Exhibit 10.2

 

EXECUTION VERSION

 

CONSULTING AGREEMENT

 

This Consulting Agreement (the “Agreement”) is made as of May 26, 2015 (the
“Effective Date”), by and among Stéphane Gonthier (“Consultant”) and 99 Cents
Only Stores LLC (the “Company”).

 

RECITALS

 

WHEREAS, Consultant was formerly the President and Chief Executive Officer of
the Company.

 

WHEREAS, based upon the past relationship with the Company and the reputation
and successful experience of Consultant, the Company desires to engage
Consultant as an independent contractor to provide the Services described
herein.

 

THEREFORE, the Company and Consultant agree as follows:

 

ARTICLE I
CONSULTING ENGAGEMENT

 

1.1                   Services.

 

(a)                                 The Company hereby engages Consultant to
perform, and Consultant agrees to perform, the following services (the
“Services”) to the extent requested by the Company during the Term (as defined
below), for and to the benefit of the Company (the “Engagement”):

 

(i)                                     Providing transition services to the
incoming Interim President and Chief Executive Officer (the “Interim CEO”) to
the extent requested by the Interim CEO;

 

(ii)                                  Preparing a weekly status report for the
Company in form and substance agreed to by Consultant and the Interim CEO; and

 

(iii)                               Other services as reasonably requested by
the Board of Directors of Number Holdings, Inc. (the “Board”) or the Interim
CEO.

 

(b)                                 Consultant agrees that proper performance of
the Services will require between five and ten hours of his business time each
week.  Consultant and the Company agree that Consultant is required to provide
less than 20% of the average level of services performed during the term of
Consultant’s employment with the Company.

 

(c)                                  Consultant shall observe all rules,
policies and practices of the Company applicable to independent contractors. 
The Company shall own all data, information, and other work developed or
obtained by Consultant pursuant to this Agreement.  Consultant shall be solely
responsible for obtaining any workers compensation insurance or similar
insurance or disability coverage for himself, and Consultant waives all rights
to recovery from the Company or any of its affiliates, or coverage pursuant to
the Company’s or any of its affiliates’ insurance policies for, any injuries
that Consultant sustains while performing services for or on behalf of the
Company or its affiliates.

 

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(d)                                 Consultant may not use the name logos,
trademarks, or depictions of the Company or any of its affiliates or any
variation thereof in any promotional, advertising or marketing literature, or in
any other way.

 

(e)                                  Concurrently herewith, Consultant shall
execute and deliver the amendment to the Fair Competition Agreement previously
entered into between Consultant and the Company, in the form attached hereto as
Exhibit A.

 

1.2                   Consulting Fee.  As full consideration for the Services,
the Company shall compensate Consultant at the rate of $4,166.67 per month (the
“Monthly Consulting Fee”) during the Term (pro-rated for any partial months),
payable in arrears beginning on the 29th day following the Effective Date.

 

1.3                   Expense Reimbursement.

 

(a)                                 The Company shall reimburse Consultant in
accordance with the Company’s standard policies and procedures for all
documented reasonable out-of-pocket expenses that have been incurred (i) with
the written pre-approval of the Interim CEO, (ii) during the Term and (iii) in
connection with the provision of the Services.  Consultant shall not use any
facilities, funds, or equipment owned or administered by the Company or any of
its affiliates in the performance of the Services, and shall not be entitled to
any reimbursement for the use of his own facilities and equipment.

 

(b)                                 All expense reimbursement will be subject to
the Company’s expense reimbursement policies as the same are in effect from time
to time.

 

1.4                   Status of Consultant as Independent Contractor. 
Consultant shall operate as an independent contractor to the Company. This
Agreement shall not create, or be construed to create, any association,
partnership, joint venture, employee or agency relationship between Consultant,
on the one hand, and the Company, on the other.  Consultant shall not directly
or indirectly represent himself as (or otherwise imply that he is) a partner,
member, principal, officer, employee, or agent of the Company or any of its
affiliates.  Without limiting the foregoing:

 

(a)                                 Subject to the terms and conditions of this
Agreement, Consultant shall retain discretion over the methods, details, means,
techniques and procedures by which the Services are rendered, as long as the
objectives set forth in Section 1.1(a) are met in a manner satisfactory to the
Company.

