, including, without limitation,
inventions (patentable or otherwise), discoveries, improvements, patents, trade
secrets, designs, reports, computer software, flow charts and diagrams, data,
documentation, writings and applications thereof (collectively, “Works”)
relating to the Business or planned business of the Company or any of the
subsidiaries or affiliates of the Company that, alone or jointly with others,
the Executive may create, make, develop or acquire during the Term of Employment
(collectively, the “Developments”) are works made for hire and shall remain the
sole and exclusive property of the Company and the Executive hereby assigns to
the Company all of his right, title and interest in and to all such
Developments. Notwithstanding any provision of this Agreement to the
contrary, “Developments” shall not include any Works that do not relate to the
Business or planned business of the Company or any of the subsidiaries or
affiliates of the Company.
(c) For
purposes of this Agreement, “Business” shall mean the operation of a retail
jewelry business that sells to the public jewelry, watches and associated
services.
(d) The
provisions of this Section 7 shall, without any limitation as to time, survive
the expiration or termination of the Executive’s employment hereunder,
irrespective of the reason for any termination.
8. Covenants Not to Solicit and
Not to Compete. The Executive agrees that during the Term of
Employment and for a period of two years with respect to (a) below and one year
with respect to (b) below commencing upon termination of the Executive’s
employment, the Executive shall not, directly or indirectly, without the prior
written consent of the Company:
(a) solicit,
entice, persuade or induce any employee, consultant, agent or independent
contractor of the Company or of any of the subsidiaries or affiliates of the
Company to terminate his or her employment or engagement with the Company or
such subsidiary or affiliate, to become employed by any person, firm or
corporation other than the Company or such subsidiary or affiliate or approach
any such employee, consultant, agent or independent contractor for any of the
foregoing purposes; or
(b) directly
or indirectly own, manage, control, invest or participate in any way in, consult
with or render services to or for any person or entity (other than for the
Company or any of the subsidiaries or affiliates of the Company) which is
primarily engaged in the retail jewelry business (“primarily” meaning having a
product mix consisting of 25% or more jewelry sales per year); provided, however, that the
restrictions of this Section 8(b) shall not extend to the ownership, management
or control of a retail jewelry business by the Executive following the
Termination of Employment provided that such activity is no less than sixty (60)
miles distant from any retail jewelry
11
store of
Signet at the time of such Termination of Employment; provided that
notwithstanding the foregoing, the Executive shall be entitled to own up to 1%
of any class of outstanding securities of any company whose common stock is
listed on a national securities exchange or included for trading on the NASDAQ
Stock Market.
9. Specific
Performance. The Executive acknowledges that the services to
be rendered by the Executive are of a special, unique and extraordinary
character and, in connection with such services, the Executive will have access
to confidential information vital to the Business of the Company and the
subsidiaries and affiliates of the Company. By reason of this, the
Executive consents and agrees that if the Executive violates any of the
provisions of Sections 7 or 8 hereof, the Company and the subsidiaries and
affiliates of the Company would sustain irreparable injury and that monetary
damages will not provide adequate remedy to the Company and that the Company
shall be entitled to have Sections 7 or 8 specifically enforced by any court
having equity jurisdiction. Nothing contained herein shall be
construed as prohibiting the Company or any of the subsidiaries or affiliates of
the Company from pursuing any other remedies available to it for such breach or
threatened breach, including, without limitation, the recovery of damages from
the Executive or cessation of payments hereunder without requirement for posting
a bond. The provisions of this Section 9 shall survive any
Termination of Employment.
10. No Conflicting
Obligations. Executive represents and warrants to the Company
that he is not under any obligation to any person, firm or corporation, other
than the Company, and has no other interest which is inconsistent or in conflict
with this Agreement, or which would prevent, limit, or impair, in any way,
Executive’s performance of any of the covenants or duties hereinabove set
forth.
11. Entire
Agreement. This Agreement embodies the entire agreement of the
parties with respect to the Executive’s employment and supersedes any other
prior oral or written agreements, arrangements or understandings between the
Executive and the Company. This Agreement may not be changed or
terminated orally but only by an agreement in writing signed by the parties
hereto.
12. Governing Law;
Jurisdiction.
(a) Except
as otherwise may be preempted by applicable federal law, this Agreement shall be
subject to, and governed by, the laws of the State of Ohio applicable to
contracts made and to be performed therein, without regard to conflict of laws
principles thereof.
