Exhibit 10.9
Execution Copy
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered as of December 13,
2007 (the "Effective Date"), by and between Claire's Stores, Inc., a Florida
corporation (the "Company"), and Xxxxx Xxxxxx (the "Executive").
WHEREAS, the Company desires to employ the Executive on the terms and
subject to the conditions set forth herein and the Executive has agreed to be so
employed.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Employment of Executive; Duties.
1.1 Title. During the Employment Period (as defined in Section 2 hereof),
the Executive shall serve as an Executive Vice President of the Company.
1.2 Duties.
(a) During the Employment Period, the Executive shall have such
executive and managerial powers and duties as may be assigned to the
Executive by the Chief Executive Officer or the Board of Directors of the
Company (the "Board"), commensurate with the Executive's position as
Executive Vice President, and shall report to the Chief Executive Officer
or the Board. The Company may adjust the duties and responsibilities of
Executive as Executive Vice President, notwithstanding the specific title
set forth in Section 1.1 hereof, based upon the Company's needs from time
to time. Except for sick leave, reasonable vacations and excused leaves of
absence, the Executive shall, throughout the Employment Period, devote the
whole of the Executive's working time, attention, knowledge and skills
faithfully, and to the best of the Executive's ability, to the duties and
responsibilities of the Executive's positions in furtherance of the
business affairs and activities of the Company and its subsidiaries and
Affiliates (as defined in Section 5.4(a) hereof).
(b) During the Employment Period, the Executive's principal place of
employment shall be at the Company's office in Hoffman Estates, Illinois.
The Executive shall relocate his principal residence to the greater
Chicago metropolitan area.
(c) The Executive shall at all times be subject to, comply with,
observe and carry out (i) the Company's rules, regulations, policies and
codes of ethics and/or conduct applicable to its employees generally and
in effect from time to time and (ii) such rules, regulations, policies,
codes of ethics and/or conduct, directions and restrictions as the
Board may from time to time reasonably establish or approve generally for
senior executive officers of the Company.
2. Term of Employment. This Agreement shall govern the terms and conditions of
the Executive's employment by the Company, and the termination thereof, during
the Term. The "Term" shall mean the period that commences on the Effective Date
and ends on February 28, 2010 (the "Term"), provided that the Term shall
automatically be extended for successive one year periods unless either party
provides written notice (a "Notice of Non-Renewal") at least ninety (90) days
prior to the expiration of the Term that the Term shall not be further extended.
The portion of the Term during which the Executive is actually employed by the
Company under this Agreement is referred to as the "Employment Period".
3. Compensation and General Benefits.
3.1 Base Salary.
(a) During the Employment Period, the Company agrees to pay to the
Executive an annual base salary in an amount equal to $585,000 (such base
salary, as may be adjusted from time to time pursuant to Section 3.1(b),
is referred to herein as the "Base Salary"). The Executive's Base Salary,
less amounts required to be withheld under applicable law, shall be
payable in equal installments in accordance with the Company's normal
payroll practices and procedures in effect from time to time for the
payment of salaries to officers of the Company, but in no event less
frequently than monthly.
(b) The Company shall review the Executive's performance on an
annual basis and, based on such review, may change the Base Salary, as it,
acting in its sole discretion, shall determine to be reasonable and
appropriate.
3.2 Bonus. Pursuant to the Company's Annual Incentive Plan (the "AIP"),
with respect to each fiscal year of the Company that begins after 2007 and that
ends during the Employment Period, the Executive shall be eligible to receive
from the Company an annual performance bonus (the "Annual Bonus") based upon the
Company's attainment of annual goals established by the Company, which may
include the Company's comparable store sales, earnings before interest, taxes,
depreciation and amortization ("EBITDA") and/or cash generation goals. The
Executive's target Annual Bonus shall be seventy-five percent (75%) of the
Executive's Base Salary if the Company meets targeted levels of performance to
be determined by the Company for the applicable year. Any Annual Bonus earned
shall be payable in full as soon as reasonably practicable following the
determination thereof, but in no event later than April 15 of the following year
(unless administratively impracticable to do so because the Company's results
for the applicable year had not yet been finalized) and in accordance with the
Company's normal payroll practices and procedures. Except as otherwise expressly
provided in the AIP and Section 4 hereof, any Annual Bonus (or portion thereof)
payable under this Section 3.2 shall not be earned and payable unless the
Executive is employed by the Company on the last day of the period to which such
Annual Bonus relates, provided that no Annual Bonus for any preceding period
shall be payable if the Executive's employment is terminated for Cause.
3.3 Expenses.
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(a) In addition to any amounts to which the Executive may be
entitled pursuant to the other provisions of this Section 3 or elsewhere
herein, the Executive shall be entitled to receive reimbursement from the
Company for all reasonable and necessary expenses incurred by the
Executive during the Term in performing the Executive's duties hereunder
on behalf of the Company, subject to, and consistent with, the Company's
policies for expense payment and reimbursement, in effect from time to
time.
(b) In addition to any reimbursement to which the Executive may be
entitled to under the Company's relocation policy, the Executive shall
also be entitled to a relocation bonus of $150,000, payable as soon as
practicable after the Effective Date.
3.4 Benefits During the Employment Period, in addition to any amounts to
which the Executive may be entitled pursuant to the other provisions of this
Section 3 or elsewhere herein, the Executive shall be entitled to participate
in, and to receive benefits under, any benefit plans, arrangements or policies
made available by the Company to its senior executive officers generally,
subject to and on a basis consistent with the terms, conditions and overall
administration of each such plan, arrangement or policy.
3.5 Employee Stock Options.
(a) Claire's, Inc. (the "Company Parent") has adopted a stock option
plan, in the form attached hereto as Exhibit A and incorporated herein by
reference (the "Plan"), for the grant of stock options to employees or
directors of the Company or of any subsidiary of the Company to purchase
shares of Common Stock of the Company Parent (the "Common Stock").
(b) On or shortly after the Effective Date, pursuant to the Plan,
the Executive shall be granted nonqualified options to purchase 437,500
shares of Common Stock at a price per share equal to $10 for its shares on
the terms set forth in the Option Grant Letter attached hereto as Exhibit
B and incorporated herein by reference (the "Option Letter").
3.6 Stock Investment.
(a) On or shortly after the Effective Date, the Executive has the
opportunity to purchase up to 30,000 shares of Common Stock for aggregate
cash consideration of $300,000 (the "Stock Purchase"). The Stock Purchase
shall otherwise be on the terms set forth in the Stock Letter attached
hereto as Exhibit C.
(b) Upon completion of the Stock Purchase, the Executive shall be
granted an additional fully vested nonqualified stock option to purchase
30,000 shares of Common Stock at a price per share equal to $10.00 on the
terms set forth in the Option Letter.
4. Termination.
4.1 General. The employment of the Executive hereunder (and the Employment
Period) shall terminate as provided in Section 2 hereof, unless earlier
terminated in accordance with the provisions of this Section 4.
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4.2 Death or Disability of the Executive.
(a) The employment of the Executive hereunder (and the Employment
Period) shall terminate upon (i) the death of the Executive and (ii) at
the option of the Company, upon not less than fifteen (15) days' prior
written notice to the Executive or the Executive's personal representative
or guardian, if the Executive suffers a "Total Disability" (as defined in
Section 4.2(b) hereof). Upon termination for death or Total Disability,
the Company shall pay to the Executive, guardian or personal
representative, as the case may be, a prorated share of the Annual Bonus
pursuant to Section 3.2 hereof (based on the period of actual employment)
that the Executive would have been entitled to had the Executive worked
the full year during which the termination occurred, which bonus shall be
based on actual performance of the Company for the year of such
termination. Any bonus shall be payable as soon as reasonably practicable
following the determination thereof, but in no event later than April 15
of the following year (unless administratively impracticable to do so
because the Company's results for the applicable year had not yet been
finalized), and in accordance with the Company's normal payroll practices
and procedures.
(b) For purposes of this Agreement, "Total Disability" shall mean
(i) if the Executive is subject to a legal decree of incompetency (the
date of such decree being deemed the date on which such disability
occurred), (ii) the written determination by a physician selected by the
Company and acceptable to Executive (which acceptance shall not be
unreasonably withheld), (which expense shall be paid by the Company) that,
because of a medically determinable disease, injury or other physical or
mental disability, the Executive is unable substantially to perform, with
or without reasonable accommodation, the material duties of the Executive
required hereby, and that such disability has lasted for ninety (90)
consecutive days or any one hundred twenty (120) days during the
immediately preceding twelve (12)-month period or is, as of the date of
determination, reasonably expected to last six (6) months or longer after
the date of determination, in each case based upon medically available
reliable information or (iii) Executive's qualifying for benefits under
the Company's long-term disability coverage, if any. In conjunction with
determining mental and/or physical disability for purposes of this
Agreement, the Executive hereby consents to (x) any examinations that the
Company reasonably determines are relevant to a determination of whether
the Executive is mentally and/or physically disabled or are required by
the Company physician, (y) furnish such medical information as may be
reasonably requested and (z) waive any applicable physician patient
privilege that may arise because of such examination. All expenses
incurred by the Executive under this subsection shall be paid by the
Company.
4.3 Termination by the Company Without Cause, Non-Renewal of the Agreement
by the Company, Resignation by the Executive For Good Reason or in the event of
a Change of Control.
(a) The Company may terminate the Executive's employment without
"Cause" (as defined in Section 4.3(g)), and thereby terminate the
Executive's
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employment (and the Employment Period) under this Agreement at any time
with no requirement for notice to the Executive.
(b) Pursuant to Section 2, the Company may terminate the Executive
upon expiration of the Term by providing a Notice of Non-Renewal.
(c) The Executive may resign, and thereby terminate the Executive's
employment (and the Employment Period), at any time for "Good Reason" (as
defined in Section 4.3(f) hereof), upon not less than thirty (30) days'
prior written notice to the Company specifying in reasonable detail the
reason therefore; provided, however, that the Company shall have a
reasonable opportunity to cure any such Good Reason (to the extent
possible) within such thirty (30) day notice period after the Company's
receipt of such notice; and provided further that, if the Company is not
seeking to cure, the Company shall not be obligated to allow the Executive
to continue working during such period and may, in its sole discretion,
accelerate such termination of employment (and the Employment Period) to
any date during such period. Executive may not terminate employment under
this Agreement for Good Reason regarding any of the Company's acts or
omissions of which Executive had actual notice for sixty (60) days or more
prior to giving notice of termination for Good Reason.
(d) In the event the Executive's employment is terminated pursuant
to this Section 4.3, then, subject to Section 4.3(e) hereof, the following
provisions shall apply:
(i) The Company shall continue to pay the Executive the Base
Salary to which the Executive would have been entitled pursuant to
Section 3.1 hereof (at the Base Salary rate during the year of
termination) for a twelve (12)-month period following such date of
termination, with all such amounts payable in accordance with the
Company's normal payroll practices and procedures in the same manner
and at the same time as though the Executive remained employed by
the Company.
(ii) If such termination occurs upon or within eighteen (18)
months following a Change of Control (as defined in Exhibit B
attached hereto), the Company shall continue to pay the Executive
the Base Salary to which the Executive would have been entitled
pursuant to Section 3.1 hereof (at the Base Salary rate during the
year of termination) for the greater of (A) a twelve (12)-month
period following such date of termination or (B) the period until
the end of the then remaining Term, with all such amounts payable in
accordance with the Company's normal payroll practices and
procedures in the same manner and at the same time as though the
Executive remained employed by the Company.
