SECOND] AMENDED AND RESTATED SEVERANCE AND RETENTION AGREEMENT
Exhibit 10.1
[SECOND] AMENDED AND RESTATED SEVERANCE AND RETENTION AGREEMENT
[SECOND] AMENDED AND RESTATED SEVERANCE AND RETENTION AGREEMENT (this “Agreement”)
dated as of ___, 2007, by and between CSK Auto, Inc., an Arizona corporation (the
“Company”), and ___ (the “Executive”).
RECITALS
The Company considers it essential and in the best interest of its stockholders to ▇▇▇▇▇▇ the
continuous employment of key management personnel. The Company further recognizes that, as in the
case of many publicly held corporations, the possibility of a change of control of the Company may
exist and that such possibility, and the uncertainty and questions which it may raise among
management, may create concerns for, and the distraction of, management personnel and may even
result in departures which might have otherwise not have taken place, all to the detriment of the
Company and its stockholders. The Company now desires to take steps to reinforce and encourage the
continued attention and dedication of members of the Company’s management, including the Executive,
to their assigned duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change of Control (as defined below) of the Company.
AGREEMENT
1. Definitions
1.1. An “Affiliate” of the Company is an entity controlling, controlled by or under
common control with the Company as defined in Rule 405 of the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
1.2. “Base Salary” shall mean the Executive’s regular annual rate of base pay as of
the date in question.
1.3. “Cause” shall mean that Executive: (i) has been convicted of a felony, or has
entered a plea of guilty or nolo contendere to a felony; (ii) has committed an act of fraud or
dishonesty which is injurious to the Company or any of its subsidiaries; (iii) has willfully and
continually refused to substantially perform his duties with the Company or any of its subsidiaries
(other than any such refusal resulting from his incapacity due to mental illness or physical
illness or injury), after a demand for substantial performance has been delivered to the Executive
by the Board of Directors of the Company, where such demand reasonably identifies the manner in
which the Board of Directors believes that the Executive has refused to substantially perform his
duties and the passage of a reasonable period of time as specified by the Board of Directors for
Executive to comply with such demand; or (iv) has willfully engaged in gross misconduct injurious
to the Company or any of its subsidiaries.
1.4. A “Change of Control” shall be deemed to have taken place if, after the date
hereof:
(a) any person, corporation, or other entity or group, including any “group” as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, other than any employee benefit
plan then maintained by CSK Auto Corporation (“Parent”), becomes the beneficial
owner of shares of Parent having 50% or more of the total number of votes that may be cast
for the election of directors of Parent (including any shares owned by such beneficial owner
or members of its “group” as of the date hereof);
(b) as the result of, or in connection with, any contested election for the Board of
Directors of Parent, or any tender or exchange offer, merger or other business combination
or sale of assets, or any combination of the foregoing (a “Transaction”), the persons who
were directors of Parent before the Transaction shall cease to constitute a majority of the
Board of Directors of Parent or any successor to Parent or its assets;
(c) at any time Parent shall consolidate or merge with any other Person and Parent
shall not be the continuing or surviving corporation, or any Person shall consolidate or
merge with Parent and Parent shall be the continuing or surviving corporation, and in
connection therewith, all or part of the outstanding Parent stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other property;
(d) Parent shall be a party to a statutory share exchange with any other Person after
which Parent is a subsidiary of any other Person; or
(e) Parent shall sell or otherwise transfer all or substantially all of the assets or
earning power of Parent and its subsidiaries (taken as a whole) to any Person or Persons.
1.5. The “Change of Control Date” shall mean the date immediately prior to the
consummation of the Change of Control.
