Document:

EXHIBIT 10.19

 

FORM OF UNSECURED TERM PROMISSORY
        NOTE

 

  	$______________

        	Dated: _______
            , 2007 

          New York, New York 

                     FOR
    VALUE RECEIVED, WHITEHALL JEWELLERS, INC., a Delaware corporation (the "Company"),
    HEREBY PROMISES TO PAY to the order of ____________________________ ("Creditor")
    the principal amount of ____________________________ AND __/100 DOLLARS ( $ _______________
    ) not later than September 30, 2007 (the "Maturity Date"). 

                     Capitalized
    terms used herein and not otherwise defined herein shall have the meaning
    ascribed to such terms in the Amended Trade Vendor Extension Agreement (as
    hereinafter defined). 

                     Section
    1.           Payments;
    General. 

                               (a)           Unless
    the Company receives written notice of an Event of Default from the Creditor
    and such Default is neither cured nor waived in accordance with the applicable
    time periods set forth in Section 3 hereof, the principal amount of this
    Note shall be payable on the Maturity Date. 

                               (b)           Starting
    as of January 17, 2006, the principal amount of this Note shall bear interest
    (computed on the basis of the actual number of days elapsed over a year of
    360 days) on the principal amount thereof from the date of the making of
    this Note until such principal amount is repaid in full at a rate per annum
    equal to 6%. From and after the date of any Event of Default, the principal
    amount of this Note and all accrued but unpaid interest thereon shall bear
    interest (computed on the basis of the actual number of days elapsed over
    a year of 360 days) at a rate per annum equal to 8%. 

                               (c)           Accrued
    interest on the principal amount of this Note shall be payable on the Maturity
    Date and after the Maturity Date on demand. 

                               (d)           All
    payments in respect of this Note are payable in lawful money of the United
    States of America in immediately available funds. 

                     Section
    2.           Definitions.

                     As
    used in this Note, the following terms shall have the respective meanings
    indicated below, such meanings to be applicable equally to the singular,
    plural, masculine, feminine and neuter forms of such terms: 

                     "Event
      of Default" has the meaning ascribed to such term in Section 3 hereof.

                     "Obligations" means
    the amounts due and owing under this Note. 

                     "Participating
      Suppliers" means, individually and collectively, suppliers of memo
      goods and/or asset goods to the Company from time to time party to the
      Amended Trade Vendor Extension Agreement. 

                     "Amended
      Trade Vendor Extension Agreement" means the Amended Trade Vendor Extension
      Agreement, dated as of November 15, 2006, by and among the Company, the
      Investor (as defined therein), and the Participating Suppliers, as the
      same now exists or may hereafter be amended, modified, supplemented, extended,
      renewed, restated or replaced. 

                     Section
    3.           Default.
    The occurrence of one or more of the following events shall constitute an "Event
    of Default" for the purpose of this Note: 

                               (a)           the
    failure of the Company to pay any amount owing under this Note when due unless
    the Company cures such failure within ten (10) days of receiving written
    notice of such failure from the Creditor;

                               (b)           the
    failure of the Company to pay any amount owing to the Creditor when due as
    a result of (i) goods sold and delivered by the Creditor to the Company,
    or (ii) consignment goods of the Creditor converted by the Company, unless
    the Company cures such failure within ten (10) days of receiving written
    notice of such failure from the Creditor;

                               (c)           the
    Company shall default in the performance of, or shall breach, any covenant
    or warranty of the Company under or in respect of the Amended Trade Vendor
    Extension Agreement unless (i) such default or breach is waived by the Creditor,
    or (ii) the Company cures such default or breach within ten (10) days of
    receiving a written notice of such default or breach from the Creditor; or 

                               (d)           the
    Company files (or consents to the filing of) any petition or complaint pursuant
    to federal or state bankruptcy or insolvency laws seeking the appointment
    of a receiver or trustee for any of its assets, seeking the adjudication
    of the Company as bankrupt or insolvent, seeking an "order for relief" under
    such statutes, or seeking a reorganization of or a plan of arrangement for
    the Company and such petition is not dismissed within sixty (60) days after
    the filing thereof.

