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EXHIBIT 10.16
WHITEHALL JEWELLERS, INC.
(F/K/A/ MARKS BROS. JEWELERS, INC.)
INCENTIVE STOCK OPTION AGREEMENT
FOR EMPLOYEES
Whitehall Jewellers, Inc., a Delaware corporation (the "Company"), hereby
grants to "FirstName" "LastName" (the "Optionee") as of "Date", (the "Option
Date"), pursuant to the provisions of the Whitehall Jewellers, Inc. 1997
Long-Term Incentive Plan (the "Plan"), an option to purchase from the Company
(the "Option") "Share" shares of its Common Stock, $.001 par value ("Stock"), at
the price of "Price" per share upon and subject to the terms and conditions set
forth below. References to employment by the Company shall include employment by
a subsidiary of the Company. Capitalized terms not defined herein shall have the
meanings specified in the Plan.
1. Designation as Incentive Stock Option and Option Subject to Acceptance of
Agreement. The Option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). To the extent (i) the Option is exercised pursuant to its
terms after the period set forth in Section 422(a) of the Code, (ii) the Option
exceeds the limitation set forth in Section 422(d) of the Code, (iii) the Plan
is not approved by the stockholders of the Company within the period required by
the Code, or (iv) the Option otherwise does not meet the requirements for an
incentive stock option under Section 422 of the Code, the Option shall not be
treated as an incentive stock option under such Section 422. The Option shall be
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after the tenth anniversary of the Option Date (the
"Expiration Date").
2.2. Exercise of Option. (a) The Option shall not be exercisable during the
first year following the Option Date. Thereafter, the Option may be exercised:
(i) on or after the first anniversary of the Option Date, for up to one-fourth
of the shares of Stock subject to the Option on the Option Date, (ii) on or
after the second anniversary of the Option Date, for up to an additional
one-fourth (one-half on a cumulative basis) of the shares of Stock subject to
the Option on the Option Date, (iii) on or after the third anniversary of the
Option Date, for up to an additional one-fourth (three-fourths on a cumulative
basis) of the shares of Stock subject to the Option on the Option Date, (iv) on
or after the fourth anniversary of the Option Date, for up to the remaining
one-fourth (all shares on a cumulative basis) of the shares of Stock subject to
the Option on the Option Date, and (v) pursuant to any acceleration provisions
of the Plan.
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(b) If the Optionee's employment by the Company terminates by reason of
Permanent and Total Disability (as defined in Section 22(e)(3) of the Code), the
Option shall be exercisable only to the extent it is exercisable on the
effective date of the Optionee's termination of employment by reason of
Permanent and Total Disability, and may thereafter be exercised by the Optionee
or the Optionee's Legal Representative until and including the earliest to occur
of (i) the date which is three months after the effective date of the Optionee's
termination of employment and (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason of
death, the Option shall be exercisable only to the extent it is exercisable on
the date of death and may thereafter be exercised by the Optionee or the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is one year
after the date of death and (ii) the Expiration Date.
(d) If the Optionee's employment with the Company is terminated by the
Company for Cause, the Option shall terminate automatically on the effective
date of Optionee's termination of employment.
(e) If the Optionee's employment by the Company terminates for any reason
other than Permanent and Total Disability, death or Cause, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and including the earliest
to occur of (i) the date which is three months after the effective date of the
Optionee's termination of employment and (ii) the Expiration Date.
(f) If the Optionee dies during the period set forth in Section 2.2(b)
following termination of employment by reason of Permanent and Total Disability,
or if the Optionee dies during the period set forth in Section 2.2(e) following
termination of employment for any reason other than Permanent and Total
Disability or Cause, the Option shall be exercisable only to the extent it is
exercisable on the date of death and may thereafter be exercised by the
Optionee's Legal Representative or Permitted Transferees, as the case may be,
until and including the earliest to occur of (i) the date which is one year
after the date of death and (ii) the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock (provided
that if the then exercisable portion of the Option is for less than one share,
then for all of such portion) to be purchased and accompanied by payment
therefor in full (or arrangement made for such payment to the Company's
satisfaction) either (i) in cash, (ii) by delivery of previously owned whole
shares of Stock (which the Optionee has held for at least six months prior to
the delivery of such shares or which the Optionee purchased on the open market
and for which the Optionee has good title, free and clear of all liens and
encumbrances) having a Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable pursuant to the Option by reason
of such exercise, (iii) by authorizing the Company to withhold whole shares of
Stock which would otherwise be delivered upon exercise of the Option having a
Fair Market Value, determined as of
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the date of exercise, equal to the aggregate purchase price payable pursuant to
the Option by reason of such exercise, (iv) in cash by a broker-dealer
acceptable to the Company to whom the Optionee has submitted an irrevocable
notice of exercise or (v) a combination of (i), (ii) and (iii), and (2) by
executing such documents as the Company may reasonably request. The Committee
shall have sole discretion to disapprove of an election pursuant to any of
clauses (ii) -- (v). Any fraction of a share of Stock which would be required to
pay such purchase price shall be disregarded and the remaining amount due shall
be paid in cash by the Optionee. No certificate representing a share of Stock
shall be delivered until the full purchase price therefor has been paid.
2.4. Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the shares of
Stock subject to the Option expire or are exercised, canceled or forfeited, the
Optionee shall, upon the Company's request, promptly return this Agreement to
the Company for full or partial cancellation, as the case may be. Such
cancellation shall be effective regardless of whether the Optionee returns this
Agreement. If the Optionee continues to have rights to purchase shares of Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) xxxx this Agreement to indicate the extent
to which the Option has expired or been exercised, canceled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to such rights,
which agreement shall otherwise be substantially similar to this Agreement in
form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be transferred by the
Optionee other than by will or the laws of descent and distribution or pursuant
to beneficiary designation procedures approved by the Company. Except to the
extent permitted by the foregoing sentence, during the Optionee's lifetime the
Option is exercisable only by the Optionee or the Optionee's Legal
Representative. Except to the extent permitted by the foregoing, the Option may
not be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the
Option, the Option and all rights hereunder shall immediately become null and
void.
