EXHIBIT 10.11
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT between Hi-Lo Automotive, Inc., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (the "Executive"), dated as of the 14th day of May, 1996.
WITNESSETH:
WHEREAS, the Executive is a principal officer of the Company and an
integral part of its management; and
WHEREAS, the Company recognizes that even the possibility of a change
of control and the uncertainty and questions which it may raise may result in
the departure or distraction of management personnel to the detriment of the
Company and its shareholders during a critical time; and
WHEREAS, the Company considers it in the best interest of the Company
and its shareholders that the Executive be encouraged to remain with the Company
in the event of any actual or threatened change of control of the Company; and
WHEREAS, the Company's Board of Directors (the "Board") has determined
that appropriate steps should be taken now to reinforce and encourage members of
the Company's management;
NOW, THEREFORE, in consideration of the above premises and mutual
agreements herein set forth and the services performed and to be performed by
the Executive for the Company, the parties agree as follows:
1. OPERATION OF AGREEMENT.
This Agreement shall be effective without any action by any party upon
the first date on which a Change of Control ( as defined in Article 2) has
occurred; PROVIDED, HOWEVER, that at the option of the Company this Agreement
may be terminated on the first anniversary of written notice of termination
given to the Executive by the Board prior to the Agreement's Effective Date.
2. DEFINITIONS.
CAUSE. For purposes of this Agreement "Cause" shall mean
termination resulting from (i) acts of dishonesty by the Executive
constituting a felony and resulting or intended to result directly or
indirectly in gain or personal enrichment to the Executive at the
expense of the Company or (ii) willful and continued failure by
Executive to substantially perform his duties with the Company (other
than any such failure resulting from Disability (as defined herein))
after a demand in writing for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed his duties, and such failure to perform the
Executive's duties results in demonstrably material injury to the
Company.
CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall occur if (i) the Company shall not be the
surviving entity in any merger or consolidation (or survives only as a
subsidiary of an entity other than a previously wholly-owned subsidiary
of the Company), (ii) the Company sells, leases
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or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company), (iii) the Company is to be
dissolved and liquidated, (iv) any person or entity, including a
"group" as contemplated by Section 13(d)(3) of the 1934 Act, (other
than Saratoga Partners, L.P., Lexington Partners II, L.P., ▇▇▇▇▇▇, Read
& Co. Inc., or any of their respective affiliates) acquires or gains
ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of capital stock of the
Company, or (v) as a result of or in connection with any cash tender or
exchange offer, merger or other business combination, sales of assets
or a contested election for the board of directors, or any combination
of the foregoing transactions (a "Transaction"), the persons who were
directors of the Company before such Transaction shall cease to
constitute a majority of the Board.
EFFECTIVE DATE. For purposes of this Agreement " Effective
Date" shall mean the first date on which a Change of Control has
occurred.
DISABILITY. For purposes of this Agreement, "Disability" shall
mean that the Executive is unable to perform the essential functions of
the job for which the Executive is being employed hereunder, with or
without reasonable accommodation, by reason of his illness, accident or
other cause, including mental disability, for a period of six
consecutive calendar months, or an aggregate of nine months during any
continuous twelve-month period.
GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean:
(i) A determination by the Executive made in
good faith that his primary management functions,
duties or responsibilities have been diminished in
any material respect and the situation is not
remedied within 30 days after receipt by the Company
of written notice from the Executive of such
determination;
(ii) Any requirement that the Executive
relocate his principal office outside of ▇▇▇▇▇▇
County, Texas;
(iii) Any modification to the rights to
indemnification or director and officer liability
insurance under which the Executive is covered
immediately prior to the Effective Date which reduces
the benefits available to the Executive under such
indemnification or insurance; or
(iv) A breach by the Company of any
provision of this Agreement not embraced within the
foregoing clause (i), (ii) or (iii) which is not
remedied within 30 days after receipt by the Company
of written notice from the Executive.
3. EMPLOYMENT PERIOD. Unless terminated pursuant to Section 6, the
Company hereby agrees to continue the Executive in its employ for the period
commencing on the Effective Date and ending on the second anniversary of such
date (the "Employment Period"). Unless terminated pursuant to Section 6, the
Executive agrees to remain in the employ of the Company until such time as the
Executive gives the Company at least 30 days written notice of the Executive's
intent to voluntarily terminate employment.
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4. POSITION AND DUTIES.
