EXHIBIT 10.33
SEPARATION AND RELEASE AGREEMENT
THIS SEPARATION AND RELEASE AGREEMENT is entered into between Xxx X.
Xxxxxx ("Employee"), and Whitehall Jewellers, Inc., a Delaware corporation
("Whitehall").
WHEREAS, Whitehall and Employee are parties to that certain Employment
and Severance Agreement dated as of January 24, 2000 (the "Employment
Agreement").
WHEREAS, Whitehall has been named a defendant in International
Diamonds, L.L.C., et al. v. Cosmopolitan Gem Corp., et al., Index No. 110101/03
(Sup. Ct., NY Cty.) (the "Capital Factors Action").
WHEREAS, each of Whitehall and Employee is the subject of a criminal
investigation by the United States Attorney for the Eastern District of New York
regarding the subject matter of the Capital Factors Action and related matters
(the "US Attorney Investigation").
WHEREAS, the United States Securities and Exchange Commission (the
"SEC") has initiated a formal inquiry into the matters that are the subject of
the Capital Factors Action (the "SEC Investigation" and together with the US
Attorney Investigation, the "Government Investigations").
WHEREAS, in connection with Whitehall's internal investigation related
to the Capital Factors Action and the Government Investigations, Whitehall
notified Employee of his termination for Cause (as defined in the Employment
Agreement) and determined that it would not be appropriate to advance the legal
costs and expenses of Employee related to the Capital Factors Action or the
Government Investigations pursuant to the Second Restated Certificate of
Incorporation of Whitehall (the "Certificate") and the Amended and Restated
By-Laws of Whitehall (the "By-Laws").
WHEREAS, Employee has executed a letter in favor of Whitehall dated
October 15, 2003 pursuant to which Employee undertook to repay all defense costs
advanced to him with respect to the US Attorney Investigation if it should be
ultimately determined that he was not entitled to indemnification pursuant to
the Certificate and the By-Laws.
WHEREAS, Whitehall and Employee wish to resolve the disputes and
potential disputes by and between them with respect to (i) the indemnification
of Employee by Whitehall for his defense costs incurred or to be incurred by him
in defending the U.S. Attorney Investigation or the SEC Investigation, whether
pursuant to the Certificate and By-Laws or otherwise, (ii) the repayment by
Employee to Whitehall of defense costs advanced to Employee on or prior to the
date hereof, (iii) the indemnification of Employee by Whitehall, whether
pursuant to the Certificate and By-Laws or otherwise, with respect to the
Capital Factors Action and any other civil action relating to the subject matter
thereof and the Government Investigations and any other criminal action relating
to the subject matter thereof, and (iv) the grounds for the termination of
Employee under the Employment Agreement and amount owed to him
thereunder, in each case, as set forth herein, and to avoid expensive and time
consuming arbitration and litigation.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, conditions and premises contained herein, the parties agree as
follows:
1. WAIVER AND RELEASE:
A. Except for breaches of this Agreement, Employee and each of his
past, present and future spouses, family, relatives, successors, heirs,
executors, administrators, trustees, agents, representatives, affiliates and
assigns and each and every person or entity that purports to assert rights or
claims through him or on his behalf (collectively, the "Employee Releasing
Parties"), individually and collectively, hereby fully, finally and forever
waive and unconditionally release, acquit and discharge each of Whitehall and
its past, present and future affiliates, employee benefit plans and programs and
other related entities (whether or not wholly owned) and the past, present and
future officers, directors, employees, agents, shareholders, trustees,
fiduciaries, administrators, attorneys and representatives of each of them, and
any other person or entity in privity with any of them (collectively, the
"Whitehall Released Parties") from, and covenant and agree not to xxx any of the
Whitehall Released Parties with regard to any and all claims, whether currently
known or unknown, which Employee now has, ever has had or may ever have against
any of the Whitehall Released Parties arising from or related to:
(i) Employee's employment the Whitehall or the termination thereof,
including but not limited to claims of wrongful discharge; breach of
contract; employment discrimination under the Civil Rights Act of 1866,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Rehabilitation Act of 1973, the Illinois Human
Rights Act, the Chicago Human Rights Ordinance, and/or the Xxxx County
Human Rights Ordinance, or any other statutory or common law causes of
action;
(ii) any demand, action, claim, liability, obligation, cost,
expense, debt, cause of action, or lawsuit arising from or relating to
the claims asserted in the Capital Factors Action or the Government
Investigations or any other civil or criminal action arising from or
relating to the subject matter thereof, including any claim for
indemnification pursuant to the Certificate, the By-laws or the
Delaware General Corporation Law, as the same exist or as they may be
amended from time to time; and
(iii) except as expressly contemplated hereby, the Employment
Agreement, including any claim for any payment pursuant to section 4, 5
or 7 thereof.
