UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 10, 2005
WHITEHALL JEWELLERS, INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware 1-15615 36-1433610
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
155 North Wacker Drive, Suite 500, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 312-782-6800
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On August 10, 2005, the Company entered into an employment agreement with
Beryl Raff in connection with her joining the Company as its Chief Executive
Officer. The Company also entered into an indemnification agreement with Ms.
Raff in connection with her appointment to the Board of Directors of the
Company.
A copy of each of the employment agreement and the indemnification
agreement is attached as Exhibit 10.1 and 10.2, respectively, to this report and
is incorporated herein by reference. The material terms of these agreements are
described under Item 5.02 of this report and are incorporated herein by
reference.
On August 12, 2005, the Company issued a press release announcing that the
Company granted Ms. Raff an inducement stock option award for the purchase of
325,000 shares of common stock of the Company at a purchase price of $6.63 per
share. This award was granted on August 10, 2005 pursuant to the terms of the
employment agreement and as a material inducement to her joining the Company. A
copy of the press release is attached as Exhibit 99.2 to this report and is
incorporated herein by reference. A copy of the stock option award is attached
as Exhibit 10.3 to this report and is incorporated herein by reference. The
material terms of the award are described under Item 5.02 of this report and are
incorporated herein by reference.
On August 11, 2005, the Company entered into an amendment to its
employment agreement with Lucinda M. Baier. A copy of the amendment is attached
as Exhibit 10.4 to this report and is incorporated herein by reference. The
material terms of the amendment are described under Item 5.02 of this report and
are incorporated herein by reference.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On August 12, 2005, the Company issued a press release announcing that
Beryl Raff, age 54, has been appointed as Chief Executive Officer of the
Company. Ms. Raff's employment with the Company as Chief Executive Officer of
the Company was effective August 10, 2005. In addition, Ms. Raff has been
elected as a director of the Company effective on the first day that she reports
for active employment with the Company, which is expected to be in approximately
30 days. The size of the Board of Directors of the Company has been increased to
six effective upon Ms. Raff joining the Board. Ms. Raff will be a Class II
director with a term scheduled to expire in 2007. A copy of the press release is
attached as Exhibit 99.1 to this report and is incorporated herein by reference.
Ms. Raff has served as Senior Vice President and General Merchandise
Manager of Fine Jewelry for JC Penney Company since 2001. Previously, Ms. Raff
was with Zale Corp. for six years, including as its Chief Executive Officer from
September 1999 to February 2001 and as Chairman from September 2000 until
February 2001. Prior to joining Zale in 1994, Ms. Raff worked for Macy's
Department Stores, where she held executive jobs with responsibility for Macy's
jewelry business. Ms. Raff is a member of the Board of Directors of Jo-Ann
Stores, Inc.
Under the terms of the employment agreement, Ms. Raff will receive an
initial annual base salary of $500,000. She will also receive cash payments in
the amount of $1,950,000 as transition compensation, payable in four equal
installments of $487,500 on each of August 12, 2005, February 1, 2006, February
1, 2007 and
February 1, 2008. If the Company does not obtain a letter of credit relating to
the 2006-2008 payments prior to August 22, 2005, those payments will be required
to be made in two installments of $487,500 each on August 12, 2005 and August
23, 2005 and one installment of $975,000 on February 1, 2006. Ms. Raff also
received an additional transition payment of $15,000 on August 12, 2005.
Beginning with the fiscal year ending January 31, 2006, Ms. Raff will be
eligible for an annual cash bonus under an arrangement to be approved by the
Compensation Committee of the Board of Directors of the Company. The bonus
arrangement will provide for a target bonus of not less than 35% of her base
salary and a maximum bonus opportunity of not less than 120% of her base salary.
The minimum annual cash bonus opportunity for the fiscal years ending January
31, 2007 and 2008 will be 40% of her base salary. Pursuant to the employment
agreement, Ms. Raff's annual bonus for the fiscal year ending January 31, 2006
will not be less than $175,000 and the sum of the annual bonus and base salary
for each of the fiscal years ending January 31, 2007 and 2008 will not be less
than $675,000. In addition, Ms. Raff will, in the sole discretion of the
Compensation Committee, be eligible during her employment with the Company to be
granted stock options, restricted stock and/or other equity-based compensation
awards. Under the terms of the employment agreement Ms. Raff received an
employment inducement stock option award for the purchase of 325,000 shares of
common stock of the Company at a purchase price of $6.63 per share and will
receive an additional award of 125,000 stock options under the Company's 1997
Long-Term Incentive Plan on August 10, 2006. The terms of the inducement award
are described below.
The employment agreement is for an initial term of three years, subject to
earlier termination, and will be automatically extended for one additional year
unless either party gives written notice of termination at least 60 days prior
to the expiration of the term. The employment agreement also provides that Ms.
Raff shall serve as a director of the Company, subject to her election as such
by the stockholders of the Company as applicable.
The employment agreement provides that if Ms. Raff's employment is
terminated without Cause (as defined in the employment agreement) during the
employment period and prior to a change in control of the Company, she will
continue to receive her base salary and target annual bonus payments for the
duration of the employment period or, if greater, an amount equal to the sum of
her then base salary and target annual bonus as of the date of termination
payable in monthly installments over a 12 month period. If Ms. Raff's employment
is terminated without Cause within 18 months after a change in control of the
Company she will receive a lump sum payment equal to 2.99 times the sum of her
then base salary and target annual bonus. If Ms. Raff's employment is terminated
without Cause after the employment period, she will receive an amount equal to
her then base salary through the first anniversary of the date of termination of
her employment. The Company will continue to pay Ms. Raff the installments of
her transition compensation described above. In addition, Ms. Raff will be
entitled to her accrued base salary through and including the date of
termination and employee benefits to which she is entitled in accordance with
the terms of the plans and programs of the Company. The severance payments
described above will be reduced by the amount of any compensation that Ms. Raff
receives from a subsequent employer or from self-employment. Ms. Raff will also
receive these payments if she terminates her employment with Good Reason (as
defined in the employment agreement). In order to receive the severance payments
described above, Ms. Raff must execute a mutual release and non-disparagement
agreement.