(iii) In the event the Executive's employment is terminated
pursuant to this Section 4.3 without Cause, and if the Company has
previously effected reductions in the Executive's Base Salary and
the base salary of all senior executives of the Company, which
reductions were substantially similar, then the Base Salary rate for
purposes of Section 4.3(c)(i) or (ii) hereof shall be the Base
Salary rate in effect immediately prior to such reductions.
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(iv) The Company shall pay to the Executive a prorated share
of the Annual Bonus pursuant to Section 3.2 hereof (based on the
period of actual employment) that the Executive would have been
entitled to had the Executive worked the full year during which the
termination occurred, based on actual performance of the Company for
the year of such termination. The bonus shall be payable as soon as
reasonably practicable following the determination thereof, but in
no event later than April 15 of the following year (unless
administratively impracticable to do so because the Company's
results for the applicable year had not yet been finalized), and in
accordance with the Company's normal payroll practices and
procedures.
(v) If the Executive elects continuation coverage (with
respect to the Executive's coverage and/or any eligible dependent
coverage) under the Consolidated Omnibus Budget Reconciliation Act
of 1986 ("COBRA Continuation Coverage") with respect to the
Company's group health insurance plan, the Executive shall be
responsible for payment of the monthly cost of COBRA Continuation
Coverage. Unless prohibited by law, the Company shall reimburse the
Executive for any portion of the monthly cost of COBRA Continuation
Coverage that exceeds the amount of the monthly health insurance
premium (with respect to the Executive's coverage and/or any
eligible dependent coverage) payable by the Executive immediately
prior to the date of Executive's termination, such reimbursements to
continue (A) for a period of twelve (12) months or (B) in the event
that the Executive's Base Salary is being paid pursuant to Section
4.3(d)(ii), for the period set forth therein. The Company shall pay
the reimbursements on a monthly basis in accordance with the
Company's normal payroll practices and procedures.
(e) As a condition precedent to the Executive's right to receive the
benefits set forth in Section 4.3(d) hereof, the Executive agrees to
execute a release of the Company and its respective Affiliates, officers,
directors, stockholders, employees, agents, insurers, representatives and
successors from and against any and all claims that the Executive may have
against any such Person (as defined in Section 5.4(f) hereof) relating to
the Executive's employment by the Company and the termination thereof, in
the form attached hereto as Exhibit D, as such form may be amended from
time to time to comply with changes in law.
(f) For purposes of this Agreement, the Executive would be entitled
to terminate the Executive's employment for "Good Reason" if without the
Executive's prior written consent:
(i) the Company fails to comply with any material obligation
imposed by this Agreement;
(ii) the Company effects a reduction in the Executive's Base
Salary, unless all senior executives of the Company receive a
substantially similar reduction in base salary; or
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(iii) the Company requires the Executive to be based
(excluding regular travel responsibilities) at any office or
location more than 75 miles outside of Hoffman Estates, Illinois,
provided that the Executive had previously relocated his principal
residence to the greater Chicago metropolitan area.
(g) For purposes of this Agreement, "Cause" means the occurrence of
any one or more of the following events:
(i) an act of fraud, embezzlement, theft or any other material
violation of law that occurs during or in the course of Executive's
employment with the Company;
(ii) intentional damage to the Company's assets;
(iii) intentional disclosure of the Company's confidential
information contrary to the Company's policies;
(iv) material breach of Executive's obligations under this
Agreement;
(v) intentional engagement in any activity which would
constitute a breach of Executive's duty of loyalty or of your
obligations under this Agreement;
(vi) material breach of any of material the Company's policy
that has been communicated to the Executive in writing;
(vii) the willful and continued failure to substantially
perform Executive's duties for the Company (other than as a result
of incapacity due to physical or mental illness); or
(viii) willful conduct by Executive that is demonstrably and
materially injurious to the Company, monetarily or otherwise.
For purposes of this Section 4.3(f), an act, or a failure to act,
shall not be deemed "willful" or "intentional" unless it is done, or
omitted to be done, by Executive in bad faith or without a reasonable
belief that Executive's action or omission was in the best interest of the
Company. Failure to meet performance standards or objectives, by itself,
does not constitute "Cause".
4.4 Termination For Cause, Voluntary Resignation Other Than For Good
Reason or Election Not to Extend the Term by the Executive.
(a) (i) the Company may, upon action of the Board, terminate the
employment of the Executive (and the Employment Period) at any time for
"Cause," (ii) the Executive may voluntarily resign other than for Good
Reason and thereby terminate the Executive's employment (and the
Employment Period) under this Agreement at any time upon not less than
thirty (30) days' prior written notice or (iii) the Executive may provide
a Notice of Non-Renewal pursuant to Section 2 hereof, in which case the
Executive's employment will terminate upon expiration of the Term.
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(b) Upon termination by the Company for Cause, by the Executive as
the result of resignation for other than for Good Reason, or by the
Executive at the end of the Term following a Notice of Non-Renewal
provided by the Executive, the Executive shall be entitled to receive all
amounts of earned but unpaid Base Salary and benefits accrued and vested
through the date of such termination.
(c) Before the Company may terminate the Executive for Cause
pursuant to Section 4.4(a)(i), the Board shall deliver to the Executive a
written notice of the Company's intent to terminate the Executive for
Cause, and the Executive shall have been given a reasonable opportunity to
cure any such acts or omissions (which are susceptible of cure as
reasonably determined by the Board by majority vote thereof) within thirty
(30) days after the Executive's receipt of such notice.
(d) If the Executive's employment terminates under this Section 4.4
prior to the first anniversary of the Effective Date, the Executive shall
be required to repay to the Company 100% of the relocation bonus in
Section 3.3(b), and if such termination occurs prior to the second
anniversary of the Effective Date, the Executive shall be required to
repay to the Company 50% of the relocation bonus in Section 3.3(b).
4.5 Resignation from Officer Positions. Upon the termination of the
Executive's employment for any reason (unless otherwise agreed in writing by the
Company and the Executive), the Executive will be deemed to have resigned,
without any further action by the Executive, from any and all officer, director
and/or director positions that the Executive, immediately prior to such
termination, (a) held with the Company or any of its Affiliates and (b) held
with any other entities at the direction of, or as a result of the Executive's
affiliation with, the Company or any of its Affiliates. If for any reason this
Section 4.5 is deemed to be insufficient to effectuate such resignations, then
Executive will, upon the Company's request, execute any documents or instruments
that the Company may deem necessary or desirable to effectuate such
resignations.
4.6 Section 409A of the Code. Notwithstanding anything to the contrary in
this Agreement, the parties mutually desire to avoid adverse tax consequences
associated with the application of Section 409A of the Code to this Agreement
and agree to cooperate fully and take appropriate reasonable actions that
preserve to the Executive, to the maximum extent practical, the full economic
benefit of this Agreement while avoiding any such consequences under Section
409A of the Code, including delaying payments and reforming the form of the
Agreement if such action would reduce or eliminate taxes and/or interest payable
as a result of Section 409A of the Code. In this regard, notwithstanding
anything to the contrary in this Section 4, to the extent necessary to comply
with Section 409A of the Code, any payment required under this Section 4 shall
be deferred for a period of six (6) months, regardless of the circumstances
giving rise to or the basis for such payment.
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5. Confidentiality, Work Product and Non-Competition and Non-Solicitation.
5.1 Confidentiality.
(a) In connection with the Executive's employment with the Company,
the Company promises to provide the Executive with access to "Confidential
Information" (as defined in Section 5.4(d) hereof) in support of the
Executive's employment duties. The Executive recognizes that the Company's
business interests require a confidential relationship between the Company
and the Executive and the fullest practical protection and confidential
treatment of all Confidential Information. At all times, both during and
after the Employment Period, the Executive shall not directly or
indirectly: (i) appropriate, download, print, copy, remove, use, disclose,
divulge, communicate or otherwise "Misappropriate" (as defined in Section
5.4(e) hereof), any Confidential Information, including, without
limitation, originals or copies of any Confidential Information, in any
media or format, except for the Company's benefit within the course and
scope of the Executive's employment or with the prior written consent of a
majority of the Board; or (ii) take or encourage any action that would
circumvent, interfere with or otherwise diminish the value or benefit of
the Confidential Information to any of the Company Parties (as defined in
Section 5.4(b) hereof).
(b) All Confidential Information, and all other information and
property affecting or relating to the business of the Company Parties
within the Executive's possession, custody or control, regardless of form
or format, shall remain, at all times, the property of the respective
Company Parties, the appropriation, use and/or disclosure of which is
governed and restricted by this Agreement.
(c) The Executive acknowledges and agrees that:
(i) the Executive occupies a unique position within the
Company, and the Executive is and will be intimately involved in the
development and/or implementation of Confidential Information;
(ii) in the event the Executive breaches this Section 5.1 with
respect to any Confidential Information, such breach shall be deemed
to be a Misappropriation of such Confidential Information; and
(iii) any Misappropriation of Confidential Information will
result in immediate and irreparable harm to the Company.
(d) Upon receipt of any formal or informal request, by legal process
or otherwise, seeking the Executive's direct or indirect disclosure or
production of any Confidential Information to any Person, the Executive
shall promptly and timely notify the Company and provide a description
and, if applicable, hand deliver a copy of such request to the Company.
The Executive irrevocably nominates and appoints the Company as the
Executive's true and lawful attorney-in-fact to act in the Executive's
name, place and stead to perform any act that the Executive might perform
to defend and protect against any disclosure of Confidential Information.
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(e) At any time the Company may request, during or after the
Employment Period, the Executive shall deliver to the Company all
originals and copies of Confidential Information and all other information
and property affecting or relating to the business of the Company Parties
within the Executive's possession, custody or control, regardless of form
or format, including, without limitation any Confidential Information
produced by the Executive. Both during and after the Employment Period,
the Company shall have the right of reasonable access to review, inspect,
copy and/or confiscate any Confidential Information within the Executive's
possession, custody or control.
(f) Upon termination or expiration of this Agreement, the Executive
shall immediately return to the Company all Confidential Information, and
all other information and property affecting or relating to the business
of the Company Parties, within the Executive's possession, custody or
control, regardless of form or format, without the necessity of a prior
Company request.
(g) During the Employment Period, the Executive represents and
agrees that the Executive will not use or disclose any confidential or
proprietary information or trade secrets of others, including but not
limited to former employers, and that the Executive will not bring onto
the premises of the Company or access such confidential or proprietary
information or trade secrets of such others, unless consented to in
writing by said others, and then only with the prior written authorization
of the Company.
5.2 Work Product/Intellectual Property.
(a) Assignment. The Executive hereby assigns to the Company all
right, title and interest to all "Work Product" (as defined in Section
5.4(h) hereof) that (i) relates to any of the Company Parties' actual or
anticipated business, research and development or existing or future
products or services, or (ii) is conceived, reduced to practice, developed
or made using any equipment, supplies, facilities, assets, information or
resources of any of the Company Parties (including, without limitation,
any intellectual property rights).
(b) Disclosure. The Executive shall promptly disclose Work Product
to the Board and perform all actions reasonably requested by the Company
(whether during or after the Employment Period) to establish and confirm
the ownership and proprietary interest of any of the Company Parties in
any Work Product (including, without limitation, the execution of
assignments, consents, powers of attorney, applications and other
instruments). The Executive shall not file any patent or copyright
applications related to any Work Product except with the written consent
of a majority of the Board.
5.3 Non-Competition and Non-Solicitation.
(a) In consideration of the Confidential Information being provided
to the Executive as stated in Section 5.1 hereof, and other good and
valuable new consideration as stated in this Agreement, including, without
limitation, employment and/or continued employment with the Company, and
the business relationships, Company goodwill, work experience, client,
customer and/or vendor relationships and other fruits of employment
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that the Executive will have the opportunity to obtain, use and develop
under this Agreement, the Executive agrees to the restrictive covenants
stated in this Section 5.3.