(b) Any
action to enforce any of the provisions of this Agreement shall be brought in a
court of the State of Ohio located in Summit County or in a Federal court
located in Cleveland, Ohio. The parties consent to the jurisdiction
of such courts and to the service of process in any manner provided by Ohio
law. Each party irrevocably waives any objection which it may now or
hereafter have to the venue of any such suit, action or proceeding brought in
such court.
12
(c) The
prevailing party in any action to enforce any of the provisions of this
Agreement shall be entitled to reimbursement from the other party for its or his
costs and expenses (including attorneys fees and expenses) incurred in
connection with such action.
13. Assignability. The
obligations of the parties hereto may not be delegated and neither party may,
without the prior written consent of the other party, assign, transfer, convey,
pledge, encumber, hypothecate or otherwise dispose of this Agreement or any
interest herein, except as hereafter provided. Any such attempted
delegation or disposition shall be null and void and without
effect. The Company and the Executive agree that this Agreement and
all of the Company’s rights and obligations hereunder may be assigned or
transferred by the Company to, and shall be assumed by and binding upon, any
affiliate or successor to the Company. The term “successor” means,
with respect to the Company or any of its subsidiaries, any corporation or other
business entity which by merger, consolidation, purchase of the assets or
otherwise, including after a Change of Control, acquires all or a material part
of the business or assets of the Company.
14. Severability. If
any provision of this Agreement or any part thereof, including, without
limitation, Sections 7 and 8, as applied to either party or to any circumstances
shall be adjudged by a court of competent jurisdiction to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement or remaining part thereof, which shall be given full effect without
regard to the invalid or unenforceable part thereof, or the validity or
enforceability of this Agreement.
If any
court construes any of the provisions of Section 7 or 8, or any part thereof, to
be unreasonable because of the duration of such provision or the geographic
scope thereof, such court may reduce the duration or restrict or redefine the
geographic scope of such provision and enforce such provision as so reduced,
restricted or redefined.
15. Notices. All
notices to the Company or the Executive permitted or required hereunder shall be
in writing and shall be delivered personally, by telecopier or by courier
service providing for next-day delivery or sent by registered or certified mail,
return receipt requested, to the following addresses:
The
Company:
Sterling
Jewelers Inc.
000 Xxxxx Xxxx
Xxxxx,
Xxxx 00000
Fax: (000)
000-0000
Attn: Chief Executive
Officer
with a
copy to:
Signet Jewelers Limited
00 Xxxxxx Xxxxxx
00
Xxxxxx, X0X 0XX
Fax: 00(000)
000-0000
Attn: Xxxx X.
Xxxxxxx
with a
copy to:
Weil,
Gotshal & Xxxxxx LLP
000 Xxxxx
Xxxxxx
Xxx Xxxx,
XX 00000-0000
Fax:
(000) 000-0000
Attn: Xxx
Xxxxx
The
Executive:
Xxxxxx Xxxxxx
Sterling Jewelers Inc.
000 Xxxxx Xxxx
Xxxxx, Xxxx 00000
Fax: (000)
000-0000
with a
copy to:
Fox Rothschild LLP
000 Xxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
XX 00000
Fax: (000)
000-0000
Attn: Xxxx X. Xxxxxx,
Esq.
Either
party may change the address to which notices shall be sent by sending written
notice of such change of address to the other party. Any such notice
shall be deemed given, if delivered personally, upon receipt; if telecopied,
when telecopied; if sent by courier service providing for next-day delivery, the
next business day following deposit with such courier service; and if sent by
certified or registered mail, three days after deposit (postage prepaid) with
the United States mail service. Any notice delivered by the Executive
to the Company shall be deemed for all purposes hereunder as also delivered to
Signet as and when delivered to the Company.
16. Compliance with Code Section
409A. To the extent applicable, this Agreement shall be
interpreted in accordance with Section 409A of the Code and Department of
Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be
issued after the date on which this Agreement is executed (collectively, the
“409A Rules”). The Company shall consult with the Executive in good
faith regarding the implementation of this Section 16.