 

(b)                                 Except as provided in the Separation and
Release Agreement between Consultant and the Company, entered into in connection
with Consultant’s termination of employment with the Company (the “Employment
Release”), Consultant is not eligible for, and Consultant hereby waives any
claim to, wages, incentive compensation, profit sharing participation, stock
options, other equity awards, health coverage and any other benefits provided to
employees of the Company or any of its affiliates.  Concurrently with the
execution of this Agreement, Consultant shall execute the acknowledgement
attached hereto as Attachment I.

 

(c)                                  If applicable, Consultant will receive an
IRS 1099 statement and related tax statements. Consultant will file all required
tax returns and pay all taxes (including, without limitation, estimated taxes,
self-employment and all other taxes, fees, additions to tax, interest and
penalties that may be assessed, imposed, or incurred as a result of the
compensation provided hereunder) in accordance with all provisions of applicable
law.  At the Company’s request, Consultant shall provide proof of required tax
payments.

 

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1.5                   No Commitments.  Consultant shall not have the power or
authority (and shall not hold himself out as having the power or authority) to
enter into contracts, agreements or understandings, or to borrow money or incur
debts or liabilities, on behalf of the Company or any of its affiliates.

 

1.6                   Representations. Consultant represents and warrants that
(a) he has the right, power and authority to enter into this Agreement and to
perform fully all of his obligations hereunder and (b) its execution, delivery
and performance of this Agreement and the performance of the Services by
Consultant do not and will not conflict with or result in any breach or default
under any other agreement of Consultant.

 

ARTICLE II
TERM AND TERMINATION

 

2.1                   Term.

 

(a)                                 Definitions.

 

(i)                                     “Term” means the period from the
Effective Date through the Termination Date.

 

(ii)                                  “Expiration Date” means May 25, 2016.

 

(iii)                               “Termination Date” means the Expiration
Date, or if earlier, the date of termination of the Engagement pursuant to
Section 2.2, 2.3 or 2.4 or otherwise.

 

(iv)                              “Cause” means:

 

(A)                               Consultant’s (x) being indicted for, or
charged with, a felony under U.S. Federal or state law (or Canadian law
equivalent), or (y) conviction of, or plea of guilty or nolo contendere to, a
misdemeanor under U.S. Federal or state law (or Canadian law equivalent) where
imprisonment is imposed (excluding traffic-related offenses and DUIs);

 

(B)                               Consultant’s perpetration of an illegal act,
dishonesty, or fraud that could cause economic injury to the Company or any
affiliate of the Company,

 

(C)                               Consultant’s insubordination, refusal or
material failure to perform the Services for any reason other than illness or
mental incapacity;

 

(D)                               Consultant’s willful misconduct or gross
negligence with regard to the Company or any of its affiliates or subsidiaries;

 

(E)                                Consultant’s appropriation of a material
corporate opportunity of the Company or any affiliate or subsidiary of the
Company; or

 

(F)                                 Consultant’s material breach of this
Agreement or any other agreement with the Company or any of its affiliates,
including any confidentiality or other restrictive covenant.

 

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(b)                                 The Company on the one hand, and Consultant,
on the other, shall have the right to terminate the Engagement for any reason or
for no reason prior to the Expiration Date, in accordance with Section 2.2 or
2.3, as applicable.

 

2.2                   Termination by the Company.

 

(a)                                 The Company may terminate the Engagement:

 

(i)                                     immediately in the event of any action
by Consultant constituting Cause; or

 

(ii)                                  (A) with 30 days’ notice to Consultant at
any time prior to the six-month anniversary of the Effective Date, or
(B) immediately at any time on or after the six-month anniversary of the
Effective Date, in each case, for any reason other than any action by Consultant
constituting Cause.

