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Circuit City Stores - CEO Retirement & Consulting Agreement
Exhibit 10.2
RETIREMENT AND CONSULTING AGREEMENT
Circuit City Stores, Inc. (the "Company") and W. Alan McCollough ("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 Mercer 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...
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