Document:

Wendelken CiC Exhibit 10.1

		

			Exhibit 10.1

		

		
			EXECUTIVE
CHANGE IN CONTROL
SEVERANCE BENEFITS AGREEMENT
		

		
			THIS EXECUTIVE CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT (the “AGREEMENT”) is entered into on October 14, 2013, between Roger Wendelken (“Executive”) and INTERSIL CORPORATION, a Delaware corporation (the “COMPANY”).
		

		
			WHEREAS, this Agreement is intended to provide Executive with the compensation and benefits described herein upon the occurrence of specific events after the date hereof.
		

		
			NOW THEREFORE, The Company and Executive hereby agree as follows:
		

		
			Certain capitalized terms used in this Agreement are defined in Article VI.
		

			
			
				 ARTICLE I
			

		

	
			
			EMPLOYMENT BY THE COMPANY

		
			1.1Executive is currently employed as an executive of the Company.
		

		
			1.2 This Agreement shall remain in full force and effect so long as Executive is employed by Company or its subsidiaries; provided, however, that the rights and obligations of the parties hereto contained in Articles II through VII shall survive Two and One Half (2-1/2) years following a Covered Termination (as hereinafter defined).
		

		
			1.3The Company and Executive wish to set forth the compensation and benefits which Executive shall be entitled to receive if Executive’s employment with the Company terminates following a Change in Control under the circumstances described in Article II of this Agreement.
		

		
			1.4The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s continued employment with the Company and Executive’s execution of the general waiver and release described in Section 3.2.
		

			
			
				 ARTICLE II
			

		

	
			
			SEVERANCE BENEFITS

		
			2.1Entitlement To Severance Benefits.  If Executive’s employment terminates due to an Involuntary Termination or a Voluntary Termination for Good Reason (as hereinafter defined) within twelve (12) months following the effective date of a Change in Control, the termination of employment will be a Covered Termination and the Company shall pay Executive the compensation and benefits described in this Article II.  If Executive’s employment terminates, but not due to an Involuntary Termination or a Voluntary Termination for Good Reason within twelve (12) months following the effective date of a Change in Control, then the termination of employment will not be a Covered Termination and Executive will not be entitled to receive any payments or benefits under this Article II.
		

		

		

		 

		

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		Payment of any benefits described in this Article II shall be subject to the restrictions and limitations set forth in Article III of this Agreement.
		

		
			2.2Lump Sum Severance Payment.  The Company shall pay to the Executive his base pay through the Date of Covered Termination at the rate in effect at the time Notice of Termination is given, subject to any applicable withholding of federal, state or local taxes, plus (i) that portion of Executive’s targeted cash bonus prorated through the Date of Covered Termination, and (ii) all other amounts to which Executive is entitled under any compensation plan or practice of the Company at the time such payments are due.  In addition, within thirty (30) days following a Covered Termination, Executive shall receive a lump sum payment equal to one hundred percent (100%) of the sum of Annual Base Pay and Annual Bonus, subject to any applicable withholding of federal, state or local taxes.
		

		
			2.3Welfare Benefits.  Following a Covered Termination, Executive and his covered dependents will be eligible to continue their Welfare Benefits coverage under any Welfare Benefits plan or program maintained by the Company on the same terms and conditions (including cost to Executive) as in effect immediately prior to the Covered Termination, for a period of one (1) year following the Covered Termination.
		

		
			With respect to any Welfare Benefits provided through an insurance policy, the Company’s obligation to provide such Welfare Benefits following a Covered Termination shall be limited by the terms of such a policy; provided that (i) the Company shall make reasonable efforts to amend such policy to provide the continued coverage described in this Section 2.3, and (ii) if a policy providing health benefits is not amended to provide the continued benefits described in this Section 2.3, the Company shall pay for the cost of comparable replacement coverage (or Medigap insurance if Executive qualifies for Medicare) until the end of the one (1) year period following the Covered Termination.
		

		
			The Company shall reimburse Executive for any income tax liability due as a result of the provision of Welfare Benefits under this Article II (and as a result of any payments due under this paragraph) in order to put Executive in the same after-tax position as if no taxable Welfare Benefits had been provided.
		

		
			This Section 2.3 is not intended to affect, nor does it affect, the rights of Executive, or Executive’s covered dependents, under any applicable law with respect to health insurance continuation coverage.
		

		
			2.4Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by retirement benefits after the date of the Covered Termination, or otherwise.
		

			
			
				 ARTICLE III
			

		

	
			
			LIMITATIONS AND CONDITIONS ON BENEFITS

		 

		

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			3.1Withholding of Taxes.  The Company shall withhold appropriate federal, state or local income and employment taxes from any payments hereunder.
		

		
			3.2Employee Agreement and Release Prior to receipt of Benefits.  Upon the occurrence of a Covered Termination, and prior to the receipt of any benefits under this Agreement on account of the occurrence of a Covered Termination, Executive shall, as of the date of a Covered Termination, execute an employee agreement and release in the form attached hereto as Exhibit A.  Such employee agreement and release shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s obligations under the Company’s standard form of proprietary information agreement.  It is understood such employee release and agreement shall comply with applicable law.  In the event Executive does not execute such release and agreement within the period required by applicable law, or if Executive revokes such employee agreement and release within the period permitted by applicable law, no benefits shall be payable under this Agreement and this Agreement shall be null and void.
		

			
			
				 ARTICLE IV
			

		

	
			
			OTHER RIGHTS AND BENEFITS

		
			4.1Nonexclusivity.  Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company.  Except as otherwise expressly provided herein, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company at or subsequent to the date of a Covered Termination shall be payable in accordance with such plan, policy, practice or program.
		

