Exhibit 10.2
RETIREMENT AND CONSULTING AGREEMENT
Circuit City Stores, Inc. (the "Company") and W. Xxxx XxXxxxxxxx
("Executive") enter into this Retirement and Consulting Agreement (this
"Agreement") on the 22nd day of December, 2005 (the "Effective Date").
W I T N E S S E T H:
WHEREAS, Executive is employed by the Company as Chairman and Chief
Executive Officer pursuant to a employment agreement dated November 19, 2003
(the "Employment Agreement");
WHEREAS, Executive has decided to resign as Chief Executive Officer
effective February 28, 2006;
WHEREAS, Executive will continue to serve as a member and Chairman of the
Board of Directors of the Company until the 2006 Annual Meeting of Shareholders;
WHEREAS, Executive has decided to retire as an employee of the Company on
July 2, 2006 (the "Retirement Date"); and
WHEREAS, the Company desires to retain Executive as a consultant following
the Retirement Date.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained in this Agreement, the parties agree as follows:
1. Resignations and Retirement Date. On February 28, 2006, Executive will
resign from the position of Chief Executive Officer of the Company and as an
officer of any subsidiary of the Company. From March 1, 2006 until the earlier
of the Retirement Date or the 2006 Annual Meeting of Shareholders, Executive
shall continue as Chairman of the Board of the Company. Executive shall continue
as an employee of the Company until the Retirement Date. At the Retirement Date,
Executive will resign from all positions with the Company then held by him, and
Executive's employment with the Company will terminate due to his retirement.
2. Effect on Employment Agreement. Executive's retirement will be treated
as a voluntary termination by Executive for purposes of the Employment
Agreement. Any changes in Executive's employment status pursuant to the terms of
this Agreement will not constitute "Good Reason" under the Employment Agreement.
The date on which Executive's obligations under Sections 8.1 and 8.2 of the
Employment Agreement would otherwise expire shall be extended by a period of
time equal to the duration of the Consulting Period (as defined below). Except
to the extent specifically modified in this Section 2 or otherwise in this
Agreement, the provisions of the Employment Agreement shall continue to apply,
including the provisions on noncompetition, confidentiality and dispute
resolution.
3. Consulting Services.
(a) Beginning on the Retirement Date and ending on July 1, 2007 (such
period, as it may be extended under paragraph 4, the "Consulting Period"),
Executive agrees to cooperate with the Company in the transition of management
of the Company following Executive's retirement and to perform such other
special projects and activities (the "Consulting Services") as may be requested
by the Board of Directors or the Chief Executive Officer and be agreed to by
Executive, which agreement may not be unreasonably withheld by Executive. The
Company and Executive agree that the services envisioned under this Agreement
will require no more than 200 hours per year of Executive's working time.
Nothing contained in this Section 2 shall be deemed to create an employment
relationship between the Company and Executive during the Consulting Period. In
providing the Consulting Services, Executive shall be an independent contractor
and shall not have authority to bind the Company with respect to any matter. In
rendering Consulting Services under this Agreement, Executive shall be free to
arrange his own time, pursuits and work schedule and to determine the specific
manner in which such services will be performed, without being required to
observe any routine or requirement as to working hours. In accordance with the
preceding, the Company agrees that Executive may provide the services requested
at his discretion and the failure to do it within a prescribed timeframe shall
not be a breach of this Agreement. During the Consulting Period, the Company
shall reimburse Executive for all out-of-pocket expenses reasonably and
necessarily incurred in the performance of such consulting services in
accordance with the travel and business expense reimbursement policies of the
Company in effect from time to time.
(b) Executive acknowledges and agrees that, during the Consulting
Period, he is not eligible as part of his compensation under this Agreement to
participate in any compensation or benefit programs offered by the Company to
its active employees or in any pension plans, profit-sharing plans, insurance
plans or other employee benefit plans offered from time to time by the Company
to its active employees and will not be entitled to personal use of corporate
aircraft. The Company recognizes that Executive may offer consulting services to
other entities during the Consulting Period, subject to the noncompetition
provisions of the Employment Agreement.
4. Payments. In consideration for the Consulting Services to be provided by
Executive pursuant to Section 2 of this Agreement and as consideration for a
release in the form contained in Exhibit A of this Agreement, the Company agrees
to pay Executive the amount of $100,000 per year (the "Payments"). The Payments
will be made on the following schedule: $75,000 on January 3, 2007 and $25,000
on April 1, 2007. The Consulting Period may be extended for additional one-year
periods by mutual consent of Executive and the Company's Chief Executive Officer
and Board of Directors. If the Consulting Period is extended, the Payments shall
be continued and will be made in equal quarterly installments in advance. The
Payments will not be made if Executive does not execute a release in the form of
Exhibit A to be effective as of the Retirement Date.
