Exhibit 10.7
Execution Copy
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered as of April 19,
2007 (the "Effective Date"), by and between Bauble Holdings Corp., a Delaware
corporation ("Holdings"), and Eugene S. Kahn (the "Executive").
WHEREAS, upon the closing (the "Closing") of the transactions contemplated
by that certain Agreement and Plan of Merger dated as of March 20, 2007 (the
"Merger Agreement"), by and among Holdings, Bauble Acquisition Sub, Inc., a
Florida corporation ("Merger Sub") and Claire's Stores, Inc., a Florida
corporation ("Claire's"), Merger Sub will merge with and into Claire's, and
Claire's shall become a wholly-owned subsidiary of Holdings (the "Acquisition");
WHEREAS, Holdings 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 Chief Executive Officer of Holdings.
1.2 Duties.
(a) During the Employment Period, the Executive shall have overall
responsibility for the business affairs and activities of Holdings, its
subsidiaries and Affiliates (as defined in Section 5.4(a) hereof), and shall do
and perform all services and acts necessary or advisable to fulfill the duties
and responsibilities of the Executive's position and shall render such services
on the terms set forth herein. In addition, the Executive shall have such other
executive and managerial powers and duties as may reasonably be assigned to the
Executive by the Board of Directors of Holdings (the "Board"), commensurate with
the Executive serving as Chief Executive Officer. Except for sick leave,
reasonable vacations and excused leaves of absence, the Executive shall,
throughout the Employment Period, devote substantially all 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 Holdings and
its subsidiaries and Affiliates.
(b) During the Employment Period, the Executive's principal place of
employment shall be at Holdings' office in Hoffman Estates, Illinois. The
Executive is encouraged, but shall not be required to, 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) Holdings' 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 Holdings.
1.3 Duties prior to the Closing Date. From the Effective Date until the
date of the Closing (the "Closing Date"), the Executive agrees to be listed as
Chief Executive Officer of Holdings or any of its subsidiaries in all
documentation in connection with the Acquisition, shall participate in the "road
show" relating to the financing of the Acquisition, and shall perform such other
services as reasonably requested by the Board in order to facilitate completion
of the Acquisition.
2. Term of Employment. This Agreement shall govern the terms and
conditions of the Executive's employment by Holdings, and the termination
thereof, from the Effective Date through the third anniversary of the Closing
Date (the "Term"), provided that on each annual anniversary of the Closing Date,
the Term shall be extended for one additional year, unless during the thirty
(30) day period ending on any such anniversary date, Holdings or the Executive
notifies the other in writing not to have the Term so extended. The portion of
the Term following the Closing Date during which the Executive is actually
employed by Holdings under this Agreement is referred to as the "Employment
Period". Should the Merger Agreement be terminated prior to completion of the
Acquisition, this Agreement shall expire and neither party shall have any
further obligations or rights hereunder, except that the Executive shall receive
a lump sum payment equal to $1,000,000 multiplied by a fraction, the numerator
of which is the number of days from and including the Effective Date, to and
including the date of expiration, and the denominator of which is 365.
3. Compensation and General Benefits.
3.1 Base Salary.
(a) During the Employment Period, Holdings agrees to pay to the
Executive an annual base salary in an amount equal to $1,000,000 (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 Holdings' normal payroll practices and
procedures in effect from time to time for the payment of salaries to officers
of Holdings, but in no event less frequently than monthly.
(b) The Board or the Compensation Committee established by the Board
(the "Compensation Committee") 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.
(c) Upon or as soon as practicable following the Closing Date,
subject to the Executive's satisfactory performance of his duties under Section
1.3, the Executive shall receive a lump sum payment equal to $1,000,000
multiplied by a fraction, the numerator of which is the number of days from and
including the Effective Date to and including the Closing Date, and the
denominator of which is 365.
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3.2 Bonus. With respect to each fiscal year of Holdings that ends during
the Employment Period, the Executive shall be eligible to receive from Holdings
an annual performance bonus (the "Annual Bonus") based upon Holdings' attainment
of annual goals established by the Board or the Compensation Committee, which
may include Holdings' comparable store sales, earnings before interest, taxes,
depreciation and amortization ("EBITDA") and/or cash generation goals. The
Executive's target Annual Bonus shall be one hundred percent (100%) of the
Executive's Base Salary if Holdings meets targeted levels of performance to be
determined by the Board or the Compensation Committee for the applicable year;
provided that for the first fiscal year that ends following the Closing Date,
the Annual Bonus shall be no less than one hundred percent (100%) of the
Executive's Base Salary paid from the Closing Date to such fiscal year end. The
Board or the Compensation Committee will also establish threshold and stretch
performance levels which, if achieved, will entitle the Executive to an Annual
Bonus equal to such percentage of Executive's Base Salary as established by the
Board or the Compensation Committee. 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 Holdings' normal payroll
practices and procedures. Except as otherwise expressly provided in 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 Holdings on
the last day of the period to which such Annual Bonus relates.