 

(b)                                 In the event of a termination of the
Engagement by the Company pursuant to Section 2.2(a)(i), Consultant shall be
entitled to all accrued Monthly Consulting Fees and all approved and unpaid
Expense Reimbursements, in each case, through the Termination Date, and to no
other amounts, except as provided in the Employment Release.  In the event of a
termination of the Engagement by the Company pursuant to
Section 2.2(a)(ii) prior to the Expiration Date, Consultant shall be entitled to
payment of the Monthly Consulting Fee from the Company through the Expiration
Date, payable in accordance with Section 1.2, and approved and unpaid Expense
Reimbursements through the Termination Date.  Notwithstanding the foregoing, any
Monthly Consulting Fees that are payable to Consultant and unpaid on the
30th day following the Termination Date (other than those accrued prior to the
Termination Date) will be forfeited unless Consultant executes within 30 days
following the Termination Date, and does not revoke, a valid release of claims
in favor of the Company in the form attached hereto as Exhibit B (the
“Release”).

 

2.3                   Termination by Consultant. Consultant may terminate the
Engagement prior to the Expiration Date upon written notice to the Company.  In
the event of a termination of the Engagement by the Consultant following
Consultant’s timely execution and non-revocation of the Employment Release, the
Consultant shall be entitled to all accrued Monthly Consulting Fees and approved
and unpaid Expense Reimbursements, in each case, through the Termination Date,
and to no other amounts, except as provided in the Employment Release.

 

2.4                   Failure to Execute the Employment Release.  If Consultant
does not timely execute, or revokes, the Employment Release, the Engagement
shall terminate automatically without any further action by the Company or
Consultant.  In the event of a termination of the Engagement pursuant to this
Section 2.4 or if Consultant terminates the Engagement prior to executing the
Employment Release, Consultant shall not be entitled to any amounts with respect
to the Engagement, this Agreement or the Employment Release and shall forfeit
any unpaid Monthly Consulting Fees.

 

2.5                   Expiration.  Unless earlier terminated as described above,
the Engagement shall terminate automatically on the Expiration Date, in which
case Consultant shall receive from the Company the Monthly Consulting Fee and
approved and unpaid Expense Reimbursements, in each case, through the
Termination Date, and to no other amounts, except as provided in the Employment
Release.

 

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ARTICLE III
GENERAL PROVISIONS

 

3.1                   Governing Law.  This Agreement, the terms of Consultant’s
Engagement, and any contest, dispute, controversy or claim arising hereunder or
related hereto (collectively, “Disputes”), shall be governed by and construed in
accordance with the laws of the State of California without regard to conflict
of law principles that would require the application of the laws of another
jurisdiction.

 

3.2                   Dispute Resolution.  All Disputes shall be resolved in
accordance with the Arbitration of Disputes Agreement previously executed by
Consultant.

 

3.3                   Notification.  Consultant shall notify the Company within
15 days of accepting any other employment, consulting, independent contractor or
any other position pursuant to which Consultant provides services to a third
party.

 

3.4                   Waiver of Contractual Right.  Failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver or
limitation of that party’s right to subsequently enforce and compel strict
compliance with every provision of this Agreement.

 

3.5                   Entire Agreement. This Agreement, together with any other
documents incorporated herein by reference and related exhibits and schedules,
constitutes the sole and entire agreement of the parties to this Agreement with
respect to the subject matter contained herein, and supersedes all prior and
contemporaneous understandings, agreements, representations and warranties, both
written and oral, with respect to such subject matter.

 

3.6                   Severability.  If any provision of this Agreement shall be
held to be invalid or unenforceable for any reason, the remaining provisions
shall continue to be valid and enforceable.  If a court finds that any provision
of this Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed and enforced as so limited.

 

3.7                   Notices.  All notices required or permitted under this
Agreement shall be in writing and shall be deemed delivered when delivered in
person or deposited in the U.S. mail, postage prepaid, or transmitted via
facsimile or electronic mail addressed as follows:

 

If to the Company:

 

99 Cents Only Stores LLC

4000 Union Pacific Avenue
Commerce, CA 90023
Facsimile: (323) 307-9611
Attention: General Counsel

 

If to Consultant, at Consultant’s then-current home address on file with the
Company.

 

3.8                   Assignment and Transfer.  Consultant’s rights and
obligations under this Agreement shall not be transferable by assignment or
otherwise, and any purported assignment, transfer or delegation thereof shall be
void.  This Agreement shall inure to the benefit of, and be binding upon and
enforceable by, any purchaser of substantially all of the Company’s assets, any
corporate successor to the Company or any assignee thereof.