                     Section
    4.           Miscellaneous. 

                     Section
    4.1.       Amendments. No amendment
    of any provision of this Note shall be effective unless it is in writing
    and signed by the Company and the Creditor, and no waiver of any provision
    of this Note, and no consent to any departure therefrom, shall be effective
    unless it is in writing and signed by the Creditor, and then such waiver
    or consent shall be effective only in the specific instance and for the specific
    purpose for which given. 

                     Section
    4.2.       Exercise of Remedies. No
    failure on the part of the Creditor to exercise, and no delay in exercising,
    any right hereunder shall operate as a waiver thereof, nor shall any single
    or partial exercise of any such right preclude any other or further exercise
    thereof or the exercise of any other right. 

                     Section
    4.3.       Unenforceability. Any provision
    of this Note which is prohibited or unenforceable in any jurisdiction shall,
    as to such jurisdiction, be ineffective to the extent of such prohibition
    or unenforceability without invalidating the remaining portions hereof or
    thereof or affecting the validity or enforceability of such provision in
    any other jurisdiction. 

                     Section
    4.4.       Fees and Expenses. The Company
    hereby agrees to pay all reasonable costs and out-of-pocket expenses (including,
    without limitation, all reasonable fees, expenses and other out-of-pocket
    client charges of counsel to the Creditor) incurred by the Creditor in connection
    with the enforcement of the Creditor’s rights, and the collection of
    all amounts due, hereunder and the costs of collection of such fees and expenses
    (collectively, the "Creditor's Costs"). 

                     Section
    4.5.       Notices. All notices, requests
    and demands to or upon the respective parties hereto shall be in writing
    and shall be deemed duly given, made or received: if delivered in person,
    immediately upon delivery; if by telex, telegram or facsimile transmission,
    immediately upon sending and upon confirmation of receipt; if by nationally
    recognized overnight courier service with instructions to deliver the next
    business day, one (1) business day after sending; and if mailed by certified
    mail, return receipt requested, five (5) days after mailing to the parties
    at their addresses set forth below (or to such other addresses as the parties
    may designate in accordance with the provisions of this Section): 

 

	                    	If to the Company:	Whitehall Jewellers, Inc. 

      125 S. Wacker Drive, Suite 2600 

      Attention: General Counsel 

      Chicago, Illinois 60606 

      Telephone No.: 312-782-6800 

      Facsimile No.: 312-782-8299 

      

        
	 	 	 
	 	with a copy to:	Shaw Gussis Fishman Glantz Wolfson

          and Towbin LLC 

      321 N. Clark Street, Suite 800 

      Chicago, Illinois 60610 

      Attention: Robert M. Fishman, Esq. 

      Telephone No.: 312-541-0151 

      Facsimile No.: 312-275-0567 
	 	 	 
	 	If to the Creditor:
    	 

 

                     Either
    party may change the address or addresses to which all notices, requests
    and other communications are to be sent by giving written notice of such
    address change to the other party in conformity with this Section 4.5, but
    such change shall not be effective until notice of such change has been received
    by the other party. 

                     Section
    4.6.           Jurisdiction.
    THE COMPANY AND THE CREDITOR HEREBY (A) IRREVOCABLY SUBMIT TO THE EXCLUSIVE
    JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY
    IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, (B)
    WAIVE ANY DEFENSE BASED ON DOCTRINES OF VENUE OR FORUM NON CONVENIENS,
    OR SIMILAR RULES OR DOCTRINES, AND (C) IRREVOCABLY
    AGREE THAT ALL CLAIMS IN RESPECT OF SUCH AN ACTION OR PROCEEDING MAY BE HEARD
    AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. 

                     Section
    4.7.           Jury
    Trial. THE COMPANY AND THE CREDITOR MUTUALLY WAIVE ANY RIGHT TO TRIAL
    BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
    TO THIS NOTE. 

                     Section
    4.8.           Governing
    Law. The validity, interpretation and enforcement of this Note and any
    dispute arising out of the relationship between the parties hereto, whether
    in contract, tort, equity or otherwise, shall be governed by the internal
    laws of the State of New York but excluding any principles of conflicts of
    law or other rule of law that would cause the application of the law of any
    jurisdiction other than the laws of the State of New York. 