5. Receipt of Other Compensation. The Company and Executive agree that, for
purposes of vesting or exercisability of any equity awards, Executive's
termination of employment at the Retirement Date will be treated as a retirement
in accordance with the retirement eligibility provisions of the Company's
retirement plan. Executive acknowledges and
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agrees that, other than as specifically set forth in this Agreement or the
Employment Agreement, following the Retirement Date, he is not and will not be
due any compensation, including, but not limited to, compensation for unpaid
salary (except for amounts unpaid and owing for Executive's employment with the
Company prior to the Retirement Date), unpaid bonus, severance and accrued or
unused vacation time or vacation pay from the Company or any of its affiliates,
and as of and after the Retirement Date, except as provided herein, he will not
be eligible to participate, except as a retired employee, in any of the
compensation or benefit plans of the Company or any of its affiliates. Executive
will be entitled to receive benefits, which are vested and accrued on or prior
to the Retirement Date or which become vested or accrued under their terms or
under the provisions of this Agreement, pursuant to the employee benefit plans
of the Company. At his retirement, Executive will be entitled to retain all
consumer electronic equipment then in his possession under the Officer
Evaluation Program with the value of such equipment being compensation income to
Executive.
6. Bonus. Executive shall be eligible to receive a bonus for the Company's
2006 fiscal year to the extent earned under the previously established terms and
conditions. Executive will not be eligible for a bonus for any portion of the
Company's 2007 fiscal year.
7. Benefit Restoration Plan. For purposes of determining the amount of
Executive's supplemental pension benefit under the Circuit City Stores, Inc.
Benefit Restoration Plan ("Restoration Plan"), Executive shall be imputed an
additional five years of age and five years of Benefit Service as of the
Retirement Date, with the estimated effects set forth in a letter, dated
December 21, 2005, from Xxxxxx Human Resource Consulting, a copy of which has
been provided to Executive. This imputed age and Benefit Service is
consideration for a release by Executive in the form of Exhibit A, effective as
of February 28, 2006.
8. Death. In the event of Executive's death during the Consulting Period,
the Payments shall terminate, except for Executive's right to receive the
payment due on January 3, 2007.
9. Non-Disparagement.
(a) At all times hereafter, Executive will not disparage or criticize,
orally or in writing, the business, products, policies, decisions, directors,
officers or employees of the Company or any of its operating divisions,
subsidiaries or affiliates to any person.
(b) At all times hereafter, the Company and its officers, directors,
employees and agents will not disparage or criticize, orally or in writing,
Executive.
10. Breach of Xxxxxxxxx.Xx the event of a breach of this Agreement, (i) the
Company shall have the right to immediately discontinue any remaining Payments
during the remaining Consulting Period hereunder, and (ii) the Consulting Period
shall thereupon cease. If the Company pursues a claim for actual damages for a
breach by Executive, any award will first be offset by any monies remaining owed
to Executive under this Agreement.
11. Executive's Understanding. Executive acknowledges by signing this
Agreement that Executive has read and understands this document, that Executive
has conferred with or had opportunity to confer with Executive's attorney
regarding the terms and meaning of this
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Agreement, that Executive has had sufficient time to consider the terms provided
for in this Agreement, that no representatives or inducements have been made to
Executive except as set forth in this Agreement, and that Executive has signed
the same KNOWINGLY AND VOLUNTARILY.
12. Non-Reliance. Executive represents to the Company and the Company
represents to Executive that in executing this Agreement they do not rely and
have not relied upon any representation or statement not set forth herein made
by the other or by any of the other's agents, representatives or attorneys with
regard to the subject matter, basis or effect of this Agreement or otherwise.
13. Severability of Provisions. In the event that any one or more of the
provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions will not
in any way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Agreement are held to be excessively broad as to
duration, scope, activity or subject, such provisions will be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.
14. Non-Assignability. The rights and benefits under this Agreement are
personal to Executive and such rights and benefits shall not be subject to
assignment, alienation or transfer, except to the extent such rights and
benefits are lawfully available to the estate or beneficiaries of Executive upon
death.