3.3 Expenses.
(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 Holdings for all
reasonable and necessary expenses incurred by the Executive during the Term in
performing the Executive's duties hereunder on behalf of Holdings, subject to,
and consistent with, Holdings' policies for expense payment and reimbursement,
in effect from time to time.
(b) Until the date the Executive relocates his principal residence
to the greater Chicago metropolitan area, the Executive shall also be entitled
to reimbursement for lodging and transportation expenses between the Chicago
area and the Executive's principal residence in the St. Louis, Missouri area.
If, after six months following the Closing Date, the Executive has not relocated
to the greater Chicago metropolitan area, Holdings will making available a
corporate apartment or reimburse the Executive for the reasonable costs to rent
an apartment, including utilities, such as gas, electricity, telephone,
cable/satellite and internet services. In addition, upon or as soon as
practicable after the Closing Date, Holdings shall pay the professional expenses
incurred by Executive in connection with the negotiation and documentation of
this Agreement (including all Exhibits thereto), up to a maximum of $27,500.
Expense reimbursement amounts described in this Section 3.3(b) and in Section
3.4 for relocation costs shall be grossed-up to the extent includible in
Executive's income.
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,
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arrangements or policies made available by Holdings 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.
The Executive shall be entitled to relocation benefits in accordance with
Holding's executive relocation policy.
3.5 Employee Stock Options and Restricted Stock.
(a) On or shortly after the Closing Date, Holdings shall have
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 Holdings or of any subsidiary of Holdings to purchase
shares of Common Stock of Holdings (the "Common Stock").
(b) On or shortly after the Closing Date, pursuant to the Plan, the
Executive shall be granted nonqualified options to purchase a total of number of
shares of Common Stock representing 2.1% of the outstanding shares of Common
Stock immediately following the Closing at a price per share equal to the price
per share paid by Apollo (as defined in Exhibit D) for its shares (the "Apollo
Price") on the terms set forth in the Option Grant Letter attached hereto as
Exhibit B and incorporated herein by reference (the "Option Letter").
(c) On or shortly after the Closing Date, the Executive shall be
awarded such number of shares of Common Stock equal to $750,000 divided by the
Apollo Price on the terms set forth in the Stock Purchase and Grant Letter
attached hereto as Exhibit C and incorporated herein by reference (the "Stock
Letter").
3.6 Stock Investment.
(a) On the Closing Date, Holdings agrees to offer and sell to
Executive, and the Executive agrees to purchase from Holdings, shares of Common
Stock for aggregate cash consideration of $1,000,000 at a price per share equal
to the Apollo Price (the "Stock Purchase"). The Stock Purchase shall otherwise
be on the terms set forth in the Stock Letter.
(b) Upon completion of the Stock Purchase, the Executive shall be
granted an additional fully vested nonqualified stock option to purchase an
equal number of shares of Common Stock at a price per share equal to the Apollo
Price 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.
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 Holdings, 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
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Section 4.2(b) hereof). Upon termination for death or Total Disability, Holdings
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 Holdings 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 Holdings' 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 Holdings and acceptable to
Executive (which acceptance shall not be unreasonably withheld), (which expense
shall be paid by Holdings) 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 Holdings'
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 Board or the Compensation Committee
reasonably determines are relevant to a determination of whether the Executive
is mentally and/or physically disabled or are required by Holdings 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 Holdings.
4.3 Termination by Holdings Without Cause or Resignation by the
Executive For Good Reason, or in the event of a Change of Control.
(a) Holdings may terminate the Executive's employment without
"Cause" (as defined in Section 4.3(g)), and thereby terminate the Executive's
employment (and the Employment Period) under this Agreement at any time with no
requirement for notice to the Executive.
(b) 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 Holdings specifying in reasonable detail the reason therefore;
provided, however, that Holdings shall have a reasonable opportunity to cure any
such Good Reason (to the extent possible) within such thirty (30) day notice
period after Holdings' receipt of such notice; and provided further that, if
Holdings is not seeking to cure, Holdings shall not be obligated to allow the
Executive to continue working during such period and may, in its sole
discretion, accelerate such termination
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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 Holdings' acts or omissions of which Executive had actual
notice for sixty (60) days or more prior to giving notice of termination for
Good Reason.
(c) In the event the Executive's employment is terminated pursuant
to this Section 4.3, then, subject to Section 4.3(d) hereof, the following
provisions shall apply:
(i) Holdings 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) had the Executive remained in the employ of Holdings
until the expiration of the Term in effect immediately prior to the
date of termination, with all such amounts payable in accordance
with Holdings' normal payroll practices and procedures in the same
manner and at the same time as though the Executive remained
employed by Holdings.
(ii) If such termination occurs upon or within eighteen (18)
months following a Change of Control (as defined in Exhibit D
attached hereto), Holdings 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) the period set forth in Section
4.3(c)(i) hereof or (B) a two (2)-year period following such date of
termination, with all such amounts payable in accordance with
Holdings' normal payroll practices and procedures in the same manner
and at the same time as though the Executive remained employed by
Holdings.