		
			4.2Parachute Payments.  In the event that any amount or benefit received or to be received by Executive pursuant to this Agreement (other than payment pursuant to this Section 4.2), or pursuant to any accelerated vesting or extension of the exercise period of Company options Executive may be entitled to under the terms of Executive’s option grants in connection with a Change in Control termination, would constitute an “excess parachute payment” subject to excise tax under Section 4999 of the Code, the Company shall pay to Executive the amount of any such excise tax; provided, however, that no payment shall be made under this Section 4.2 to the extent that it would reduce Executive’s after-tax income.
		

		
			4.3      Stock Options, Deferred Stock Units and Performance-Based Equity Awards. 
		

		
			In the event of a Covered Termination, all stock options, deferred stock units (“DSUs”) and restricted stock units (“RSUs”) granted to Executive by the Company during Executive’s employment with the Company then outstanding, other than awards subject to performance criteria, shall immediately become fully vested (and with respect to the stock options, fully exercisable).  In the event of a Covered Termination, performance-based equity awards granted to Executive by the Company during Executive’s employment with the Company then outstanding (including performance-based deferred stock units (“PDSUs”), market stock units (“MSUs”) and market stock options (“MSOs”)) that include terms providing that the ultimate amount of equity earned by Executive depends on performance relative to certain performance 
		

		 

		

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		criteria established at the time of the grant by the Compensation Committee of the Company’s Board of Directors (“Performance Criteria”) for each of one or more performance periods shall immediately become fully vested (and with respect to MSOs, fully exercisable) as follows: (a) Executive’s unvested PDSUs, MSUs and MSOs for which the performance period has been completed shall become fully vested with the number of shares payable to Executive under a particular grant being determined using the Performance Criteria for the respective performance period, (b) Executive’s unvested PDSUs for any performance period in progress shall become fully vested with the number of shares payable to Executive under a particular grant being determined applying the Performance Criteria to the performance level achieved through the last day of the quarter immediately preceding the Change in Control, (c) Executive’s unvested PDSUs for any performance period that has yet to begin shall become fully vested with the number of shares payable to Executive for such performance period  being deemed to be the same number payable to Executive for the immediately-preceding performance period, and (d) Executive’s unvested MSUs and MSOs for any performance period in progress shall become fully vested with the number of shares payable to Executive under a particular grant being determined by applying the Performance Criteria to the performance level achieved through the date of the Change in Control.  All equity awards shall be immediately exercisable in accordance with the terms of the respective awards.
		

		
			 
		

			
			
				 ARTICLE V
			

		

	
			
			NON-ALIENATION OF BENEFITS

		
			No benefit hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to so subject a benefit hereunder shall be void.
		

			
			
				 ARTICLE VI
			

		

	
			
			DEFINITIONS

		
			For purposes of the Agreement, the following terms shall have the meanings set forth below:
		

		
			6.1“Agreement” means this Executive Change in Control Severance Benefits Agreement.
		

		
			6.2“Annual Base Pay” means Executive’s annual base pay at the rate in effect during the last regularly scheduled payroll period immediately preceding (i) the Change in Control or (ii) the Covered Termination, whichever is greater.
		

		
			6.3“Annual Bonus” means the Executive’s projected or estimated annual cash incentive bonus at target for the fiscal year of the Company in which termination of Executive’s employment occurs.
		

		
			6.4“Change in Control” means the consummation of any of the following transactions after the date hereof:
		

		
			(a)the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in 
		

		 

		

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		the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of liquidation or dissolution of the Company or an agreement for the sale, lease, exchange or other transfer or disposition by the Company of all or substantially all (more than fifty percent (50%)) of the Company’s assets;
		

		
			(b)any person (as such term is used in Sections 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) directly or indirectly of 25% or more of the Company’s outstanding Common Stock; or
		

		
			(c)a change in the composition of the Board of Directors of the Company within a three (3) year period, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either:
		

		
			(A)are directors of the Company as of May 15, 2002;
		

		
			(B)are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the directors of the Company who are Incumbent Directors described in (A) above at the time of such election or nomination; or
		

		
			(C)are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the directors of the Company who are Incumbent Directors described in (A) or (B) above at the time of such election or nomination.
		

		
			Notwithstanding the foregoing, “Incumbent Directors” shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company.
		

		
			6.5“Company” means Intersil Corporation, a Delaware corporation, and any successor thereto.
		

		
			6.6“Covered Termination” means an Involuntary Termination or a Voluntary Termination for Good Reason within twelve (12) months following a Change in Control after the date hereof.  No other event shall be a Covered Termination for purposes of this Agreement.
		

		
			6.7“Date of Covered Termination” means the first date following the last date of Executive’s employment with the Company or its subsidiaries as a result of a Covered Termination.
		

		
			6.8“Date of Notice of Termination” means the date the Executive is given notice, either verbal or written, that his employment with the Company or its subsidiaries has been or will be terminated.
		

		
			6.9“Involuntary Termination” means Executive’s dismissal or discharge by the Company or its subsidiaries (or, if applicable, by the successor entity) for reasons other than fraud, 
		

		 

		

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		misappropriation or embezzlement on the part of Executive which resulted in material loss, damage or injury to the Company.  Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for one of these reasons unless and until there shall have been delivered to Executive a copy of a resolution, duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Company’s Board of Directors at a meeting of the Board called and held for the purpose (after reasonable notice to Executive and an opportunity for the Executive, together with Executive’s counsel, to be heard before the Board of Directors), finding that in the good faith opinion of the Board of Directors, Executive was guilty of conduct set forth in the immediately preceding sentence and specifying the particulars thereof in detail.
		

		
			The termination of an Executive’s employment would not be deemed to be an “Involuntary Termination” if such termination occurs as a result of the death or disability of Executive.
		

