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EXHIBIT 10.1
EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 24th day of January, 2000 by
and between Whitehall Jewellers, Inc., a Delaware corporation, and Jon Browne
("Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive as an Executive
Vice President and the Executive desires to accept such employment, upon the
conditions set forth herein;
WHEREAS, in this capacity Executive will be a key employee of the
Company and his services and knowledge are valuable to the Company;
WHEREAS, the Board (as defined in Section 1) has determined that it is
in the best interests of the Company and its stockholders to secure Executive's
services, and to encourage Executive's full attention and dedication to the
Company, the Board has authorized the Company to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause means (1) the commission by Executive of a felony involving
moral turpitude or (2) any material breach of any statutory or common law duty
to the Company or any subsidiary involving wilful malfeasance.
(c) "Change in Control" means:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 25% or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the 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
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a conversion or exchange privilege in respect of outstanding convertible or
exchangeable securities), (B) any acquisition by an employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, (C) any acquisition by an Exempt Person, or (D) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such reorganization,
merger or consolidation, each of the conditions described in clauses (i), (ii)
and (iii) of subsection (3) of this Section (1)(c) shall be satisfied;
(2) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
such Board; provided, however, that any individual who becomes a director of the
Company subsequent to the date hereof whose election, or nomination for election
by the Company's stockholders, was approved by the vote of at least a majority
of the directors then comprising the Incumbent Board shall be deemed to have
been a member of the Incumbent Board; and provided further, that no individual
who was initially elected as a director of the Company as a result of an actual
or threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board shall be deemed to have been a member of the Incumbent
Board;
(3) approval by the stockholders of the Company of a reorganization,
merger or consolidation unless, in any such case, immediately after such
reorganization, merger or consolidation, (i) more than 60% of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and more than 60% of the combined voting
power of the then outstanding securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals or entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation and in substantially the same
proportions relative to each other as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be, (ii) no
Person (other than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation resulting from such
reorganization, merger or consolidation (or any corporation controlled by the
Company) and any Person which beneficially owned, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 25% or more of
the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 25%
or more of the then outstanding shares of common stock of such corporation or
25% or more of the combined voting power of the then outstanding securities of
such corporation entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such reorganization, merger or
consolidation; or
(4) approval by the stockholders of the Company of (i) a plan of
complete liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or
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substantially all of the assets of the Company other than to a corporation with
respect to which, immediately after such sale or other disposition, (A) more
than 60% of the then outstanding shares of common stock thereof and more than
60% of the combined voting power of the then outstanding securities thereof
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such sale or other disposition and in substantially the same
proportions relative to each other as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person (other
than the Company, any employee benefit plan (or related trust) sponsored or
maintained by the Company or such corporation (or any corporation controlled by
the Company) and any Person which beneficially owned, immediately prior to such
sale or other disposition, directly or indirectly, 25% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 25% or more of
the then outstanding shares of common stock thereof or 25% or more of the
combined voting power of the then outstanding securities thereof entitled to
vote generally in the election of directors and (C) at least a majority of the
members of the board of directors thereof were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Company" means Whitehall Jewellers, Inc., a Delaware corporation.
(f) "Date of Termination" means (1) the effective date on which
Executive's employment by the Company terminates as specified in a prior written
notice by the Company or Executive, as the case may be, to the other, delivered
pursuant to Section 12 or (2) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(g) "Exempt Person" means each of Hugh M. Patinkin, John R. Desjardins,
Matthew M. Patinkin and any Affiliate (as such term is defined in Rule 12b-1
under the Securities Exchange Act of 1934, as in effect on the date hereof,
"Affiliate") thereof.