(b) From the Effective Date until the end of the Restricted Period
(as defined in Section 5.4(g) hereof), the Executive agrees that the
Executive will not, directly or indirectly, on the Executive's own behalf
or on the behalf of any other Person, within the United States of America
or in any other country or territory in which the businesses of the
Company are conducted:
(i) engage in a Competing Business (as defined in Section
5.4(c) hereof), including, without limitation, by owning, managing,
operating, controlling, being employed by, providing services as a
consultant or independent contractor to or participating in the
ownership, management, operation or control of any Competing
Business;
(ii) induce or attempt to induce any customer, vendor,
supplier, licensor or other Person in a business relationship with
any Company Party, for or with which the Executive or employees
working under the Executive's supervision had any direct or indirect
responsibility or contact during the Employment Period, (A) to do
business with a Competing Business or (B) to cease, restrict,
terminate or otherwise reduce business with the Company for the
benefit of a Competing Business, regardless of whether the Executive
initiates contact; or
(iii) (A) solicit, recruit, persuade, influence or induce, or
attempt to solicit, recruit, persuade, influence or induce anyone
employed or otherwise retained by any of the Company Parties
(including any independent contractor or consultant), to cease or
leave their employment or contractual or consulting relationship
with any Company Party, regardless of whether the Executive
initiates contact for such purposes or (B) hire, employ or otherwise
attempt to establish, for any Person, any employment, agency,
consulting, independent contractor or other business relationship
with any Person who is or was employed or otherwise retained by any
of the Company Parties (including any independent contractor or
consultant).
(c) The parties hereto acknowledge and agree that, notwithstanding
anything in Section 5.3(b)(i) hereof, (i) the Executive may own or hold,
solely as passive investments, securities of Persons engaged in any
business that would otherwise be included in Section 5.3(b)(i), as long as
with respect to each such investment the securities held by the Executive
do not exceed five percent (5%) of the outstanding securities of such
Person and such securities are publicly traded and registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (ii) the Executive may serve on the board of
directors (or other comparable position) or as an officer of any entity at
the request of the Board; provided, however, that in the case of
investments otherwise permitted under clause (i) above, the Executive
shall not be permitted to, directly or indirectly, participate in, or
attempt to influence, the management, direction or policies of (other than
through the exercise of any voting rights
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held by the Executive in connection with such securities), or lend the
Executive's name to, any such Person.
(d) The Executive acknowledges that (i) the restrictive covenants
contained in this Section 5.3 hereof are ancillary to and part of an
otherwise enforceable agreement, such being the agreements concerning
Confidential Information and other consideration as stated in this
Agreement, (ii) at the time that these restrictive covenants are made, the
limitations as to time, geographic scope and activity to be restrained, as
described herein, are reasonable and do not impose a greater restraint
than necessary to protect the good will and other legitimate business
interests of the Company, including without limitation, Confidential
Information (including trade secrets), client, customer and/or vendor
relationships, client and/or customer goodwill and business productivity,
(iii) in the event of termination of the Executive's employment, the
Executive's experiences and capabilities are such that the Executive can
obtain gainful employment without violating this Agreement and without the
Executive incurring undue hardship, (iv) based on the relevant benefits
and other new consideration provided for in this Agreement, including,
without limitation, the disclosure and use of Confidential Information,
the restrictive covenants of this Section 5.3, as applicable according to
their terms, shall remain in full force and effect even in the event of
the Executive's involuntary termination from employment, with or without
Cause and (v) the Executive has carefully read this Agreement and has
given careful consideration to the restraints imposed upon the Executive
by this Agreement and consents to the terms of the restrictive covenants
in this Section 5.3, with the knowledge that this Agreement may be
terminated at any time in accordance with the provisions hereof.
5.4 Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(a) An "Affiliate" of any specified Person means any other Person,
whether now or hereafter existing, directly or indirectly controlling or
controlled by, or under direct or indirect common control with, such
specified Person. For purposes hereof, "control" or any other form
thereof, when used with respect to any Person, means the power to direct
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing.
(b) "Company Parties" means the Company, and its direct and indirect
parents, subsidiaries and Affiliates, and their successors in interest.
(c) "Competing Business" means any business that owns or operates a
specialty retail chain, which chain derives 15% or more of its revenue for
the trailing 12 months from the sale of costume jewelry or accessories
targeted to girls or women.
(d) Confidential Information.
(i) Definition. "Confidential Information" means any and all
material, information, ideas, inventions, formulae, patterns,
compilations, programs,
12
devices, methods, techniques, processes, know how, plans (marketing,
business, strategic, technical or otherwise), arrangements, pricing
and other data of or relating to any of the Company Parties (as well
as their customers and/or vendors) that is confidential, proprietary
or trade secret (A) by its nature, (B) based on how it is treated or
designated by a Company Party, (C) because the disclosure of which
would have a material adverse effect on the business or planned
business of any of the Company Parties and/or (D) as a matter of
law.
(ii) Exclusions. Confidential Information does not include
material, data, and/or information (A) that any Company Party has
voluntarily placed in the public domain, (B) that has been lawfully
and independently developed and publicly disclosed by third parties,
(C) that constitutes the general non-specialized knowledge and
skills gained by the Executive during the Employment Period or (D)
that is otherwise in the public domain through lawful means;
provided, however, that the unauthorized appropriation, use or
disclosure of Confidential Information by the Executive, directly or
indirectly, shall not affect the protection and relief afforded by
this Agreement regarding such information.
(iii) Inclusions. Confidential Information includes, without
limitation, the following information (including without limitation,
compilations or collections of information) relating or belonging to
any Company Party (as well as their clients, customers and/or
vendors) and created, prepared, accessed, used or reviewed by the
Executive during or after the Employment Period: (1) product and
manufacturing information, such as ingredients, combinations of
ingredients and manufacturing processes; (2) scientific and
technical information, such as research and development, tests and
test results, formulae and formulations, studies and analysis; (3)
financial and cost information, such as operating and production
costs, costs of goods sold, costs of supplies and manufacturing
materials, non-public financial statements and reports, profit and
loss information, margin information and financial performance
information; (4) customer related information, such as customer
related contracts, engagement and scope of work letters, proposals
and presentations, customer-related contacts, lists, identities and
prospects, practices, plans, histories, requirements and needs,
price information and formulae and information concerning client or
customer products, services, businesses or equipment specifications;
(5) vendor and supplier related information, such as the identities,
practices, history or services of any vendors or suppliers and
vendor or supplier contacts; (6) sales, marketing and price
information, such as marketing and sales programs and related data,
sales and marketing strategies and plans, sales and marketing
procedures and processes, pricing methods, practices and techniques
and pricing schedules and lists; (7) database, software and other
computer related information, such as computer programs, data,
compilations of information and records, software and computer
files, presentation software and computer-stored or backed-up
information including, but not limited to, e-mails, databases, word
processed documents, spreadsheets, notes, schedules, task lists,
images and video; (8) employee-related information, such as lists or
directories identifying employees, representatives and contractors,
and information regarding the competencies (knowledge, skill,
13
experience), compensation and needs of employees, representatives
and contractors and training methods; and (9) business- and
operation-related information, such as operating methods,
procedures, techniques, practices and processes, information about
acquisitions, corporate or business opportunities, information about
partners and potential investors, strategies, projections and
related documents, contracts and licenses and business records,
files, equipment, notebooks, documents, memoranda, reports, notes,
sample books, correspondence, lists and other written and graphic
business records.
(e) "Misappropriate", or any form thereof, means:
(i) the acquisition of any Confidential Information by a
Person who knows or has reason to know that the Confidential
Information was acquired by theft, bribery, misrepresentation,
breach or inducement of a breach of a duty to maintain secrecy or
espionage through electronic or other means (each, an "Improper
Means"); or
(ii) the disclosure or use of any Confidential Information
without the express consent of the Company by a Person who (A) used
Improper Means to acquire knowledge of the Confidential Information
(B) at the time of disclosure or use, knew or had reason to know
that his or her knowledge of the Confidential Information was (x)
derived from or through a Person who had utilized Improper Means to
acquire it, (y) acquired under circumstances giving rise to a duty
to maintain its secrecy or limit its use or (z) derived from or
through a Person who owed a duty to the Company to maintain its
secrecy or limit its use or (C) before a material change of his or
her position, knew or had reason to know that it was Confidential
Information and that knowledge of it had been acquired by accident
or mistake.
(f) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, business trust, joint-stock
company, estate, trust, unincorporated organization, government or other
agency or political subdivision thereof or any other legal or commercial
entity.
(g) "Restricted Period" means the longer of (i) twelve (12) months
after the date of termination of employment (the Executive's last day of
work for the Company) or (ii) the period during which the Executive is
receiving payments from the Company pursuant to Section 4 hereof.
(h) "Work Product" means all patents and patent applications, all
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports, creative works, discoveries, software,
computer programs, modifications, enhancements, know-how, formulations,
concepts and ideas, and all similar or related information (in each case
whether or not patentable), all copyrights and copyrightable works, all
trade secrets, confidential information, and all other intellectual
property and intellectual property rights that are conceived, reduced to
practice, developed or made by the
14
Executive either alone or with others in the course of employment with the
Company (including employment prior to the date of this Agreement).
5.5 Remedies. Because the Executive's services are unique and because the
Executive has access to Confidential Information, the Executive acknowledges and
agrees that if the Executive breaches any of the provisions of Section 5 hereof,
the Company may suffer immediate and irreparable harm for which monetary damages
alone will not be a sufficient remedy. The restrictive covenants stated in
Section 5 hereof are without prejudice to the Company's rights and causes of
action at law.
5.6 Interpretation; Severability.
(a) The Executive has carefully considered the possible effects on
the Executive of the covenants not to compete, the confidentiality
provisions and the other obligations contained in this Agreement, and the
Executive recognizes that the Company has made every effort to limit the
restrictions placed upon the Executive to those that are reasonable and
necessary to protect the Company's legitimate business interests.
(b) The Executive acknowledges and agrees that the restrictive
covenants set forth in this Agreement are reasonable and necessary in
order to protect the Company's valid business interests. It is the
intention of the parties hereto that the covenants, provisions and
agreements contained herein shall be enforceable to the fullest extent
allowed by law. If any covenant, provision or agreement contained herein
is found by a court having jurisdiction to be unreasonable in duration,
scope or character of restrictions, or otherwise to be unenforceable, such
covenant, provision or agreement shall not be rendered unenforceable
thereby, but rather the duration, scope or character of restrictions of
such covenant, provision or agreement shall be deemed reduced or modified
with retroactive effect to render such covenant, provision or agreement
reasonable or otherwise enforceable (as the case may be), and such
covenant, provision or agreement shall be enforced as modified. If the
court having jurisdiction will not review the covenant, provision or
agreement, the parties hereto shall mutually agree to a revision having an
effect as close as permitted by applicable law to the provision declared
unenforceable. The parties hereto agree that if a court having
jurisdiction determines, despite the express intent of the parties hereto,
that any portion of the covenants, provisions or agreements contained
herein are not enforceable, the remaining covenants, provisions and
agreements herein shall be valid and enforceable. Moreover, to the extent
that any provision is declared unenforceable, the Company shall have any
and all rights under applicable statutes or common law to enforce its
rights with respect to any and all Confidential Information or unfair
competition by the Executive.
