Document:

Exhibit 10.3

 

[COMPANY LETTERHEAD]

 

Private & Confidential

 

, 2016

 

Dear [·]:

 

99 Cents Only Stores LLC (the “Company”) wishes to award you a refinancing bonus, subject to the terms and conditions of this letter agreement (the “Letter Agreement”).

 

1.              Bonus.  Subject to your execution of this Letter Agreement, you will be eligible to receive a refinancing bonus in the amount of $[·] (the “Refinancing Bonus”), payable within 30 days following the consummation of an amendment, an amendment and restatement or refinancing of the Company’s term loan facility (any such transaction, a “Refinancing Transaction”)  in which lenders holding no less than 85% of the aggregate principal amount of term loans immediately prior to such Refinancing Transaction consent to (or in the case of a refinancing, participate in) such Refinancing Transaction on terms and conditions satisfactory to the Company (but which in any event extends the final maturity of the term facility or any refinancing term facility to a date on or subsequent to January 1, 2022), as determined by the Compensation Committee of the Company. The foregoing Refinancing Bonus shall be subject to applicable withholding.  You will not be eligible for a Refinancing Bonus unless a Refinancing Transaction occurs prior to October 1, 2018.

 

2.              Termination. Except as provided below, if your employment with the Company terminates for any reason prior to the payment of the Refinancing Bonus, you will forfeit all rights under this Letter Agreement to receive any Refinancing Bonus; provided, in the event of a termination of your employment by the Company without Cause or by you for Good Reason, in either case within 45 days prior to the date of the Refinancing Transaction (“Cause” and “Good Reason” having the respective meanings defined under your employment agreement with the Company dated [·](1) (the “Employment Agreement”)), you shall be entitled to the Refinancing Bonus as provided in Section 1 above as if your employment had not terminated, which Refinancing Bonus shall be paid prior to March 15 of the calendar year following the year in which such termination occurs.

 

3.              Acknowledgements.  You acknowledge and agree that:

 

(a)         this Letter Agreement is not an agreement of employment (but that the Company and you remain parties to your Employment Agreement in accordance with the terms thereof);

 

(b)         this Letter Agreement shall not (i) guarantee that the Company or any of its affiliates will employ you for any specific time period or (ii) modify or limit the Company’s right to terminate or modify your employment or compensation (to the extent otherwise permitted under your Employment Agreement); and

 

(c)          you are not relying on any oral promises or representations in signing this Letter Agreement, but have decided to sign based solely on the terms of this Letter Agreement.

 

(1)  NTD: Confirm for each executive.

 

 

4.              Miscellaneous.

 

(a)         Governing Law.  All controversies and claims arising out of or relating to this Letter Agreement, the actions taken in connection herewith and the transactions contemplated hereby, including its validity, interpretation, construction, performance and enforcement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to its principles of conflict of laws.

 

(b)         Assignment and Transfer.  Your rights and obligations under this Letter Agreement shall not be transferable by assignment or otherwise, and any purported assignment, transfer or delegation thereof shall be void; provided, your rights under this Letter Agreement shall inure to the benefit of, and be enforceable by, your heirs and beneficiaries.  This Letter 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 Letter Agreement contains the entire agreement and understanding between you and the Company with respect to the Refinancing Bonus, and supersedes any prior or contemporaneous written or oral agreements, representations and warranties between you and the Company regarding any entitlement to a refinancing bonus or other special bonus.

 

(d)         Amendment and Waiver.  This Letter Agreement may not be amended, modified, waived or discharged except by a writing signed by both you and 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.

 

(e)          Withholding.  The Company and any of its subsidiaries shall have the right to deduct from any payment to be made to you the required Federal, state, local and other taxes required to be withheld.  You shall be solely responsible for any and all tax liability incurred in connection with the Refinancing Bonus.

 

(f)           Dispute Resolution.  All controversies and claims arising out of or relating to this Letter Agreement, or the breach hereof, shall be governed by the [Mutual Arbitration of Disputes agreement set forth as Exhibit D](2) to your Employment Agreement.

 

(g)          Section 409A.  Although the Company does not guarantee to you the particular tax treatment of the Retention Bonus, the Retention Bonus is intended to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance promulgated thereunder (“Section 409A”), and this Letter Agreement shall be limited, construed and interpreted in accordance with such intent.  In no event shall the Company be liable for any additional tax, interest or penalties that may be imposed on you by Section 409A or for any damages for failing to comply with Section 409A.  A termination of employment shall not be deemed to have occurred for purposes of any provision of this Letter Agreement upon or following a termination of your employment unless such termination is also a “separation from service” within the meaning of Section 409A and references to a “termination,” “termination of employment” or like terms shall mean separation from service.  Whenever a payment under this Letter Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

(2)  NTD: Confirm for each executive.