(h) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events:
(1) any of (i) the assignment to Executive of any duties
materially lower in responsibility than Executive's responsibilities with
the Company as of the date Executive commences employment with the Company
or, if a Change in Control has occurred, immediately prior to such Change
in Control, (ii) a change in Executive's title or office as "Executive Vice
President" (other than additions thereto) or in Executive's reporting
responsibilities with the Company as in effect on the date of this
Agreement or, if a Change in Control has occurred, immediately prior to
such Change in Control or (iii) any removal or involuntary termination of
Executive from the Company otherwise than as expressly permitted by this
Agreement or any failure to re-elect Executive to any position with the
Company held by Executive as of the commencement of Executive's
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employment or, if a Change of Control has occurred, immediately prior to
such Change in Control;
(2) a reduction by the Company in Executive's rate of annual base
salary as in effect on the date of this Agreement or, if a Change in
Control has occurred, immediately prior to such Change in Control, or as
the same may be increased from time to time thereafter;
(3) any requirement of the Company that Executive (i) be based
anywhere other than at the facility where the Executive is located on the
date of this Agreement (or a new headquarters facility within a 30-mile
radius of the Company's current headquarters) or (ii) travel on Company
business to an extent substantially more burdensome than the travel
obligations of Executive as of the commencement of Executive's employment
or, if a Change of Control has occurred, immediately prior to such Change
in Control;
(4) the failure of the Company to (i) continue in effect any
employee benefit plan or compensation plan in which Executive is
participating as of the commencement of Executive's employment or (or as of
the expiration of any applicable waiting period), 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 in the aggregate, or the taking of any
action by the Company which would adversely affect Executive's
participation in or materially reduce Executive's benefits under any such
plan, (ii) provide Executive and Executive's dependents welfare benefits
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for Executive as of the commencement of
Executive's employment (or as of the expiration of any applicable waiting
period) or, if a Change in Control has occurred, prior to such Change in
Control or, 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 as of the
commencement of Executive's employment (or as of the expiration of any
applicable waiting period) 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 as of the commencement of Executive's employment or,
if a Change in Control has occurred, prior to such Change in Control or, if
more favorable to Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies, (v) provide Executive with paid vacation (with respect to which
there shall be no waiting period) in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in
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effect for Executive as of the commencement of Executive's employment 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 as of the commencement of
Executive's employment or, if a Change in Control has occurred, prior to
such Change in Control, or if more favorable to Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies; or
(5) the failure of the Company to obtain the assumption agreement
from any successor as contemplated in Section 11(b).
For purposes of this Agreement, any good faith determination of Good
Reason made by Executive shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive shall not constitute Good Reason.
(i) "Nonqualifying Termination" means a termination of Executive's
employment (1) by the Company for Cause, (2) by Executive for any reason other
than a Good Reason, (3) as a result of Executive's death or (4) by the Company
due to Executive's absence from his duties with the Company on a full-time basis
for at least 180 consecutive days as a result of Executive's incapacity due to
physical or mental illness; provided, however, that a termination of Executive's
employment for any reason whatsoever during the "Window Period" (hereinafter
defined) shall not constitute a Nonqualifying Termination.
(j) "Termination Period" means the period of time beginning with the
date hereof and ending on the earliest to occur of (1) Executive's death and (2)
three years following a Change in Control.
(k) "Window Period" means the 30-day period commencing six months after
the date of a Change in Control.
2. Position; Responsibilities. The Company shall employ Executive
initially as an Executive Vice President -- commencing January 24, 2000 (the
"Commencement Date"). Executive shall perform such executive and administrative
duties as the chief executive officer of the Company (the "Company CEO") or
Board may assign to Executive from time to time. While an employee of the
Company Executive shall perform faithfully the duties assigned Executive to the
best of Executive's abilities and devote Executive's full and undivided business
time and attention to the transaction of the Company's business and not engage
in any other business activities except with the approval of the Company CEO.
The Company or Executive may terminate Executive's employment at any time
provided that the other provisions of this agreement are complied with.
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3. Compensation; Options. (a) Base Salary. As compensation for
Executive's services hereunder, the Company shall pay to Executive base salary
at an annual rate of $220,000 or such higher salary as may be established by the
Company from time to time.
(b) Bonus. Executive shall be entitled to participate in the Company's
Management Bonus Plan or other bonus plan made available to elected officers of
the Company generally.
(c) Benefits. Executive shall be entitled to all fringe benefits made
available to elected officers of the Company generally (currently including
vacation days, health benefits, life insurance coverage, automobile benefits and
reimbursement of expenses) from time to time. In addition, if the Executive is
subject to a "waiting period" with respect to any welfare benefits applicable to
Executive or Executive's dependents, the Company will reimburse Executive for
premiums paid by Executive for health insurance during such waiting period to
the extent that the Company would have reimbursed or paid for premiums under the
Company's welfare benefit plans if no waiting period had applied.
(d) Options. Executive shall be granted stock options under one or
more of the Company's stock option plans effective as of the Commencement Date
for 50,000 shares of the Company's common stock at an exercise price per share
equal to the average of the high and low transaction prices of a share of such
common stock on the New York Stock Exchange on the Commencement Date (the
"Exercise Price"). Such options (the "Options") shall be issued pursuant to the
stock option agreement attached hereto as Exhibit A. The Options shall be
incentive stock options for purposes of Section 422 of the Code, to the extent
permitted by law and as provided in the stock option agreement covering such
options. All of the Options other than those that are incentive stock options
shall be nonqualified stock options.