(iii) In the event the Executive's employment is terminated
pursuant to this Section 4.3 without Cause, and if Holdings has
previously effected reductions in the Executive's Base Salary and
the base salary of all senior executives of Holdings, 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.
(iv) Holdings 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 Holdings 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
Holdings' 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 Holdings'
group health insurance plan,
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the Executive shall be responsible for payment of the monthly
cost of COBRA Continuation Coverage. Unless prohibited by law,
Holdings 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) through the expiration of the Term in effect
immediately prior to the date of termination or (B) in the
event that Executive's Base Salary is being paid pursuant to
Section 4.3(c)(ii), for the period set forth therein. Holdings
shall pay the reimbursements on a monthly basis in accordance
with Holdings' normal payroll practices and procedures.
(d) As a condition precedent to the Executive's right to
receive the benefits set forth in Section 4.3(c) hereof, the Executive agrees to
execute a release of Holdings 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 Holdings and the termination thereof, in the form
attached hereto as Exhibit E, as such form may be amended from time to time to
comply with changes in law.
(e) 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) Holdings fails to comply with any material
obligation imposed by this Agreement;
(ii) Holdings changes the Executive's position from that
of Chief Executive Officer;
(iii) Holdings effects a reduction in the Executive's
Base Salary, unless all senior executives of Holdings receive
a substantially similar reduction in base salary; or
(iv) Holdings 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.
(f) 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 Holdings;
(ii) intentional damage to Holdings' assets;
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(iii) intentional disclosure of Holdings' confidential
information contrary to Holdings' 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 Holdings' policy
that has been communicated to the Executive in writing;
(vii) the willful and continued failure to substantially
perform Executive's duties for Holdings (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 Holdings, 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 Holdings. 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.
(a) (i) Holdings 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) either Holdings or the Executive may elect not to extend or further
extend the Term pursuant to Section 2 hereof.
(b) Upon termination by Holdings for Cause, by the Executive as the
result of resignation for other than for Good Reason, or by Holdings or the
Executive at the end of the Term as the result of an election not to extend or
further extend the Term, 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 Holdings may terminate the Executive for Cause pursuant
to Section 4.4(a)(i), the Directors other than Executive (the "Disinterested
Directors") shall deliver to the Executive a written notice of Holdings' 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 Disinterested Directors by majority vote
thereof) within thirty (30) days after the Executive's receipt of such notice.
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4.5 Resignation from Officer Positions. Upon the termination of the
Executive's employment for any reason (unless otherwise agreed in writing by
Holdings 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 Holdings 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, Holdings 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 Holdings' request, execute any documents or instruments
that Holdings may deem necessary or desirable to effectuate such resignations.
In addition, the Executive hereby designates the Secretary or any Assistant
Secretary of Holdings and of any Affiliate to execute any such documents or
instruments as the Executive's attorney-in-fact to effectuate such resignations
if execution by the Secretary or any Assistant Secretary of Holdings or
Affiliate is deemed by Holdings or the Affiliate to be a more expedient means to
effectuate such resignation or 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.
5. Confidentiality, Work Product and Non-Competition and
Non-Solicitation.
5.1 Confidentiality.
(a) In connection with the Executive's employment with Holdings,
Holdings 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 Holdings' business interests
require a confidential relationship between Holdings 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 (A) Holdings' benefit within the course and scope of
the Executive's employment or with the prior written consent of a majority of
the Disinterested Directors, (B) that which the Executive is required to
disclose by applicable law, regulations or legal process (provided that the
Executive provides Holdings with prior notice according to Section 5.1(d)
hereof) or (C) that which the Executive discloses to his spouse, personal tax
and financial advisors, and/or attorney as reasonably necessary or appropriate
to advance the Executive's tax, financial and other personal planning; or (ii)
take or
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encourage any action that would circumvent, interfere with or otherwise diminish
the value or benefit of the Confidential Information to any of Holdings 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 Holdings,
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 Holdings.
(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 Holdings and provide a description and, if
applicable, hand deliver a copy of such request to Holdings. The Executive
irrevocably nominates and appoints Holdings 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.
(e) At any time Holdings may request, during or after the Employment
Period, the Executive shall deliver to Holdings 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, Holdings 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 Holdings 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
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of others, including but not limited to former employers, and that the Executive
will not bring onto the premises of Holdings 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
Holdings.
5.2 Work Product/Intellectual Property.
(a) Assignment. The Executive hereby assigns to Holdings 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 Disinterested Directors and perform all actions reasonably requested by
Holdings (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 Disinterested Directors.
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 Holdings, and the business
relationships, Company goodwill, work experience, client, customer and/or vendor
relationships and other fruits of employment 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 Closing 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 Holdings 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
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cease, restrict, terminate or otherwise reduce business with
Holdings 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 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 Holdings, 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
12
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 Holdings, 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, provided that a competing business shall not include any such
chain where the average revenue per purchase transaction for the trailing 12
months is more than five times Holdings' average revenue per purchase
transaction for the same period.