		
			6.10“Voluntary Termination for Good Reason” means that the Executive voluntarily terminates his employment after any of the following are undertaken without Executive’s express written consent:
		

		
			(a)the assignment to Executive of any duties or responsibilities which result in any diminution or adverse change of Executive’s position, status or circumstances of employment as in effect immediately prior to the Change in Control of the Company; any removal of Executive from or any failure to reelect Executive to any of such positions, except in connection with the termination of his employment for death, disability, retirement, fraud, misappropriation, embezzlement or any other voluntary termination of employment by Executive other than Voluntary Termination for Good Reason;
		

		
			(b)a reduction by the Company in Executive’s Annual Base Pay or targeted annual cash incentive bonus in effect at the time;
		

		
			(c)any failure by the Company to continue in effect any benefit plan or arrangement, including incentive plans or plans to receive securities of the Company, in which Executive is participating at the time of the Change in Control of the Company (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Company which would adversely affect Executive’s participation in or reduce Executive’s benefits under any Benefit Plans or deprive Executive of any fringe benefit enjoyed by Executive at the time of the Change in Control of the Company, provided, however, that Executive may not terminate for Good Reason following a Change in Control of the Company if the Company offers a range of benefit plans and programs which, taken as a whole, are comparable to the Benefit Plans as determined in good faith by Executive;
		

		
			(d)a relocation of Executive, or the Company’s principal executive offices if Executive’s principal office is at such offices, to a location more than fifteen (15) miles from the location at which Executive performed Executive’s duties immediately prior to the Change in Control of the Company, except for required travel by Executive on the Company’s business to an extent substantially consistent with Executive’s business travel obligations at the time of the Change in Control of the Company;
		

		 

		

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			(e)any breach by the Company of any provision of this Agreement; or
		

		
			(f)any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company.
		

		
			6.11“Welfare Benefits” means benefits providing for coverage or payment in the event of Executive’s death, disability, illness or injury that were provided to Executive immediately before a Change in Control, whether taxable or non-taxable and whether funded through insurance or otherwise, including without limitation all life and health insurance coverage.
		

			
			
				 ARTICLE VII
			

		

	
			
			GENERAL PROVISIONS

		
			7.1Section 409A.     Notwithstanding any other provision of this Agreement to the contrary, any amount payable hereunder, including reimbursements, that is subject to the requirements of Section 409A of the Code, shall be paid in compliance with Section 409A of the Code and the regulations issued thereunder.  If Executive is a “specified employee” within the meaning of Section 409A of the Code and the regulations issued thereunder, and a payment or benefit provided for in this Agreement would be subject to additional tax under Section 409A of the Code if the payment or benefit is paid within six (6) months after Executive’s “separation from service” (within the meaning of Section 409A of the Code) then such payment or benefit required under this Agreement shall not be paid (or commence) until the first day which is six (6) months after Executive’s separation from service.  In such case, any payments that would otherwise have been made during such period shall be made to Executive in a lump sum as soon as administratively feasible upon the earlier of (i) the date that is six (6) months after termination of Executive’s employment or (ii) Executive’s death.  In addition, amounts payable hereunder upon Executive’s termination of employment that are subject to Section 409A of the Code shall only be paid upon Executive’s “separation from service” as defined under Section 409A of the Code.  Furthermore, notwithstanding any other provision of this Agreement to the contrary, it is specifically understood and agreed that the Company may unilaterally amend this Agreement to the extent necessary to effect compliance with Section 409A of the Code.
		

		
			7.2Employment Status.  This Agreement does not constitute a contract of employment or impose on Executive any obligation to remain as an employee, or impose on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee, or (iii) to change the Company’s policies regarding termination of employment.
		

		
			7.3Notices.  Any notices provided hereunder must be in writing and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by telex or facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at his address as listed in the Company’s payroll records.  Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at his address as listed in the Company’s payroll records.
		

		
			7.4Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this 
		

		 

		

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		Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.
		

		
			7.5Waiver.  If either party should waive any breach of any provisions of the Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.
		

		
			7.6Complete Agreement.  This Agreement, including Exhibit A and other written agreements referred to in this Agreement, constitutes the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment of their agreement with regard to the subject matter hereof, and expressly supersedes all other agreements, promises or understandings, whether oral or written.  This Agreement is entered into without reliance on any promise or representation other than those expressly contained herein.
		

		
			7.7Amendment or Termination of Agreement.  This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive.  The written consent of the Company to a change or termination of this Agreement must be signed by an executive officer of the Company after such change or termination has been approved by the Compensation Committee of the Company’s Board of Directors.
		

		
			7.8Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.
		

		
			7.9Headings.  The headings of the Articles and sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.
		

		
			7.10Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of his duties hereunder and Executive may not assign any of his rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.
		

		
			7.11Attorneys Fees.  If Executive brings any action to enforce his rights hereunder, Executive shall be entitled to recover his reasonable attorneys’ fees and costs incurred in connection with such action if Executive is the prevailing party in such action.
		

		
			7.12Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California.
		

		
			7.13Non-Publication.  The parties mutually agree not to disclose publicly the terms of this Agreement except to the extent that disclosure is mandated by applicable law.
		

		 

		

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			7.14Construction of Agreement.  In the event of a conflict between the text of this Agreement and any summary, description or other information regarding this Agreement, the text of this Agreement shall control.
		

		
			 
		

		
			[Signatures Appear on the Following Page]
		

		

		

		 

		

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			Exhibit 10.1

		

		IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year written above.
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						INTERSIL CORPORATION                             EXECUTIVE

					
						a Delaware Corporation

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						/s/ Thomas C. Tokos

					
					
						/s/ Roger Wendelken

				
	
					
						Thomas C. Tokos

					
					
						Roger Wendelken

				
	
					
						SVP, General Counsel and

					
					
						SVP, Worldwide Sales

				
	
					
						Corporate Secretary

					
					
						 

				

		
			 
		

		
			 
		

		
			 
		

		
			Exhibit A:  Employee Agreement and Release
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

		

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		Exhibit A
		

		
			Intersil Corporation
		

		
			Employee Agreement and Release
		

		
			I understand and agree completely to the terms set forth in the foregoing agreement.
		