                     Section
    4.9.           Counterparts.
    This instrument may be executed in any number of counterparts, each of which,
    when executed, shall be an original, but all of which, when taken together,
    shall constitute one and the same instrument. 

	BY: 

      WHITEHALL JEWELLERS, INC. 

      
	 	 
	By:	 
	 	 
	 	 	 	 
	Name:	 
	 	 
	 	 	 	 
	Title:	 
	 	 

	 	 	ACKNOWLEDGED BY: 

      
       

	 	 	 	 
	 	 	By:	 

	 	 	 	 
	 	 	Name:	 

	 	 	 	 
	 	 	Title:EXHIBIT 10.20 

FORM OF UNSECURED TERM PROMISSORY NOTE - EXTENSION AGREEMENT

WHITEHALL JEWELLERS INC.

June 5, 2007

 

 

 

 

Subject: Unsecured Term Promissory Note -Extension Agreement

 

          
  _____________________ (“Noteholder”) and Whitehall Jewellers, Inc.
  (“Whitehall”)
  are parties to an Unsecured Term Promissory Note dated June ____, 2007 issued
  by Whitehall to Noteholder (the “Term
  Note”) in the principal amount of $______________, (_______________________________________ DOLLARS),
  together with accrued interest from January 17, 2006 as provided in the Term
  Note. Whitehall has requested that Noteholder  extend the Maturity Date under
  the Term Note from September 30, 2007 to March 31, 2009 (the “New Maturity
  Date”). Noteholder has agreed, based on the following terms, that the Term
  Note is hereby amended to reflect the New Maturity Date  and that any references
  in the Term Note to the Maturity Date shall hereinafter refer to the New Maturity
  Date:

          I.        Whitehall
agrees and acknowledges (a) that the indebtedness in the Term Note is due and
owing without offset, defense, discount, allowance, or counterclaim of any nature
whatsoever, and Noteholder  agrees and acknowledges that the indebtedness in
the Term Note represents the entire indebtedness due and owing to the Noteholder
pursuant to the ATVEA (as defined below) for Trade Debt due and owing as of September
23, 2005; and (b) that Noteholder  has fully complied to date with its obligations
under the Amended Trade Vendor Extension Agreement dated as of November 15, 2006
(“ATVEA”). Whitehall and Noteholder hereby agree that (A) notwithstanding
Section 13 of the ATVEA, their  respective obligations to each other under ATVEA
shall extend until the earliest to occur of (i) receipt by the Participating
Suppliers of the Settlement Payments and (ii) March 31, 2009 and (B) the Term
Note may only be assigned in accordance with  Section 14(b) of the ATVEA. The
Noteholder shall attach this letter agreement to the Term Note and shall inform
any assignee of the Term Note of this letter agreement.

          II.        Section
3 of the Term Note is hereby amended to add the following provisions:

  
    
      “(e) Prior to the New Maturity Date, Whitehall: 

               (A) fails either: (i) to pay, in the aggregate, the amount of $2,500,000 ("Mandatory Payment") on account of the Term Notes to Participating Suppliers under the ATVEA that have not agreed to the
    New Maturity Date by executing this letter agreement; or (ii) to the extent that the Mandatory Payment is not fully utilized under subsection 3(e)(A)(i), to pay the unused balance, pro rata, to those Participating Suppliers under the ATVEA that have
    executed this letter agreement (the 

  

___________________ 

Attn: _______________

June ___, 2007 

Page 2 

  
    
      “Eligible Participating Suppliers”); any payments made under this clause (ii) shall be applied first to accrued but unpaid interest on the Term Notes held by the Eligible Participating Suppliers and second to the
      outstanding principal on the Term Notes held by the Eligible Participating Suppliers; or 

               (B) pays, in the aggregate, an amount greater than the Mandatory Payment on account of the Term Notes, other than in connection with a partial repayment of the Term Notes by the Company on a pro rata
    basis among the Eligible Participating Suppliers; 