1.6. The Executive shall have “Good Reason” to terminate employment if, without the
Executive’s consent:
(a) the Executive’s duties, responsibilities or authority are materially reduced or
diminished (provided, however, that neither (i) a change in the Executive’s reporting
relationships, nor (ii) an adjustment in the nature of the Executive’s duties and
responsibilities that, in either case, does not remove from him the authority with respect
to the Company’s functional area, employees or products and services that the Executive had
immediately prior to such change or adjustment shall constitute Good Reason);
(b) the Executive’s compensation or benefits are reduced;
(c) the Company reduces the potential earnings of the Executive under any
performance-based bonus or incentive plan of the Company;
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(d) the Company requires that the Executive’s employment be based at a location outside
a 50 mile radius from the location of the Executive’s employment location as of the date
hereof or the Executive’s employment location immediately prior to a Change of Control Date,
as the case may be;
(e) any purchaser, assign, continuing or surviving corporation, or successor of the
Company or its business or assets (whether by acquisition, merger, liquidation,
consolidation, reorganization, sale or transfer of assets or business, or otherwise) fails
or refuses to expressly assume in writing this Agreement and all of the duties and
obligations of the Company hereunder pursuant to Section 9 hereof; or
(f) the Company breaches any of the material provisions of this Agreement or the
Executive’s employment agreement, if any.
Notwithstanding the foregoing, none of the events referred to in (a) through (f) above shall
constitute Good Reason unless the Executive gives written notice to the Company of his election to
terminate his employment for such reason within 15 days after he becomes aware of the existence of
facts or circumstances constituting Good Reason. Such notice shall set forth in reasonable detail
the facts and circumstances constituting the Good Reason and, if the Good Reason is a curable
condition (in the good faith determination of the Company), shall provide the Company with 30 days
to cure such condition. The notice shall also specify the date when the termination of employment
is to become effective (if the Good Reason is not curable or is curable, but not cured within the
30 days), which date shall be not less than 45 days and not more than 90 days from the date the
notice is given; provided, however, that after receiving such notice, the Company shall be
permitted to terminate the Executive’s employment prior to the termination date specified by
Executive without payment of additional compensation to the Executive (other than the Company shall
still be obligated for payment of Standard Severance Benefits in accordance with the terms and
conditions herein).
1.7. “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d).
1.8. “Target Bonus” shall mean the target bonus (100% level) established for the
Executive for the year in question under the Company’s “Annual Incentive Plan” or “Performance Unit
Plan,” as applicable.
2. Retention Bonus. If a Change of Control occurs and (i) the Executive remains
continuously employed by the Company or its Affiliates or the continuing or surviving corporation
in the case of Section 1.4 hereof on a full-time basis through the date that is six months
following the Change of Control Date or (ii) the Executive’s employment with the Company is
terminated (a) by the Company without Cause or (b) by the Executive for Good Reason, in each case
before the date that is six months following the Change of Control Date, the Company shall pay to
the Executive a gross lump sum cash amount equal to three (3) months of the Executive’s then
current Base Salary (the “Retention Bonus”). The Retention Bonus, if earned in accordance
with the preceding sentence, shall be paid to the Executive within 10 days following the date that
is six
months following a Change of Control Date. Any payment of the
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Retention Bonus shall be paid net of any applicable withholding required under federal, state or local law.
3. Change of Control Severance Benefits
3.1. Eligibility for Change of Control Severance Benefits. The Executive shall be
eligible for the benefits described in Section 3.2 (the “Change of Control Severance
Benefits”) if there has been a Change of Control and during the twelve (12) month period
commencing on the Change of Control Date (the “Post Change of Control Period”), the
Executive’s employment with the Company is terminated (i) by the Company without Cause or (ii) by
the Executive for Good Reason.
3.2. Severance Benefit. Upon satisfaction of the terms and conditions of this
Agreement, and subject to Section 5, the Executive shall be entitled to the following Change of
Control Severance Benefits:
(a) Cash Payments. The Executive shall be entitled to receive an amount in
cash equal to the sum of:
(i) 100% of the greater of (x) the sum of the Executive’s Base Salary and
Target Bonus, in each case as in effect upon the date Executive’s employment was
terminated, or (y) the sum of the Executive’s Base Salary and Target Bonus, in each
case as in effect on the Change of Control Date; and
(ii) accrued and unused vacation.
The payment shall be made in equal monthly installments over a twelve (12) month period (the
“severance period”) and shall be paid net of any applicable withholding required under
federal, state or local law. Any such payment shall be in lieu of any payment otherwise due
under the Company’s “Annual Incentive Plan” or “Performance Unit Plan” for the year in which
the Executive’s termination occurs.