(d) Confidential Information.
(i) Definition. "Confidential Information" means any and all
material, information, ideas, inventions, formulae, patterns,
compilations, programs, 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
13
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,
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 Holdings by a Person who (A)used
Improper Means to acquire knowledge of the Confidential Information
(B)at the time of disclosure or use,
14
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
Holdings 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 Holdings) or (ii) the period during which the Executive is receiving
payments from Holdings 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 Executive either alone
or with others in the course of employment with Holdings (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, Holdings 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 Holdings' 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 Holdings has made every effort to limit the restrictions placed
upon the Executive to those that are reasonable and necessary to protect
Holdings' 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 Holdings' 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,
15
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, Holdings 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 Holdings, the Executive will not directly or indirectly disclose or
release to the Media any information concerning or relating to any aspect of the
Executive's employment or termination from employment with Holdings 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 Holdings or any of its
Affiliates, which would constitute libel, slander or disparagement of Holdings
or any of its Affiliates, including, without limitation, any such statements,
comments or communications that criticize, ridicule or are derogatory to
Holdings 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,
16
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, Holdings 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 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(d) 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.
17
(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.
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 Holdings, 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 Holdings and
all goodwill developed with Holdings' clients, customers and other business
contacts by the Executive during any past employment with Company, as
applicable, is the exclusive property of Holdings; 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 Holdings or any of its subsidiaries to the benefit of the
indemnification provisions contained in the By-Laws of Holdings or as a matter
of law, whichever is greater. In addition, during the term of the Executive's
employment, and for as long as liability may exist thereafter, the Executive
shall be covered under any directors' and officers' insurance policy maintained
by Holdings to the highest level of such coverage as provided to any other
director or officer of Holdings.
6.6 Post-Termination Assistance. During the Restricted Period, the
Executive shall cooperate, at the reasonable request of Holdings (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
Holdings 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.
18
6.7 Entire Agreement; Waiver. This Agreement contains the entire
agreement between the Executive and Holdings 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.
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 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 Holdings, 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 Holdings or Holdings, to:
Bauble Holdings Corp.
2400 W. Central Rd.
Hoffman Estates, IL 60192
Attention: General Counsel
19
with a copy (which shall not constitute notice) to:
Morgan Lewis & Bockius
101 Park Avenue
New York, NY 10178
Attention: Gary Rothstein, Esq.
Telephone: (212) 309-6360
Facsimile: (212) 309-6001
E-mail: grothstein@morganlewis.com
If to the Executive, to:
Eugene S. Kahn
at the address most recently on file in the records of Holdings
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 Holdings that
his acceptance of employment and the performance of his duties for Holdings 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 Holdings under this
Agreement.
20
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 Closing Date.
BAUBLE HOLDINGS CORP.
By: /s/ Peter P. Copses
--------------------------------
Name: Peter P. Copses
Title: President
EXECUTIVE
/s/ Eugene S. Kahn
------------------------------------
Name: Eugene S. Kahn
22
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
8
to any particular assets of the Company or Affiliates of the Company, or any
Shares allocated or 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
BAUBLE HOLDINGS CORP.
c/o Apollo Management VI, L.P.
10250 Constellation Boulevard
Suite 2900
Los Angeles, CA 90067
May 29, 2007
Eugene S. Kahn
2400 W. Central Rd.
Hoffman Estates, IL 60192
Re: Grant of Stock Options
Dear Gene:
We are pleased to inform you that you have been granted options to purchase
1,353,280 shares of common stock of Bauble Holdings Corp. (the "Company"). As
further described below, the options have varying features relating to vesting
and are denominated as an "Investment Option", a "Time Option" a "Target
Performance Option" and a "Stretch Performance Option". These options and 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,
and are subject in all respects to the provisions of the Plan, except as
specifically modified hereby. The Investment Option has not been granted under
the Plan and shall have no effect on the number of options that may be awarded
under the Plan. However, in all other respects, the Investment Option shall be
treated as if it were awarded under the Plan, and shall be subject to the terms
and conditions of the Plan, except as specifically modified hereby. Capitalized
terms not otherwise defined in the text are defined in the Plan.
1. Investment Option: The key terms of the Investment Option are as follows:
(a) Number of Shares. 100,000
(b) Exercise Price per Share. $10.00
(c) Vesting. The Investment Option is fully vested and immediately
exercisable.
2. Time Option: The key terms of the Time Option are as follows:
(a) Number of Shares. 477,440
(b) Exercise Price per Share. $10.00
(c) Vesting. The Time Option will vest and become exercisable in four
equal annual installments on May 29, 2008, 2009, 2010 and 2011,
provided that the Time Option will become fully vested and
exercisable immediately prior to a "Change of Control" (as defined
in the Employment Agreement among you and the Company dated as of
April 19, 2007 (the "Employment Agreement").