6. Miscellaneous.
6.1 Public Statements.
(a) Media Nondisclosure. The Executive agrees that during the
Employment Period or at any time thereafter, except as may be authorized
in writing by the Company, the Executive will not directly or indirectly
disclose or release to the Media any
15
information concerning or relating to any aspect of the Executive's
employment or termination from employment with the Company and/or any
aspect of any dispute that is the subject of this Agreement. For the
purposes of this Agreement, the term "Media" includes, without limitation,
any news organization, station, publication, show, website, web log
(blog), bulletin board, chat room and/or program (past, present and/or
future), whether published through the means of print, radio, television
and/or the Internet or otherwise, and any member, representative, agent
and/or employee of the same.
(b) Non-Disparagement. The Executive agrees that during the
Employment Period or at any time thereafter, the Executive will not make
any statements, comments or communications in any form, oral, written or
electronic to any Media or any customer, client or supplier of the Company
or any of its Affiliates, which would constitute libel, slander or
disparagement of the Company or any of its Affiliates, including, without
limitation, any such statements, comments or communications that
criticize, ridicule or are derogatory to the Company or any of its
Affiliates; provided, however, that the terms of this Section 6.1(b) shall
not apply to communications between the Executive and, as applicable, the
Executive's attorneys or other persons with whom communications would be
subject to a claim of privilege existing under common law, statute or rule
of procedure. The Executive further agrees that the Executive will not in
any way solicit any such statements, comments or communications from
others.
6.2 ARBITRATION. SUBJECT TO THE RIGHTS UNDER SECTION 6.3 HEREOF TO SEEK
INJUNCTIVE OR OTHER EQUITABLE RELIEF, BINDING ARBITRATION SHALL BE THE EXCLUSIVE
REMEDY FOR ANY AND ALL DISPUTES, CLAIMS OR CONTROVERSIES, WHETHER STATUTORY,
CONTRACTUAL OR OTHERWISE, BETWEEN THE PARTIES HERETO ARISING UNDER OR RELATING
TO THIS AGREEMENT OR THE EXECUTIVE'S EMPLOYMENT BY OR TERMINATION FROM THE
COMPANY (INCLUDING, BUT NOT LIMITED TO, THE AMOUNT OF DAMAGES, OR THE
CALCULATION OF ANY BONUS OR OTHER AMOUNT OR BENEFIT DUE) (COLLECTIVELY,
"DISPUTES"). THE PARTIES EACH WAIVE THE RIGHT TO A JURY TRIAL AND WAIVE THE
RIGHT TO ADJUDICATE THEIR DISPUTES UNDER THIS AGREEMENT OUTSIDE THE ARBITRATION
FORUM PROVIDED FOR IN THIS AGREEMENT, EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT.
(a) Procedure Generally. The parties agree to submit the Dispute to
a single arbitrator selected from a panel of JAMS arbitrators. The
arbitration will be governed by the JAMS Comprehensive Arbitration Rules
and Procedures in effect at the time the arbitration is commenced, subject
to the terms and modifications of this Agreement. If for any reason JAMS
cannot serve as the arbitration administrator or cannot fulfill the panel
requirements of the Arbitration Provision, the Company may select an
alternative arbitration administrator, such as AAA, to serve under the
terms of this Agreement.
(b) Arbitrator Selection. To select the arbitrator, the parties
shall make their respective strikes from a panel of former federal court
judges and magistrates, to the extent available from JAMS (the "First
Panel"). If the parties cannot agree upon an arbitrator from the First
Panel or if such a panel is not available from JAMS, then the
16
parties will next make their respective strikes from a panel of former
Illinois state court trial and appellate judges, to the extent available
from JAMS (the "Second Panel"). Any arbitrators proposed for the First and
Second Panels provided for in this Section 6.2(b) must be available to
serve in the Agreed Venue. If the parties cannot agree upon an arbitrator
from the Second Panel or if such a panel is not available from JAMS, then
the parties will next make their respective strikes from the panel of all
other JAMS arbitrators available to serve in the Agreed Venue.
(c) VENUE. THE PARTIES STIPULATE AND AGREE THAT THE EXCLUSIVE VENUE
OF ANY SUCH ARBITRATION PROCEEDING (AND OF ANY OTHER PROCEEDING, INCLUDING
ANY COURT PROCEEDING, UNDER THIS AGREEMENT) SHALL BE CHICAGO, ILLINOIS
(THE "AGREED VENUE").
(d) Authority and Decision. The arbitrator shall have the authority
to award the same damages and other relief that a court could award. The
arbitrator shall issue a reasoned award explaining the decision and any
damages awarded. The arbitrator's decision will be final and binding upon
the parties and enforceable by a court of competent jurisdiction. The
parties will abide by and perform any award rendered by the arbitrator. In
rendering the award, the arbitrator shall state the reasons therefor,
including (without limitation) any computations of actual damages or
offsets, if applicable.
(e) Fees and Costs. In the event of arbitration under the terms of
this Agreement, the fees charged by JAMS or other arbitration
administrator and the arbitrator shall be borne by the parties equally. In
addition, the parties shall each bear their own costs, expenses and
attorneys' fees incurred in arbitration.
(f) Limited Scope. The following are excluded from binding
arbitration under this Agreement: claims for workers' compensation
benefits or unemployment benefits; replevin; and claims for which a
binding arbitration agreement is invalid as a matter of law.
6.3 Injunctive Relief. The parties hereto may seek injunctive relief in
arbitration; provided, however, that as an exception to the arbitration
agreement set forth in Section 6.2 hereof, the parties, in addition to all other
available remedies, shall each have the right to initiate an action in any court
of competent jurisdiction in order to request injunctive or other equitable
relief regarding the terms of Sections 5 or 6.2 hereof. The exclusive venue of
any such proceeding shall be in the Agreed Venue. The parties agree (a) to
submit to the jurisdiction of any competent court in the Agreed Venue, (b) to
waive any and all defenses the Executive may have on the grounds of lack of
jurisdiction of such court and (c) that neither party shall be required to post
any bond, undertaking or other financial deposit or guarantee in seeking or
obtaining such equitable relief. Evidence adduced in any such proceeding for an
injunction may be used in arbitration as well. The existence of this right shall
not preclude or otherwise limit the applicability or exercise of any other
rights and remedies that a party hereto may have at law or in equity.
17
6.4 Settlement of Existing Rights. In exchange for the other terms of this
Agreement, the Executive acknowledges and agrees that: (a) the Executive's entry
into this Agreement is a condition of employment and/or continued employment
with the Company, as applicable; (b) except as otherwise provided herein, this
Agreement will replace any existing employment agreement between the parties and
thereby act as a novation, if applicable; (c) the Executive is being provided
with access to Confidential Information, including, without limitation,
proprietary trade secrets of one or more Company Parties, to which the Executive
has not previously had access; (d) all Company inventions and intellectual
property developed by the Executive during any past employment with the Company
and all goodwill developed with the Company's clients, customers and other
business contacts by the Executive during any past employment with Company, as
applicable, is the exclusive property of the Company; and (e) all Confidential
Information and/or specialized training accessed, created, received or utilized
by the Executive during any past employment with Company, as applicable, will be
subject to the restrictions on Confidential Information described in this
Agreement, whether previously so agreed or not.
6.5 Indemnification. The Executive shall be entitled from the Effective
Date until the end of the Employment Period in the capacity as an officer or
director of the Company or any of its subsidiaries to the benefit of the
indemnification provisions contained in the By-Laws of the Company or as a
matter of law, whichever is greater. In addition, during the term of the
Executive's employment and, where applicable under the terms of the relevant
liability policy thereafter, the Executive shall be covered under any directors'
and officers' insurance policy maintained by the Company.
6.6 Post-Termination Assistance. During the Restricted Period, the
Executive shall cooperate, at the reasonable request of the Company (i) in the
transition of any matter for which the Executive had authority or responsibility
during the Employment Period, or (ii) with respect to any other matter involving
the Company for which the Executive may be of assistance. The Executive shall be
entitled to reimbursement of any out-of-pocket expenses he incurs in providing
such assistance upon submission of documentation supporting such expenses.
6.7 Entire Agreement; Waiver. This Agreement contains the entire agreement
between the Executive and the Company with respect to the subject matter hereof,
and supersedes any and all prior understandings or agreements, whether written
or oral. No modification or addition hereto or waiver or cancellation of any
provision hereof shall be valid except by a writing signed by the party to be
charged therewith. No delay on the part of any party to this Agreement in
exercising any right or privilege provided hereunder or by law shall impair,
prejudice or constitute a waiver of such right or privilege. Additionally, as of
the Effective Date, the Executive acknowledges and agrees that the consulting
agreement he is a party to (the "Consulting Agreement") terminates and the
Executive further acknowledges that he is not entitled to any further
compensation under the Consulting Agreement.
6.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without regard to principles
of conflict of laws.
6.9 Successors and Assigns; Binding Agreement. The rights and obligations
of the parties under this Agreement shall be binding upon and inure to the
benefit of the parties hereto
18
and their heirs, personal representatives, successors and permitted assigns.
This Agreement is a personal contract, and, except as specifically set forth
herein, the rights and interests of the Executive herein may not be sold,
transferred, assigned, pledged or hypothecated by any party without the prior
written consent of the others. As used herein, the term "successor" as it
relates to the Company, shall include, but not be limited to, any successor by
way of merger, consolidation or sale of all or substantially all of such
Person's assets or equity interests.
6.10 Representation by Counsel; Independent Judgment. Each of the parties
hereto acknowledges that (a) it or the Executive has read this Agreement in its
entirety and understands all of its terms and conditions, (b) it or the
Executive has had the opportunity to consult with any individuals of its or the
Executive's choice regarding its or the Executive's agreement to the provisions
contained herein, including legal counsel of its or the Executive's choice, and
any decision not to was the Executive's or its alone and (c) it or the Executive
is entering into this Agreement of its or the Executive's own free will, without
coercion from any source, based upon its or the Executive's own independent
judgment.
6.11 Interpretation. The parties and their respective legal counsel
actively participated in the negotiation and drafting of this Agreement, and in
the event of any ambiguity or mistake herein, or any dispute among the parties
with respect to the provisions hereto, no provision of this Agreement shall be
construed unfavorably against any of the parties on the ground that the
Executive, it, or the Executive's or its counsel was the drafter thereof.
6.12 Survival. The applicable provisions of Sections 4, 5 and 6 hereof
shall survive the termination of this Agreement.
6.13 Notices. All notices and communications hereunder shall be in writing
and shall be deemed properly given and effective when received, if sent by
facsimile or telecopy, or by postage prepaid by registered or certified mail,
return receipt requested, or by other delivery service which provides evidence
of delivery, as follows:
If to the Company or the Company, to:
Claire's Stores, Inc.
0000 X. Xxxxxxx Xx.
Xxxxxxx Xxxxxxx, XX 00000
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxx & Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxxx@xxxxxxxxxxx.xxx
19
If to the Executive, to:
Xxxxx Xxxxxx
0000 XX 00xx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
or to such other address as one party may provide in writing to the other party
from time to time.
6.14 No Conflicts. The Executive represents and warrants to the Company
that his acceptance of employment and the performance of his duties for the
Company will not conflict with or result in a violation or breach of, or
constitute a default under any contract, agreement or understanding to which he
is or was a party or of which he is aware and that there are no restrictions,
covenants, agreements or limitations on his right or ability to enter into and
perform the terms of this Agreement.
6.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Facsimile transmission of
any signed original document or retransmission of any signed facsimile
transmission will be deemed the same as delivery of an original. At the request
of any party, the parties will confirm facsimile transmission by signing a
duplicate original document.
6.16 Captions. Paragraph headings are for convenience only and shall not
be considered a part of this Agreement.
6.17 No Third Party Beneficiary Rights. Except as otherwise provided in
this Agreement, no entity shall have any right to enforce any provision of this
Agreement, even if indirectly benefited by it.