(b) Benefits Continuation. During the severance period, the Company shall
provide the Executive (and his eligible dependents, to the extent applicable and
comparable to coverage afforded prior to termination of employment) with continued
coverage under the Company’s medical, dental, vision and Exec-U-Care benefit plans, in
each case, in accordance with the terms thereof and with the same level of coverage (and
related cost to the Executive) as if the Executive had remained employed during such
period. In no event shall the Executive be entitled to participation in any other
employee benefit plans or arrangements or perquisites provided by the Company from and
after the date the Executive’s employment is terminated, except as set forth herein.
(c) Outplacement Services. The Company shall provide reimbursement to the
Executive for outplacement counseling services from an outplacement firm of national
reputation engaged by the Executive to assist the Executive in obtaining new employment,
provided that the amount required to be reimbursed for such services by the
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Company
shall not exceed 15% of the greater of Executive’s Base Salary as in effect upon the date
Executive’s employment was terminated or as in effect on the Change of Control Date.
(d) If the Company determines (i) that on the date the Executive’s employment with the
Company terminates or at such other time that the Company determines to be relevant, the
Executive is a “specified employee” (as such term is defined under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”)) of the Company and (ii) that payment
of the amounts set forth in Section 3.2(a)(i) or other such payments provided hereunder
would be considered “deferred compensation” under Section 409A of the Code subject to the
additional tax under Section 409A(a)(1)(B) of the Code if provided at the time otherwise
required under this Agreement, then commencement of such payments shall be delayed until the
earlier of (A) the Executive’s death or disability (within the meaning of Section 409A of
the Code) or (B) the date that is six months following the Executive’s “separation from
service” with the Company (within the meaning of Section 409A of the Code). Any installment
payments that are delayed pursuant to the preceding sentence shall be paid in lump sum on
the first date such payments become payable pursuant to the preceding sentence, after which
time the remainder of the payments shall be made in equal monthly installments pursuant to
Section 3.2.
4. Standard Severance Benefits
4.1. Eligibility for Standard Severance Benefits. If the Executive’s employment with
the Company is terminated (i) by the Company without Cause or (ii) by the Executive for Good
Reason, in each case other than during the Post Change of Control Period, the Executive shall be
eligible for the benefits described in Section 4.2 (the “Standard Severance Benefits”).
4.2. Severance Benefit. Upon satisfaction of the terms and conditions of this
Agreement, and subject to Section 5, the Executive shall be entitled to the following Standard
Severance Benefits:
(a) Cash Payments. The Executive shall be entitled to receive an amount in
cash equal to the sum of:
(i) 100% of the greater of (x) the sum of Executive’s Base Salary and Target
Bonus, in each case as in effect upon the date Executive’s employment was
terminated, or (if applicable) (y) the sum of Executive’s Base Salary and Target
Bonus, in each case as in effect on the date Executive gives notice, pursuant to
Section 1.6, in the case of a termination for Good Reason; and
(ii) accrued and unused vacation.
The payment shall be made in equal monthly installments over a twelve (12) month period (the
“severance period”) and shall be paid net of any applicable withholding required under
federal, state or local law. Any such payment shall be in lieu of any
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payment otherwise due under the Company’s “Annual Incentive Plan” or “Performance Unit Plan” for the year in
which the Executive’s termination occurs.
(b) Benefits Continuation. During the severance period, the Company shall
provide the Executive (and his eligible dependents, to the extent applicable and comparable
to coverage afforded prior to termination of employment) with continued coverage under the
Company’s medical, dental, vision and Exec-U-Care benefit plans, in each case, in accordance
with the terms thereof and with the same level of coverage (and related cost to the
Executive) as if the Executive had remained employed during such period. In no event shall
the Executive be entitled to participation in any other employee benefit plans or
arrangements or perquisites provided by the Company from and after the date the Executive’s
employment is terminated, except as set forth herein.
(c) Outplacement Services. The Company shall provide reimbursement to the
Executive for outplacement counseling services from an outplacement firm of national
reputation engaged by the Executive to assist the Executive in obtaining new employment,
provided that the amount required to be reimbursed for such services by the Company shall
not exceed 15% of the greater of Executive’s Base Salary as in effect upon the date
Executive’s employment was terminated or Executive’s Base Salary in effect on the date
Executive gives notice pursuant to Section 1.6, in the case of a termination for Good
Reason.