(a) During the Employment Period, the Executive shall continue
to serve as a principal officer of the Company with office, title and
primary management functions, duties, and responsibilities,
substantially similar to those held and performed during the 90-day
period immediately preceding the Effective Date provided that any
change in such functions, duties and responsibilities which results
solely from the Company no longer being a reporting company under the
Federal securities laws or the Company being a subsidiary of another
company shall not be considered a change in functions, duties or
responsibilities for any purpose under this Agreement.
(b) During the Employment Period, the Executive shall devote
the Executive's full time and efforts during normal business hours to
the business and affairs of the Company except for reasonable vacations
and except for illness or incapacity, but nothing in this Agreement
shall preclude the Executive from (i) devoting reasonable periods
required for serving as a director or member of a committee of any
organization involving no conflict of interest with the interests of
the Company, and (ii) engaging in charitable and community activities
and professional organizations, provided that such activities do not
materially interfere with the regular performance of his duties and
responsibilities under this Agreement.
(c) Executive shall have as his principal office and shall
perform his duties hereunder primarily at the Company's headquarters at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at such other
location as the Board shall direct within ▇▇▇▇▇▇ County, Texas.
5. COMPENSATION.
(a) BASE SALARY. During the Employment Period, the Executive
shall receive a base salary ("Base Salary") equal to the average of the
Executive's monthly salary during the three full months immediately
preceding the Effective Date multiplied by twelve. The Base Salary
shall not be reduced after the Effective Date. The Base Salary will be
paid in equal semi-monthly installments.
(b) OTHER NON-SALARY BENEFITS. During the Employment Period,
the Executive shall be entitled to participate in all bonus, incentive,
savings and retirement plans, policies and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, policies and programs
provide the Executive with incentive opportunities, savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than those provided by the Company and its
affiliated companies for the Executive under such plans, policies and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or if more favorable to the Executive,
those provided generally at any time after the Executive Date to other
peer executives of the Company and its affiliated companies. During the
Employment Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, policies and programs
provided by the Company and its affiliated companies (including to the
extent they exist and without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to
the extent applicable generally to other peer executives of the Company
and its affiliated companies, but in no event shall such plans,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than such plans, practices, policies
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, those provided
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generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies. During the Employment
Period, the Executive shall be entitled to perquisites, including,
without limitation, an office, secretarial and clerical staff, and to
fringe benefits, including, without limitation, the payment of
allowances for, and reimbursement of, automobile expenses, and cellular
telephone charges, in each case at least equal to those attached to his
office immediately prior to the Effective Date.
(c) VACATION. The Executive shall be entitled to receive such
paid vacation time each year during the term of this Agreement as is
consistent with the vacation policy of the Company for Executive's
position. Such vacation shall be taken at a time convenient to the
Company. Any vacation time to which the Executive is entitled in
accordance with the foregoing that is not taken by the Executive in any
year during the Employment Period shall not be cumulative, and the
Executive shall not receive any cash or noncash benefit in lieu of
vacation time not taken by the Executive except that Executive shall be
entitled to receive cash in lieu of any unused vacation time applicable
for the year in which any termination of employment occurs.
(d) EXPENSES. Upon submission of proper vouchers, the Company
will pay or reimburse the Executive for reasonable transportation,
hotel, travel and related expenses incurred by the Executive on
business trips away from the Executive's principal office, and for
other business and entertainment expenses reasonably incurred by the
Executive in connection with the business of the Company and its
subsidiaries during the Employment Period, all subject to such
limitations as may from time to time be prescribed by the Board.
(e) INDEMNITY. The Executive shall be entitled to and shall be
provided the benefits of indemnification and director and officer
liability insurance on the same basis as in effect immediately
preceding the Effective Date, or if more favorable to the Executive, as
in effect at anytime thereafter with respect to other officers of
similar position and responsibility.
6. TERMINATION.
(a) DEATH OR DISABILITY. Executive's employment shall
terminate automatically upon the Executive's death. The Company may
terminate Executive's employment upon Executive's Disability, by giving
to the Executive written notice of its intention to terminate the
Executive's employment. The Company shall have the right to terminate
the Executive's employment effective as of the applicable date of his
Disability.
(b) CAUSE. The Company may terminate the Executive's
employment for "Cause" upon written notice as required herein.