  

            (f)
      the Company shall have terminated the employment of Edward Dayoob and Michael
      Don without Cause (as defined in their respective employment agreements);
      or 

             (g)
      a Change of Control (as defined below) shall have occurred. The term “Change
      of Control” means the occurrence of any one or more of the following
      events: 

                       (i)
      any person (as such term is used in Rule 13d-5 under the Securities Exchange
      Act of 1934 (the “Exchange Act”))
      or group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the
      Exchange Act), other than affiliates of Prentice Capital Management, LP,
      becomes the beneficial owner of 50% or more of the common stock of the
      Company entitled to vote generally in the election of directors of the
      Company (“Voting Securities”); 

                       (ii)
      individuals who, as of the date hereof, constitute the board of directors
      of the Company (the “Incumbent Directors”)
      cease for any reason to constitute at least 50.1% of the members of the
      board of directors of the Company; provided that any individual who becomes
      a director after the date hereof whose election or nomination for election
      by the Company’s shareholders was approved by at least 50.1% of the
      members of the then-existing board of directors of the Company (other than
      an election or nomination of an individual whose initial assumption of
      office is in connection with an actual or threatened “election contest” relating
      to the election of the directors of the Company (as such terms are used
      in Rule 14a-11 under the Exchange Act) or “tender offer” (as
      such term is used in Section 14(d) of the Exchange Act)) shall be deemed
      to be an Incumbent Director; 

                       (iii)
      the sale, lease, transfer, conveyance or other disposition in one or a
      series of related transactions, of all or substantially all of the assets
      of the Company; or 

                      (iv)
      the consummation of:

  
              (A)
        a merger or consolidation (a “Merger”)
        as a result of which the individuals and entities who were the respective
        beneficial owners of the Voting

  

___________________ 

Attn: _______________

June ___, 2007 

Page 3 

  Securities of the Company immediately before
      such Merger do not beneficially own, immediately after such Merger, directly
      or indirectly, more than 50% of the Voting Securities of the corporation
      resulting from such Merger (or its parent corporation), or 

            (B)
      a plan relating to the liquidation of the Company.

            Any
      references to the Company in this clause (g) shall, following the consummation
      of the contemplated reverse merger pursuant to which a wholly-owned subsidiary
      of a public company will be merged with and into the Company, refer to
      the public company parent entity. 

          III.        Whitehall
shall pay, on or prior to December 24, 2007, for all Holiday Flyer Goods (as
defined below) shipped to it by the Eligible Participating Suppliers; provided,
however, the maximum payment  to be made for such Holiday Flyer Goods on or prior
to December 24, 2007 shall be $10,000,000 and any amounts due and owing in
excess of $10,000,000 shall be paid in accordance with standard vendor terms.
Any payments made for the Holiday  Flyer Goods on or prior to December 24, 2007
shall be made pro rata among the Eligible Participating Suppliers based on the
amount shipped by such Participating Suppliers. The term “Holiday Flyer
Goods” means any merchandise shipped by the
Eligible Participating Suppliers that is displayed in Whitehall’s initial
Holiday Flyer to be distributed on or about November 12, 2007.

          IV.        This
letter agreement amends the Term Note and the obligations of Whitehall and the
Noteholder to each other under the ATVEA and, to the extent there is a conflict
between the terms of this letter  agreement, on the one hand, and the terms of
the Term Note or ATVEA on the other hand, the terms of this letter agreement
shall prevail. Except as amended hereby, the Term Note and ATVEA shall continue
in accordance with its terms. 

          Please confirm Noteholder’s agreement with the foregoing by signing and returning to the undersigned a duplicate copy of this letter agreement. This letter agreement may be executed in any number
of counterparts, each of which, when executed, shall be an original, but all of which, when taken together, shall constitute one and the same instrument. 

___________________ 

Attn: _______________

June ___, 2007 

Page 4 

  	WHITEHALL JEWELLERS,
          INC. 
	 
	 
	By:__________________________ 
	Name: 
	Its: 

The foregoing is acknowledged and agreed to:

_____________________________ 

By: __________________________

Name:

Its:

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