15. Notice. Any notice to be given hereunder shall be in writing and shall
be deemed given when mailed by certified mail, return receipt requested,
addressed as follows:
To Executive at:
W. Xxxx XxXxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
To the Company at:
Circuit City Stores, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxxx 00000
Attention: General Counsel
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CIRCUIT CITY STORES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Chairperson, Compensation and Personnel Committee
EXECUTIVE
/s/ W. Xxxx XxXxxxxxxx
W. Xxxx XxXxxxxxxx
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EXHIBIT A
Form of Release
1. Executive on behalf of himself, his heirs, executors, administrators and
assigns, does hereby knowingly and voluntarily release, acquit and forever
discharge the Company and any affiliates, legal representatives, successors,
assigns and past, present and future directors, officers, employees, trustees
and shareholders (collectively, the "Released Parties") from and against any and
all charges, complaints, claims, cross-claims, third-party claims,
counterclaims, contribution claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever, known or
unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured,
which, at any time up to and including the date thereof, exists, have existed,
or may arise from any matter whatsoever occurring, including, but not limited
to, any claims arising out of or in any way related to Executive's employment
with the Company or its affiliates and the conclusion thereof, which Executive,
or any of his heirs, executors, administrators and assigns and affiliates and
agents ever had, now has or at any time hereafter may have, own or hold against
any of the Released Parties. Executive acknowledges that in exchange for this
release, the Company is providing Executive with a total consideration,
financial or otherwise, which exceeds what Executive would have been given
without the release. By executing this Agreement, Executive is waiving all
claims against the Released Parties arising under federal, state and local labor
and antidiscrimination laws and any other restriction on the right to terminate
employment, including, without limitation, Title VII of the Civil Rights Act of
1964, as amended, the Americans with Disabilities Act of 1990, as amended.
Executive represents and warrants that he has not filed or initiated any legal
or equitable proceeding, or any proceeding involving a private right of action,
against any of the Released Parties and that no such proceedings have been
initiated against any of the Released Parties on his behalf. Executive will not
cause or encourage any lawsuit or any action involving a private right to be
maintained or instituted against any of the Released Parties, and he will not
participate in any manner in any such proceedings against any of the Released
Parties, except as required by law. Nothing herein shall release any party from
any obligation under the Employment Agreement between Executive and the Company
dated November 19, 2003 or the Retirement and Consulting Agreement between
Executive and the Company dated December 22, 2005, or limit or adversely affect
any right Executive may have to indemnification under Article VII of the
Company's Articles of Incorporation or coverage under any liability insurance
policy maintained by the Company or any of its affiliates.
2. EXECUTIVE SPECIFICALLY WAIVES AND RELEASES THE RELEASED PARTIES FROM ALL
CLAIMS EXECUTIVE MAY HAVE AS OF THE DATE EXECUTIVE SIGNS THIS AGREEMENT
REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, 29 U.S.C. ss. 621 ("ADEA"). EXECUTIVE FURTHER AGREES:
(A) THAT EXECUTIVE'S WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND
VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKER'S BENEFIT PROTECTION ACT OF
1990; (B) THAT EXECUTIVE UNDERSTANDS THE TERMS OF THIS RELEASE; (C) THAT THE
PAYMENTS FOR CONSULTING SERVICES WOULD NOT BE PROVIDED TO ANY EXECUTIVE
TERMINATING HIS EMPLOYMENT WITH THE COMPANY WHO DID
NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH PAYMENTS AND BENEFITS
WOULD NOT HAVE BEEN PROVIDED HAD EXECUTIVE NOT SIGNED THIS RELEASE, AND THAT THE
PAYMENTS AND BENEFITS ARE IN EXCHANGE FOR THE SIGNING OF THIS RELEASE; (D) THAT
EXECUTIVE HAS BEEN ADVISED IN WRITING BY THE COMPANY TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTING THIS RELEASE; (E) THAT THE COMPANY HAS GIVEN EXECUTIVE A
PERIOD OF AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER THIS RELEASE;
(F) THAT EXECUTIVE REALIZES THAT FOLLOWING EXECUTIVE'S EXECUTION OF THIS
RELEASE, EXECUTIVE HAS SEVEN (7) DAYS IN WHICH TO REVOKE THIS RELEASE BY WRITTEN
NOTICE TO THE UNDERSIGNED, AND (G) THAT THE COMPANY'S OBLIGATION TO MAKE
PAYMENTS FOR CONSULTING SERVICES SHALL BE VOID AND OF NO FORCE AND EFFECT IF
EXECUTIVE CHOOSES TO SO REVOKE, AND IF EXECUTIVE CHOOSES NOT TO SO REVOKE, THAT
THIS RELEASE THEN BECOMES EFFECTIVE AND ENFORCEABLE.
3. To the maximum extent permitted by law, Executive covenants not to xxx
or to institute or cause to be instituted any action in any federal, state, or
local agency or court against any of the Released Parties, including, but not
limited to, any of the claims released in this Agreement. Notwithstanding the
foregoing, nothing herein shall prevent Executive or any of the Released Parties
from instituting any action required to enforce the terms of the Agreement and
this Release. In addition, nothing herein shall be construed to prevent
Executive from enforcing any rights Executive may have under the Employee
Retirement Income Security Act of 1974.
EXECUTIVE
/s/ W. Xxxx XxXxxxxxxx Dated: 12-22-2005
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W. Xxxx XxXxxxxxxx
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