Document:

exv10w23

 

Exhibit 10.23

December 12, 2006

Tim Kullman

PetSmart, Inc.

19601 North 27th Avenue

Phoenix, Arizona 85027

Dear Tim:

     We are pleased you have agreed to stay on in the position of Chief Financial Officer and
assist in transitioning your responsibilities to your successor before you resign from PetSmart
(“the Company”). We have agreed that you will stay for a mutually acceptable length of time, at
least until February 6, 2007, but no longer than through April 30, 2007 (“Last Day”), depending on
when the Company locates a replacement and other needs of the business. This letter agreement
(“Agreement”) embodies the special package we are offering in exchange for your agreement to stay
beyond your original resignation date.

	1.	 	RETENTION BONUS. The Company will pay you the gross sum of $622,500 less
applicable payroll taxes and deductions no later than 2 weeks (14 days) after you execute the
Resignation Letter (Exhibit A) which can occur now and the Release of Claims (Exhibit B) and
the Confidentiality, Non-Solicitation and Non-Compete Agreement (Exhibit C) which cannot occur
before your Last Day. In addition, you will be paid for all earned but unpaid vacation hours
as of your Last Day. When the amount has been determined (March or April 2007) that you would
otherwise have received under the executive incentive program for 2006 performance, the
Company will pay you an additional sum at that time, equal to that amount, less applicable
payroll taxes and deductions.

	2.	 	OTHER COMPENSATION. You acknowledge and agree that, except as
expressly provided in this Agreement, you will not receive from the Company any additional
compensation (including but not limited to salary, fees, vacation, bonuses, stock, stock
options), severance or benefits after your Last Day, except those which are inalienable under
applicable law (such as any vested account balance under the Company’s 401 (k) plan). In
addition, any amounts you contributed under the Employee Stock Purchase Plan and the Deferred
Compensation Plan will be paid to you pursuant to the Plan documents subject to any
restrictions on the timing of such payments as may be required under applicable laws and
regulations. You agree you will not receive any payment under any Company incentive
compensation plan.

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	3.	 	HEALTH BENEFITS. Your current health care benefits will terminate on your
Last Day, at which time you will be eligible to continue these benefits under COBRA
(Consolidated Omnibus Budget Reconciliation Act of 1985). You must complete and submit the
COBRA election forms within 60 calendar days from the day the materials are mailed to you to
continue health care benefits under COBRA. The Company agrees to pay a portion of your COBRA
payments for eighteen (18) months, or until you are eligible for medical, dental or vision
coverage through a subsequent source, whichever is sooner. The portion to be paid by the
Company will be equal to the portion of the premium paid by the Company prior to your
separation. The company portion for COBRA will change from time to time when it is changed for
active associates. You will be responsible for paying the remaining portion of the COBRA
premium as notified by the Company. It shall be your obligation to notify the Company
immediately if you become eligible for coverage by another employer’s medical, dental or
vision plan. All disability benefits will cease on your Last Day.

	4.	 	LIFE INSURANCE. If you are covered by life insurance and the Company pays the
premiums prior to your Last Day, the Company will provide you with life insurance coverage for
eighteen (18) months, or until you are eligible for life insurance coverage through a
subsequent source, whichever is sooner. At the Company’s option, such coverage can be
obtained by conversion or portability of existing policies or through purchase by the Company
of a policy or policies of insurance of substantially the same coverage as the policy in
effect on your Last Day.

	5.	 	STOCK OPTIONS, RESTRICTED STOCK AND STOCK INVESTMENT PLAN. Your
rights under any current stock option or restricted stock agreement are governed by the actual
plan document. Your options and restricted stock will vest according to Company policy until
your Last Day. You will have ninety (90) calendar days from your Last Day to exercise any
vested options unless your applicable stock options agreement(s) provide otherwise. Your
other rights with regard to your stock options and restricted stock will be determined in
accordance with the applicable stock option agreement(s) and related plan document(s). You
will not receive additional grants of stock awards during fiscal year 2007.

	6.	 	OTHER EXECUTIVE BENEFIT PROGRAMS. The Company will pay to you within 30
(thirty) calendar days of your Last Day, the dollar amount of any unused financial planning
and related services included as part of the Executive Choice program and yearly medical
examination -under the Executive Physical program for which you were eligible to have been
paid by the Company for the year in which the Last Day occurs and for which you have not
already been paid, less applicable payroll taxes and deductions.