(d) If the Company determines (i) that on the date the Executive’s employment with the
Company terminates or at such other time that the Company determines to be relevant, the
Executive is a “specified employee” (as such term is defined under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”)) of the Company and (ii) that payment
of the amounts set forth in Section 4.2(a)(i) or other such payments provided hereunder
would be considered “deferred compensation” under Section 409A of the Code subject to the
additional tax under Section 409A(a)(1)(B) of the Code if provided at the time otherwise
required under this Agreement, then commencement of such payments shall be delayed until the
earlier of (A) the Executive’s death or disability (within the meaning of Section 409A of
the Code) or (B) the date that is six months following the Executive’s “separation from
service” with the Company (within the meaning of Section 409A of the Code). Any installment
payments that are delayed pursuant to the preceding sentence shall be paid in lump sum on
the first date such payments become payable pursuant to the preceding sentence, after which
time the remainder of the payments shall be made in equal monthly installments pursuant to
Section 4.2.
5. Release. Notwithstanding anything in this Agreement to the contrary, neither the
Retention Bonus, the Change of Control Severance Benefits nor the Standard Severance Benefits shall
be payable to the Executive pursuant to this Agreement unless and until the eighth (8th) day after
the Executive executes (and does not subsequently revoke), in each case, a general release in the
form of Exhibit A attached hereto (the “Release”).
6. Tax Indemnity Payments.
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(a) Notwithstanding anything in this Severance Agreement or any other agreement between
the Executive and the Company to the contrary, in the event that it shall be determined that
the aggregate payments or distributions by the Company, any purchaser, successor, or assign
thereof, or any of its or their affiliates to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms hereof, the LTIP or
otherwise, but determined without regard to any additional payments required under this
Section 6 (each a “Payment”), constitute “parachute payments” (as such term is
defined under Section 280G of the Code or any successor provision, and the regulations
promulgated thereunder (collectively, “Section 280G”)) subject to the excise tax
imposed by Section 4999 of the Code or any successor provision (collectively, “Section
4999”) or any interest or penalties with respect to such excise tax (the total excise
tax, together with any interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”)), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any federal, state or local income and self-employment taxes
and Excise Tax (and any interest and penalties imposed with respect to any such taxes)
imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 6(c) hereof, all determinations required to be
made under this Section 6, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company’s public accounting firm (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 6, shall be paid by the Company to the Executive
within five (5) business days of the receipt of the Accounting Firm’s determination (it
being understood, however, that the Gross Up Payment may, if permitted by law, be paid
directly to the applicable taxing authorities). If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a written report
detailing its determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application of Section
4999 at the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company should have
been made by the Company (an “Underpayment”), or that Gross-Up Payments will have
been made by the Company which should not have been made (an “Overpayment”),
consistent with the calculations required to be made hereunder. In either such event, the
Accounting Firm shall determine the amount of the Underpayment or Overpayment that has
occurred. In the event that the Company exhausts its remedies pursuant to Section 6(c) and
the Executive thereafter is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be
promptly paid by the Company to or for the benefit of the
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Executive. In the case of an
Overpayment, the Executive shall, at the direction and expense of the Company, take such
steps as are reasonably necessary (including, if reasonable, the filing of returns and
claims for refund), and otherwise reasonably cooperate with the Company to correct such
Overpayment (or, if retained by the Executive, at his own expense to repay such
Overpayment); provided, however, that (i) in the event of an Overpayment actually paid to
the IRS or other relevant taxing authority, and provided that the Executive uses his best
efforts to seek a refund of any such Overpayment, the Executive shall not be obligated to
return to the Company an amount greater than the net after-tax portion of the Overpayment
that he has retained or has recovered as a refund from the applicable taxing authorities and
(ii) this provision shall be interpreted in a manner consistent with the intent of Section
6(a) hereof to make the Executive whole, on an after-tax basis, from the application of
Section 4999.