3. Target Performance Option: The key terms of the Target Performance Option
are as follows:
(a) Number of Shares. 477,440
(b) Exercise Price per Share. $10.00
(c) Vesting.
(i) 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 Bauble 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 Bauble Investors Liquidity Event, the
Target Performance Option will become fully vested and
immediately exercisable at such time.
(ii) If, on any Measurement Date prior to a Qualified IPO, the
Target Performance Goal would be satisfied by disregarding in
the calculation of Net Equity Value, some portion, but not
all, of your Target Performance Option as well as similar
target performance options granted to other employees, then a
portion of your Target Performance Option shall vest, as
determined by the Option Committee in a fair and equitable
manner.
(d) Definitions. For purposes of both the Target Performance Option and
the Stretch Performance Option:
(i) "Bauble 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 Bauble Investors
have been exchanged for or converted into consideration, all
or substantially all of which consists of cash or readily
marketable securities that
2
the Bauble Investors can immediately resell for cash at
prevailing quoted prices without legal, contractual or market
restrictions.
(ii) "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.
(iii) "Measurement Date" means (1) prior to a Qualified IPO, the
last day of any fiscal quarter, starting with the last day of
the eight 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 Bauble Investors Liquidity Event, whether before or after
a Qualified IPO.
(iv) "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 outstanding options or warrants to purchase Shares,
whether or not exercisable, in each case as of the Measurement
Date, less (3) debt as of the Measurement Date. EBITDA, cash
and debt shall be determined by the Option Committee based on
the Company's financial statements for such period, subject to
such adjustments to reflect unusual, nonrecurring or
extraordinary events as the Option Committee shall deem
equitable and appropriate.
(v) "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 Option 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.
(vi) "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 Option Committee shall make such
adjustment to the 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.
(vii) "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
3
of 90 consecutive trading days ending on the Measurement Date,
or (3) upon a Bauble Investors Liquidity Event, the price per
Share realized by the Bauble Investors.
4. Stretch Performance Option: The key terms of the Stretch Performance
Option are as follows:
(a) Number of Shares. 298,400
(b) Exercise Price per Share. $10.00
(c) Vesting.
(i) If on any Measurement Date, the Value Per Share equals or
exceeds the Stretch Stock Price (the "Stretch Performance
Goal"), then (1) if such Measurement Date is other than the
date of a Bauble 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 Bauble Investors Liquidity Event, the
Stretch Performance Option will become fully vested and
immediately exercisable at such time.
(ii) If, on any Measurement Date prior to a Qualified IPO, the
Stretch Performance Goal would be satisfied by disregarding in
the calculation of Net Equity Value, some portion, but not
all, of your Stretch Performance Option as well as similar
stretch performance options granted to other employees, then a
portion of your Stretch Performance Option shall vest, as
determined by the Option Committee in a fair and equitable
manner.
5. Termination of the Options. The Options shall terminate on the earliest
of:
(a) immediately upon termination of your employment if for Cause;
(b) immediately upon termination of your employment for any reason as to
the portion of any Option that did not vest prior to or upon the
date of such termination;
(c) the 91st day following the date of termination of your employment,
other than for Cause, death, Total Disability (as defined in your
Employment Agreement) or other than under circumstances entitling
you to severance benefits under Section 4.3 of your Employment
Agreement;
4
(d) the 181st day following the date of termination of your employment
under circumstances entitling you to severance benefits under
Section 4.3 of your Employment Agreement;
(e) the first anniversary of the date of termination of your employment
by reason of your death or Total Disability;
(f) as to any Performance Option, the date of a Bauble Investors
Liquidity Event to the extent the Target Performance Goal or Stretch
Performance Goal, as applicable, is not achieved at such time, or
was not previously achieved;
(g) the seventh anniversary of the date hereof; and
(h) cancellation, termination or expiration of the Options pursuant to
action taken by the Option Committee in accordance with Section 7 of
the Plan.
Notwithstanding the forgoing, following a Change of Control, paragraphs
5(c), (d) and (e) above shall be inapplicable.
6. Vesting upon Certain Terminations. As to the Time Option and each
Performance Option where the applicable Performance Goal had previously
been achieved (i) each such Option will become fully vested and
exercisable upon termination of your employment by reason of your death or
"Total Disability", as defined in your Employment Agreement, and (ii) a
portion of each such Option will become vested and exercisable upon
termination of your employment under circumstances entitling you to
severance benefits under Section 4.3 of your Employment Agreement, 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. 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.
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.
5
Sincerely,
BAUBLE HOLDINGS CORP.
By:/s/ Lance Milken
-------------------------
Name: Lance Milken
Title: Secretary
Agreed to and Accepted by:
/s/ Eugene S. Kahn
-------------------------
Eugene S. Kahn
6
Exhibit C
BAUBLE HOLDINGS CORP.
c/o Apollo Management VI, L.P.
