Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”), effective as of August 24, 2016, is
entered into by and among 99 Cents Only Stores LLC, a California limited
liability company (the “Company”) and Jack Sinclair (“Executive”).

 

NOW, THEREFORE, the Company and Executive agree as follows:

 

1.                                      Employment.

 

(a)                                 Term.  The term of this Agreement shall
commence on August 21, 2015 (the “Start Date”) and shall continue until the
third anniversary of the Start Date (the “Initial Term”); provided, that on the
last day of the Initial Term and on each anniversary of such date thereafter,
the term of this Agreement automatically shall be extended for an additional
year unless, not later than 90 days prior to the expiration of the then-existing
term, either party gives written notice to the other that the term of this
Agreement will not be extended.  The Initial Term, together with any extensions,
collectively shall be referred to as the “Term.” After the Term, Executive’s
continued employment with the Company, if any, shall be pursuant to such terms
and conditions as Executive and the Company may agree.

 

(b)                                 Duties and Responsibilities.  Executive
shall serve as the full-time Chief Merchandising Officer of the Company and
shall have the duties and responsibilities customarily associated with such
position, and such additional duties and responsibilities as may from time to
time be assigned to him by the Chief Executive Officer of the Company (the
“CEO”).  Executive shall report directly to the CEO.  Executive shall (i) devote
his full business time to the business and affairs of the Company, (ii) not
engage in any other business activities as a director, officer, employee or
consultant or in any other capacity, whether or not he receives compensation
therefor, other than activities approved by the Board of Directors (the “Board”)
of the Company’s parent, Number Holdings, Inc. (“Parent”) or an authorized
committee thereof and (iii) observe and comply with all rules, regulations,
policies and practices of the Company.  Notwithstanding the foregoing, Executive
may serve on the boards of charitable, civic or religious organizations, engage
in charitable and community affairs and activities, and manage his personal
investments; provided that such activities do not interfere with the performance
of Executive’s duties and responsibilities hereunder.

 

2.                                      Compensation.

 

(a)                                 Base Salary.  So long as he remains employed
by the Company, during the Term Executive shall be paid a base salary (“Base
Salary”), which initially shall be at the annual rate of $575,000, payable in
installments consistent with the Company’s normal payroll practices.

 

(b)                                 Annual Incentive Bonus.

 

(i)                                     Executive shall be eligible to earn an
annual incentive bonus (“Annual Bonus”) for each fiscal year of the Company
under a bonus plan approved by the Board or an authorized committee thereof. 
Executive’s target Annual Bonus shall be 75% of the Base Salary in effect at the
beginning of such fiscal year. The actual level of payment will be contingent
upon achieving applicable performance goals as determined by the Board or an
authorized committee thereof.

 

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(ii)                                  For any bonus paid with respect to fiscal
year 2016 (the “FY16 Bonus”), if Executive’s employment terminates for any
reason other than a termination by the Company without Cause (as defined below)
prior to August 21, 2017, then Executive shall repay to the Company, net of
taxes, the FY16 Bonus.  For the avoidance of doubt, if Executive resigns prior
to August 21, 2017, then then Executive shall repay to the Company, net of
taxes, the FY16 Bonus.  Any such repayment will be due 60 days following the
date of termination.  In addition, if the Company incurs any costs or expenses,
including attorneys’ fees, in the collection of the repayment or all or any
portion of the FY16 Bonus, then, in addition to all other remedies, and so long
as the Company prevails in any dispute, Executive shall reimburse the Company
for such costs and expenses.

 

(iii)                               No Bonus shall be earned until the date that
such Bonus is paid, and Executive must be an employee in good standing on such
date to earn any such Bonus.  Payment of each such Bonus will be at the sole
discretion of the Board or an authorized committee thereof, based on its
evaluation of the level of achievement of performance goals.

 

3.                                      Employee Benefits.

 

(a)                                 Business Expenses.  Upon timely submission
of itemized expense statements and other documentation in accordance with the
procedures specified by the Company, Executive shall be entitled to
reimbursement for actual out of pocket business and travel expenses duly
incurred by Executive in the course of his duties hereunder in accordance with
the policies of the Company then in effect generally applicable to senior
executives of the Company.