(c) The Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require a payment by the Company, or a change in
the amount of the payment by the Company of, the Gross-Up Payment. Such notification shall
be given as soon as practicable after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid; provided that the failure to give any notice pursuant to this Section
6(c) shall not impair the Executive’s rights under this Section 6 except to the extent the
Company is materially prejudiced thereby. The Executive shall not pay such claim prior to
the expiration of the 30-day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and
(iv) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income, self-employment or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
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Without limitation on the foregoing provisions of this Section 6(c), the Company shall
control all proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided further, that if the Company
directs the Executive to pay such claim and ▇▇▇ for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or income,
self-employment or other tax (including interest or penalties with respect to any such
taxes) imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
If, after the receipt by the Executive of any Overpayment or any amount advanced by the
Company pursuant to Section 6(c) hereof, the Executive becomes entitled to receive, and
receives, any refund with respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of Section 6(c) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 6(c), a determination is made that the Executive shall not
be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration
of ninety (90) days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
7. Restrictive Covenants.
7.1. Confidentiality. The Executive understands and acknowledges that during the
Executive’s employment with the Company, the Executive has had and will have access to and has
learned and will learn (i) information proprietary to the Company and its Affiliates that concerns
the operation and methodology of the businesses conducted by the Company and its Affiliates and as
the same are hereafter conducted by the Company and its Affiliates (the “Business”) or (ii)
other information proprietary to the Company and its Affiliates, including, without limitation,
trade secrets, processes, patent and trademark applications, product development, price, customer
and supply lists, pricing and marketing plans, policies and strategies, details of client and
consultant contracts, operations methods, product development techniques, business acquisition
plans, new personnel acquisition plans and all other confidential
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information with respect to the Business (collectively, “Proprietary Information”).
The Executive agrees that, from and after the date hereof, the Executive will keep confidential and
will not disclose directly or indirectly any such Proprietary Information to any third party,
except as required to fulfill the Executive’s duties as an Executive of the Company, and will not
misuse, misappropriate or exploit such Proprietary Information in any way. The restrictions
contained herein shall not apply to any information which (a) was already available to the public
at the time of disclosure, or subsequently becomes available to the public otherwise than by breach
of this Agreement, or (b) was disclosed due to a requirement of law, provided that the Executive
shall have given prompt notice of such requirement to the Company to enable the Company to seek an
appropriate protective order with respect to such disclosure. Upon any termination of the
employment of the Executive, the Executive shall promptly return to the Company and its Affiliates
all documents, computer disks, records, notebooks and similar repositories of any Proprietary
Information in the Executive’s possession, including copies thereof.
7.2. Agreement Not to Compete/Non-Solicitation.
(a) During the twelve (12) month period following the Executive’s termination of
employment under circumstances entitling the Executive to either the Change of Control
Severance Benefits or the Standard Severance Benefits, as applicable (the “Non-Compete
Period”), the Executive shall not become engaged in a managerial or executive capacity
for, or consultant to, Auto Zone, Inc., The Pep Boys – Manny, Moe & ▇▇▇▇, ▇’▇▇▇▇▇▇
Automotive, Inc., Advance Stores Company, Incorporated or Discount Auto Parts, Inc..
(b) During the Non-Compete Period, the Executive shall not, directly or indirectly,
hire or attempt to hire any employee of the Company.
(c) During the Non-Compete Period, the Executive shall not, directly or indirectly,
call on or solicit any person, firm, corporation, business or other entity who or which is,
or within two years prior to the Non-Compete Period had been, a customer of the Company or
any Affiliate of the Company.
7.3. Remedies. The Executive acknowledges and agrees that damages for a breach or
threatened breach of any of the covenants set forth in this Section 7 will be difficult to
determine and will not afford a full and adequate remedy, and therefore agrees that the Company, in
addition to seeking actual damages in connection therewith, may seek specific enforcement of any
such covenant in any court of competent jurisdiction, including, without limitation, by the
issuance of a temporary or permanent injunction. In addition, the Company may terminate the
payment of any remaining Change of Control Severance Benefits or Standard Severance Benefits in the
event of a breach or threatened breach of any of the covenants set forth in this Section 7.