10250 Constellation Boulevard
Suite 2900
Los Angeles, CA 90067
May 29, 2007
Eugene S. Kahn
2400 W. Central Rd.
Hoffman Estates, IL 60192
Re: Acquisition of Shares
Dear Gene:
This will evidence our agreement, effective on May 29, 2007 (the "Effective
Date") relating to the purchase by you from Bauble Holdings Corp., a Delaware
corporation (the "Company"), of 100,000 shares of the Company's common stock
(the "Common Stock"), as well as the award by the Company to you of 75,000
shares of Common Stock, in each case on the terms and conditions set forth in
this letter agreement (the "Letter Agreement"). The shares of Common Stock so
purchased are hereinafter referred to as the "Purchased Shares" and the shares
of Common Stock so awarded are hereinafter referred to as the "Awarded Shares",
and collectively are referred to as the "Shares". Capitalized terms used below
and not otherwise defined in the text shall have the meaning set forth in
paragraph 7.
1. Purchase Price. The purchase price per Purchased Share is $10.00, for a
total of $1,000,000 payable by wire transfer to the Company on the
Effective Date. The Awarded Shares shall be issued for no cost to you
(other than in respect of taxes, as provided in paragraph 6 below).
2. Vesting. All of the Purchased Shares will be treated as "Vested Shares" on
the Effective Date. The Awarded Shares will be "Unvested Shares" and will
become "Vested Shares" as to 25% of the total number of Shares on each of
the first four anniversaries of the Effective Date, provided that all of
the Unvested Shares will become Vested Shares upon a "Change of Control"
(as defined in the Employment Agreement among you and the Company dated as
of April 19, 2007 (the "Employment Agreement")), or upon termination of
your employment by reason of your death or "Total Disability" as defined
in your Employment Agreement. In addition, upon a termination of your
employment under circumstances entitling you to severance benefits under
Section 4.3 of your Employment Agreement, a number of Unvested Shares
shall become Vested Shares as is equal to the number of Unvested Shares
that would have become Vested Shares 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.
3. Forfeiture; Repurchase Right.
(a) Upon termination of your employment with the Company and its
Affiliates for any reason, all of your Unvested Shares shall immediately
be forfeited to the Company for no consideration.
(b) The Company shall have the right (but not the obligation) to
repurchase any or all of your Vested Shares upon termination of your
employment with the Company and its Affiliates for any reason. Such right
shall be exercisable by the Company during the one year period following
the date of such termination' unless prior to the Company's exercise of
such right you have disposed of the Shares in accordance with the terms of
this Letter Agreement. Notwithstanding the foregoing, this paragraph 3(b)
shall not apply to any of the Purchased Shares.
(c) The price per Share to be paid by the Company should it choose
to exercise its repurchase right pursuant to paragraph 3(b) shall equal
the Fair Market Value per Share; provided, however, that the price per
Share to be paid by the Company shall equal the lower of the price per
Share you paid to the Company (if any), less any distributions you
received in respect of such Share, or the Fair Market Value per Share if
the Shares are to be repurchased following termination of your employment
for Cause, or are to be repurchased following your termination of
employment for any reason, and prior to such repurchase you engage in
"Specified Conduct". For these purposes "Specified Conduct" means (i) your
unauthorized disclosure of confidential information relating to the
Company or its Affiliates, (ii) your 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 your termination of employment,
(iii) your 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) your hiring, directly or indirectly, any individual who was an
employee of the Company or its Affiliates within the six month period
prior to your termination of employment, or your soliciting or inducing,
directly or indirectly, any such individual to terminate his or her
employment with the Company or its Affiliates.
(d) The price per Share to be paid by the Company should it choose
to exercise its repurchase right shall be made paid by cash or plain check
against delivery of certificates representing the Shares repurchased by
the Company. The Company may offset against the payment of the repurchase
price any amounts owed by you to the Company or any Affiliate of
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the Company (including under the Note described in paragraph 6(c) below).
In such case the amount owed will to the extent of the offset be treated
as satisfied.
(e) Should the Company choose not to exercise its repurchase right,
or is prohibited by law or contract from doing so, each Bauble Investor or
its controlling Affiliates may exercise such right as if it were the
Company.
4. Restrictions/Rights on Shares.
(a) Drag-Along Right. If one or more Bauble Investors notifies you
that it or they desire to sell shares of Common Stock representing at
least a majority of the outstanding shares of Common Stock of the Company
(disregarding any sale to Affiliates of such Bauble Investor) and
specifies the terms and conditions of such proposed sale, then you shall
take all necessary and desirable actions reasonably requested by such
Bauble 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 Bauble Investors shall designate in such
notice) you shall cause a pro rata number of your 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 of Common Stock
being sold by such Bauble Investors. In furtherance, and not in
limitation, of the foregoing, in connection with such a sale, you 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 Bauble Investors as directed by
such Bauble Investors.