 

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3.9                   Code Section 409A Compliance.  The intent of the parties
is that payments and benefits under this Agreement comply with, or be exempt
from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and the regulations and guidance promulgated thereunder (collectively “Code
Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement
shall be interpreted to be in compliance therewith; provided, that the Company
does not guarantee to Consultant any particular tax treatment with respect to
this Agreement and any payments hereunder.  In no event whatsoever shall the
Company be liable for any additional tax, interest or penalties that may be
imposed on Consultant by Code Section 409A or any damages for failing to comply
with Code Section 409A.

 

For purposes of Code Section 409A, Consultant’s right to receive any installment
payments pursuant to this Agreement shall be treated as a right to receive a
series of separate and distinct payments.  Whenever a payment under this
Agreement specifies a payment period with reference to a number of days (e.g.,
“payment shall be made within ten calendar days following the date of
termination”), the actual date of payment within the specified period shall be
within the sole discretion of the Company.  In no event may Consultant, directly
or indirectly, designate the calendar year of any payment to be made under this
Agreement that is considered non-qualified deferred compensation.

 

With regard to any provision herein that provides for reimbursement of costs and
expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the
right to reimbursement or in-kind benefits shall not be subject to liquidation
or exchange for another benefit; (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year; provided, that this clause (ii) shall not
be violated with regard to expenses reimbursed under any arrangement covered by
Internal Revenue Code Section 105(b) solely because such expenses are subject to
a limit related to the period the arrangement is in effect; and (iii) such
payments shall be made on or before the last day of the Consultant’s taxable
year following the taxable year in which the expense was incurred.

 

3.10            Interpretation.  The headings and captions of this Agreement are
provided for convenience only and are intended to have no effect in construing
or interpreting this Agreement.  The language in all parts of this Agreement
shall be in all cases construed according to its fair meaning and not strictly
for or against the Company or Consultant.  As used herein:  (a) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (b) reference to any law, rule or regulation means such law,
rule or regulation as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other
provision of any law, rule or regulation means that provision of such law,
rule or regulation from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision; (c) “hereunder,” “hereof,” “hereto,” and words of
similar import shall be deemed references to this Agreement as a whole and not
to any particular article, section or other provision hereof; (d) “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term; (e) “or” is used in the
inclusive sense of “and/or”; and (f) references to documents, instruments or
agreements shall be deemed to refer as well to all addenda, exhibits, schedules
or amendments thereto.

 

3.11            Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be considered to have the force and effect of
an original.

 

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3.12            Each Party the Drafter.  Consultant understands the terms and
conditions set forth in this Agreement and acknowledges having had adequate time
to consider whether to agree to the terms and conditions and to consult a lawyer
or other advisor of Consultant’s choice.  This Agreement and the provisions
contained herein shall not be construed or interpreted for or against any party
to this Agreement because that party drafted or caused that party’s legal
representative to draft any of its provisions.

 

3.13            Amendment and Waiver.  This Agreement may be amended, waived or
discharged only by a writing signed by Consultant and by a duly authorized
representative of the Company.  No failure or neglect of either party hereto in
any instance to exercise any right, power or privilege hereunder or under law
shall constitute a waiver of any other right, power or privilege or of the same
right, power or privilege in any other instance.  All waivers by either party
hereto must be contained in a written instrument signed by the party to be
charged and, in the case of the Company, by a duly authorized representative of
the Company. The rights and remedies provided by this Agreement are cumulative,
and the exercise of any right or remedy by either party hereto (or by its
successor), whether pursuant to this Agreement, to any other agreement, or to
law, shall not preclude or waive its right to exercise any or all other rights
and remedies.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties execute this Agreement.

 

 

99 Cents Only Stores LLC

 

 

 

 

 

 

 

By:

/s/ Andrew Giancamilli

 

Name:

Andrew Giancamilli

 

Title:

Interim President and Chief Executive Officer

 

 

 

 

 

Stéphane Gonthier

 

 

 

 

 

/s/ Stéphane Gonthier

 

[Signature Page to the Consulting Agreement]

 

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EXHIBIT A

 

AMENDMENT TO FAIR COMPETITION AGREEMENT

 

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EXHIBIT B

 

FORM OF RELEASE

 

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ATTACHMENT I

 

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