8. Waiver of Other Severance Benefits. The Change of Control Severance Benefits and
Standard Severance Benefits payable pursuant to this Agreement are in lieu of any and all other
severance benefits that may otherwise be payable to the Executive upon termination of his or her
employment for any reason, (including, without limitation, any benefits to which the Executive
might otherwise have been entitled under the Stockholders Agreement, dated
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October 30, 1996, among the stockholders named therein and the Company, any employment
agreement and any letter agreements to which the Executive is a party (collectively,
“Contractual Benefits”), except those benefits which are to be made available to the
Executive as required by applicable law, and Executive hereby waives all such Contractual Benefits
in exchange for the Company’s agreement to make the payments to be made hereunder.
9. Assumption of Agreement. The Company will require any successor (whether by
purchase of assets, merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform all of the obligations of the
Company under this Agreement (including the obligation to cause any subsequent successor to also
assume the obligations of this Agreement) unless such assumption occurs by operation of law.
10. Notices. Any notice or communication given by either party hereto to the other
shall be in writing and personally delivered, delivered by overnight delivery service or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the following
addresses:
| (a) | If to the Company: | |||
| CSK Auto Corporation | ||||
| ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attn.: General Counsel | ||||
| with a copy to: | ||||
| ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP | ||||
| ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. | ||||
| (b) | if to the Executive, to the address of the Executive as it | |||
| appears in the records of the Company |
Any notice shall be deemed given when actually delivered to such address, or five days after
such notice has been mailed or one day after such notice has been sent by overnight delivery
service, whichever comes earliest. Any person entitled to receive notice may designate in writing,
by notice to the other, such other address to which notices to such person shall thereafter be
sent.
11. Miscellaneous.
11.1. Entire Agreement. This Agreement, including the Release, contains the entire
understanding of the parties in respect of its subject matter, and any other agreement or
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understanding between the parties, oral or written, made prior to the date of this Agreement is
hereby terminated in its entirety.
11.2. Amendment; Waiver. This Agreement may not be amended, supplemented, cancelled
or discharged, except by written instrument executed by the party affected thereby. No failure to
exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof. No waiver of any breach of any provision of this Agreement shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision.
11.3. Binding Effect; Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of any successor of the Company by reorganization, merger or
consolidation, or any assignee of all or substantially all of the Company’s business and
properties. The Company may assign its rights and obligations under this Agreement to any of its
Affiliates without the consent of the Executive, but shall remain liable for any payments provided
hereunder not timely made by any Affiliate assignee. The Executive’s rights or obligations under
this Agreement may not be assigned by the Executive.
11.4. Headings. The headings contained in this agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
11.5. Governing Law. This Agreement shall be construed in accordance with and
governed for all purposes by the laws and public policy (other than conflict of laws principles) of
the State of Arizona applicable to contracts executed and to be wholly performed within such state.
11.6. Arbitration. Except as provided in Section 7.3 hereof, any dispute or
controversy arising under or in connection with this Agreement, including any claim arising out of
or in connection with any termination of the Executive’s employment, shall be settled exclusively
by arbitration in Phoenix, Arizona in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.
11.7. Further Assurances. Each of the parties agrees to execute, acknowledge, deliver
and perform, and cause to be executed, acknowledged, delivered and performed, at any time and from
time to time, as the case may be, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary to carry out the
provisions or intent of this Agreement.
11.8 Severability. The parties have carefully reviewed the provisions of this
Agreement and agree that they are fair and equitable. However, in light of the possibility of
differing interpretations of law and changes in circumstances, the parties agree that if any one or
more of the provisions of this Agreement shall be determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the provisions of this Agreement shall, to
the extent permitted by law, remain in full force and effect and shall in no way be affected,
impaired or invalidated. Moreover, if any of the provisions contained in this Agreement is
determined by a court of competent jurisdiction to be excessively broad as to
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duration, activity,
geographic application or subject, it shall be construed, by limiting or reducing it to the extent
legally permitted, so as to be enforceable to the extent compatible with then applicable law.