(b) Tag-Along Right. If one or more Bauble Investors desires to sell
shares of Common Stock representing at least a majority of the outstanding
shares of Common Stock of the Company (disregarding any sale to Affiliates
of such Bauble Investor), the Company shall notify you in writing of the
impending sale. After such notice, you may, but are not obligated to, by
written notice, request that such Bauble Investor cause such designated
purchaser to purchase on the same terms and conditions as are applicable
to such Bauble Investor's Shares, the number of your shares of Common
Stock to be sold, which as a percentage of your shares of Common Stock
shall not exceed the percentage of such Bauble Investor's Shares to be
sold. The Company shall cause such Bauble Investor to agree, within ten
(10) business days of the receipt of such notice (or such longer period of
time as such Bauble Investor shall designate in such notice) to cause your
shares of Common Stock 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 Bauble Investor's Shares. In furtherance, and
not in limitation, of the foregoing, in connection with such a sale, you
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 Bauble Investor as
directed by such Bauble Investor.
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(c) Restrictions on Transfer. Except for transfers made pursuant to
paragraphs 3, 4(a) and 4(b), the Shares may not be sold, pledged,
encumbered or otherwise transferred, other than by the laws of decent and
distribution (but the Shares shall in any event remain subject to the
terms of this Letter Agreement).
(d) Voting. You hereby irrevocably appoint Apollo Management VI,
L.P. on behalf of certain affiliated co-investment partnerships (with full
power of substitution), as your proxy and attorney-in-fact (in such
capacity, the "Proxy Holder") to vote and give or withhold consent, with
respect to all shares of Common Stock held by you at any time, for all
matters subject to your vote 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 the Company or by written consent or otherwise, giving and
granting to the Proxy Holder all powers you 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 you 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. You hereby affirm that this irrevocable proxy is given in
consideration for the mutual agreements contained in this Agreement and
that this irrevocable proxy is coupled with an interest and may, under no
circumstances, be revoked. The Company hereby acknowledges receipt of and
the validity of the foregoing irrevocable proxy, and agrees to recognize
the Proxy Holder as the sole attorney and proxy for you at all times. You
intend that this irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 212 of the
Delaware General Corporation Law.
(e) Qualified IPO. The restrictions and rights contained in
paragraphs 3(b), 4(a), 4(b) and 4(d) shall lapse upon a Qualified IPO, and
the restrictions contained in paragraph 4(c) shall lapse on the first
anniversary of a Qualified IPO; provided, however, that paragraph 4(c)
shall remain in effect with respect to Unvested Shares until they become
Vested Shares; provided further, that unless otherwise determined by the
Company, you shall enter into such standstill agreements and related
agreements as the managing underwriters of such Qualified IPO may request.
(f) Certificates for Shares. The Shares issued may be evidenced in
such manner as the Company shall determine. If certificates representing
the Shares are registered in your name, the certificates evidencing your
Shares may bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to your Shares, and the Company may retain
physical possession of the certificates, in which case you shall be
required to have delivered a power of transfer to the Company, endorsed in
blank, relating to your Shares.
5. Representations.
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(a) Authority. You have the requisite power, authority and capacity
to execute this Letter Agreement and to perform your obligations under
this Letter Agreement and to consummate the transactions contemplated
hereby, and your acceptance has been duly and validly executed and
delivered by you and constitutes your legal, valid and binding obligation,
enforceable against you in accordance with its terms, except to the extent
that such validly binding effect and enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium and other
laws relating to or affecting creditors' rights generally.
(b) Shares Unregistered. You acknowledge that (i) the offer and
sale, or grant of the Shares has not been registered under applicable
securities laws; (ii) the Shares acquired by you must be held
indefinitely; (iii) 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; (iv) you are acquiring the Shares for the purpose
of investment and not with a view to, or for resale in connection with,
the distribution thereof, and not with any present intention of
distributing the Shares and you have no present plan or intention to sell
any of the Shares; (v) either you are an "accredited investor" under Rule
501(a) of the Securities Act of 1933, or your knowledge and experience in
financial and business matters are such that you are capable of evaluating
the merits and risks of your investment in the Shares; (vi) you and your
representatives, including your professional, financial, tax and other
advisors, if any, have carefully considered your proposed investment in
the Shares, and you understand and have taken cognizance of (or have been
advised by your representatives as to) the risk factors related to the
acquisition of the Shares, and no representations or warranties have been
made to you or your representatives concerning the Shares, the Company or
the Company's business, operations, financial condition or prospects or
other matters; (vii) in making your decision to purchase the Shares, you
have relied upon independent investigations made by you and, to the extent
believed by you to be appropriate, your representatives, including your
professional, financial, tax and other advisors, if any; and (viii) you
and your representatives have been given the opportunity to request to
examine all documents of, and to ask questions of, and to receive answers
from, the Company and its representatives concerning the terms and
conditions of the acquisition of the Shares and to obtain any additional
information which you or your representatives deem necessary.