	7.	 	INSIDER TRADING POLICY. You acknowledge and agree you continue to be bound by the
PetSmart Insider Trading Policy and the laws, rules and regulations of the United States
Securities and Exchange Commission (the “SEC”). If you currently, or on your Last Day, are
subject to limitations on your ability to buy or sell Company stock or have otherwise been
notified by the General Counsel of the Company that you are prohibited from buying or selling
PetSmart stock, the Company strongly recommends you continue to abide by your obligations in
these areas. Should you have any questions with regard to your obligations please refer to
the Insider Trading Policy available at www.petm.com.

	8.	 	EXPENSE REIMBURSEMENTS. You agree, within ten (10) business days after your Last Day,
you will submit your final documented expense reimbursement statement reflecting all business
expenses you have incurred.

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	9.	 	RETURN OF COMPANY PROPERTY. On or before your Last Day you shall return to the
Company all Company documents (all originals and all copies thereof, whether in paper, hard
copy, computer files or other electronic form) and other Company property you have had in your
possession at any time, including, but not limited to, Company files, emails, email
attachments, notes, drawings, records, business plans and forecasts, financial information,
customer information, specifications, training materials, personnel information, sales and
marketing information, computer-recorded information, tangible property including, but not
limited to, credit cards, cell phones, laptops, entry cards, identification badges and keys;
and any materials of any kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof).

	10.	 	PROPRIETARY INFORMATION AND NON-COMPETITION. You acknowledge your continuing
obligations under and agree to be bound by the agreements you signed upon joining PetSmart.
You further agree that in your position at PetSmart you have been given confidential,
proprietary, and trade secret information and that acceptance of a position with a competitor
of PetSmart will inevitably result in disclosure of PetSmart confidential and proprietary
information. You further agree to sign and be bound by the Confidentiality, Non-Solicitation,
and Non-Compete Agreements attached as Exhibit C.

	11.	 	COOPERATION WITH COMPANY. In exchange for the consideration afforded by this
Agreement, you agree you will cooperate with the Company on all business or legal matters as
to which the Company may request assistance following your Last Day, including (but not
limited to) any actual or potential litigation, regulatory matters, compliance issues,
investigations and/or claims that are filed or may be filed that in any way concern matters or
issues you have been involved with during your employment with the Company. This obligation
includes (but is not limited to) providing truthful, accurate and complete information to any
tribunal, the Company and its attorneys, spending adequate time for preparation in advance of
testimony or depositions as a witness, and otherwise cooperating with the Company and its
attorneys.

	12.	 	CONFIDENTIALITY. The provisions of this Agreement shall be held in strict
confidence by you and shall not be publicized or disclosed in any manner whatsoever; provided
however, you may disclose this Agreement in confidence (a) to your immediate family; (b) to
your attorneys, accountants, auditors, tax preparation advisors, and financial advisors; and
(c) as necessary to enforce this Agreement’s terms and/or as otherwise required by law or as
necessary to comply with the terms of this Agreement.

	13.	 	BREACH OF AGREEMENTS. You acknowledge and agree your right to any of the
benefits or payments made or owing to you under this Agreement shall, without prior written
notice, terminate immediately upon the occurrence of any of the following:

	 	(i)	 	you breach the Confidentiality, Non-Solicitation, and
Non-Competition Agreement identified in Section 10 or any similar
confidentiality, non-competition and non-solicitation agreements entered into
between you and the Company;
	 
	 	(ii)	 	you become employed by or associated with a “PetSmart
Competitor” or engage in actions prohibited by this Agreement;

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	 	(iii)	 	you own, manage, operate, join, control, or participate in the
ownership, management, operation, or control of, are employed by, or connected
in any manner with, any person, enterprise, or entity which is engaged in any
business competitive with that of the Company; provided, however, that such
restriction will not apply to any passive investment representing an interest
of less than two percent (2%) of an outstanding class of publicity-traded
securities of any corporation or other entity or enterprise;
	 
	 	(iv)	 	you encourage or solicit any of the Company’s then current
employees to leave the Company’s employ for any reason or interfere in any
other manner with employment relationships at the time existing between the
Company and its then current employees;
	 
	 	(v)	 	you induce any of the Company’s then current clients,
customers, suppliers, vendors, distributors, licensors, licensees, or other
third party to terminate their existing business relationship with the Company
or you interfere in any other manner with any existing business relationship
between the Company and any then current client, customer, supplier, vendor,
distributor, licensor, licensee, or other third party.