		
			I hereby confirm my obligations under the Company’s standard form of proprietary information agreement.
		

		
			I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows:  “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected this settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company.
		

		
			Except as otherwise set forth in this Agreement, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, 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 (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the Effective Date of this Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal American with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to provide you with continued coverage under the Company’s directors and officers liability insurance policy to the same extent that it has provided such coverage to previously departed officers and directors of the Company.
		

		

		

		 

		

			A-1

		

 

		

			 

		

		I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after the Effective Date of this Agreement; (b) I have the right to consult with an attorney prior to executing this Agreement; (c) I have twenty-one (21) days to consider this Agreement (although I may choose to voluntarily execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (e) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by me, provided that the Company has also executed this Agreement by that date (“Effective Date”).
		

		
			 
		

		
			By:______________________________
		

		
			     
		

		
			 
		

		
			 
		

		
			 
		
Date:______________________________

		 

		

			A-2Exhibit 10.1

 

PURCHASE AGREEMENT

 

This Purchase Agreement (“Agreement”) is entered into by and among Sherry Gold, individually and in her capacity as Trustee of The Gold Revocable Trust dated 10/26/2005, Jeff Gold, Howard Gold, Karen Schiffer and Eric Schiffer (collectively, the “Sellers”), Number Holdings, Inc. (together with its successors and assigns, the “Company”) and, solely with respect to Section 2 hereof, 99¢ Only Stores (“99 Cents”), as of October 15, 2013 (the “Execution Date”).

 

In consideration of the mutual covenants, agreements and representations contained herein, the adequacy of which is hereby acknowledged, the parties hereto expressly and intentionally bind themselves as follows:

 

1.                                      REPURCHASE OF NUMBER EQUITY INTERESTS

 

(a)                                 On the Purchase Date (defined below), (i) each Seller shall sell to the Company, and the Company shall purchase from each Seller, all of the Shares owned by such Seller for the consideration set forth opposite such Seller’s name on Annex A hereto and (ii) all of the Options held by each Seller shall be automatically cancelled and forfeited in exchange for the consideration set forth opposite such Seller’s name on Annex B hereto, in each case in accordance with the terms of this Agreement.

 

(b)                                 Within five Business Days after the Execution Date, each Seller shall deliver to the Company the stock certificates evidencing all of the Shares owned by such Seller duly endorsed in blank or accompanied by stock powers in the form of Exhibit A hereto, to be held in escrow by the Company, and an executed original IRS Form W-9 certifying that such Seller is exempt from federal back-up withholding. Upon payment of the Aggregate Consideration to the Sellers less applicable withholding, if any, the certificates representing the Shares shall be automatically released from escrow and delivered to the Company, without any further action by the Sellers or the Company. In the event the Aggregate Consideration is not paid to the Sellers on the Purchase Date, the certificates representing the Shares shall be released from escrow and delivered back to the Sellers without any further action by the Sellers or the Company, and the Sellers shall be entitled to exercise any and all rights and remedies they may have at law or in equity.

 

(c)                                  The closing of the transactions contemplated hereby shall take place at the offices of Proskauer Rose LLP, 2049 Century Park East, Suite 3200, Los Angeles, California, at 10:00 a.m., Los Angeles time, on the date that is (i) 45 calendar days after the date hereof, or if such date is not a Business Day, on the first Business Day immediately following such 45th calendar day, (ii) if earlier than such 45th day, five Business Days following written notice by the Company to the Sellers, or (iii) such other date as may be agreed by the parties hereto (the “Purchase Date”).  On the Purchase Date the Company shall deliver to each Seller, by wire transfer of immediately available funds to the account set forth under such Seller’s name on the signature page hereto, such Seller’s Aggregate Consideration less applicable withholding.  Each Seller shall execute such documents and take such other actions as may be reasonably requested by the Company to implement the terms and provisions of this Agreement.

 

 

(d)                                 Upon receipt of the Aggregate Consideration by each Seller, such Seller authorizes the other parties to the Stockholders Agreement to amend the schedule to the Stockholders Agreement and take such other actions as they determine, in each case, to reflect that such Seller no longer owns any Class A Stock or Class B Stock as of such date.

 

2.                                      AMENDMENTS TO CERTAIN AGREEMENTS

 

(a)                                 Effective as of the Purchase Date, the Restrictive Covenant Agreements shall be amended as follows:

 

(i)                                     Clauses (a) and (b) of the first sentence of Section 1 shall be deleted in their entirety and shall be replaced with the following:

 

“(a) any business or enterprise (i) engaged in or related to the retail sale (including importing, distributing and other levels in the supply chain) of “deep discount” or “extreme value” groceries and other general merchandise goods, or the private labeling of “deep discount” or “extreme value” groceries and other general merchandise goods, or (ii) materially engaged in the retail sale (including importing, distributing and other levels in the supply chain) of discount groceries and other general merchandise goods, or the private labeling of discount groceries and other general merchandise goods, (b) any business or activity conducted by the Company or any of its subsidiaries at the time of termination of the Executive’s employment,”

 

(ii)                                  Clause (iii) of the proviso in the first sentence of Section 1 shall be deleted in its entirety and shall be replaced with the following:

 

“(iii) Executive’s direct or indirect passive investment in a private equity fund that has a portfolio company engaged in the Business of the Company so long as Executive does not directly or indirectly provide services of any kind to such fund, its manager or any other fund managed by its manager or any of such manager’s affiliates (except as set forth in clause (iv) below), or (iv) Executive’s service as an employee or consultant to a private equity fund that has a portfolio company engaged in the Business of the Company; provided, that (x) such fund’s investment in such portfolio company was made subsequent to the commencement of Executive’s service to such fund (and the engagement of Executive was not made in anticipation of such investment), and (y) effective upon (and for the duration of) any such investment, Executive and such fund implement an “ethical wall” arrangement that provides reasonable and customary protection against Executive directly or indirectly (A) having contact with or providing service to such portfolio company or (B) advising such fund, its manager or any other person with respect thereto.”