B. Notwithstanding the generality of the foregoing, Employee does
not waive and/or release any rights that he may have to benefits under the
United HealthCare Options Preferred Provider Organization Plan, the Cigna Dental
PPO, Exec-U-Care Group Medical Reimbursement Insurance, the Whitehall Jewellers,
Inc. 401(k) Plan, the Whitehall Jewellers, Inc., 1997 Long-Term Incentive Plan
and grants thereunder, the Blanket Accident Insurance Program and the Voluntary
Long-Term Disability Plan (the "Plans") to which Employee may be entitled as a
result of his employment by Whitehall through the Termination Date; provided
that
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for the purposes of determining what rights Employee has under any of the Plans,
the termination of the employment of Employee under the Employment Agreement
shall be deemed to have been for Cause and shall be a Nonqualifying Termination
thereunder.
C. Except for breaches of this Agreement, Whitehall hereby fully,
finally and forever waives and unconditionally releases, acquits and discharges
Employee from, and covenants and agrees not to xxx Employee with regard to any
and all claims which Whitehall now has, ever has had or may ever have against
Employee arising from or related to (i) any obligation of Employee to repay
amounts advanced to Employee for defense costs related to the Government
Investigations prior to the date hereof and (ii) any demand, action, claim,
liability, obligation, cost, expense, debt, cause of action, or lawsuit arising
from or relating to the claims asserted in the Capital Factors Action or the
Government Investigations.
D. Employee and Whitehall represent and warrant to each other that
he/it has the full right and power to grant, execute, and deliver the releases,
undertakings and agreements contained in this Agreement. Whitehall represents
and warrants to Employee that as of the date hereof it does not have knowledge
of any claim that Whitehall has against Employee other than any claim arising
from or relating to the claims asserted in the Capital Factors Action or the
Government Investigations. For purposes of the preceding sentence, "knowledge"
shall mean the actual conscious awareness of the directors and executive
officers of Whitehall.
2. EMPLOYEE'S TERMINATION DATE: Employee's employment with Whitehall
terminated effective December 25, 2003 (the "Termination Date") for all
purposes.
3. PAYMENTS ON BEHALF OF EMPLOYEE: Whitehall agrees to advance
reasonable defense costs incurred by Employee in defending against the US
Attorney Investigation, the SEC Investigation, the Capital Factors Action or any
other civil or criminal action arising from the subject matter thereof up to a
maximum of $293,000 (such amount to include fees and expenses advanced prior to
the date hereof and fees and expenses advanced pursuant to Section 10.C.
below). Such costs shall be advanced by Whitehall only after receipt of copies
of appropriate invoices from Jenner & Block LLP or such other legal counsel of
national prominence as employee may retain.
4. CONTINUED COOPERATION: Employee agrees to continue to cooperate with
Whitehall in connection with the Capital Factors Action, the Government
Investigations and Whitehall's internal investigation relating thereto,
including by making himself reasonably available for interviews. Nothing in this
Section 4 shall obligate Employee to incur any out-of-pocket expense, and
Whitehall agrees to pay all reasonable out-of-pocket expenses that Employee
incurs in providing any cooperation Whitehall may request. For purposes of
clarification, such out-of-pocket expenses shall not include attorneys' fees or
expenses, but shall include items such as travel expenses.
5. BENEFIT CONTINUATION: Employee may elect to continue his group
health insurance, dental insurance, Exec-U-Care coverage and long-term
disability insurance with respect to Employee and his dependents for the
greatest of (i) the 12-month period following the
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Termination Date, (ii) the period provided pursuant to the terms of the plan or
(iii) if the coverage or insurance is subject to COBRA, the COBRA continuation
period. In any case, for the 12-month period immediately following the
Termination Date (and only for such period), the costs of such continuation
shall be shared by Whitehall and Employee in the same proportion as such costs
were shared immediately prior to the Termination Date.
