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EXHIBIT 10.14
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of November, 2000 by and
among Whitehall Jewellers, Inc., a Delaware corporation, WH Inc. of Illinois, an
Illinois corporation and a wholly-owned subsidiary of Whitehall Jewellers, Inc.,
and Xxxx X. Xxxxxxxxx ("Executive").
W I T N E S S E T H
WHEREAS, immediately prior to the date hereof, Executive served as a key
employee of the Company (as defined in Section 1) and his or her services and
knowledge continue to be valuable to the Company in connection with the
management of one or more of the Company's principal operating facilities,
divisions, departments or subsidiaries;
WHEREAS, the Company and Executive have each determined that, effective as
of the date hereof, Executive shall commence employment with the Subsidiary (as
defined in Section 1) and, concurrently therewith, cease employment with the
Company;
WHEREAS, concurrently with the execution hereof, Executive and the Company
are terminating Executive's Severance Agreement with the Company dated as of May
7, 1996; and
WHEREAS, each of the Board of Directors of the Company and the Board of
Directors of the Subsidiary (each as defined in Section 1) have determined that
it is in the best interests of the Company, its stockholders and the Subsidiary
to secure Executive's continued services, and to encourage Executive's full
attention and dedication to the Subsidiary, the Board of Directors of the
Company and the Board of Directors of the Subsidiary have each authorized the
Company and the Subsidiary, respectively, to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company, the Subsidiary 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 of Directors of the Company" means the Board of Directors of the
Company.
(b) "Board of Directors of the Subsidiary" means the Board of Directors of
the Subsidiary.
(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, the Subsidiary or any other subsidiary involving willful malfeasance.
Activities undertaken by Executive in accordance with the letter from the
Company to Executive dated February 12, 1996
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and the related amendment of such date to Executive's prior Employment Agreement
dated August 30, 1995 (as amended) with the Company (notwithstanding the fact
that such Employment Agreement was terminated) shall not constitute "Cause."
(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 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 of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors the Company; 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 any individual who was initially
elected as a director of the Company as a result of an actual or threatened
solicitation by a person or a group for the purpose of opposing a solicitation
by any other person or group with respect to the election or removal of
directors shall not be deemed 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
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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, 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 of Directors of the
Company providing for such reorganization, merger or consolidation; and
(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 of Directors of the Company providing for such sale or other
disposition.
(d) "Company" means Whitehall Jewellers, Inc., a Delaware corporation.
(e) "Date of Termination" means (1) the effective date on which Executive's
employment by the Subsidiary terminates as specified in a prior written notice
by the Subsidiary or Executive, as the case may be, to the other, delivered
pursuant to Section 10 or (2) if Executive's employment by the Subsidiary
terminates by reason of death, the date of death of Executive.
(f) "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.
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(g) "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 inconsistent in any
material respect with Executive's position(s), duties, responsibilities or
status with the Subsidiary as of the date of this Agreement 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 Subsidiary
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 Subsidiary otherwise than as
expressly permitted by this Agreement or any failure to re-elect Executive to
any position with the Subsidiary 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 Subsidiary 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 Subsidiary 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
Subsidiary's current headquarters) or (ii) travel on Subsidiary 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
immediately prior to the date of this Agreement or, if a Change in Control has
occurred, prior to such Change in Control, unless Executive is permitted to
participate in other plans providing Executive with substantially comparable
benefits, or the taking of any action by the Company or the Subsidiary 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
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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 9(b).
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 or the Subsidiary promptly after receipt of notice thereof given
by Executive shall not constitute Good Reason.
(h) "Nonqualifying Termination" means a termination of Executive's
employment (1) by the Subsidiary 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
Subsidiary due to Executive's absence from his duties with the Subsidiary 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.
(i) "Subsidiary" means WH Inc. of Illinois, an Illinois corporation.
(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. 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
Subsidiary shall pay to Executive (or Executive's beneficiary or estate), and
the Company shall guarantee such payment, within 30 days following the Date of
Termination, as compensation for services rendered to the Subsidiary:
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(1) a lump sum cash amount equal to the sum of (i) Executive's full annual
base salary from the Subsidiary 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 Subsidiary and its affiliated companies in respect of the two fiscal
years of the Subsidiary (or such portion thereof during which Executive
performed services for the Subsidiary or the Company if Executive shall have
been employed by the Subsidiary 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 Subsidiary and its affiliated companies, or 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), bonus paid or payable, including by reason of any
deferral, to Executive by the Subsidiary and its affiliated companies in respect
of the five fiscal years of the Subsidiary (or such portion thereof during which
Executive performed services for the Company if Executive shall have been
employed by the Subsidiary 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 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 Subsidiary or 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 and the Subsidiary
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 or the Subsidiary and its
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affiliated companies, and the Subsidiary 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 Subsidiary shall
pay to Executive, and the Company shall guarantee such payment, 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 Subsidiary 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.