	14.	 	ENTIRE AGREEMENT. This Agreement, including all exhibits, constitutes the
complete, final and exclusive embodiment of the entire agreement between you and the Company
with regard to the subject matter hereof, and supersedes any and all agreements previously
entered into by and between you and the Company, except the Company and you agree that the
Confidentiality Agreement and Agreement Not to Compete and Non-Solicitation Agreement
identified in Section 10 and any similar confidentiality, non-competition and non-solicitation
agreements entered into between you and the Company shall also remain in force and effect. To
the extent the provisions of such other agreements differ in substance from this Agreement,
those provisions shall be enforceable to the extent they afford additional or greater
protection to the Company. This Agreement is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein. It may not be
modified except in a written agreement signed by you and a duly authorized officer of the
Company. Each party has carefully read this Agreement, has been afforded the opportunity to
be advised of its meaning and consequences by his or its respective attorneys, and signed the
same of his or its own free will.

	15.	 	SUCCESSORS AND ASSIGNS. This Agreement will bind the heirs, personal representatives,
successors, assigns, executors, and administrators of each party, and will inure to the
benefit of each party, its heirs, successors, and assigns.
	 
	16.	 	WARRANTIES. You warrant and represent that there are no liens or claims of lien or
assignments in law or equity or otherwise on or against any potential claims or causes of
action released herein. Both you and the Company warrant and represent that we are each,
respectively, fully entitled and duly authorized to enter into this Agreement and perform our
respective obligations hereunder.
	 
	17.	 	INDEMNITY. Nothing contained herein will be deemed to terminate or alter any
obligation of the Company to indemnify you or provide you with a legal defense, to the extent
provided under applicable law, the certificate of incorporation or the bylaws of the Company,
with respect to any claims which may be brought against you arising from or relating to your
service as an officer or director of the Company or any of its affiliates.

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	18.	 	APPLICABLE LAW. This Agreement will be deemed to have been entered into and will be
construed and enforced in accordance with the laws of the State of Arizona as applied to
contracts made and to be performed entirely within Arizona.

	19.	 	SEVERABILITY. If a court or tribunal of competent jurisdiction determines any term
or provision of this Agreement, the Confidentiality Agreement and Agreement Not to Compete and
Non-Solicitation Agreement identified in Section 10, and/or any similar confidentiality,
non-competition and non-solicitation agreements entered into between you and the Company, is
invalid or unenforceable, in whole or in part, then the remaining terms and provisions of this
Agreement and such other agreements shall remain enforceable. Notwithstanding any contrary
provision in any such agreements, the court or tribunal will have the authority to modify or
replace the invalid or unenforceable term or provision with a valid and enforceable term or
provision that most accurately represents the parties’ intention with respect to the invalid
or unenforceable term or provision.

	20.	 	PARAGRAPH HEADINGS. The paragraph headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or interpretation of this
Agreement.

	21.	 	COUNTERPARTS. This Agreement may be executed in two counterparts, each of which will
be deemed an original, all of which together constitutes one and the same instrument.

	22.	 	CONSTRUCTION. This Agreement will be deemed drafted by both parties, and will not be
construed against either party as the drafter of the document.

     In order to have earned the stay bonus and all other benefits outlined above, you must sign
the Resignation Letter which can occur now and the Release of Claims as well as a renewed
Confidentiality, Non-Solicitation and Non-Competition Agreement no earlier than your last day of
employment with PetSmart. Copies of these documents are enclosed for your review as Exhibits A, B
and C. Please advise me of your acceptance of the Company’s offer by signing below. Return the
originals to me and retain the enclosed copy for your files. On behalf of the Company, we wish you
every success in the future.

	 	 	 	 	 
	PetSmart, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Francesca Spinelli	 	 
	 

	 	 	 	 
	 

	 	Francesca Spinelli	 	 
	 

	 	Senior Vice President People	 	 
	 
	 	 	 	 
	UNDERSTOOD AND AGREED:	 	 
	 
	 

	 	/s/ Timothy Kullman	 	 
	 	 	 
	Timothy Kullman	 	 
	 
	 	 	 	 
	 

	 	12/12/2006	 	 
	 	 	 
	Date:	 	 

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EXHIBIT A

December 12, 2006

Francesca Spinelli

Senior Vice President, People

PetSmart, Inc.

19601 N. 27th Avenue

Phoenix, AZ 85027

     I hereby tender my resignation as an employee and/or officer of PetSmart, Inc., and any of its
affiliates or subsidiaries, which includes my resignation from all boards and committees associated
with PetSmart, Inc. and/or its affiliates or subsidiaries, effective at a date determined by the
Company, reasonably convenient to me, not to occur before February 6, 2007, or after April 30,
2007.