 

2

 

(iii)                               The following new paragraph shall be added to the end of Section 1:

 

“In the event Executive receives or becomes entitled to receive salary, wages, other employment income, equity based compensation or other remuneration (including deferred compensation) of any kind (other than expense reimbursement) (“Specified Income”) in connection with providing services or capital to any Person or business in violation of this Section 1, the amount of such Specified Income (which, in the case of any non-cash remuneration, shall be valued as of the time of receipt by Executive as set forth below) shall reduce on a dollar-for-dollar basis amounts (if any) that remain due and owing to Executive as Separation Pay (under and as defined in the Separation and Release Agreement between Executive and the Company dated January 23, 2013), with such amounts applied to reduce payments in respect of Separation Pay in the order such payments are due to Executive.  Notwithstanding anything herein to the contrary, including but not limited to Sections 6 and 7 hereof, so long as Executive notifies the Company in writing of amounts that may constitute Specified Income on or before the day thirty (30) days after receiving such remuneration (which notification may be prospective and may cover recurring payments), the reduction of Separation Pay as set forth in this paragraph shall be the Company’s sole and exclusive remedy for any breach by Executive of the provisions of this Section 1.  The value of any non-cash remuneration constituting Specified Income shall be determined by the Company in good faith and Executive shall provide to the Company all information that the Company reasonably requests, subject to obligations of confidentiality to third parties, to make such determination.  The Company shall provide Executive written notice promptly following each such determination.  If Executive notifies the Company within five business days that Executive disagrees with such determination, such value shall be determined by a nationally recognized independent valuation firm mutually acceptable to Executive and the Company, or, in the absence of an agreement on the independent valuation firm within ten business days of such written notice from Executive, each party shall then select one nationally recognized independent valuation firm within five business days and, within five business days of such selections, the selected firms shall select a third independent valuation firm, which third firm shall determine such value.  The determination of the independent valuation firm selected pursuant to the preceding sentence (the “Independent Expert”) shall be conclusive and binding on the parties absent manifest error.  The Independent Expert shall be instructed to provide the parties its determination of the value within 15 business days of being retained, which determination shall be based solely on written submissions by Executive and the Company and not on an independent review.  Executive and the Company shall make available to the Independent Expert all relevant books and records and other items reasonably requested by the Independent Expert to make such determination.  The Independent Expert may not assign a value greater than the greatest value claimed by either party or less than the smallest value claimed by either party.  The fees and expenses of the valuation firms selected by the respective parties shall be borne by the parties selecting them, and the fees of the Independent Expert shall be shared equally by Executive and the Company.  Executive shall not take any action or enter into any arrangement or agreement to avoid or seek to avoid the purpose of this provision.”

 

3

 

(iv)                              The following new paragraph shall be added after Section 12:

 

“13.  Attorneys’ Fees.  In any action or other proceeding to enforce rights hereunder, the prevailing party shall receive an award of costs and expenses related to such proceeding, including attorneys’ fees.”

 

(b)                                 Effective as of the Purchase Date, the Separation Agreements shall be amended by adding the following proviso after the first sentence of Section 3 thereof:

 

“; provided that, notwithstanding the foregoing, the Company acknowledges and agrees that, subject to satisfaction by Executive of the notification requirement set forth in Section 1 of the Restrictive Covenant Agreement (as amended), the Company’s sole and exclusive remedy for any breach by Executive of Section 1 of the Restrictive Covenant Agreement (as amended) shall be a reduction in Separation Pay in the manner provided in such Section.”

 

(c)                                  The first sentence of Section 12 of the Separation Agreements shall be deleted in its entirety and shall be replaced with the following:

 

“Executive shall take no action (a) for the period of four years following the Termination Date that might interfere with the activities of the Company or any other Released Party and (b) from this date forward that might damage the reputation of any of them.”

 

3.                                      REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Each Seller, severally and not jointly, represents and warrants to the Company as of the Execution Date and the Purchase Date that:

 

(a)                                 This Agreement has been duly executed and delivered by such Seller, and is a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.  Such Seller has full power and authority to enter into this Agreement and consummate the transactions contemplated hereby.

 

(b)                                 Other than the Shares and Options neither such Seller nor any of its affiliates or family members owns, beneficially or of record, any equity interest in the Company or any of its subsidiaries.  Each Seller is the sole legal and beneficial owner of the Shares set forth opposite such Seller’s name on Annex A hereto and Options set forth opposite such Seller’s name on Annex B hereto, and has valid title to all of such Shares and Options, in each case free and clear of all Liens (other than restrictions on transfer arising under applicable securities laws and the Stockholders Agreement).

 

(c)                                  Each Seller has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the transactions contemplated hereby and is consummating such transactions with a full understanding of all of the terms, conditions and risks and willingly assumes those terms, conditions and risks.  The Company has made available to each Seller, at a reasonable time prior to the date hereof, the opportunity to ask questions and receive answers concerning the terms and conditions of the transactions

 

4

 

contemplated hereby. The Sellers have completed their own independent inquiry and have relied fully upon the advice of their own legal counsel, accountants, tax, financial and other advisors in determining the legal, tax, financial and other consequences of this Agreement and the transactions contemplated hereby.  Neither the Company nor any of its representatives had made any representation or warranty in connection herewith (except those expressly set forth in this Agreement) that has been relied upon by any Seller, or which acted as an inducement for any Seller to enter into this Agreement.