6. DIRECTORS AND OFFICERS LIABILITY INSURANCE; INDEMNIFICATION:
Whitehall agrees that, notwithstanding the termination of Employee's employment
with Whitehall, Whitehall shall, for at least 3 years after the Date of
Termination, use all reasonable efforts to have Employee included as a named
insured or otherwise covered for actions or failure to act by Employee in his
capacity as a director or officer of Whitehall to at least the same extent as
other executive officers or directors, as the case may be, of Whitehall under
any directors or officers liability insurance policies maintained by Whitehall;
provided that the additional cost of providing coverage with a retroactive date
including Employee's period of service or with an extended reporting period or a
combination of both does not materially increase the cost of Whitehall's
directors and officers insurance. Whitehall agrees that it will not alter the
indemnification provisions in the Certificate or By-laws so as to give Employee
less protection thereunder with respect to periods during which Employee served
Whitehall as an executive officer or other employee as is afforded other
executive officers or peer employees, as the case may be, with respect to
periods during which they serve Whitehall.
7. OTHER PAYMENTS OR BENEFITS: The parties understand and agree that
the Employee is entitled to no payments or benefits of any kind, other than
those set forth above.
8. WITHHOLDING TAXES: Whitehall may withhold from all payments due to
Employee or to be paid on behalf of Employee hereunder all taxes which, by
applicable federal, state, local or other law, Whitehall is required to withhold
therefrom.
9. DISCLOSURE: Employee acknowledges that Whitehall may file a copy of
this Agreement with the SEC and, therefore, that the terms hereof will be
publicly disclosed. Notwithstanding the preceding, Employee and Whitehall agree
not to disclose any information with respect to the negotiation of this
Agreement to any person other than Employee's spouse, his attorney, officers and
directors of Whitehall who have a need to know such information, or as may be
otherwise required by law or stock exchange rules.
10. OTHER UNDERTAKINGS:
A. Employee agrees that, during his employment with Whitehall, he
has had access to and/or has acquired confidential information of Whitehall and
its affiliates, including strategic and tactical business, financial, profit,
marketing, analytical and sales information, vendor pricing agreements and
contract details and internal organizational structure, and trade secrets
belonging to Whitehall ("Confidential Information"). Accordingly, Employee
agrees that he shall not directly or indirectly use, disclose, or take any
action that may result in the use by or disclosure to any person or entity of
any Confidential Information of Whitehall, unless such
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information lawfully has become generally available to the public not as a
result of a breach of this Agreement by Employee, or except as otherwise
required by law.
B. Employee shall not take any action, verbal or otherwise, that
would be reasonably likely to disparage or damage the reputation or operations
of Whitehall or any of the other Whitehall Released Parties.
C. Subject to the limitations set forth in Section 3, Whitehall
shall reimburse Employee for reasonable legal fees and expenses incurred by
Employee for the review and/or negotiation by legal counsel of this Agreement.
11. NON-ADMISSION: The parties agree that this Agreement is not
intended to and does not constitute any admission of fault, wrongdoing,
responsibility or liability on the part of Whitehall or Employee.
12. ACKNOWLEDGMENTS: Employee hereby acknowledges that he is entering
into this Agreement knowingly and voluntarily, and further acknowledges that:
A. this Agreement is written in a manner understood by Employee;
B. this Agreement refers to and specifically waives claims under
the Age Discrimination in Employment Act, as amended, except to the extent that
such claims arise after the date of this Agreement;
C. Employee has received valuable consideration, to which he would
not otherwise have been entitled, in exchange for the waiver and release of
claims included in this Agreement;
D. Employee has been advised by Whitehall in writing to consult
with an attorney prior to executing this Agreement;
E. Employee may take up to 21 days from receipt of this Agreement
to consider whether to sign the Agreement; and
F. Employee shall have seven days following execution to revoke
this Agreement (in which case this Agreement shall be null and void and neither
Employee nor Whitehall shall any obligations under it), and the Agreement shall
not take effect until those seven days have expired.
13. COMPLETE AGREEMENT: The parties agree that this Agreement
supersedes and renders null and void all previous agreements of any kind between
the parties, except as stated herein. The parties further agree that no promise
or inducement has been offered for this Agreement other than as set forth
herein.
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14. APPLICABLE LAW: The provisions of this Agreement shall be governed
by the laws of the State of Illinois.
WHEREFORE, the parties have affixed their signatures below.
/s/ Xxx X. Xxxxxx Whitehall Jewellers, Inc.
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Signature of Employee
Xxx X. Xxxxxx By: /s/ Xxxx Xxxxxxxx
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Printed Name of Employee Its: CEO
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3/3/04 3/5/04
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Dated Dated
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