3.2. Investment Representation. The Optionee hereby represents and covenants
that (a) any share of Stock purchased upon exercise of the Option will be
purchased for investment and not with a view to the distribution thereof within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from
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registration under the Securities Act and such state securities laws; and (c) if
requested by the Company, the Optionee shall submit a written statement, in form
satisfactory to the Company, to the effect that such representation (x) is true
and correct as of the date of purchase of any shares hereunder or (y) is true
and correct as of the date of any sale of any such shares, as applicable. As a
further condition precedent to any exercise of the Option, the Optionee shall
comply with all regulations and requirements of any regulatory authority having
control of or supervision over the issuance or delivery of the shares and, in
connection therewith, shall execute any documents which the Board or the
Committee shall in its sole discretion deem necessary or advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the delivery of
Stock upon exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company in addition to the purchase price of the shares,
such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to advance the
Required Tax Payments by any of the following means: (1) a cash payment to the
Company pursuant to Section 3.3(a), (2) delivery to the Company of previously
owned whole shares of Stock (which the Optionee has held for at least six months
prior to the delivery of such shares or which the Optionee purchased on the open
market and for which the Optionee has good title, free and clear of all liens
and encumbrances) having a Fair Market Value, determined as of the date the
obligation to withhold or pay taxes first arises in connection with the Option
(the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold whole shares of Stock which would otherwise be delivered to
the Optionee upon exercise of the Option having a Fair Market Value, determined
as of the Tax Date, equal to the Required Tax Payments, (4) a cash payment by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (5) any combination of (1), (2) and (3). The
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (2)-(5). Shares of Stock to be delivered or withheld may have a
Fair Market Value in excess of the minimum amount of the Required Tax Payments,
but not in excess of the amount determined by applying the Optionee's maximum
marginal tax rate. Any fraction of a share of Stock which would be required to
satisfy any such obligation shall be disregarded and the remaining amount due
shall be paid in cash by the Optionee. No certificate representing a share of
Stock shall be delivered until the Required Tax Payments have been satisfied in
full.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in
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connection with the first exercise of the Option, in whole or in part, occurring
after such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to the nearest hundredth) by (ii) the excess,
if any, of (A) the Fair Market Value on the exercise date over (B) the exercise
price of the Option. The decision of the Committee regarding any such adjustment
shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Option is subject to the condition
that if the listing, registration or qualification of the shares subject to the
Option upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the purchase or delivery of
shares hereunder, the Option may not be exercised, in whole or in part, unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company agrees to use reasonable efforts to effect or obtain any such listing,
registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in whole or
in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not be
entitled to any privileges of ownership with respect to shares of Stock subject
to the Option unless and until purchased and delivered upon the exercise of the
Option, in whole or in part, and the Optionee becomes a stockholder of record
with respect to such delivered shares; and the Optionee shall not be considered
a stockholder of the Company with respect to any such shares not so purchased
and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event shall the
granting of the Option or its acceptance by the Optionee give or be deemed to
give the Optionee any right to continued employment by the Company or any
affiliate of the Company.
3.9. Decisions of Board or Committee. The Board or the Committee shall have
the right to resolve all questions which may arise in connection with the Option
or its exercise. Any interpretation, determination or other action made or taken
by the Board or the Committee regarding the Plan or this Agreement shall be
final, binding and conclusive.
3.10. Company to Reserve Shares. The Company shall at all times prior to the
expiration or termination of the Option reserve and keep available, either in
its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.
3.11. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Optionee hereby acknowledges receipt of a copy of the Plan.
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4. Miscellaneous Provisions.
4.1. Meaning of Certain Terms. (a) As used herein, employment by the Company
shall include employment by a corporation which is a "subsidiary corporation" of
the Company, as such term is defined in section 424 of the Code. References in
this Agreement to sections of the Code shall be deemed to refer to any successor
section of the Code or any successor internal revenue law.
(b) As used herein, the term "Legal Representative" shall include an
executor, administrator, legal representative, guardian or similar person and
the term "Permitted Transferee" shall include any transferee pursuant to a
transfer permitted under the Plan and Section 3.1 hereof.
4.2. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.3. Notices. All notices, requests or other communications provided for in
this Agreement shall be made, if to the Company, to Whitehall Jewellers, Inc.,
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx, 00000, Attention:
Secretary, and if to the Optionee, to "FirstName" "LastName", "Address1",
"City", "State", "PostalCode". All notices, requests or other communications
provided for in this Agreement shall be made in writing either (a) by personal
delivery to the party entitled thereto, (b) by facsimile with confirmation of
receipt, (c) by mailing in the United States mails to the last known address of
the party entitled thereto or (d) by express courier service. The notice,
request or other communication shall be deemed to be received upon personal
delivery, upon confirmation of receipt of facsimile transmission or upon receipt
by the party entitled thereto if by United States mail or express courier
service; provided, however, that if a notice, request or other communication is
not received during regular business hours, it shall be deemed to be received on
the next succeeding business day of the Company.
4.4. Governing Law. This Agreement, the Option and all determinations made
and actions taken pursuant hereto and thereto, to the extent not governed by the
laws of the United States, shall be governed by the laws of the State of
Delaware and construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.5. Counterparts. This Agreement may be executed in two counterparts each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.
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WHITEHALL JEWELLERS, INC.
By:________________________________
Name:
Accepted this _______ day of
________________, 2001.
__________________________________________
"FirstName" "LastName"