 

(b)                                 Benefit Plans.  So long as he remains
employed by the Company during the Term, Executive shall be entitled to
participate in the Company’s employee benefit plans and programs (“Benefit
Plans”) as they may exist from time to time, in each case as offered by the
Company to its senior executives generally, subject to the terms and conditions
thereof.  Nothing in this Agreement shall require the Company to maintain any
Benefit Plan, or shall preclude the Company from terminating or amending any
Benefit Plan from time to time.

 

(c)                                  Vacation.  Executive shall be entitled to
vacation time in accordance with the Company’s vacation policy for senior
executives.  Executive acknowledges that given his position at the Company,
Executive will remain generally available and accessible to the Company’s senior
managers through an electronic means of communication when reasonably possible.

 

4.                                      Termination of Employment.  This
Agreement may be terminated in accordance with this Section 4.

 

(a)                                 For Cause.  The Company may terminate
Executive’s employment for “Cause” immediately upon written notice for any of
the following reasons: (i) Executive’s (x) being indicted for or charged with a
felony under United States or applicable state law or (y) conviction of, or plea
of guilty or nolo contendere to a misdemeanor where imprisonment is imposed
(other than for a traffic-

 

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related offense); (ii) perpetration by Executive of an illegal act, dishonesty,
or fraud that could cause economic injury to the Company, Parent or any of their
subsidiaries or any act of moral turpitude by Executive; (iii) Executive’s
insubordination, refusal to perform his duties or responsibilities for any
reason other than illness or incapacity or unsatisfactory performance of his
duties for the Company, Parent or any of their subsidiaries; (iv) willful and
deliberate failure by Executive to perform his duties after he has been given
notice and an opportunity to effectuate a cure as determined by the Company;
(v) Executive’s willful misconduct or gross negligence with regard to the
Company, Parent or any of their subsidiaries; (vi) Executive’s unlawful
appropriation of a material corporate opportunity; or (vii) Executive’s breach
of agreement with the Company or any of its affiliates, including  any
confidentiality or other restrictive covenant entered into between Executive and
the Company or any of its affiliates, including the Fair Competition Agreement.

 

Upon termination of Executive’s employment for Cause, neither the Company, nor
any of its affiliates, shall be under any further obligation to Executive,
except the Company’s obligation to pay (A) all accrued but unpaid Base Salary to
the date of termination within 30 days following such termination, less all
applicable deductions, (B) any accrued but unused vacation, (C) any earned and
vested benefits and payments pursuant to the terms of any Benefit Plan and
(D) all unreimbursed business expenses incurred and properly submitted in
accordance with this Agreement (the payments and benefits described in
subsections (A) through (D) herein shall be referred herein as the “Accrued
Benefits”).

 

(b)                                 Without Cause.  The Company may terminate
Executive’s employment at any time without Cause immediately upon written
notice.  Upon termination of Executive’s employment by the Company without Cause
during the Term, in addition to the Accrued Benefits, Executive shall be
entitled to receive:

 

(i)                                     If the Company terminates Executive’s
employment without Cause prior to March 11, 2017, an amount equal to one and
one-half times Executive’s Base Salary, payable in equal installments over 18
months following termination of employment in accordance with the Company’s
regular payroll schedule, or

 

(ii)                                  If the Company terminates Executive’s
employment without Cause on or after March 11, 2017, an amount equal to
Executive’s Base Salary, payable in equal installments over 12 months following
termination of employment in accordance with the Company’s regular payroll
schedule.

 

The foregoing payments shall commence on the 60th day following termination of
employment provided, that such payments and benefits shall be contingent on
(A) Executive executing and delivering to the Company a release of claims
against the Company substantially in the form attached hereto as Exhibit B
(subject to any modifications necessary to render such release fully enforceable
under applicable law, as determined by the Company) (“Release”), and such
Release becoming effective by such date and (B) Executive’s continued compliance
with all post-termination restrictive covenants applicable to Executive,
including the covenants contained in the Fair Competition Agreement.  Any
installments delayed pursuant to the foregoing sentence shall be paid with the
first such payment on the 60th day following termination of employment.  A
termination of Executive’s employment under this Section 4(b) does not include a
termination of employment by reason of Executive’s Disability (as defined below)
or upon the death of Executive, or the Company’s timely notice of its option not
to extend the Term.