 

(d)                                 The Sellers understand that the Company may possess material non-public information not known to Sellers that may impact the value of the Shares and Options and the disadvantage to which Sellers may be subject due to the disparity of information between the Company and the Sellers. Notwithstanding this, each Seller has deemed it appropriate to engage in the transactions contemplated hereby and agrees that no Company Party shall have any liability to the Sellers or any other Person due to or in connection with the non-disclosure of any information or otherwise as a result of the transactions contemplated hereby.  To the fullest extent lawful, each Seller hereby irrevocably waives any claim that it might have based on the failure of any Company Party to disclose any information.

 

(e)                                  The Sellers have been advised to consult an attorney regarding this Agreement prior to executing it and have been given sufficient time to do so. Each Seller is solely responsible for payment of his, her or its own taxes.  The Company has not provided and will not provide tax advice to any Seller.  Each Seller fully understands and acknowledges the significance and consequences of this Agreement.

 

(f)                                   No Seller has brought or filed (or assigned to any other Person the right to bring or file) any claims or charges against any Company Party with any governmental authority or agency, court or arbitral body.

 

(g)                                  To the extent the Seller is a natural person and is married and is a resident of a state governed by community property laws or similar laws relating to marital property, such Seller has delivered a Spousal Consent executed by his or her spouse.

 

(h)                                 The execution, delivery and performance of this Agreement by each Seller and the consummation by such Seller of the transactions contemplated by this Agreement do not and will not: (a) to the extent such Seller is not a natural person, conflict with or result in a violation of any of the provisions of the organizational documents of such Seller, (b) conflict with or result in a violation of any judgment, order or law applicable to such Seller, (c) conflict with, or result in a violation or breach of, or default under, any material instrument or agreement of indebtedness to which such Seller is a party or by which any of such Seller’s properties or assets is bound or (d) require any consent or, or registration, declaration or filing with, notice to, or permit from, any governmental entity, except, in the case of clauses (b) and (d) above, any such items that, individually or in the aggregate, would not be expected to be materially adverse with respect to the ability of such Seller to timely perform any of its obligations hereunder in any material respect.

 

(i)                                     The Company is relying on each Seller’s representations, warranties and agreements herein as a condition to proceeding with the transactions contemplated hereby. Without such representations, warranties and agreements, the Company would not engage in such transactions.

 

5

 

4.                                      REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Sellers as of the Execution Date and the Purchase Date that:

 

(a)                                 This Agreement has been duly authorized, executed and delivered by the Company, and is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.  The Company has full power and authority to enter into this Agreement and consummate the transactions contemplated hereby.

 

(b)                                 The Company has not brought or filed (or assigned to any other Person the right to bring or file) any claims or charges against any Seller, with any governmental authority or agency, court or arbitral body.

 

(c)                                  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement do not and will not: (a) conflict with or result in a violation of any of the provisions of the organizational documents of the Company, (b) conflict with or result in a violation of any judgment, order or law applicable to the Company, (c) conflict with, or result in a violation or breach of, or default under, the ABL Credit Agreement, the Term Credit Agreement, or the Indenture, or (d) require any consent of, or registration, declaration or filing with, notice to, or permit from, any governmental entity, except, in the case of clauses (b) and (d) above, any such items that, individually or in the aggregate, would not be expected to be materially adverse with respect to the ability of the Company to timely perform any of its obligations hereunder in any material respect.

 

5.                                      RELEASE OF CLAIMS

 

(a)                                 Upon receipt of the Aggregate Consideration and in consideration of the other terms and provisions of this Agreement, except for the rights and obligations contained in this Agreement, (i) each Seller, on behalf of such Seller and such Seller’s heirs and assigns, shall and does hereby forever waive, and relieve, release and discharge each Company Party from, and (ii) the Company, on behalf of itself and its successors and assigns, shall and does hereby forever waive, and relieve, release and discharge each Seller Party from, all claims, charges, complaints, debts, liabilities, demands, obligations, liens, promises, acts, agreements, losses, costs, expenses (including attorneys’ fees), damages, actions, and causes of action, of whatever kind or nature, whether known or unknown, accrued or not yet accrued, suspected or unsuspected, (x) in the case of clause (i) that such Seller had, now has, or may hereafter have against any Company Party and (y) in the case of clause (ii) that the Company had, now has, or may hereafter have against any Seller Party, in each case from the beginning of time to the Purchase Date directly or indirectly relating to, based upon or arising out of the Shares or Options or such Seller’s ownership thereof (collectively, “Claims”).  This release includes, but is not limited to, any

 

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Claim for (1) breach of oral, implied, or written contract (including Claims under the Employment Agreements, the Option Agreements, the Bylaws, the Stockholders Agreement or otherwise); (2) breach of the implied covenant of good faith and fair dealing; and (3) any non-statutory tort or contractual claim.  Notwithstanding anything herein to the contrary, this release excludes all Claims directly or indirectly relating to, based upon or arising out of this Agreement, the Separation Agreements (as amended hereby), the Arbitration Agreements or the Restrictive Covenant Agreements (as amended hereby).

 

(b)                                 Each Seller and the Company expressly waive all rights afforded by Section 1542 of the Civil Code of the State of California, which states as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

 

Each Seller and the Company understand the significance of the release of unknown claims and waiver of statutory protection against a release of unknown claims.  Each Seller and the Company expressly assume the risk of such unknown and unanticipated claims and agrees that this Agreement applies to all Claims, whether known, unknown or unanticipated.

 

(c)                                  Solely with respect to the release of Claims by each Seller and the Company as provided in this Section 5, each Seller and the Company hereby expressly assume the risk of any mistake of fact or that the true facts might be other than or different from the facts now known or believed to exist, and it is the express intention of the parties to forever settle, adjust and compromise any and all disputes between and among them with respect to any Claim, finally and forever, and without regard to who may or may not have been correct in their respective understandings of the facts or the law relating thereto.