6.18 Withholdings. Any payments provided for hereunder shall be paid net
of any applicable withholdings required under Federal, state or local law and
any additional withholdings to which Executive has agreed.
6.19 No Mitigation. In the event of any termination of the Executive's
employment hereunder, the Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the Company under this
Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement,
intending it as a document under seal, to be effective for all purposes as of
the Effective Date.
20
CLAIRE'S STORES, INC.
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
EXECUTIVE
/s/ Xxxxx Xxxxxx
---------------------------------------
Name: Xxxxx Xxxxxx
21
Exhibit A
CLAIRE'S INC.
STOCK INCENTIVE PLAN
Section 1. Purpose
The Plan authorizes the Committee to provide employees or directors of the
Company or its subsidiaries, who are in a position to contribute to the
long-term success of the Company or its subsidiaries, with Shares or Options to
acquire Shares in the Company. The Company believes that this incentive program
will cause those individuals to increase their interest in the welfare of the
Company and its subsidiaries, and aid in attracting, retaining and motivating
individuals of outstanding ability.
Section 2. Definitions
Capitalized terms used herein shall have the meanings set forth in this
Section.
(a) "Affiliate" of any specified Person means any other Person, whether
now or hereafter existing, directly or indirectly controlling or
controlled by, or under direct or indirect common control with, such
specified Person. For purposes hereof, "control" or any other form
thereof, when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
shall have meanings correlative to the foregoing.
(b) "Claire's Investor" shall mean any of Apollo Investment Fund VI,
L.P., Apollo Investors Claire's A LLC, and Apollo Investors Claire's
B LLC, and each of their successors or assigns.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" shall have the meaning ascribed thereto in any effective
employment agreement between the Company or subsidiaries and the
Grantee, or if no employment agreement is in effect that contains a
definition of cause, then Cause shall mean a finding by the
Committee that the Grantee has (i) committed a felony or a crime
involving moral turpitude, (ii) committed any act of gross
negligence or fraud, (iii) failed, refused or neglected to
substantially perform his duties (other than by reason of a physical
or mental impairment) or to implement the reasonable directives of
the Company (which, if curable, is not cured within 30 days after
notice thereof to the Grantee by the Committee), (iv) materially
violated any policy of the Company (which, if curable, is not cured
within 30 days after notice thereof to the Grantee by the
Committee), or (v) engaged in conduct that is materially injurious
to the Company, monetarily or otherwise.
1
(e) "Committee" shall mean the Compensation Committee of the Board,
unless a different committee is appointed by the Board to administer
the Plan.
(f) "Company" shall mean Claire's Inc., a corporation organized under
the laws of the State of Delaware.
(g) "Disability" shall have the meaning ascribed thereto in any
effective employment agreement between the Company and the Grantee,
or if no employment agreement is in effect that contains a
definition of disability, then Disability shall mean any physical or
mental incapacitation which results in a Grantee's inability to
perform his duties and responsibilities hereunder, as determined by
the Committee in its good faith judgment, for a period of 180
consecutive days.
(h) "Employee" shall mean any individual that is providing services to
the Company or any of its subsidiaries as an employee or director.
(i) "Grant Letter" shall mean a letter, certificate or other agreement
accepted by the Grantee, evidencing the grant of an Option hereunder
and containing such terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee shall approve.
(j) "Grantee" shall mean an Employee granted an Option under the Plan.
(k) "ISO" shall mean any Option or portion thereof that meets the
requirements of an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, and that is designated by the
Committee to be an ISO.
(l) "Nonqualified Option" shall mean any Option or portion thereof that
is not an ISO.
(m) "Options" shall refer to options issued under and subject to the
Plan.
(n) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, business trust,
joint-stock company, estate, trust, unincorporated organization,
government or other agency or political subdivision thereof or any
other legal or commercial entity.
(o) "Plan" shall mean this Stock Incentive Plan as set forth herein and
as amended from time to time.
(p) "Qualified IPO" means a sale by the Company of Shares in an initial
underwritten (firm commitment) public offering registered under the
Securities Act of 1933, with gross proceeds to the Company of not
less than $300 million, resulting in the listing of the Shares on a
nationally recognized stock exchange, including without limitation
the Nasdaq Stock Market.
2
(q) "Share" shall mean a share of common stock of the Company, or of any
class of security, if any, into which such common stock may be
converted or for which such common stock may be exchanged.
(r) "Specified Conduct" means a Grantee's (i) unauthorized disclosure of
confidential information relating to the Company or its Affiliates,
(ii) engaging, directly or indirectly, as an employee, partner,
consultant, director, stockholder, owner, or agent in any business
that is competitive with the businesses conducted by the Company and
its Affiliates at the time of termination of Grantee's employment,
(iii) soliciting or inducing, directly or indirectly, any former,
present or prospective customer or client of the Company or its
Affiliates to purchase any services or products offered by the
Company or its Affiliates from any Person other than the Company or
its Affiliates, or (iv) hiring, directly or indirectly, any
individual who was an employee of the Company or its Affiliates
within the six month period prior to termination of Grantee's
employment, or soliciting or inducing, directly or indirectly, any
such individual to terminate his or her employment with the Company
or its Affiliates.
Section 3. Shares Available under the Plan
Subject to the provisions of Section 7, the total number of Shares that
may be issued under the Plan shall not exceed 6,160,300. If, prior to exercise,
any awards are forfeited, lapse or terminate for any reason without issuance of
Shares, the Shares covered thereby may again be available for Option grants
under the Plan.
Section 4. Administration of the Plan
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select the Employees to whom Options or Shares may be
granted;
(ii) to determine the number of Shares awarded or subject to an
Option;
(iii) to determine the terms and conditions of any Shares or Option
granted under the Plan, including the purchase or exercise price,
conditions relating to exercise, and termination of the right to exercise;
(iv) to determine whether any Option shall be an ISO or a
Nonqualified Option;
(v) to determine the restrictions or conditions related to the
delivery, holding and disposition of Shares;
(vi) to prescribe the form of each Grant Letter;
3
(vii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Option or award of Shares, or Grant Letter or other instrument hereunder;
and
(ix) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. Any action of the Committee
with respect to the Plan shall be final, conclusive and binding on all Persons,
including the Company, its Affiliates, Grantees, or any Person claiming any
rights under the Plan from or through any Grantee, except to the extent the
Committee may subsequently modify, or take further action not consistent with,
its prior action. If not specified in the Plan, the time at which the Committee
must or may make any determination shall be determined by the Committee, and any
such determination may thereafter be modified by the Committee. The express
grant of any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Company or
any Affiliate of the Company the authority, subject to such terms as the
Committee shall determine, to perform such functions as the Committee may
determine, to the extent permitted under applicable law.
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any of its
Affiliates, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. To the fullest
extent permitted by applicable law, no member of the Committee, nor any officer
or employee of the Company acting on behalf of the Committee, shall be
personally liable for any action, determination or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Company acting on its behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.
Section 5. Option Termination.
Unless otherwise determined by the Committee and set forth in a Grant
Letter, Options shall terminate on the earliest of:
(a) the 91st day following the date the Grantee ceases to be an
Employee for any reason (except if such cessation is on account of death
or Disability, the 181st day following such cessation); provided, however,
that (i) in all cases the portion of any Option that did not vest prior to
or upon the date of termination of employment or
4
engagement for any reason shall terminate immediately upon such
termination, and (ii) if such termination is for Cause, the vested portion
shall terminate as well;
(b) the seventh anniversary of the date of grant as set forth in the
Grant Letter; and
(c) cancellation, termination or expiration of the Options pursuant
to action taken by the Committee in accordance with Section 7.
Section 6. Exercise of Options
(a) Only the vested portion of any Option may be exercised. A Grantee
shall exercise an Option by delivery of written notice to the Company setting
forth the number of Shares with respect to which the Option is to be exercised,
together with cash, a certified check or bank draft payable to the order of the
Company, in amount equal to the sum of the exercise price for such Shares and
any withholding tax obligation arising in connection with such exercise. The
Committee may, in its sole discretion, permit other forms of payment, including
notes or other contractual obligations of a Grantee to make payment on a
deferred basis.
(b) Before the Company issues any Shares to a Grantee pursuant to the
exercise of an Option, the Company shall have the right to require that the
Grantee make such provision, or furnish the Company such authorization,
necessary or desirable so that the Company may satisfy its obligation under
applicable tax laws to withhold for income or other taxes due upon or incident
to such exercise. The Committee, may, in its discretion, permit such withholding
obligation to be satisfied through the withholding of Shares that would
otherwise be delivered upon exercise of the Option.
(c) As a condition to the grant of an Option or delivery of any Shares
upon exercise of an Option, the Company shall have the right to require that the
Grantee become party to any stockholders agreement then in effect.
Section 7. Adjustment Upon Changes in Capitalization
In the event any recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase,
exchange or issuance of Shares or other securities, any stock dividend or other
special and nonrecurring dividend or distribution (whether in the form of cash,
securities or other property), liquidation, dissolution, or other similar
transactions or events, affects the Shares, then the Committee shall make such
equitable adjustment as it determines in its discretion is appropriate in order
to prevent dilution or enlargement of the rights of Grantees under the Plan,
including adjustment in (i) the number and kind of Shares deemed to be available
thereafter for grants of Options or Shares under Section 3, (ii) the number and
kind of Shares that may be delivered or deliverable in respect of outstanding
Options, and (iii) the exercise price. In addition, the Committee is authorized
to make such adjustments as it shall in its sole discretion determine are
appropriate in the terms and conditions of, and the criteria included in,
Options and Shares (including, without limitation, cancellation of Options in
exchange for the in-the-money value, if any, of the vested portion thereof,
cancellation of unvested and/or out-of-the-money Options for no consideration,
substitution of
5
Options using securities of a successor or other entity, acceleration of the
time that Options expire, or adjustment of performance targets or the manner in
which they are calculated) in recognition of unusual or nonrecurring events
(including, without limitation, an event described in the preceding sentence)
affecting the Company, the Claire's Investors or any other Affiliate of the
Company or the financial statements of the Company, the Claire's Investors or
any Affiliate of the Company, or in response to changes in applicable laws,
regulations or accounting principles.
Section 8. Restrictions/Rights on Shares.
(a) Restrictions on Issuing Shares. No Shares shall be issued or
transferred to an Employee under the Plan unless and until all applicable legal
requirements have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition the acquisition of Shares on the
Grantee's undertaking in writing to comply with such restrictions on any
subsequent disposition of the Shares issued or transferred thereunder as the
Committee shall deem necessary or advisable as a result of any applicable law,
regulation, official interpretation thereof, or any underwriting agreement.
(b) ISO Notice. A Grantee shall notify the Company of any disposition of
Shares acquired upon exercise of an ISO if such disposition occurs within one
year of the date of such exercise or within two years of the date of grant of
such ISO. The Company may impose such procedures as it determines may be
necessary to ensure that such notification is made.
(c) Transfer Restrictions. Except for transfers made pursuant to Sections
8(d) or (e) below, Shares issued to a Grantee pursuant to the Plan may not be
sold, pledged, encumbered or otherwise transferred, other than by the laws of
decent and distribution (but such Shares shall in any event remain subject to
the terms of the Plan and Grant Certificate).