4. Payments Upon Termination of Employment.
(a) If during the Termination Period the employment of Executive shall
terminate, other than by reason of a Nonqualifying Termination, then the Company
shall pay to Executive (or Executive's beneficiary or estate) within 30 days
following the Date of Termination, as compensation for services rendered to the
Company:
(1) a lump sum cash amount equal to the sum of (i) Executive's
full annual base salary from the Company and its affiliated companies
through the Date of Termination, to the extent not theretofore paid, (ii)
Executive's annual bonus in an amount at least equal to the higher of (x)
one-half of the maximum bonus the Executive could earn during the fiscal
year during which such Change in Control occurs and (y) the average of the
Executive's annual bonus (annualized for any fiscal year consisting of less
than 12 full months) with respect to which bonus paid or payable, including
by reason of any deferral, to Executive by the Company and its affiliated
companies in respect of the two fiscal years of the Company (or such
portion thereof during which Executive performed services for the Company
if Executive shall have been employed by the Company for less than such two
fiscal year period) immediately preceding the fiscal year in which the
Change in Control occurs, multiplied by a fraction, the numerator of which
is the number of days in the fiscal year in which the Change in Control
occurs through
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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 6) in an amount
equal to (i) 2.5 times (1.0 times if a Change in Control has not occurred)
Executive's highest annual base salary from the Company and its affiliated
companies in effect during the 12-month period prior to the Date of
Termination plus (ii) 2.5 times ([1.0 times if a Change in Control has not
occurred) Executive's highest annualized (for any fiscal year consisting of
less than 12 full months or with respect to which Executive has been
employed by the Company for less than 12 full months), bonus paid or
payable, including by reason of any deferral, to Executive by the Company
and its affiliated companies in respect of the five fiscal years of the
Company (or such portion thereof during which Executive performed services
for the Company if Executive shall have been employed by the Company for
less than such five fiscal year period) immediately preceding the fiscal
year in which the Change in Control occurs; provided however, that any
amount paid pursuant to this Section 4(a)(2) shall be paid in lieu of any
other amount of severance relating to salary or bonus continuation to be
received by Executive upon termination of employment of Executive under any
severance plan, policy or arrangement of the Company.
(b) For a period of 2.5 years (12 months if a Change in Control has not
occurred) commencing on the Date of Termination, the Company shall continue to
keep in full force and effect all policies of medical, accident, disability and
life insurance with respect to Executive and his dependents with the same level
of coverage, upon the same terms and otherwise to the same extent as such
policies shall have been in effect immediately prior to the Date of Termination
or, if more favorable to Executive, as provided generally with respect to other
peer executives of the Company and its affiliated companies, and the Company and
Executive shall share the costs of the continuation of such insurance coverage
in the same proportion as such costs were shared immediately prior to the Date
of Termination.
(c) If during the Termination Period the employment of Executive shall
terminate by reason of a Nonqualifying Termination, then the Company shall pay
to Executive within 30 days following the Date of Termination, a cash amount
equal to the sum of (1) Executive's full annual base salary from the Company
through the Date of Termination, to the extent not theretofore paid and (2) any
compensation previously deferred by Executive (together with any interest and
earnings thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid.
5. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment, benefit or distribution by the Company or its affiliated
companies to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (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
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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 5(c), all determinations
required to be made under this Section 5, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the Company's
public accounting firm (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within 15 business
days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, Executive shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion that failure to report the Excise Tax on
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made, including subsequent interest, taxes and penalties ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 5(c) and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. Executive shall not
pay such claim prior to the expiration of the 30-day period following the date
on which Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
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(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively to
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and provided
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 5(c), Executive becomes entitled to receive, and
receives, any refund with respect to such claim, Executive shall (subject to the
Company's complying with the requirements of Section 5(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by Executive of
an amount advanced by the Company pursuant to Section 5(c), a determination is
made that Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and
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shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Withholding Taxes. The Company may withhold from all payments due
to Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
7. Reimbursement of Expenses. (a) If any contest or dispute shall
arise under this Agreement involving termination of Executive's employment with
the Company (which shall be deemed to include, without limitation, issues
relating to Executive's stock options) or involving the failure or refusal of
the Company to perform fully in accordance with the terms hereof, the Company
shall reimburse Executive, on a current basis, for all legal fees and expenses,
if any, incurred by Executive in connection with such contest or dispute,
together with interest at a rate equal to the base rate of The First National
Bank of Boston from time to time in effect, but in no event higher than the
maximum legal rate permissible under applicable law, such interest to accrue
from the date the Company receives Executive's statement for such fees and
expenses through the date of payment thereof; provided, however, that in the
event the resolution of any such contest or dispute includes a finding denying,
in total, Executive's claims in such contest or dispute, Executive shall be
required to reimburse the Company, over a period of 12 months from the date of
such resolution, for all sums advanced to Executive pursuant to this Section 7;
provided, further, that no such reimbursement shall be required if Executive had
a reasonable basis for the position taken by Executive with respect to such
claims.