(a) Separate and Distinct
Elements of Compensation. For purposes of the applicability,
if any, of Section 409A of the Code to any compensation paid or
benefits
14
provided
under this Agreement, the following payments and benefits constitute separate
and distinct elements of deferred compensation: (i) any Annual Bonus; (ii) any
Long Term Bonus (with the cash and each equity portion thereof being considered
separate and distinct elements of deferred compensation); (iii) any
reimbursement under Section 5 hereof; (iv) any Gross-Up under Section 5 hereof;
and (v) any continuation of Base Salary hereunder for six (6) months or twelve
(12) months, as applicable, following the Termination of
Employment.
(b) Payment Delay if Executive
Is Specified Employee. Notwithstanding any provision of the
Agreement to the contrary, if at the time of the Executive’s Termination of
Employment with the Company and/or Signet, the Executive is a “Specified
Employee,” as defined in the Specified Employee Procedure of Signet Group PLC
and Members of Its Controlled Group in effect from time to time, and the
deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such Termination of Employment is necessary in order to
prevent any accelerated or additional tax under Section 409A of the Code, then
the Company shall defer the commencement of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or
provided to the Executive) until first day of the seventh month immediately
following the Executive’s Termination of Employment (or, if applicable and
earlier, the date on which the payments or benefits would commence under Section
4(b) hereof).
(c) No Acceleration of Payments
or Benefits. Any payments or benefits hereunder to which the
409A Rules apply may not be accelerated except to the extent permitted under the
409A Rules.
(d) 409A Amendments to
Agreement. If any other payments of money or other benefits
due to the Executive hereunder could cause the application of an accelerated or
additional tax under Section 409A of the Code, the Company shall negotiate with
the Executive in good faith any amendments to this Agreement that the Company
and/or the Executive determines necessary or appropriate to preserve the
intended tax treatment of the benefits provided by this Agreement, provided, however, that the
adoption of any such amendments shall require the written consent of the
Executive, which consent shall not be unreasonably withheld.
17. Withholding
Taxes. The Company may withhold from any amounts payable
under this Agreement such federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
18. Directors and Officers
Insurance. During the Term of Employment, the Company shall
keep in force for the Executive coverage under a directors and officers
liability insurance policy, such coverage to be at a level no less than that
maintained for substantially all of the executive officers of the Company or
Signet (during the period the Executive is a executive officer of Signet) and
substantially all of the members of the Board of Directors Signet (during any
period the Executive is a member of the Board of Directors of
Signet).
15
19. Paragraph
Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same instrument.
16
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first written above.
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STERLING
JEWELERS INC.
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||
|
By:
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/s/ Xxxxx
Xxxxxx
|
|
|
Name:
|
Xxxxx
Xxxxxx
|
|
|
Title:
|
Director
and Executive Chairman
|
|
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EXECUTIVE
|
||
|
/s/ Xxxxxx
X. Xxxxxx
|
||
|
XXXXXX
X. XXXXXX
|
||
17
EXHIBIT
A
RELEASE
This
RELEASE (“Release”) dated as of ___________, 20__ between Sterling Jewelers
Inc., a Delaware corporation (the “Company”), and Xxxxxx X. Xxxxxx (the
“Executive”).
WHEREAS,
the Company and the Executive previously entered into an employment agreement
dated _____, 2010 (the “Employment Agreement”); and
WHEREAS,
the Executive's employment with the Company has terminated effective ______ __,
20__ (“Termination Date”);
NOW,
THEREFORE, in consideration of the premises and mutual agreements contained
herein and in the Employment Agreement, the Company and the Executive agree as
follows:
1. Capitalized
terms not defined herein shall have the meaning as defined under the Employment
Agreement.
2. In
consideration of the Executive’s release under Paragraph 3 hereof, the Company
shall pay to the Executive or provide benefits to the Executive as set forth in
Section __1, as applicable, of the Employment Agreement,
which is attached hereto and made a part hereof.