(d) Repurchase Right. Unless otherwise determined in a Grant Letter, the
Company shall have the right (but not the obligation) to repurchase any or all
of the Shares acquired upon exercise of the Options upon a Grantee's ceasing to
be an Employee for any reason. Such right shall be exercisable by the Company
during the one year period following the later of the date of such cessation or
the date the Option is exercised. The price per Share to be paid by the Company
should it choose to exercise its repurchase right shall equal the fair market
value per share, as determined by the Board in good faith; provided, however, if
the Shares are to be repurchased following a termination for Cause, or if, prior
to such repurchase the Grantee engages in Specified Conduct, then the price per
Share to be paid by the Company shall not exceed the price per Share paid by the
Grantee, less any distributions paid in respect of such Share. The price per
Share to be paid by the Company should it choose to exercise its repurchase
right shall be paid in cash or by plain check against delivery of certificates
representing the repurchased Shares; provided that, if such payment would result
in a default or breach on the part of the Company or any subsidiary under any
loan or other agreement, then payment shall be deferred until the first business
day that it may occur without any such default or breach existing or resulting
(and such deferral shall be credited with a market rate of interest as
determined by the Committee), provided, further that if such payment cannot be
made within two years of the date of such repurchase, the Grantee may elect to
cancel such repurchase and
6
receive a return of the repurchased Shares. The Company may offset against the
payment of the repurchase price any amounts owed by the Grantee to the Company
or any Affiliate of the Company. Should the Company choose not to exercise its
repurchase right, or is otherwise prohibited by law or contract from doing so,
any Claire's Investor or its controlling Affiliates may exercise such right as
if it were the Company.
(e) Drag-Along Right. If one or more Claire's Investors notifies a holder
of Shares issued under the Plan that it or they desires to sell Shares
representing at least a majority of the outstanding Shares of the Company and
specifies the terms and conditions of such proposed transfer, then such holder
shall take all necessary and desirable actions reasonably requested by such
Claire's Investors in connection with the consummation of such sale, and within
ten (10) business days of the receipt of such notice (or such longer period of
time as such Claire's Investors shall designate in such notice) such holder
shall cause a pro rata number of his Shares to be sold to the designated
purchaser on the same terms and conditions for the same per share consideration
and at the same time as the Shares being sold by such Claire's Investors. In
furtherance, and not in limitation, of the foregoing, in connection with such a
sale, such holder will, (i) consent to and raise no objections against the sale
or the process pursuant to which it was arranged, (ii) waive any dissenter's
rights and other similar rights and (iii) execute all documents containing such
terms and conditions as those executed by such Claire's Investors as directed by
such Claire's Investors.
(f) Tag-Along Right. If one or more Claire's Investors desires to sell
Shares representing at least a majority of the outstanding Shares of the Company
(disregarding any sale to Affiliates of such Claire's Investor), the Company
shall notify a holder of Shares in writing. After such notice, a holder of
Shares issued under the Plan may, but is not obligated to, by written notice,
request that such Claire's Investor cause such designated purchaser to purchase
on the same terms and conditions as are applicable to such Claire's Investor's
Shares, the number of such holder's Shares to be sold, which as a percentage of
such Holder's Shares shall not exceed the percentage of such Claire's Investor's
Shares to be sold. The Company shall cause such Claire's Investor to agree,
within ten (10) business days of the receipt of such notice (or such longer
period of time as such Claire's Investor shall designate in such notice) to
cause such holder's Shares to be purchased by the designated purchaser on the
same terms and conditions for the same per share consideration and at the same
time as the sale of the Claire's Investor's Shares. In furtherance, and not in
limitation, of the foregoing, in connection with such a sale, such holder will,
(i) consent to and raise no objections against the sale or the process pursuant
to which it was arranged, (ii) waive any dissenter's rights and other similar
rights and (iii) execute all documents containing such terms and conditions as
those executed by such Claire's Investor as directed by such Claire's Investor.
(g) Voting. Each holder of Shares issued under the Plan shall be deemed to
have irrevocably appointed Apollo Management VI, L.P. on behalf of certain
affiliated co-investment partnerships (with full power of substitution), as such
holder's proxy and attorney-in-fact (in such capacity, the "Proxy Holder") to
vote and give or withhold consent, with respect to all Shares held by such
stockholder at any time, for all matters subject to the vote of such holder from
time to time in such manner as the Proxy Holder shall determine in its sole and
absolute discretion, whether at any meeting (whether annual or special and
whether or not an adjourned meeting) of
7
the Company or by written consent or otherwise, giving and granting to the Proxy
Holder all powers such holder would possess if personally present and hereby
ratifying and confirming all that the Proxy Holder shall lawfully do or cause to
be done by virtue hereof. The Proxy Holder shall not have any liability to any
holder of Shares as a result of any action taken or failure to take action
pursuant to the foregoing proxy except for any action or failure to take action
not taken or omitted in good faith or which involves intentional misconduct or a
knowing violation of applicable law. The Company acknowledges the validity of
the foregoing irrevocable proxy, and agrees to recognize the Proxy Holder as the
sole attorney and proxy for each such holder of Shares at all times.
(g) Qualified IPO. The rights and restrictions contained in subsections
(d), (e) and (f) above shall lapse upon a Qualified IPO, and the restrictions in
paragraph (c) shall lapse on the first anniversary of a Qualified IPO; provided,
however, that unless otherwise determined by the Committee, each Grantee shall
enter into such standstill agreements and related agreements as the managing
underwriters of such Qualified IPO may request.
(h) Certificates for Shares. Shares issued under the Plan may be evidenced
in such manner as the Committee shall determine. If certificates representing
Shares are registered in the name of a Grantee, such certificates may bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Shares, and the Company may retain physical possession of the
certificates, in which case the Grantee shall be required to have delivered a
power of transfer to the Company, endorsed in blank, relating to the Shares.
(i) Third Party Beneficiaries Rights. The Claire's Investors and their
Affiliates shall be third party beneficiaries under subsections (d) and (e), and
Apollo Management VI, L.P. shall be a third party beneficiary under subsection
(g), and they each shall be entitled to enforce their rights thereunder as to
any Grantee.
Section 9. General Provisions
(a) Grant Letter. Each award under the Plan shall be evidenced by a Grant
Letter. The terms and provisions of such Grant Letters may vary among Grantees
and among different awards granted to the same Grantee.
(b) No Right to Employment. The grant of an award under the Plan in any
year shall not give the Grantee any right to similar grants in future years, any
right to continue such Grantee's employment relationship with the Company or its
Affiliates, or, with respect to an Option, until the Option is exercised and
Shares are issued, any rights as a stockholder of the Company. All Grantees
shall remain subject to discharge to the same extent as if the Plan were not in
effect. For purposes of the Plan, a Grantee shall cease to be an Employee upon a
sale of any subsidiary of the Company that employs or engages such Grantee,
unless the Grantee shall otherwise continue to provide services to the Company
or another subsidiary of the Company as an employee or director.
(c) No Funding. No Grantee, and no beneficiary or other Persons claiming
under or through the Grantee, shall have any right, title or interest by reason
of any award under the Plan to any particular assets of the Company or
Affiliates of the Company, or any Shares allocated or
8
reserved for the purposes of the Plan or subject to any Option except as set
forth herein. The Company shall not be required to establish any fund or make
any other segregation of assets to assure satisfaction of the Company's
obligations under the Plan.
(d) No Transfers. No Option may be sold, transferred, assigned, pledged or
otherwise encumbered, except by will or the laws of descent and distribution,
and an Option shall be exercisable during the Grantee's lifetime only by the
Grantee. Upon a Grantee's death, the estate or other beneficiary of such
deceased Grantee shall be subject to all the terms and conditions of the Plan
and Grant Letter, including the provisions relating to the termination of the
right to exercise an Option.
(e) Governing Law; Jurisdiction. The Plan shall be governed by and
construed in accordance with the laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois, except to the
extent that the Delaware General Corporation Law applies as a result of the
Company being incorporated in the State of Delaware, in which case the Delaware
General Corporation Law shall apply. Each Grantee, and each beneficiary or other
Person claiming under or through the Grantee by accepting the grant of an Option
consents to the exclusive jurisdiction of any state or federal court located
within the State of Illinois, agrees that all actions or proceedings relating to
the Plan shall be litigated in such courts, waives any defense of forum non
conveniens, and agrees to be bound by any final and nonappealable judgment
rendered thereby in connection with the Plan. To the extent the Grantee is a
party to an employment agreement with the Company or any of its subsidiaries
that provides for binding arbitration of employment disputes, then any disputes
between the Company and such Grantee arising under the Plan shall be arbitrated
in accordance with the procedures set forth in such employment agreement.
Section 10. Amendment or Termination
In addition to its authority elsewhere in the Plan, the Committee may, at
any time, amend or terminate the Plan or any Grant Letter; provided, however,
that, no such action shall adversely affect the rights of Grantees with respect
to Options or other awards previously granted hereunder or under such Grant
Letter.
9
Exhibit B
CLAIRE'S INC.
0000 X. Xxxxxxx Xx.
Xxxxxxx Xxxxxxx, XX 00000
December 13, 0000
Xxxxx Xxxxxx
0000 XX 00xx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Re: Grant of Stock Options
Dear Xxxxx:
We are pleased to inform you that you have been granted options to purchase
437,500(1) shares of common stock of Claire's Inc. (the "Company"), the parent
company of Claire's Stores, Inc. As further described below, the options have
varying features relating to vesting and are denominated as a "Time Option," a
"Target Performance Option," and a "Stretch Performance Option." These options
are collectively referred to as the "Options," and the Target Performance Option
and the Stretch Performance Option are collectively referred to as the
"Performance Options." The Time Option and the Performance Options have been
granted pursuant to the Company's Stock Incentive Plan (the "Plan"), a copy of
which is attached as Exhibit A, and the Options and underlying Shares are
subject in all respects to the provisions of the Plan (including, without
limitation, Section 8), except as specifically modified hereby. Capitalized
terms not otherwise defined in the text or in paragraph 7 are defined in the
Plan.
1. Time Option: The key terms of the Time Option are as follows:
(a) Number of Shares. 175,000
(b) Exercise Price per Share. $10.00
(c) Vesting. The Time Option will vest and become exercisable in four
equal annual installments on December 13 of each of 2008, 2009, 2010
and 2011, provided that the Time Option will become fully vested and
exercisable immediately prior to a Change of Control.
2. Target Performance Option: The key terms of the Target Performance Option
are as follows:
(a) Number of Shares. 175,000
--------
(1) total of 1(a), 2(a), and 3(a)
1
(b) Exercise Price per Share. $10.00
(c) Vesting. If on any Measurement Date, the Value Per Share equals or
exceeds the Target Stock Price (the "Target Performance Goal"), then
(1) if such Measurement Date is other than the date of a Claire's
Investors Liquidity Event, the Target Performance Option will vest
and become exercisable in two equal annual installments on each of
the first two anniversaries of such Measurement Date, provided that
if a Change of Control occurs after any such Measurement Date, any
unvested installment shall become fully vested immediately prior to
the Change of Control, and (2) if such Measurement Date is the date
of a Claire's Investors Liquidity Event, the Target Performance
Option will become fully vested and immediately exercisable at such
time.
3. Stretch Performance Option: The key terms of the Stretch Performance
Option are as follows:
(a) Number of Shares. 87,500
(b) Exercise Price per Share. $10.00
(c) Vesting. If on any Measurement Date, the Value Per Share equals or
exceeds the Stretch Target Stock Price (the "Stretch Performance
Goal"), then (1) if such Measurement Date is other than the date of
a Claire's Investors Liquidity Event, the Stretch Performance Option
will vest and become exercisable in two equal annual installments on
each of the first two anniversaries of such Measurement Date,
provided that if a Change of Control occurs after any such
Measurement Date, any unvested installment shall become fully vested
immediately prior to the Change of Control, and (2) if such
Measurement Date is the date of a Claire's Investors Liquidity
Event, the Stretch Performance Option will become fully vested and
immediately exercisable at such time.