 

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(c)                                  Resignation.  Executive may resign his
employment upon providing the Company 30 day’s prior written notice; provided,
that the Company shall have the right to accelerate Executive’s termination date
to an earlier date than specified in Executive’s notice.  In the event of such
resignation by Executive, the Company shall be under no further obligation to
Executive, except to pay the Accrued Benefits.

 

(d)                                 Disability; Death.  The Company may
terminate Executive’s employment if Executive experiences a “Total Disability”
(or equivalent) as defined under the Company’s Long Term Disability Plan in
effect at the time of the disability (or, if no Long Term Disability Plan is in
effect at the time of the disability, if executive becomes disabled within the
meaning of Section 409A (as defined below)) (a “Disability”).  In the event that
Executive’s employment is terminated by reason of Executive’s Disability or upon
the death of Executive, the Company shall be under no further obligation to
Executive (or his estate), except to pay the Accrued Benefits.

 

(e)                                  Cooperation.  Following termination of
employment for any reason, Executive shall (i) cooperate with the Company, as
reasonably requested by the Company, to effect a transition of Executive’s
responsibilities and to ensure that the Company is aware of all matters being
handled by Executive and (ii) cooperate and provide assistance to the Company at
its reasonable request in connection with any action, suit or proceeding brought
by or against the Company or any of its affiliates (or in which any of them is
or may be a party) or that relates in any way to Executive’s employment by the
Company.  The Company shall reimburse Executive promptly for actual
out-of-pocket expenses incurred by him in connection with assisting the Company
in the manner described in the immediately preceding sentence in accordance with
the policies of the Company then in effect generally applicable to senior
executives of the Company.  Upon termination for any reason, Executive shall be
deemed to have resigned from all offices and directorships then held with the
Company or any of its subsidiaries. Executive’s obligations under this
Section 4(e) shall survive the termination of Executive’s employment and the
termination of the Agreement.

 

5.                                      Other Agreements.  Executive shall
execute and deliver to the Company the Fair Competition Agreement and the
Arbitration Agreement, attached hereto as Exhibit C and Exhibit D,
respectively.  Such execution and delivery is a condition to the effectiveness
of this Agreement. Executive shall at all times comply with the Fair Competition
Agreement.

 

6.                                      Withholding.  The Company may withhold
from any amounts payable to Executive hereunder all federal, state, city or
other taxes that the Company may reasonably determine are required to be
withheld pursuant to any applicable law or regulation and any additional
withholding to which Executive has agreed.

 

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7.                                      Section 409A.  Notwithstanding anything
herein to the contrary:

 

(a)                                 The Company does not guarantee to Executive
any particular tax treatment relating to the payments and benefits under this
Agreement.  It is intended that such payments and benefits be exempt from, or
comply with, Section 409A of the Internal Revenue Code (the “Code”) and the
regulations and guidance promulgated thereunder (collectively, “Section 409A”),
and all provisions of this Agreement shall be administered, interpreted and
construed in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A.  Notwithstanding any other provision hereof, in no
event shall the Company be liable for, or be required to indemnify Executive
for, any liability of Executive for taxes or penalties under Section 409A or
otherwise.

 

(b)                                 A termination of employment shall not be
deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits upon or following a
termination of employment unless such termination is also a “separation from
service” within the meaning of Section 409A.

 

(c)                                  With regard to any provision herein that
provides for reimbursement of costs and expenses or in-kind benefits, except as
permitted by 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 Section 105(b) of the Code 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 Executive’s taxable year following the taxable year in which the
expense was incurred.

 

(d)                                 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.  If under this Agreement, an amount is to be paid in
two or more installments, for purposes of Section 409A, each installment shall
be treated as a separate payment.

 

(e)                                  Notwithstanding any other provision of this
Agreement, if at the time of the Executive’s termination of employment, he is a
“specified employee”, determined in accordance with Section 409A, any payments
and benefits provided under this Agreement that constitute “nonqualified
deferred compensation” subject to Section 409A that are provided to the
Executive on account of his separation from service shall not be paid until the
first day of the seventh month following such date of termination, or if
earlier, within 60 calendar days after Executive’s death to the personal
representative of Executive’s estate.

 

8.                                      Miscellaneous.

 

(a)                                 Governing Law.  This Agreement, 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.