3. The
Executive, on his own behalf and on behalf of his heirs, estate and
beneficiaries, does hereby release the Company, and in such capacities, any of
its subsidiaries or affiliates, and each past or present officer, director,
agent, employee, shareholder, and insurer of any such entities, from any and all
claims made, to be made, or which might have been made of whatever nature,
whether known or unknown, from the beginning of time, including those that arose
as a consequence of his employment with the Company, or arising out of the
severance of such employment relationship, or arising out of any act committed
or omitted during or after the existence of such employment relationship, all up
through and including the date on which this Release is executed,
including, without limitation, any tort and/or
contract claims, common law or statutory claims, claims under any local, state
or federal wage and hour law, wage collection law or labor relations law, claims
under any common law or other statute, claims of age, race, sex, sexual
orientation, religious, disability, national origin, ancestry, citizenship,
retaliation or any other claim of employment discrimination, including under
Title VII of the Civil Rights Acts of 1964 and 1991, as amended (42 U.S.C. §§
2000e et seq.), Age Discrimination in Employment
Act, as amended (29 U.S.C. §§ 621, et seq.); the Americans with Disabilities Act (42
U.S.C. §§ 12101 et seq.), the Rehabilitation Act of 1973 (29
U.S.C. 701 et seq.), the Family and Medical Leave Act (29
U.S.C. §§ 2601 et seq.), the Fair Labor Standards Act (29 U.S.C.
§§ 201 et seq.), the Employee Retirement Income
Security Act of 1974 (29 U.S.C. §§ 1001 et seq.) and any other law (including any
state or local law or ordinance) prohibiting employment discrimination or
relating to employment, retaliation in employment, termination of employment,
wages, benefits or otherwise. If any
arbitrator or court rules that such waiver of rights to file, or have filed on
his behalf, any administrative or judicial charges or complaints is ineffective,
the Executive agrees not to seek or accept any money damages or any other relief
upon the filing of any such administrative or judicial
1 Insert applicable
section.
18
charges
or complaints. The Executive relinquishes any right to future
employment with the Company and the Company shall have the right to refuse to
re-employ the Executive, in each case without liability of the Executive or the
Company. The Executive acknowledges and agrees that even though
claims and facts in addition to those now known or believed by him to exist may
subsequently be discovered, it is his intention to fully settle and release all
claims he may have against the Company and the persons and entities described
above, whether known, unknown or suspected.
4. The
Company and the Executive acknowledge and agree that the release contained in
Paragraph 3 does not, and shall not be construed to, release or limit the scope
of any existing obligation of the Company and/or any of its subsidiaries or
affiliates (i) to indemnify the Executive for his acts as an officer or director
of Company in accordance with the Certificate of Incorporation and all
agreements thereunder, (ii) to pay any amounts or benefits pursuant to Section 2
of this Release or any Standard Entitlements (as defined in the Employment
Agreement) to which the Executive is entitled under the Employment Agreement, or
(iii) with respect to the Executive’s rights as a shareholder of the Company,
Signet or any of their subsidiaries.
5. Executive acknowledges that pursuant to the Release set
forth in Paragraph 3 above, Executive is waiving and releasing any rights he may
have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that
Executive’s waiver and release of such rights is knowing and
voluntary. Executive acknowledges that the consideration given for
the ADEA waiver and release under this Agreement is in addition to anything of
value to which Employee was already entitled.
(a) Executive further acknowledges that he has been advised
by this writing that:
(i) Executive should consult with an attorney prior to
executing this Release and has had an opportunity to do so;
(ii) Executive has up to twenty-one (21) days within which to
consider this ADEA waiver and release;
(iii) Executive has seven (7) days following Executive’s
execution of this Agreement to revoke this ADEA waiver and release, but only by
providing written notice of such revocation to the Company in accordance with
the “Notices” provision in Section 9 of the Employment
Agreement;
(iv) the ADEA waiver and release shall not be effective until
the seven (7) day revocation period has expired; and
(v) the twenty-one (21) day period set forth above shall run
from the date Executive receives this Release. The Parties agree that
any modifications made to this Agreement prior to its execution shall not
restart, or otherwise affect, this twenty-one day (21)
period.
(b) It
is the intention of the parties in executing this Release that this Release
shall be effective as a full and final accord and satisfaction and release of
and from all liabilities, disputes, claims and matters covered under this
Release, known or unknown, suspected or unsuspected.
19
6.
This
Release shall become effective on the first (1st) day
following the day that this Release becomes irrevocable under Paragraph
5. All payments due to the Executive shall be payable in accordance
with the terms of the Employment Agreement.
[remainder
of page intentionally blank]
20
IN
WITNESS WHEREOF, the parties have executed this Release on the date first above
written.
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STERLING
JEWELERS INC.
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By:
|
||
|
Name:
|
||
|
Title:
|
||
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XXXXXX
X. XXXXXX
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21