(c) Acknowledgement. You acknowledge: (i) that this award of the
opportunity to purchase the Shares 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) that 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) that the
purchase of the Shares shall not create a right to further employment with
the Company and shall not interfere with the Company's or your ability to
terminate your employment relationship at any time with or without cause;
(iv) that your purchase the Shares is voluntary; and (v) that this award
is not part of normal or expected compensation for
5
purposes of calculating any severance, resignation, redundancy, end of
service payments, bonuses, long-service awards, pension or retirement
benefits or similar payments.
6. Taxes on Awarded Shares.
(a) Awarded Shares. Unless you file an election under Section 83(b)
of the Internal Revenue Code of 1986, as amended (the "Code"), you will
recognize income, taxable at ordinary income rates and subject to payroll
tax withholding, on each date the Awarded Shares become Vested Shares in
an amount equal to the fair market value of such Shares. However, if you
timely file a Section 83(b) election, the date for measuring the amount of
ordinary compensation income you must recognize is the Effective Date. In
that case, the Company will take the position for all returns and reports
it must file with the Internal Revenue Service (including your 2007 Form
W-2) that the value of the Awarded Shares equals $750,000. To be
effective, a Section 83(b) election must be filed with the Internal
Revenue Service within 30 days of the Effective Date and attached to your
2007 federal income tax return, and a copy of the election must be filed
with the Company. However, if you forfeit the Shares, you will not be
entitled to recover the taxes you paid. When you sell the Shares, you will
recognize capital gain (or loss) equal to the difference between the
amount realized on the sale, and your tax basis in the shares (which is
the amount of ordinary compensation income previously recognized). Such
gain (or loss) will be taxed as long term capital gain (or loss) if you
held the shares for more than one year. Your holding period starts on the
vesting dates, unless you make a Section 83(b) election, in which case the
holding period will start on the Effective Date. A sample form of Section
83(b) election is attached as Appendix I for your information. However, it
is your responsibility to timely file such election. Because the Company
is a privately held company, the determination of the fair market value of
its shares is complicated. If the tax authorities determine that the fair
market value should be calculated differently than the Company's
calculation, you may have additional tax consequences. Tax laws change
frequently and sometimes on a retroactive basis. You are advised to
consult with your own tax or financial advisor, and should not rely on the
Company's description of tax consequences above.
(b) Withholding. The Company shall have the right to withhold from
any amount payable or allocable to you such amounts as may be required in
order for the Company to satisfy any withholding obligation that it may
have under applicable law, and may condition the vesting of any Shares on
your making arrangements necessary to enable the Company to satisfy any
such withholding obligation.
(c) Tax Loan. If you make a Section 83(b) election, upon the
Company's receipt of its copy thereof, the Company will loan to you an
amount equal to the federal, state and local taxes due by reason of such
election (determined assuming you pay taxes at the highest applicable
marginal rate), subject to your execution of (i) the Note attached as
Appendix II, which will govern the repayment of such advance and the
circumstances under which such
6
repayment will be forgiven, and (ii) the Pledge Agreement attached as
Appendix III, which will secure your repayment obligation to the Company.
7. Definitions.
(a) "Affiliate" means, with respect to any Person, any other Person
that controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
its correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of securities, by contract or otherwise.
(b) "Bauble 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) "Cause" shall have the meaning ascribed thereto in the
Employment Agreement.
(d) "Fair Market Value" of the Shares on any given date shall be
determined in good faith by the Board of Directors of the Company, taking
into account such factors as the Board determines are appropriate.
(e) "Person" means an individual, partnership, corporation, limited
liability company or partnership, trust, unincorporated organization,
joint venture, government (or agency or political subdivision thereof) or
any other entity of any kind.
(f) "Qualified IPO" means a sale by the Company of shares of Common
Stock 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
common stock on a nationally recognized stock exchange, including without
limitation the Nasdaq National Market System.
8. Employee Data Privacy. As a condition of the award of this opportunity to
purchase the Shares, you consent to the collection, use and transfer of
personal data as described in this paragraph 8. 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 the award of this opportunity to purchase Shares ("Data").
You further understand that the Company and/or its Affiliates will
transfer Data amongst themselves as necessary for the purposes of
implementation, administration and
7
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 the award of this opportunity to purchase Shares, 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.
9. Third Party Beneficiaries Rights. The Bauble Investors and their
Affiliates shall be third party beneficiaries under paragraphs 3(e) and
4(a) above, and Apollo Management VI, L.P. shall be a third party
beneficiary under paragraph 4(d), and they each shall be entitled to
enforce their rights thereunder.
10. Confidentiality. You agree not to disclose or discuss in any way the terms
of this offer 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).
11. Governing Law. All questions concerning the construction, validity and
interpretation of this Letter Agreement shall be governed and construed in
accordance with the domestic 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 laws of the Delaware apply as a result
of the Company being incorporated in Delaware.
* * * *
Sincerely,
BAUBLE HOLDINGS CORP.
By:/s/ Lance Milken
- ----------------------------
Name: Lance Milken
Title: Secretary
Agreed to and Accepted by:
/s/ Eugene S. Kahn
- ----------------------------
Eugene S. Kahn
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