3. Certain Additional Payments by the Subsidiary. (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment, benefit or distribution by the Subsidiary 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 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 3(c), all determinations required
to be made under this Section 3, 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 to the Subsidiary, 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 Subsidiary or 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 Subsidiary and the Company. Any Gross-Up
Payment, as determined pursuant to this Section 3, shall be paid by the
Subsidiary, and such payment shall be guaranteed 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 Subsidiary, 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
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hereunder, it is possible that Gross-Up Payments which will not have been made
by the Subsidiary should have been made, including subsequent interest and
penalties ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Subsidiary and the Company exhaust their
remedies pursuant to Section 3(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 Subsidiary to or for the benefit of Executive, and such payment shall be
guaranteed by the Company.
(c) Executive shall notify the Subsidiary and the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Subsidiary 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 Subsidiary and 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 notice to
the Subsidiary and the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If either the
Subsidiary or 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 Subsidiary and the Company any information reasonably requested
by the Subsidiary or the Company relating to such claim,
(2) take such action in connection with contesting such claim as the
Subsidiary or 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 Subsidiary or the Company,
(3) cooperate with the Subsidiary and the Company in good faith in order
effectively to contest such claim, and
(4) permit the Subsidiary and the Company to participate in any proceedings
relating to such claim;
provided, however, that the Subsidiary and 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 3(c), the Subsidiary and the Company shall
jointly control all proceedings taken in connection with such contest and, at
their option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at their 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 Subsidiary and the Company shall determine; provided
further, that if the Subsidiary and the Company direct Executive to pay such
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claim and xxx for a refund, the Subsidiary shall advance the amount of such
payment to Executive on an interest-free basis, and such advance shall be
guaranteed by the Company, and the Subsidiary and the Company 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 Subsidiary's and the Company's joint
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
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
Subsidiary or the Company pursuant to Section 3(c), Executive becomes entitled
to receive, and receives, any refund with respect to such claim, Executive shall
(subject to the Subsidiary's complying with the requirements of Section 3(c))
promptly pay to the Subsidiary or the Company, as the case may be, 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 Subsidiary or the Company pursuant to Section 3(c), a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and neither the Subsidiary nor the Company notifies 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.
4. Withholding Taxes. The Subsidiary 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 Subsidiary is required to
withhold therefrom.
5. Reimbursement of Expenses. If any contest or dispute shall arise under
this Agreement involving termination of Executive's employment with the
Subsidiary (which shall be deemed to include, without limitation, issues
relating to Executive's stock options) or involving the failure or refusal of
the Subsidiary to perform fully in accordance with the terms hereof, the
Subsidiary shall reimburse Executive and the Company shall guarantee such
reimbursement, 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 Subsidiary 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 Subsidiary, over a period of 12 months from the date of such
resolution, for all sums advanced to Executive pursuant to this Section 5;
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.
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6. Intentionally Omitted.
7. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle
Executive to continued employment with the Subsidiary or its affiliated
companies.
8. Directors and Officers Liability Insurance; Indemnification. The Company
and the Subsidiary agree that, notwithstanding a Termination of Executive's
employment with the Subsidiary, the Company and the Subsidiary 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 and the Subsidiary to at least the same extent as other executive
officers or directors, as the case may be, of the Company and the Subsidiary
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 and the
Subsidiary agree that they 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 and the
Subsidiary 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 or the Subsidiary.
9. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger or consolidation of
the Subsidiary whereby the Subsidiary 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 Subsidiary. 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 9, 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 and the Subsidiary 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 Subsidiary 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.
(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
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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.
10. 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 address on record at the Company or the
Subsidiary, if to the Company, to Whitehall Jewellers, Inc., 000 X. Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, attention: Secretary, and if to the Subsidiary
to, WH Inc. of Illinois, c/o Whitehall Jewellers, Inc., 000 X. Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, attention: Secretary, or (2) to such other address as
such 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 Subsidiary 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 Subsidiary 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 Subsidiary hereunder or preclude Executive or the Subsidiary
from asserting such fact or circumstance in enforcing Executive's or the
Subsidiary's rights hereunder.
11. Full Settlement; Resolution of Disputes. (a) The obligations of the
Company and the Subsidiary to make any payments provided for in this Agreement
and otherwise to perform their obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company or the Subsidiary 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 Subsidiary 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 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 Subsidiary 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 3, the Subsidiary shall
pay all amounts, and provide all benefits, to Executive and his dependents or
other beneficiaries, as the case may be, that the Subsidiary would be required
to pay or provide pursuant to paragraphs (a) and (b) of Section 3 as though such
termination were by the Subsidiary without Cause or by Executive with Good
Reason; provided, however, that the Subsidiary shall not be required to pay any
disputed
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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.
12. 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.
13. 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.
14. 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 each of the Company and the
Subsidiary. 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, the Subsidiary or the Company to insist
upon strict compliance with any provision of this Agreement or to assert any
right Executive, the Subsidiary 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 or the Subsidiary.
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IN WITNESS WHEREOF, each of the Company and the Subsidiary have caused this
Agreement to be executed by a duly authorized officer and Executive has executed
this Agreement as of the day and year first above written.
WHITEHALL JEWELLERS, INC.
By:/s/ Xxxx X. Xxxxxxxx
--------------------
Xxxx X. Xxxxxxxx
Chairman, President and
Chief Executive Officer
WH INC. OF ILLINOIS
By: /s/ Xxx X. Xxxxxx
-----------------------
Xxx X. Xxxxxx
Assistant Secretary
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
Xxxx X. Xxxxxxxxx
00