4. Termination of the Options. The Options shall terminate pursuant to the
provisions of Section 5 of the Plan, provided that Performance Options
shall terminate no later than the date of a Claire's Investors Liquidity
Event to the extent the Target Performance Goal or the Stretch Performance
Goal, as applicable, is not achieved at such time, or was not previously
achieved.
5. Representations. By accepting this award of Options, you represent to the
following, and understand that the Company would not have granted this
award to you but for your representations and acknowledgements below.
(a) Shares Unregistered; Investor Knowledge. You acknowledge and agree
that (i) neither the grant of the Options nor the offer to acquire
Shares upon exercise thereof has been registered under applicable
securities laws; (ii) there is no established market for the Shares
and it is not anticipated that there will be any such market for the
Shares in the foreseeable future; and (iii) your knowledge and
experience in financial and business matters are such that you are
capable of evaluating the merits and risks of any investment in the
Shares.
2
(b) Acknowledgement. You acknowledge and agree that: (i) this award is a
one-time benefit, which does not create any contractual or other
right to receive future awards, or benefits in lieu of awards; (ii)
all determinations with respect to any such future awards,
including, but not limited to, the times when awards shall be
granted, the number of shares subject to each award, the exercise or
purchase price, and the time or times when each award shall vest,
will be at the sole discretion of the Company; (iii) this award is
not part of normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement
benefits or similar payments; and (iv) THAT THIS AWARD SHALL NOT
CREATE A RIGHT TO FURTHER EMPLOYMENT WITH THE COMPANY OR ITS
AFFILIATES AND SHALL NOT INTERFERE WITH THE ABILITY OF THE COMPANY
OR ANY OF ITS AFFILIATES TO TERMINATE YOUR EMPLOYMENT RELATIONSHIP
AT ANY TIME, AND UPON TERMINATION OF YOUR EMPLOYMENT FOR ANY REASON
WHATSOEVER, ANY RIGHTS IN RESPECT OF THE OPTIONS OR THE UNDERLYING
SHARES TO WHICH YOU WOULD HAVE BEEN ENTITLED HAD YOUR EMPLOYMENT NOT
TERMINATED SHALL LAPSE UPON THE DATE OF TERMINATION UNLESS EXPRESSLY
STATED OTHERWISE HEREIN OR THE PLAN, AND YOU SHALL NOT BE ENTITLED
TO ANY COMPENSATION IN RESPECT OF LOSS OF ALL OR ANY OF THE OPTIONS
OR UNDERLYING SHARES.
(c) Employee Data Privacy. You consent to the collection, use and
transfer of personal data as described in this paragraph 5(c). You
understand that the Company and its Affiliates hold certain personal
information about you including, but not limited to, your name, home
address and telephone number, date of birth, social security number,
salary, nationality, job title, common shares or directorships held
in the Company, details of all other entitlement to common shares
awarded, cancelled, exercised, vested, unvested or outstanding in
your favor, for the purpose of managing and administering this award
("Data"). You further understand that the Company and/or its
Affiliates will transfer Data among themselves as necessary for the
purposes of implementation, administration and management of this
award, and that the Company and/or any of its Affiliates may each
further transfer Data to any third parties assisting the Company in
such implementation, administration and management. You authorize
them to receive, possess, use, retain and transfer Data in
electronic or other form, for the purposes of implementing,
administering and managing this award, including any requisite
transfer of such Data as may be required for the administration of
this award and/or the subsequent holding common shares on your
behalf to a broker or other third party with whom the shares
acquired on exercise may be deposited. You understand that he or she
may, at any time, view the Data, require any necessary amendments to
it or withdraw the consent herein in writing by contacting the local
human resources representative.
(d) Confidentiality. You agree not to disclose or discuss in any way the
terms of this award to or with anyone other than members of your
immediate family, or your
3
personal counsel or financial advisors (and you will advise such
persons of the confidential nature of this offer).
6. Vesting upon Death/Disability. As to the Time Option, as well as the
Performance Options where the Target Performance Goal or Stretch
Performance Goal, as applicable, had previously been achieved, a portion
of each such Option will become vested and exercisable upon termination of
your employment with the Company and its Affiliates by reason of your
death or Disability, such portion to equal the portion of each such Option
that would have vested on the next scheduled vesting date had your
employment not so terminated, multiplied by a fraction, the numerator of
which is the number of days that elapsed from the most recent vesting date
to the date of such termination, and the denominator of which is 365.
7. Definitions. For purposes of this letter:
(a) "Apollo" means Apollo Management VI, L.P. and its Affiliates or any
entity controlled thereby or any of the partners thereof.
(b) "Board" means the board of directors of the Company, or any
committee thereof duly authorized to act on behalf of the Board.
(c) "Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other
equivalents of or interests in, however designated, equity of such
Person, including any Preferred Stock, but excluding any debt
securities convertible into such equity.
(d) "Change of Control" means:
(i) any event occurs the result of which is that any "Person," as
such term is used in Sections 13(d) and 14(d) of the Exchange
Act, other than one or more Permitted Holders or their Related
Parties, becomes the beneficial owner, as defined in Rules
l3d-3 and l3d-5 under the Exchange Act (except that a Person
shall be deemed to have "beneficial ownership" of all shares
that any such Person has the right to acquire within one year)
directly or indirectly, of more than 50% of the Voting Stock
of the Company or any successor company thereto, including,
without limitation, through a merger or consolidation or
purchase of Voting Stock of the Company; provided that none of
the Permitted Holders or their Related Parties have the right
or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board; provided
further that the transfer of 100% of the Voting Stock of the
Company to a Person that has an ownership structure identical
to that of the Company prior to such transfer, such that the
Company becomes a wholly owned Subsidiary of such Person,
shall not be treated as a Change of Control;
(ii) after an initial public offering of Capital Stock of the
Company during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted
the Board, together with any new directors whose
4
election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of a
majority of the directors of the Company then still in office
who were either directors at the beginning of such period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the
Board then in office;
(iii) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions other than a merger or
consolidation, of all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole to any
Person or group of related Persons other than a Permitted
Holder or a Related Party of a Permitted Holder; or
(iv) the adoption of a plan relating to the liquidation or
dissolution of the Company.
(e) "Claire's Investors Liquidity Event" means any transaction
(including, without limitation, a stock sale, redemption or buy
back, merger, consolidation or otherwise) immediately following
which all of the Shares held by all Claire's Investors have been
exchanged for or converted into consideration, all or substantially
all of which consists of cash or readily marketable securities that
the Claire's Investors can immediately resell for cash at prevailing
quoted prices without legal, contractual or market restrictions.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(g) "Investor Sale" means of sale of Shares by a Claire's Investor in
connection with or following a Qualified Public Offering.
(h) "Investor Percentage" means the percentage derived by dividing (i)
the number of Shares of Common Stock held by all Claire's Investors
immediately following the applicable Investor Sale, by (ii) the
number of Shares held by all Claire's Investors as of the date
hereof (subject to adjustment for stock splits etc.).
(i) "Fully Diluted Shares" means, on any Measurement Date, the number of
Shares outstanding, plus the number of Shares subject to all
outstanding options, warrants and rights to acquire Shares, whether
or not exercisable.
(j) "Measurement Date" means (1) prior to a Qualified IPO, the last day
of any fiscal quarter, starting with the last day of the eighth full
fiscal quarter after May 29, 2007, (2) following a Qualified IPO,
each trading day, starting with the 90th trading day following the
Qualified IPO, or (3) the date of a Claire's Investors Liquidity
Event, whether before or after a Qualified IPO.
(k) "Net Equity Value" means (1) 8.5 multiplied by the Company's
consolidated earnings, before interest, income taxes, depreciation
and amortization ("EBITDA") for the four fiscal quarters ending upon
a Measurement Date, plus (2) the sum of cash, cash equivalents, and
the aggregate exercise price of all
5
outstanding options or warrants to purchase Shares, whether or not
exercisable, in each case as of the Measurement Date, less (3) all
debt and capital leases outstanding as of the Measurement Date.
EBITDA, cash and debt shall be determined by the Committee based on
the Company's financial statements for such period, subject to such
adjustments to reflect unusual, nonrecurring or extraordinary events
as the Committee shall deem equitable and appropriate.
(l) "Permitted Holder" means Apollo.
(m) "Preferred Stock" as applied to the Capital Stock of any corporation
means Capital Stock of any class or classes, however designated,
that is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation
or dissolution of such corporation, over shares of Capital Stock of
any other class of such corporation.
(n) "Related Party" means:
(i) any controlling stockholder, 50% (or more) owned Subsidiary,
or immediate family member (in the case of an individual) of
any Permitted Holder; or
(ii) any trust, corporation, partnership, limited liability company
or other entity, the beneficiaries, stockholders, partners,
members, owners or Persons beneficially holding an 50% or more
controlling interest of which consist of any one or more
Permitted Holders and/or such other Persons referred to in the
immediately preceding clause (1).
(o) "Stretch Target Stock Price" means $10.00, accumulated at an
effective annual rate of 32% from May 29, 2007 to the Measurement
Date, provided that the Committee shall make such adjustment to the
Stretch Target Stock Price as it reasonably determines is equitable
and appropriate to reflect changes to the outstanding Shares or
capital structure of the Company, including contributions and
distributions of capital.
(p) "Subsidiary" means, with respect to any specified Person:
(i) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any
contingency and after giving effect to any voting agreement or
stockholders' agreement that effectively transfers voting
power) to vote in the election of directors, managers or
trustees of the corporation, association or other business
entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of
such Person or (b) the
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only general partners of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).
(q) "Target Stock Price" means $10.00, accumulated at an effective
annual rate of 22.5% from May 29, 2007 to the Measurement Date,
provided that the Committee shall make such adjustment to the Target
Stock Price as it determines is equitable and appropriate to reflect
changes to the outstanding Shares or capital structure of the
Company, including contributions and distributions of capital.
(r) "Value Per Share" means (1) prior to a Qualified IPO, the Net Equity
Value divided by the Fully Diluted Shares, (2) following a Qualified
IPO, the average closing price of a Share for the period of 90
consecutive trading days ending on the Measurement Date, or (3) upon
a Claire's Investors Liquidity Event, the price per Share realized
by the Claire's Investors.
(s) "Voting Stock" of an entity means all classes of Capital Stock of
such entity then outstanding and normally entitled to vote in the
election of directors or all interests in such entity with the
ability to control the management or actions of such entity.
8. Federal Taxes: The Options granted to you are treated as "nonqualified
options" for federal tax purposes, which means that when you exercise, the
excess of the value of the Shares issued on exercise over the exercise
price paid for the Shares is income to you, subject to wage-based
withholding and reporting. When you sell the Shares acquired upon
exercise, the excess (or shortfall) between the amount you receive upon
the sale and the value of the shares at the time of exercise is treated as
capital gain (or loss). State and local taxes may also apply. You should
consult your personal tax advisor for more information concerning the tax
treatment of your Options. The Company is not making any representations
concerning the tax treatment of the Options, and is not responsible for
any taxes, interest or penalties you incur in connection with your
Options, even if the taxing authorities successfully challenge any
position taken by the Company in respect of wage withholding and reporting
or otherwise.
We are excited to give you this opportunity to share in our future success.
Please indicate your acceptance of this option grant and the terms of the Plan
by signing and returning a copy of this letter.
Sincerely,
CLAIRE'S INC.
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
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Title: Chief Executive Officer
Agreed to and Accepted by:
/s/ Xxxxx Xxxxxx
------------------------------------------
8
Exhibit C
CLAIRE'S INC.