11.9 Amendment and Restatement. This Agreement is an amendment and restatement of
that certain Severance and Retention Agreement dated [date] (the “Original Agreement”). Upon the
full execution of this Agreement, the Original Agreement shall be deemed to be null and void.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| CSK AUTO, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| EXECUTIVE | ||||||
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EXHIBIT A
Date of Notification:
GENERAL RELEASE
This is a General Release (this “Release”) executed by (the
“Executive”) pursuant to Section 5 of the [Second] Amended and Restated Severance and
Retention Agreement dated as of ___, 200___ (the “Retention Agreement”)
between CSK Auto, Inc., an Arizona corporation (the “Company”), and the Executive.
WHEREAS, the Company and the Executive intend that the terms and conditions of the Retention
Agreement and this Release shall govern all issues related to the Executive’s employment and
termination of employment by the Company;
WHEREAS, the Executive has had at least 21 days to consider the form of this Release.
WHEREAS, the Company advised the Executive in writing to consult with a lawyer before signing
this Release;
WHEREAS, the Executive has represented and hereby reaffirms that the Executive has disclosed
to the Company any information in the Executive’s possession concerning any conduct involving the
Company or its affiliates that the Executive has any reason to believe involves any false claims to
the United States or is or may be unlawful or violates the policies of the Company in any respect;
WHEREAS, the Executive acknowledges that the consideration to be provided to the Executive
under the Retention Agreement is sufficient to support this Release;
WHEREAS, the Executive represents that the Executive has not filed any charges, claims or
lawsuits against the Company involving any aspect of the Executive’s employment which have not been
terminated as of the date of this Release; and
WHEREAS, the Executive understands that the Company regards the representations by the
Executive as material and that the Company is relying on these representations in paying amounts to
the Executive pursuant to the Retention Agreement.
THEREFORE, the Executive agrees as follows:
1. The Executive, on behalf of the Executive and anyone claiming through the Executive,
including the Executive’s heirs, assigns and agents, releases and discharges the Company and its
directors, officers, employees, subsidiaries, affiliates and agents, and the predecessors,
successors and assigns of any of them (the “Released Parties”), from each and every claim,
action or right of any sort, in law or in equity, known or unknown, asserted or
A-1
unasserted,
foreseen or unforeseen, arising on or before the Effective Date (as defined in Section 7 hereof).
(a) This Release includes, but is not limited to: any claim of discrimination on the basis of
race, sex, religion, marital status, sexual orientation, national origin, handicap or disability,
age, veteran status, special disabled veteran status or citizenship status; any other claim based
on a statutory prohibition or common law doctrine; any claim arising out of or related to the
Executive’s employment with the Company, the terms and conditions thereof or the termination or
cessation thereof; any express or implied employment contract, any other express or implied
contract affecting terms and conditions of the Executive’s employment or the termination or
cessation thereof, or a covenant of good faith and fair dealing; any tort claims and any personal
gain with respect to any claim arising under the qui tam provisions of the False Claims Act, 31
U.S.C. 3730.
(b) The Executive represents that the Executive understands this Release, that rights and
claims under the Age Discrimination in Employment Act of 1967, as amended, the Civil Rights Act of
1964, as amended, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Older Workers’
Benefit Protection Act, the Family and Medical Leave Act, the Americans with Disabilities Act and
the Employee Retirement Income Security Act of 1974 are among the rights and claims against the
Released Parties the Executive is releasing, and that the Executive understands that the Executive
is not releasing any rights or claims arising after the Effective Date.
(c) The Executive further agrees never to ▇▇▇ the Released Parties or cause the Released
Parties to be sued regarding any matter within the scope of this Release. If the Executive
violates this Release by suing any of the Released Parties or causing any of the Released Parties
to be sued, the Executive agrees to pay all costs and expenses of defending against the suit
incurred by the Released Parties, including reasonable attorneys’ fees.
(d) The Executive expressly represents and warrants that the Executive is the sole owner of
the actual or alleged claims, demands, rights, causes of action and other matters that are released
herein, that the same have not been transferred or assigned or caused to be transferred or assigned
to any other person, firm, corporation or other entity, and that the Executive has the full right
and power to grant, execute and deliver this Release. This Release does not impair Executive’s
right to file a charge or complaint with any federal, state, or local enforcement agency. However,
Executive agrees that this Release may be pleaded as a complete bar to any action or suit before
any administrative body or court with respect to any complaint, charge, or claim arising under any
federal, state, local or other law.