	 	 	 
	 
	 
	 

Timothy Kullman

	 	 

 

 

Exhibit B

RELEASE OF CLAIMS

1. RELEASE. You hereby release, acquit and forever discharge PetSmart, Inc., PetSmart
Store Support Group, Inc., their parent entities and subsidiaries, and their officers, directors,
agents, servants, , employees, attorneys, shareholders, successors, assigns and affiliates
(collectively the “Company”), of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising or in any way related to agreements, events, acts or conduct at any time prior
to and/or including the date of your execution of this Release of Claims (collectively “Claims and
Demands”), including but not limited to: all Claims and Demands directly or indirectly arising out
of or in any way connected with your employment with the Company or the termination of that
employment; Claims and Demands related to salary, bonuses, commissions, stock, stock options,
restricted stock or any other ownership interests in the Company, vacation pay, fringe benefits,
expenses reimbursements, severance pay, or any other form of compensation; Claims and Demands
involving or arising under any type of federal, state, local or other laws, statutes, regulations,
ordinances or any other source of legal obligations, including but not limited to: the federal
Civil Rights Act of 1964, as amended; the federal Americans with Disabilities Act of 1990; the
federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); Arizona Civil Rights
Act, as amended; tort law; contract law; wrongful discharge; discrimination; harassment; fraud;
defamation; emotional distress; and any claims of breach of the implied covenant of good faith and
fair dealing; provided, however, that nothing herein shall prevent you from enforcing the terms of
the Agreement or obtaining your vested right to an employee pension benefit.

2. WAIVER IS KNOWING AND VOLUNTARY. You acknowledge that, among other things, you are
hereby knowingly and voluntarily waiving and releasing any and all rights you may have under the
Age Discrimination in Employment Act (“ADEA”), as amended, arising to and including the date you
sign this Release of Claims. You also acknowledge that the retention pay and other benefits
afforded under the Agreement constitute consideration that is in addition to anything of value to
which you already are entitled. You further acknowledge that you have been advised in writing as
stated in this Section 17: (a) that your waiver and release do not apply to any rights or claims
that arise after the execution date of this Agreement and Release of Claims; (b) to consult with
an attorney prior to executing this Agreement and Release of Claims; (c) that you have twenty-one
(21) calendar days to consider this Agreement and Release of Claims (although you may knowingly
choose to voluntarily execute this Agreement and Release of Claims earlier); and (d) that you have
seven (7) calendar days following the execution of this Agreement and Release of Claims to revoke
the Agreement and Release of Claims. The Company and you agree that any notice of revocation must
be in writing and delivered, or provided to a third-party commercial carrier (for example, Federal
Express or United Parcel Service) or the U.S. Postal Service, at any time on or before the seventh
(7th) calendar day following your execution of this Release of Claims for delivery the next
business day to:

General Counsel

PetSmart, Inc.

19601 North 27th Avenue

Phoenix, Arizona 85027

The Company and you agree that any changes made to the Agreement after you receive it, whether or
not material, do not restart the running of the 21 calendar day review period. The Agreement shall
not be effective until the tenth calendar day after the Agreement and Release of Claims is executed
by you, provided that you have not revoked the Agreement and Release of Claims and provided that
the Company has also executed this Agreement.

You expressly waive and relinquish all rights and benefits under that section and any law or legal
principle of similar effect in any jurisdiction with respect to the release of unknown and
unsuspected claims granted in this Agreement and Release of Claims.

	 	 	 
	UNDERSTOOD AND AGREED:
	 	 
	 
	 	 
	 
	 
	 

Timothy Kullman

	 	 
	 
	 	 
	 

Date:

	 	 

 

 

Exhibit C

Confidentiality, Non-Solicitation, and Non-Compete Agreement

You agree not to use or disclose any confidential or proprietary information of the Company
without prior written authorization from a duly authorized Officer of the Company except as
may be required by law or in any judicial process.

You agree for one (1) year following your Last Day you will not, either directly or
through others, solicit, attempt to solicit or hire any employee, consultant, or independent
contractor of the Company, its parents, subsidiaries or affiliates to terminate his or her
relationship with the Company, its parents, subsidiaries or affiliates in order to become an
employee, consultant or independent contractor to or for any other person or entity.