0000 X. Xxxxxxx Xx.
Xxxxxxx Xxxxxxx, XX 00000
December 13, 0000
Xxxxx Xxxxxx
0000 XX 00xx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Dear Xxxxx:
We are pleased to inform you that you have been awarded the opportunity to
purchase shares of common stock of Claire's Inc. (the "Company"), the parent
company of Claire's Stores, Inc., and to receive a matching stock award grant on
a buy one, get one ("BOGO") basis, in each case on the terms described below.
This opportunity is being made available to you pursuant to the Company's Stock
Incentive Plan (the "Plan"), a copy of which is attached as Exhibit A, and the
Shares you purchase (the "Purchased Shares"), the matching option grant (the
"BOGO Option"), and any Shares acquired upon exercise of the BOGO Option (the
"BOGO Shares") are subject in all respects to the provisions of the Plan, except
as specifically modified hereby. Capitalized terms not otherwise defined in the
text are defined in the Plan.
9. Opportunity to Purchase Shares. You may purchase Shares at a price per
Share of $10.00. You must purchase Shares in increments of 1,000, and the
number of Shares you may purchase is limited to 30,000 shares.
10. Grant of Matching Option: On the date that you complete the purchase of
Shares described in paragraph 1 above, you will be granted a BOGO Option
relating to the same number of Shares that you purchase under paragraph 1
above at an exercise price per Share of $10.00. The BOGO Option will be
immediately exercisable from the date it is granted until the date it
expires or otherwise terminates pursuant to Section 4 of the your Option
Grant Letter dated December 13, 2007.
11. Rights/Restrictions on Shares. The Purchased Shares and the BOGO Shares
are subject to the rights and restrictions set forth in Section 8 of the
Plan, provided that in addition to the Company's rights under Section 8(d)
of the Plan (Repurchase Right), if you voluntarily resign from employment
with the Company and its Affiliates prior to the earlier of December 13,
2011 or the date of a Qualified IPO, then the price per Share to be paid
by the Company for any BOGO Shares it chooses to repurchase under Section
8(d) of the Plan shall not exceed the price per Share paid by you upon
exercise of the BOGO Option, less any distributions paid in respect of
such Share.
12. Representations. By accepting this opportunity to purchase Shares and
receive an option award, you represent to the following, and understand
that the Company would not have
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made this opportunity available to you but for your representations and
acknowledgements below.
(a) Shares Unregistered; Investor Knowledge. You acknowledge and agree
that (i) neither the opportunity to purchase Shares, the grant of
the BOGO Option nor the offer to acquire Shares upon exercise
thereof has been registered under applicable securities laws; (ii)
there is no established market for the Shares and it is not
anticipated that there will be any such market for the Shares in the
foreseeable future; and (iii) your knowledge and experience in
financial and business matters are such that you are capable of
evaluating the merits and risks of any investment in the Shares.
(b) Acknowledgement. You acknowledge and agree that: (i) this award is a
one-time benefit, which does not create any contractual or other
right to receive future awards, or benefits in lieu of awards; (ii)
all determinations with respect to any such future awards,
including, but not limited to, the times when awards shall be
granted, the number of shares subject to each award, the exercise or
purchase price, and the time or times when each award shall vest,
will be at the sole discretion of the Company; (iii) this award is
not part of normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement
benefits or similar payments; and (iv) THAT THIS AWARD SHALL NOT
CREATE A RIGHT TO FURTHER EMPLOYMENT WITH THE COMPANY OR ITS
AFFILIATES AND SHALL NOT INTERFERE WITH THE ABILITY OF THE COMPANY
OR ITS AFFILIATES TO TERMINATE YOUR EMPLOYMENT RELATIONSHIP AT ANY
TIME, AND UPON TERMINATION OF YOUR EMPLOYMENT FOR ANY REASON
WHATSOEVER, ANY RIGHTS IN RESPECT OF THE PURCHASED SHARES, THE BOGO
OPTION OR THE UNDERLYING SHARES TO WHICH YOU WOULD HAVE BEEN
ENTITLED HAD YOUR EMPLOYMENT NOT TERMINATED SHALL LAPSE UPON THE
DATE OF TERMINATION UNLESS EXPRESSLY STATED OTHERWISE HEREIN OR THE
PLAN, AND YOU SHALL NOT BE ENTITLED TO ANY COMPENSATION IN RESPECT
OF LOSS OF ALL OR ANY OF THE PURCHASED SHARES, THE BOGO OPTION OR
UNDERLYING SHARES.
(c) Employee Data Privacy. You consent to the collection, use and
transfer of personal data as described in this paragraph 4(c). You
understand that the Company and its Affiliates hold certain personal
information about you including, but not limited to, your name, home
address and telephone number, date of birth, social security number,
salary, nationality, job title, common shares or directorships held
in the Company, details of all other entitlement to common shares
awarded, cancelled, exercised, vested, unvested or outstanding in
your favor, for the purpose of managing and administering this award
("Data"). You further understand that the Company and/or its
Affiliates will transfer Data among themselves as necessary for the
purposes of implementation, administration and management of this
award, and that the Company and/or any of its Affiliates may
2
each further transfer Data to any third parties assisting the
Company in such implementation, administration and management. You
authorize them to receive, possess, use, retain and transfer Data in
electronic or other form, for the purposes of implementing,
administering and managing this award, including any requisite
transfer of such Data as may be required for the administration of
this award and/or the subsequent holding common shares on your
behalf to a broker or other third party with whom the shares
acquired on exercise may be deposited. You understand that he or she
may, at any time, view the Data, require any necessary amendments to
it or withdraw the consent herein in writing by contacting the local
human resources representative.
(d) Confidentiality. You agree not to disclose or discuss in any way the
terms of this award to or with anyone other than members of your
immediate family, or your personal counsel or financial advisors
(and you will advise such persons of the confidential nature of this
offer).
13. Federal Taxes: The BOGO Option is treated as a "nonqualified option" for
federal tax purposes, which generally means that when you exercise, the
excess of the value of the Shares issued on exercise over the exercise
price paid for the Shares is income to you, subject to wage-based
withholding and reporting. However, if you exercise the BOGO Option prior
to the earlier of December 13, 2011 or the date of a Qualified IPO, unless
you make a "section 83(b) election" within 30 days of exercise, taxes will
be deferred until the earlier of December 13, 2011 or the date of a
Qualified IPO, at which time the value of the Shares at such time over the
exercise price paid is income to you, subject to wage-based withholding
and reporting. When you sell your Purchased Shares, or your BOGO Shares
(assuming an 83(b) election, if applicable, was made), the excess (or
shortfall) between the amount you receive upon the sale and the value of
the shares at the time you acquired them is treated as capital gain (or
loss). State and local taxes may also apply. You should consult your
personal tax advisor for more information concerning the tax treatment of
your Purchased Shares, BOGO Option and BOGO Shares. The Company is not
making any representations concerning tax consequences, and is not
responsible for any taxes, interest or penalties you incur in connection
with your Shares or BOGO Option, even if the taxing authorities
successfully challenge any position taken by the Company in respect of
wage withholding and reporting or otherwise.
14. Acceptance. In order to accept this offer to purchase Shares, you must
countersign below, indicate the number of Shares you desire to purchase in
the space indicated immediately above your signature. Return the
countersigned copy of this letter, along with a check for the purchase
price, NO LATER THAN FRIDAY, JANUARY 4, 2008 to Xxx XxXxxxx.
We are excited to give you this opportunity to share in our future success.
Please contact Xxx XxXxxxx should you have any questions.
Sincerely,
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CLAIRE'S INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
Agreed to and Accepted as to ___________ Shares by:
---------------------------------------------------
4
Exhibit D
RELEASE
I, Xxxxx Xxxxxx, the undersigned, agree to accept the compensation,
payments, benefits and other consideration provided for in Section 4.3(d) of the
employment agreement between me and by and between Claire's Stores, Inc. (the
"Company") dated as of December 13, 2007 (the "Employment Agreement") in full
resolution and satisfaction of, and hereby IRREVOCABLY AND UNCONDITIONALLY
RELEASE, REMISE AND FOREVER DISCHARGE the Company and Releasees from any and all
agreements, promises, liabilities, claims, demands, rights and entitlements of
any kind whatsoever, in law or equity, whether known or unknown, asserted or
unasserted, fixed or contingent, apparent or concealed, to the maximum extent
permitted by law ("Claims"), which I, my heirs, executors, administrators,
successors or assigns ever had, now have or hereafter can, shall or may have
for, upon, or by reason of any matter, cause or thing whatsoever existing,
arising, occurring or relating to my employment and/or termination thereof with
the Company and Releasees, or my status as a stockholder of the Company and
Releasees, at any time on or prior to the date I execute this Release,
including, without limitation, any and all Claims arising out of or relating to
compensation, benefits, any and all contract claims, tort claims, fraud claims,
claims for bonuses, commissions, sales credits, etc., defamation, disparagement,
or other personal injury claims, claims for accrued vacation pay, claims under
any federal, state or municipal wage payment, discrimination or fair employment
practices law, statute or regulation, and claims for costs, expenses and
attorneys' fees with respect thereto. This release and waiver includes, without
limitation, any and all rights and claims under Title VII of the Civil Rights
Act of 1964, the Civil Rights Acts of 1866, 1871 and 1991, the Employee
Retirement Income Security Act, the Age Discrimination in Employment Act
(including but not limited to the Older Workers Benefit Protection Act), the
Americans with Disabilities Act, the National Labor Relations Act, the Family
and Medical Leave Act, the Equal Pay Act, the Xxxxxxxx-Xxxxx Act, [add
applicable state laws] and all amendments to the foregoing, and any other
federal, state or local statute, ordinance, regulation or constitutional
provision regarding employment, compensation, employee benefits, termination of
employment or discrimination in employment. Notwithstanding the above, I do not
release my right to any right to indemnification I may have as a director,
officer or employee pursuant to applicable law and/or the Company's certificate
of incorporation nor do I release any rights to any earned and vested benefits
to which I am entitled under the terms of any employee benefit plan maintained
by the Company or any of its subsidiaries.
I represent and affirm (i) that I have not filed any Claim against the
Company or Releasees and (ii) that to the best of my knowledge and belief, there
are no outstanding Claims.
For the purpose of implementing a full and complete release and discharge
of Claims, I expressly acknowledge that this Release is intended to include in
its effect, without limitation, all the Claims described in the preceding
paragraphs, whether known or unknown, apparent or concealed, and that this
Release contemplates the extinction of all such Claims, including Claims for
attorney's fees. I expressly waive any right to assert after the execution of
1
this Release that any such Claim has, through ignorance or oversight, been
omitted from the scope of the Release.
For purposes of this Release, the term "the Company and Releasees"
includes the Company and its past, present and future direct and indirect
parents, subsidiaries, affiliates, divisions, predecessors, successors, and
assigns, and their past, present and future officers, directors, shareholders,
representatives, agents, attorneys and employees, in their official and
individual capacities, and all other related individuals and entities, jointly
and individually, and this Release shall inure to the benefit of and shall be
binding and enforceable by all such entities and individuals.
I understand that I have a period of up to 21 days from my receipt of this
Release to review and consider this Release. I further understand that once I
have signed this Release, I may revoke it at any time during the 7 days
following its execution by delivering a written notice of revocation to the
Company, attention General Counsel. I further understand that if I fail to
execute and return this Release to the Company, attention General Counsel, prior
to the expiration of such 21 day period, or revoke my execution of the Release
during such 7 day period, I will not be entitled to the compensation, payments,
benefits and other consideration provided for in Section 4.3(d) of the
Employment Agreement.
I ACKNOWLEDGE THAT I HAVE READ THIS
RELEASE AND I UNDERSTAND
AND ACCEPT ITS TERMS
------------------------------ ---------------------
Xxxxx Xxxxxx Date
Sworn to before me this
___ day of ________, 20__
------------------------------
Notary Public
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