 

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(b)           Assignment and Transfer.  Executive’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.

 

(c)           Entire Agreement.  This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof, and supersedes any prior or contemporaneous written or oral agreements,
representations and warranties between them respecting the subject matter
hereof.  Without limiting the foregoing, this Agreement expressly supersedes all
prior agreements (written or oral) relating to Executive’s employment with the
Company or any of its subsidiaries.

 

(d)           Amendment and Waiver; Rights Cumulative.  This Agreement may be
amended, waived or discharged only by a writing signed by Executive and by a
duly authorized representative of the Company (other than Executive).  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 (other than Executive).  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.

 

(e)           Severability.  If any term, provision, covenant or condition of
this Agreement, or the application thereof to any person, place or circumstance,
shall be held to be invalid, unenforceable or void, the remainder of this
Agreement and such term, provision, covenant or condition as applied to other
persons, places and circumstances shall remain in full force and effect.

 

(f)            Dispute Resolution.  Except as provided in the Fair Competition
Agreement, all Disputes shall be resolved in accordance with the Arbitration
Agreement attached hereto as Exhibit D and incorporated herein.  This
Section 8(f) shall survive the termination of Executive’s employment and the
expiration or termination of this Agreement.  Executive shall execute and
deliver to the Company a copy of such Agreement as a condition to the
effectiveness of this Agreement.

 

(g)           Notices.  Any notices or other communication required or permitted
under this Agreement shall be effective only if it is in writing and shall be
deemed given when delivered personally, one day after it is sent through a
reputable overnight carrier, or three business days after it is mailed by
registered mail, return receipt requested, to the parties at the following
addresses (or at such other address as a party may specify by notice given
hereunder to the other party:

 

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If to Executive:

 

At the address listed in the Company’s personnel records.

 

If to the Company:

 

99 Cents Only Stores, LLC
4000 Union Pacific Avenue
Commerce, CA 90023
Telephone: (323) 980-8145
Facsimile: (323) 307-9611
Attention: General Counsel

 

with copies to:

 

Ares Management LLC
2000 Avenue of the Stars, 12th Floor
Los Angeles, CA 90067
Telephone: (310) 201-4100
Facsimile: (310) 201-4170
Attention: Dennis Gies

 

and

 

Proskauer Rose LLP
2049 Century Park East, Suite 3200
Los Angeles, CA 90067
Telephone: (310) 284-4582
Facsimile: (310) 557-2193 
Attention: Michael A. Woronoff, Esq.

 

(h)           Further Assurances.  Executive shall, upon the Company’s
reasonable request, execute such further documents and take such other actions
as may be permitted or reasonably required by law to implement the purposes,
objectives, terms, and provisions of this Agreement.

 

(i)            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 Executive.  As used herein:  (i)  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; (ii) 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; (iii) “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; (iv) “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term; (v) “or” is used in the
inclusive sense of “and/or”; and (vi) references to documents, instruments or
agreements shall be deemed to refer as well to all addenda, exhibits, schedules
or amendments thereto.

 

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(j)            Acknowledgement.  Executive 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 Executive’s choice.

 

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

 

(l)            Each Party the Drafter.  Executive 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 Executive’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.

 

(m)          Time of Essence.  Time is and shall be of the essence in connection
with this Agreement and the terms and conditions contained herein.

 

(n)           Survival.  All rights and obligations of any party in Sections 4
through 8 of this Agreement not fully satisfied or performed, as applicable, on
the date Executive’s employment is terminated, shall survive the termination of
Executive’s employment and the expiration or termination of this Agreement.

 

[Remainder of Page Intentionally Left Blank / Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the date first written above.

 

99 CENTS ONLY STORES LLC

 

By:

/s/ Paul Dolby

 

 

 

 

Name:

Paul Dolby

 

 

 

 

Title:

Senior Vice President, Human Resources

 

 

 

 

 

 

JACK SINCLAIR

 

 

 

/s/ Jack Sinclair

 

 

 

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EXHIBIT A

 

[RESERVED]

 

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EXHIBIT B

 

RELEASE

 

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EXHIBIT C

 

FAIR COMPETITION AGREEMENT

 

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EXHIBIT D

 

ARBITRATION AGREEMENT

 

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