2. The Executive acknowledges that the Executive is bound by the provisions of Section 7 of
the Retention Agreement.
3. The Executive understands that any and all Company covenants which relate to Company
obligations to the Executive following any Change of Control Date (as defined in the Retention
Agreement), including but not limited to the payments set forth in the Retention Agreement, are
contingent on the Executive’s satisfaction of the Executive’s obligations under this Release.
2
4. The Executive agrees that he or she will cooperate fully with the Company in connection
with any and all existing or future claims, disputes, negotiations, investigations, litigation or
administrative proceedings brought by or against the Company or any of its affiliates, agents,
officers, directors or employees, whether administrative, civil or criminal in nature, in which and
to the extent the Company deems the Executive’s cooperation necessary. Such cooperation may
include, but shall not be limited to, providing information or documents, providing declarations or
statements to the Company, meeting with attorneys or other representatives of Company, preparing
for and give depositions or testimony, and/or otherwise cooperating in the investigation, defense
or prosecution of such matters. The Executive understands that the Company will reimburse the
Executive for reasonable out-of-pocket expenses incurred as a result of such cooperation. Nothing
herein shall prevent the Executive from communicating with or participating in any government
investigation. The Executive will act in good faith to furnish the information and cooperation
required by this Section 4 and the Company will act in good faith so that the requirement to
furnish such information and cooperation does not create a hardship for the Executive.
5. The Executive agrees, subject to any obligations the Executive may have under applicable
law, that the Executive will not make or cause to be made any statements that disparage, are
inimical to, or damage the reputation of the Company or any of its affiliates, subsidiaries,
agents, officers, directors or Executives. In the event such a communication is made to anyone,
including but not limited to the media, public interest groups and publishing companies, it will be
considered a material breach of the terms of the Retention Agreement and this Release and the
Executive will be required to reimburse the Company for any and all payments made under the terms
of the Retention Agreement and all commitments to make additional payments to the Executive will be
null and void.
6. The Company is not obligated to offer employment to the Executive (or to accept services or
the performance of work from the Executive directly or indirectly) now or in the future.
7. The Executive may revoke this Release in writing within seven days of signing it. This
Release will not take effect until the Effective Date. If the Executive revokes this Release, all
of its provisions and the payment provisions of the Retention Agreement shall be void and
unenforceable. Such revocation must be received by the Company no later than 11:59 p.m. on the
seventh day after Executive’s execution of this Release at the following address: CSK Auto, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: . The “Effective Date” shall be the
day after the end of the revocation period described in this Section 7 hereof.
8. The Executive shall keep strictly confidential all the terms and conditions, including
amounts, in the Retention Agreement and this Release and shall not disclose them to any person
other than the Executive’s spouse, the Executive’s legal or financial advisor or United States
governmental officials who seek such information in the course of their official duties, unless
compelled by law to do so. If a person not a party to the Retention Agreement requests or demands,
by subpoena or otherwise, that the Executive disclose or produce the Retention Agreement or this
Release or any terms or conditions thereof, the Executive shall immediately
notify the Company and shall give the Company an opportunity to respond to such
3
notice before
taking any action or making any decision in connection with such request or subpoena.
9. The Retention Agreement and this Release constitute the entire understanding between the
parties. The Executive has not relied on any oral statements that are not included in the
Retention Agreement or this Release.
10. In the event that any provision of this Agreement is determined to be legally invalid or
unenforceable by any court or arbitrator of competent jurisdiction, and cannot be modified to be
enforceable, the affected provision shall be stricken from the Agreement, and the remaining terms
of the Agreement and its enforceability shall remain unaffected.
11. This Release shall be construed, interpreted and applied in accordance with the law of the
State of Arizona (other than conflict of laws principles).
12. In the event that Executive’s termination constitutes a exit incentive or other employment
termination program offered to a group or class of employees under 29 U.S.C. §626(F), Executive
shall have forty-five (45) days within which to consider this Release and Executive shall be
provided with all other disclosures required by law.
| EXECUTIVE | ||||
Date:
4