(b) The Company shall reimburse Executive for reasonable legal fees and
expenses incurred by Executive for the review and/or negotiation by legal
counsel of this Agreement.
8. Intentionally Omitted.
9. Scope of Agreement. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company or its subsidiaries.
10. Directors and Officers Liability Insurance; Indemnification. The
Company agrees that, notwithstanding a Termination of Executive's employment
with the Company, the Company shall, for at least three years after the Date of
Termination, use all reasonable efforts to have Executive included as a named
insured or otherwise covered for actions or failures to act by Executive in his
capacity as a director or officer of the Company to at least the same extent as
other executive officers or directors, as the case may be, of the Company under
any directors and officers liability insurance policies maintained by the
Company; provided that the additional cost of providing coverage with a
retroactive date including Executive's period of service or with an extended
reporting period or a combination of both does not materially increase the cost
of the Company's directors and officers insurance. The Company agrees that it
will not alter the indemnification provisions in its charter or by-laws so as to
give Executive less protection thereunder with respect to periods during which
Executive serves or served the Company as an executive officer or other employee
as is afforded other executive officers or peer employees, as the case may be,
with respect to periods during which they serve the Company.
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11. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred.
(b) The Company agrees that concurrently with any merger, consolidation
or transfer of assets referred to in paragraph (a) of this Section 11, it will
cause any successor or transferee unconditionally to assume, by written
instrument delivered to Executive (or his beneficiary or estate), all of the
obligations of the Company hereunder. Failure of the Company to obtain such
assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall be a breach of this Agreement and shall entitle
Executive to compensation and other benefits from the Company in the same amount
and on the same terms as Executive would be entitled hereunder if Executive's
employment were terminated following a Change in Control other than by reason of
a Nonqualifying Termination. For purposes of implementing the foregoing, the
date on which any such merger, consolidation or transfer becomes effective shall
be deemed the Date of Termination.
(c) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive's estate.
12. Notice. (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five days after deposit in the
United States mail, certified and return receipt requested, postage prepaid,
addressed (1) if to the Executive, to Jon Browne, 2322 Maple Avenue, Northbrook,
Illinois 60062, and if to the Company, to Whitehall Jewellers, Inc., 155 N.
Wacker Drive, Chicago, Illinois 60606, attention: Secretary, or (2) to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
(b) A written notice of Executive's Date of Termination by the Company
or Executive, as the case may be, to the other, shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) specify the termination date (which date shall be not
less than 15 days after the giving of such notice). The failure by Executive or
the Company to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or the Company hereunder or preclude Executive or the
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Company from asserting such fact or circumstance in enforcing Executive's or the
Company's rights hereunder.
13. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Executive or others. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement and, such amounts shall not be reduced whether or not Executive
obtains other employment.
(b) If there shall be any dispute between the Company and Executive in
the event of any termination of Executive's employment (which shall be deemed to
include, without limitation, issues relating to Executive's options), then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause, that the
determination by Executive of the existence of Good Reason was not made in good
faith, or that the Company is not otherwise obligated to pay any amount or
provide any benefit to Executive and his dependents or other beneficiaries, as
the case may be, under paragraphs (a) and (b) of Section 4, the Company shall
pay all amounts, and provide all benefits, to Executive and his dependents or
other beneficiaries, as the case may be, that the Company would be required to
pay or provide pursuant to paragraphs (a) and (b) of Section 4 as though such
termination were by the Company without Cause or by Executive with Good Reason;
provided, however, that the Company shall not be required to pay any disputed
amounts pursuant to this paragraph except upon receipt of an undertaking by or
on behalf of Executive to repay all such amounts to which Executive is
ultimately adjudged by such court not to be entitled.
14. Governing Law; Validity. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
16. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or the Company may have hereunder,
including, without limitation, the right of Executive to terminate employment
for Good Reason, shall not be deemed to be a waiver of such provision or right
or any other provision or right of this Agreement. The rights of, and benefits
payable to, Executive, his estate or his beneficiaries pursuant to this
Agreement are in addition to any rights of, or benefits payable to, Executive,
his estate or his beneficiaries under any other employee benefit plan or
compensation program of the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.
WHITEHALL JEWELLERS, INC.
By:
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Hugh M. Patinkin
Chairman, President and
Chief Executive Officer
By:
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Jon Browne
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