You further agree until one (1) year from your Last Day, you will not directly or
indirectly, aid, assist, participate in, consult with, render services for, accept a
position with, become employed by, or otherwise enter into any relationship with any
PetSmart Competitor. PetSmart Competitor is defined to mean any entity engaged in business,
in whole or in part, in the pet retail or pet services industry that has annual gross
revenues related to pets, pet products or services of at least $100 million, including but
not limited to, Petco, Pet Supplies Plus, Pet Supermarket, Pet Value (Canada), Super Pet
(Canada), and the pet business of Wal-Mart, Target, or other mass merchandisers.

	 	 	 
	UNDERSTOOD AND AGREED:
	 	 
	 
	 	 
	 
	 
	 

Timothy Kullman

	 	 
	 
	 	 
	 

Date:<PAGE>
Exhibit 10.1

                            NOTE AMENDMENT AGREEMENT

         This agreement ("Agreement") is by and among iLinc Communications,
Inc., a Delaware corporation ("iLinc" or the "Company"), [Note Holder Name] (the
"Note Holder"), and Cerberus Financial, Inc. (the "Note Agent") (all
collectively called the "Parties"), with this Agreement to be effective on the
closing of the Offering (the "Effective Date"). All capitalized terms used, but
not defined in this Agreement, have the meaning given to them in the Unit
Purchase and Agency Agreement that was executed by and among the Parties on
April 19, 2004 (the "Unit Purchase Agreement").

         WHEREAS, the Note Holder participated in an offering by iLinc to
purchase a unit that consisted of a senior unsecured promissory note (the
"Senior Note"), a copy of which is attached as Exhibit "A," and common stock of
the Company and simultaneously executed the Unit Purchase Agreement;

         WHEREAS, the Parties now wish to modify the terms of the Senior Note
and the Unit Purchase Agreement as provided herein;

         NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein and other good and valuable consideration, the
undersigned Parties do hereby agree as follows:

1.   All references in the Senior Note, and all references in the Unit Purchase
     Agreement, to the "Maturity Date" and the "due date" shall be amended
     hereby to reflect the new Maturity Date and due date of July 15, 2010 (the
     "Maturity Date").

2.   In consideration for the extension of the Senior Note term, all references
     in the Senior Note, and all references in the Unit Purchase Agreement
     (specifically Section 3.1(a) of the Unit Purchase Agreement) to the
     "interest rate" or the "Stated Rate," shall be amended and increased to a
     new "Stated Rate" of twelve percent (12%) per annum, with the new increased
     Stated Rate to begin to accrue under the amended Senior Note on January 16,
     2007, and continue thereafter at that increased Stated Rate until maturity
     or the Senior Note is fully paid.

3.   All other terms and provisions of the Senior Note and the Unit Purchase
     Agreement not specifically amended by this Agreement shall remain unchanged
     and without amendment.

4.   Note Holder hereby represents and warrants to iLinc that Note Holder: is an
     "accredited investor" as that term is defined in Rule 501(a) of Regulation
     D promulgated under the 1933 Act; confirms that the financial and investor
     suitability information provided in the subscription agreement executed
     with the original purchase of the Note remains substantially true and
     correct; has not assigned, pledged or otherwise in any manner whatsoever,
     sold or transferred, any right, title, or interest in the Senior Note; has
     the authority to execute this Agreement and is legally competent to execute
     this Agreement; has obtained any and all necessary consents to give full
     effect to this Agreement; and has relied solely and completely upon its own
     judgment.

5.   The Parties agree to cooperate fully and execute any and all supplementary
     documents and to take all additional actions which may be necessary to give
     full force and effect to the terms and intent of this Agreement. To the
     extent that the provisions of this Agreement conflict with any provision of
     the Senior Note or the Unit Purchase Agreement, then the provisions of this
     Agreement shall control and supersede. The Parties represent each to the
     other that this Agreement has been duly authorized, executed and delivered
     and that it constitutes valid and binding obligations upon the Parties
     hereto and upon their respective successors and assigns.

6.   This Agreement shall become effective: (i) following execution by all of
     the Parties in their respective signature spaces provided below, and (ii)
     upon approval of this Agreement by holders representing more than fifty
     percent (50%) of the outstanding principal balance of the Senior Notes.

<PAGE>

         IN WITNESS WHEREOF, the undersigned Parties have executed this
Agreement to be effective on the Effective Date.

[Note Holder Name]

By: /s/ Signature of Note Holder
    ----------------------------------------

CERBERUS FINANCIAL, INC.

By: /s/ Thomas R. Hislop
    ----------------------------------------
Name: Thomas R. Hislop

ILINC COMMUNICATIONS, INC.

By: /s/ James M. Powers, Jr.
    ----------------------------------------
Name: James M. Powers, Jr.

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