 

2

 

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

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME]
    
	
 
    	
[POSITION]
    

 

Acknowledged and agreed to:

 

	
 
    	
 
    	
 
    	
 
    
	
[NAME]
    	
 
    	
Date
    

 

3Exhibit 10.4

 

July   , 2016

 

[NAME]

[ADDRESS]

 

2016 Mid-Term Cash Incentive Plan

 

Dear [       ]:

 

Reference is made to the 99 Cents Only Stores LLC (the “Company”) 2016 Mid-Term Cash Incentive Plan (“Plan”) and to your Employment Agreement with the Company dated [•] (“Employment Agreement”).  With respect to your Award of a Mid-Term Bonus under the Plan (and all references to “the Participant” below shall refer to you), the provisions of the Plan to the contrary notwithstanding:

 

1.                                      Section 3.4 of the Plan shall be disregarded and in lieu thereof the following shall apply:

 

3.4                               Separation from Service.

 

(a)  Except as set forth in Section 3.4(b), if the Participant incurs a Separation from Service for any reason prior to a payment hereunder, the Participant’s Award shall automatically terminate as of the date of such Separation from Service, and thereafter the Participant shall have no right as to any unpaid Mid-Term Bonus.

 

(b)  In the event of the Participant’s Separation from Service prior to a payment hereunder and prior to the occurrence of a Change in Control (i) without Cause by the Company or (ii) for Good Reason by the Participant, the Participant shall be eligible for a pro rata portion of the Mid-Term Bonus Award that is earned (if any) and unpaid under Sections 3.1 and 3.2 and Appendix A of the Plan based on the fraction:

 

(x) the numerator of which is the number of days employed during the fiscal year in which the Initial EBITDA Goal is achieved as to the Award under Section 3.1.1 of the Plan and the denominator of which is the number of days in such fiscal year, and

 

(y) if the Initial EBITDA Goal is achieved, the numerator of which is the number of days in the fiscal year in which the Second EBITDA Goal is achieved (if attained) as to the Award under Section 3.1.2 of the Plan and the denominator of which is the number of days in such fiscal year,

 

in each case under subparagraph (x) or (y), as applicable, subject to the attainment of the applicable performance requirements under Sections 3.1 and 3.2 of the Plan; provided, in the event of a Change in Control (1) after the date of Separation

 

 

from Service, (2) prior to the date on which the Mid-Term Bonus Award is earned under Section 3.1.1 or 3.1.2 of the Plan, as applicable, and (3) no more than 90 days following the date of such Separation from Service, the denominator in the fraction under subparagraph (x) or (y), as applicable, shall, if greater, be the number of days in the fiscal year of such Change in Control through the date of such Change in Control.

 

Notwithstanding the foregoing, all determinations with respect to any Award payable under this Section 3.4(b) shall be made, and any payments with respect thereto shall be paid, prior to March 15 of the calendar year following the calendar year of the later of (1) the Participant’s Separation from Service, and (2) the end of the applicable fiscal year with respect to which the Award is payable (the “Short-Term Deferral Date”) and the Participant shall have no right to any unpaid Mid-Term Bonus following the applicable Short-Term Deferral Date.

 

For purposes of this Section 3.4, the terms “Cause” and “Good Reason” shall have the meanings ascribed thereto under the Employment Agreement and the term “Change in Control” shall have the meaning ascribed thereto under the Number Holdings, Inc. 2012 Stock Incentive Plan.

 

2.                                      Any amendment, suspension or termination of the Plan or the Participant’s Award thereunder by the Plan Administrator pursuant to Section 4.6 of the Plan shall be disregarded unless consented to in advance in writing by the Chief Executive Officer of the Company and such amendment, suspension or termination applies to the Participant no less favorably than it applies to the Chief Executive Officer.

 

3.                                      Section 4.11 shall be disregarded and in lieu thereof all disputes between the Company and you under the Plan shall be governed by the Mutual Arbitration of Disputes agreement set forth as Exhibit D to your Employment Agreement.

 

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

 

	
99   CENTS ONLY STORES LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    
	
Its:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[NAME]
    	
 
    
				

 

2

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