 

6.                                      GOVERNING LAW; SEVERABILITY

 

This Agreement, and all matters directly or indirectly relating to or arising out of this Agreement, will be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to conflicts of laws principles that would require the application of any other law. The parties hereto irrevocably submit, in any proceeding directly or indirectly relating to or arising out of this Agreement, to the exclusive jurisdiction of the courts of the State of Delaware or any federal court of the District of Delaware (in each case located in New Castle County), consent that any such proceeding may only be brought in such courts, waive any objection that they may now or hereafter have to the venue of such proceeding in any such court or that such proceeding was brought in an inconvenient forum and agree to be bound by any judgment rendered thereby in connection with this Agreement.  This provision may be filed with any court as written evidence of the knowing and voluntary irrevocable agreement between the parties to waive any objections to jurisdiction, to venue or to convenience of forum.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) DIRECTLY OR INDIRECTLY RELATING TO OR ARISING OUT OF THIS AGREEMENT.

 

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7.                                      AMENDMENTS AND WAIVERS

 

This Agreement may not be amended, restated, modified or supplemented in any respect and the observance of any term of this Agreement may not be waived, except by a written instrument executed by the Company and each Seller against whom such amendment, restatement, modification, supplement or waiver is sought to be enforced.  The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation and shall not be deemed a waiver of any subsequent breach.

 

8.                                      MISCELLANEOUS

 

(a)                                 This Agreement is not assignable by any party.  Notwithstanding the foregoing, (i) the Company shall have the right to assign this Agreement to any of its affiliates, or to any successor or Person to whom or which the business of the Company may be transferred; provided that no such assignment shall the relieve the Company from its obligations hereunder, and (ii) any Seller shall have the right to assign this Agreement to a partnership or limited liability company, the partners or members of which consist solely of such Seller and one or more of the other Sellers (a “Seller Assignee”), in connection with a Transfer of Shares by such Seller to such Seller Assignee; provided that such Seller Assignee shall execute a joinder to this Agreement (including an amendment to Annex A and Annex B of this Agreement to reflect the Transfer) and the Stockholders Agreement.  All covenants and agreements hereunder shall inure to the benefit of and be binding upon the parties’ successors and assigns.

 

(b)                                 Except for a Company Party and a Seller Party, this Agreement does not create, and shall not be construed as creating, any rights enforceable by any Person not a party to this Agreement.

 

(c)                                  Each party has participated in negotiating and drafting this Agreement, so if an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if the parties had drafted it jointly, as opposed to being construed against a party because it was responsible for drafting one or more provisions of this Agreement.

 

(d)                                 This Agreement may be signed in counterparts (including by facsimile or electronic transmission).

 

(e)                                  This Agreement sets forth the entire understanding of the parties in connection with the subject matter hereof.  Any and all prior negotiations or discussion, either oral or written, in connection with the subject matter hereof are merged into this Agreement.

 

(f)                                   In the event that any action or proceeding is initiated to enforce or interpret the provisions of this Agreement, or to recover for a violation of this Agreement, the substantially prevailing party in any such action or proceeding shall be entitled to its costs (including reasonable attorneys’ fees).

 

8

 

(g)                                  This Agreement shall never at any time for any purpose be considered as an admission of liability or wrongdoing by any Person.

 

(h)                                 Notwithstanding anything herein to the contrary, (i) the obligations of Sherry Gold individually and in her capacity as Trustee of the Trust shall be joint and several and (ii) the obligations of each other Seller hereunder shall be several and not joint.

 

(i)                                     Sherry Gold, individually and in her capacity as Trustee of the Trust, shall not amend, modify or revoke the Trust in any manner that purports to limit, impair or prevent the Trust’s performance of its obligations under this Agreement.

 

9.                                      DEFINITIONS AND RULES OF CONSTRUCTION

 

(a)                                 When used in this Agreement, the following terms shall have the respective meanings specified therefor below.

 

“ABL Credit Agreement” means the $175,000,000 Credit Agreement, dated as of January 13, 2012, as amended by Amendment No. 1 to the ABL Credit Agreement, dated as of April 4, 2012, by and among the Company, 99 Cents, Royal Bank of Canada and the other parties thereto, as may be further amended, modified or restated from time to time.

 

“Aggregate Consideration” means, with respect to each Seller, the aggregate of the amounts of consideration set forth opposite such Seller’s name on Annex A and B hereto.

 

“Arbitration Agreements” means collectively, each of the Arbitration Agreements, dated as of January 13, 2012, by and between the Company, 99 Cents and each of Jeff Gold, Howard Gold and Eric Schiffer, respectively.

 

“Business Day” means each day that is not a day on which banking institutions in the City of New York or Toronto, Ontario, Canada are authorized or obligated by law or executive order to close.

 

“Bylaws” means the Amended and Restated Bylaws of the Company, as amended or amended and restated from time to time.

 

“Class A Stock” means the Class A common stock, $0.001 par value per share, of the Company.

 

“Class B Stock” means the Class B common stock, $0.001 par value per share, of the Company.

 

“Company Parties” means (a) the Company, its parents, subsidiaries, affiliates, and insurers, and each of their respective predecessors, successors, and assigns, (b) the directors, officers, shareholders, partners and employees of each of the foregoing, and (c) representatives and agents acting in their capacity as such for any of the foregoing set forth in clause (a) or (b).

 

9

 

“Employment Agreements” means collectively, each of the Employment Agreements, dated as of January 13, 2012, by and between the Company, 99 Cents and each of Jeff Gold, Howard Gold and Eric Schiffer, respectively.

 

“Indenture” means the Indenture, dated as of December 29, 2011, as supplemented by the Supplemental Indenture dated as of January 13, 2012, by and among 99 Cents, the guarantors party thereto and Wilmington Trust, National Association, as may be further amended, modified or restated from time to time.

 

“Liens” means liens, charges, claims, concessions, restrictions, options, encumbrances, mortgages, security interests and other adverse claims of any kind.

 

“Option Agreements” means collectively, each of the Non-Qualified Stock Option Agreements pursuant to the Company 2012 Stock Incentive Plan, dated as of March 22, 2012, by and between the Company and each of Jeff Gold, Howard Gold, Eric Schiffer and Karen Schiffer, respectively.