The employment agreement also provides Ms. Raff with certain benefits,
including participation in the Company's employee benefit plans generally
available to executives of the company and relocation assistance. The employment
agreement also contains confidentiality, noncompete and nonsolicitation
covenants from Ms. Raff.
The employment inducement stock option award granted to Ms. Raff will vest
in three equal annual installments commencing August 10, 2006. The purchase
price per share is $6.63. Any unvested portion of the award will be forfeited
upon the termination of Ms. Raff's employment with the Company, except if Ms.
Raff's employment is terminated by her for Good Reason (as defined in the
employment agreement) or if there is change of control of the Company, in which
case the option will vest in full. In addition, if Ms. Raff's employment is
terminated by the Company for Cause, the award will be forfeited upon
termination.
In connection with her election as a director of the Company, Ms. Raff
entered into an indemnification agreement. The indemnification agreement
generally requires the Company to indemnify and hold Ms. Raff harmless to the
greatest extent permitted by law for liabilities arising out of her service to
the Company as a director, officer, employee, controlling person, fiduciary or
other agent or affiliate of the Company, or any subsidiary of the Company,
except that the Company will not be required to indemnify Ms. Raff for any
intentional malfeasance by her or any act undertaken by her where she did not in
good faith believe she was acting in the best interests of the Company, or for
any other acts, omissions or transactions from which she may not be relieved of
liability under applicable law. The indemnification agreement also provides for
the advancement of defense expenses by the Company. The obligation of the
Company to make an advance payment of expenses to Ms. Raff is subject to the
condition that, if, when and to the extent that it is determined pursuant to the
terms of the indemnification agreement that she would not be permitted to be
indemnified under applicable law, the Company will be entitled to be reimbursed
by her for all amounts previously paid
In connection with Ms. Raff's appointment, Lucinda M. Baier has stepped
down as Chief Executive Officer of the Company effective August 11, 2005. Ms.
Baier will continue to serve as President and Chief Operating Officer of the
Company. The Company and Ms. Baier have entered into an amendment, effective
August 11, 2005, to the employment agreement between the Company and Ms. Baier
dated November 30, 2004. Pursuant to this amendment Ms. Baier's term of
employment under the employment agreement will continue to December 9, 2005 and
from and after such date Ms. Baier's employment by the Company will be at will.
During the remaining term of the employment agreement, as amended, Ms. Baier's
annual base salary will be $500,000. Under the terms of the employment
agreement, as amended, if the Company terminates Ms. Baier's employment without
Cause (as defined in the employment agreement) or Ms. Baier terminates her
employment within 60 days prior to December 9, 2005, Ms. Baier will be entitled
to receive payment of an amount equal to her monthly base salary for a period of
12 months, any accrued but unpaid salary and vacation and annual bonus through
and including the effective date of the termination of her employment
(determined on a pro rata basis for the number of days of the fiscal year for
which she was employed by the Company), such annual bonus to be paid following
the Compensation Committee's determination of her annual bonus, if any, for the
fiscal year in which the termination of employment occurred, and other employee
benefits to which she was entitled on the date of the termination of her
employment in accordance with the terms of the applicable plans. In order to
receive the severance payments described above, Ms. Baier must execute a mutual
release and non-disparagement agreement.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
Exhibit
No. Exhibit
- ------- -------
10.1 Employment Agreement, dated as of August 10, 2005, between the
Company and Beryl Raff
10.2 Indemnification Agreement, dated August 10, 2005, between the
Company and Beryl Raff
10.3 Non Qualified Stock Option Agreement, dated August 10, 2005, between
the Company and Beryl Raff
10.4 Amendment, effective August 11, 2005, to Employment Agreement, dated
November 30, 2004, between the Company and Lucinda M. Baier
99.1 Press Release dated August 12, 2005, announcing the appointment of
Beryl Raff as Chief Executive Officer of the Company
99.2 Press Release dated August 12, 2005, announcing the provision of an
employment inducement award to Beryl Raff, Chief Executive Officer
of the Company
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WHITEHALL JEWELLERS, INC.
(Registrant)
By: /s/ John R. Desjardins
-------------------------------
John R. Desjardins
Executive Vice President
and Chief Financial Officer
Date: August 15, 2005
EXHIBIT INDEX
The following exhibit is furnished herewith as noted below.
Exhibit No. Exhibit
- ----------- -------------------------------------------------------------------
10.1 Employment Agreement, dated as of August 10, 2005, between the
Company and Beryl Raff
10.2 Indemnification Agreement, dated August 10, 2005, between the
Company and Beryl Raff
10.3 Non Qualified Stock Option Agreement, dated August 10, 2005, between
the Company and Beryl Raff
10.4 Amendment, effective August 11, 2005, to Employment Agreement, dated
November 30, 2004, between the Company and Lucinda M. Baier
99.1 Press Release dated August 12, 2005, announcing the appointment of
Beryl Raff as Chief Executive Officer of the Company
99.2 Press Release dated August 12, 2005, announcing the provision of an
employment inducement award to Beryl Raff, Chief Executive Officer
of the Company