 

“Options” means the Options to purchase Shares of Class A Stock or Class B Stock held by the Sellers.

 

“Person” means an individual, a corporation, a general or limited partnership, a limited liability company, a joint stock company, an association, a trust or any other entity or organization, including a government, a political subdivision or an agency or instrumentality thereof.

 

“Restrictive Covenant Agreements” means collectively, each of the Non-Competition, Non-Solicitation and Confidentiality Agreements, dated as of January 13, 2012, by and between 99 Cents and each of Jeff Gold, Howard Gold and Eric Schiffer, respectively.

 

“Seller Party” means, with respect to each Seller, (a) such Seller, his, her or its heirs and insurers, and each of their respective predecessors, successors, and assigns, and (b) representatives and agents acting in their capacity as such for any of the foregoing set forth in clause (a).

 

“Separation Agreements” means collectively, each of the Separation and Release Agreements, dated as of January 23, 2013, by and between 99 Cents and each of Jeff Gold, Howard Gold and Eric Schiffer, respectively, and the Separation and Release Agreement, dated as of February 15, 2013, by between 99 Cents and Karen Schiffer.

 

“Shares” means the shares of Class A Stock and Class B Stock being purchased and sold pursuant to this Agreement.

 

“Spousal Consent” means a spousal consent, a form of which is attached hereto as Exhibit B.

 

“Stockholders Agreement” means the Stockholders Agreement, dated as of January 13, 2012, by and among the Company, Ares Corporate Opportunities Fund III, L.P., Canada Pension Plan Investment Board and the other stockholders party thereto, as amended from time to time.

 

10

 

“Term Credit Agreement” means the $525,000,000 Credit Agreement, dated as of January 13, 2012, as amended by Amendment No. 1 to the Term Credit Agreement, dated as of April 4, 2012, by and among the Company, 99 Cents, Royal Bank of Canada and the other parties thereto, as may be further amended, modified or restated from time to time.

 

“Transfer” shall have the meaning set forth in the Stockholders Agreement.

 

“Trust” means the Gold Revocable Trust dated 10/26/2005, as amended.

 

(b)           Any provision of this Agreement that refers to the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation.”  References to numbered or letter articles, sections and subsections refer to articles, sections and subsections, respectively, of this Agreement unless expressly stated otherwise.  All references to this Agreement include, whether or not expressly referenced, the exhibits and schedules attached hereto.  References to a Section, paragraph, Exhibit or Schedule, shall be to a Section or paragraph of, or Exhibit or Schedule to, this Agreement unless otherwise indicated.  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The word “or” when used in this Agreement is not exclusive.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Unless otherwise expressly indicated, any agreement, instrument, law or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  References to a Person are also to its permitted successors and assigns.

 

[Signatures Follow Beginning on Next Page]

 

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IN WITNESS WHEREOF, the parties hereby agree to the terms and conditions of this Agreement as set forth above and the undersigned has executed this Agreement as of the date first set forth above.

 

	
 
    	
THE   GOLD REVOCABLE TRUST
    
	
 
    	
DATED   10/26/2005
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Sherry Gold
    
	
 
    	
Name:
    	
Sherry   Gold
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
Wire   Instructions
    
	
 
    	
ABA#
    
	
 
    	
Account   #:
    
	
 
    	
Beneficiary:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Sherry Gold
    
	
 
    	
Sherry   Gold, an individual
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Howard Gold
    
	
 
    	
Howard   Gold, an individual
    
	
 
    	
Wire   Instructions
    
	
 
    	
ABA#
    
	
 
    	
Account   #:
    
	
 
    	
Beneficiary:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jeff Gold
    
	
 
    	
Jeff   Gold, an individual
    
	
 
    	
Wire   Instructions
    
	
 
    	
ABA#
    
	
 
    	
Account   #:
    
	
 
    	
Beneficiary:
    

 

 

	
 
    	
/s/   Karen Schiffer
    
	
 
    	
Karen   Schiffer, an individual
    
	
 
    	
Wire   Instructions
    
	
 
    	
ABA#
    
	
 
    	
Account   #:
    
	
 
    	
Beneficiary:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Eric Schiffer
    
	
 
    	
Eric   Schiffer, an individual
    
	
 
    	
Wire   Instructions
    
	
 
    	
ABA#
    
	
 
    	
Account   #:
    
	
 
    	
Beneficiary:
    

 

 

	
 
    	
NUMBER   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Frank Schools
    
	
 
    	
Name:
    	
Frank   Schools
    
	
 
    	
Title:
    	
Senior   Vice President, Chief Financial Officer
    

 

 

	
 
    	
SOLELY   WITH RESPECT TO
    
	
 
    	
SECTION 2:
    
	
 
    	
 
    
	
 
    	
99¢   ONLY STORES
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Frank Schools
    
	
 
    	
Name:
    	
Frank   Schools
    
	
 
    	
Title:
    	
Senior   Vice President, Chief Financial Officer
    

 

 

By its signature below, the undersigned being each of the Major Stockholders (under and as defined in the Stockholders Agreement) hereby (a) waives any right to receive notice of the Transfer of Shares to the Company pursuant to Section 1 of this Agreement and (b) consents to any Transfer of Shares by a Seller Assignee back to the transferring Seller.

 

	
 
    	
ARES   CORPORATE OPPORTUNITIES FUND III, L.P.
    
	
 
    	
 
    
	
 
    	
By:   ACOF Operating Manager III, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Adam Stein
    
	
 
    	
Name:
    	
Adam   Stein
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
CANADA   PENSION PLAN INVESTMENT BOARD
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Shane Feeney
    
	
 
    	
Name:
    	
Shane   Feeney
    
	
 
    	
Title:
    	
Authorized   Signatory

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