Executive's employment shall in no event be considered to have been
terminated by the Company for Cause if such termination took place as
the result of (i) bad judgment or negligence, or (ii) any act or
omission without intent of gaining therefrom directly or indirectly a
profit to which the Executive was not legally entitled, or (iii) any
act or omission believed by the Executive in good faith to have been in
or not opposed to the interest of the Company, or (iv) any act or
omission in respect of which a determination is made that the Executive
met the applicable standard of conduct prescribed for indemnification
or reimbursement or payment of expenses under the by-laws of the
Company or the laws of the State of Delaware or the directors and
officers liability insurance of the Company, in each case as in effect
at the time of such act or omission. The Executive shall not be deemed
to have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the
affirmative
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vote of not less than a majority of the entire membership of the Board
at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Executive was
guilty of conduct contained in the definition of Cause and specifying
the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated
by the Executive at any time for Good Reason. Executive's employment
shall in no event be considered to have been terminated by Executive
for Good Reason if such termination by the Executive took place as a
result of changes in the Executive's functions, duties and
responsibilities resulting solely from the Company no longer being a
reporting company under the Federal securities laws or the Company
being a subsidiary of another company.
(d) VOLUNTARY TERMINATION AFTER ONE YEAR. The Executive's
employment may be terminated by the Executive at any time after the
first anniversary of the Effective Date.
(e) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company for Cause or due to Disability or by the
Executive for Good Reason or otherwise shall be communicated by Notice
of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated, if applicable, and (iii) if the termination
date is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after the
giving of such notice).
(f) DATE OF TERMINATION. If the Executive's employment is
terminated for any reason, whether pursuant to the terms of this
Agreement or otherwise, the date set forth in the notice of termination
as the termination date of the Executive's employment shall be deemed
the "Date of Termination."
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DURING DISABILITY. During any period that Executive is
unable to perform his duties hereunder during the Employment Period as
a result of incapacity due to physical or mental illness or injury, the
Company shall continue to pay to the Executive his full Base Salary and
other benefits as in effect immediately prior to such physical or
mental illness or injury until Executive's employment is terminated.
(b) DEATH; DISABILITY. If during the Employment Period the
Executive's employment is terminated by reason of death or Disability,
the Company shall (x) pay to the Executive or his estate a lump sum
payment (made within 10 days after the Date of Termination) equal to
the Executive's Base Salary divided by twelve multiplied by the number
of full or partial months remaining in the Employment Period, (y)
provide the medical insurance benefits contemplated by Section 5(b) for
one year from the Date of Termination or through the end of the
Employment Period whichever is longer and (z) make available medical
benefits equivalent to those required to be provided under "COBRA" for
a period of eighteen months after the expiration of the Company's
obligations under clause (y) above.
(c) CAUSE; VOLUNTARY TERMINATION PRIOR TO ONE YEAR. If the
Executive's employment shall be terminated either (i) for Cause by the
Company or (ii) by the Executive voluntarily prior to the first
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anniversary of the Effective Date other than for Good Reason, the
Company shall pay the Executive's full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given and shall have no further obligations to the Executive under this
Agreement.
(d) GOOD REASON; VOLUNTARY TERMINATION AFTER ONE YEAR; OTHER
THAN FOR CAUSE. If, during the Employment Period, (i) the Company shall
terminate the Executive's employment other than for Cause, death or
Disability, (ii) the employment of the Executive shall be terminated by
the Executive for Good Reason or (iii) the Executive shall terminate
his employment after the first anniversary date of the Effective Date
for any reason or no reason, the Company shall (x) pay to the Executive
as severance pay hereunder and in lieu of any other amounts due
hereunder a lump sum payment (made within 10 days after the Date of
Termination) equal to two times the Executive's then current Base
Salary, (y) provide the medical insurance benefits contemplated by
Section 5(b) for one year from the Date of Termination or through the
end of the Employment Period whichever is longer and (z) make available
to the Executive medical benefits equivalent to those required to be
provided under "COBRA" for a period of eighteen months after the
expiration of the Company's obligations under clause (y) above.
(e) PAYMENT LIMITATION. Notwithstanding anything to the
contrary in this Agreement, the payments and benefits otherwise
provided by this Agreement shall be reduced if and to the extent that
such payments and benefits, when added to any payments and benefits
provided by the Company other than under this Agreement, would result
in any such payments being nondeductible to the Company or would
subject Executive to an excise tax pursuant to the golden parachute
payment provisions of Section 280G or Section 4999 of the Internal
Revenue Code of 1986, as amended. Any reduction of payments and
benefits under this Agreement resulting from the foregoing limitations
shall be applied to the payments and benefits due to be otherwise
provided to Executive latest in time.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any or program of the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan or program.
9. EXECUTIVE OBLIGATIONS.
(a) For the Employment Period the Executive will not do or say
anything that reasonably may be expected to have the effect of
diminishing or impairing the goodwill and good reputation of the
Company and its officers, directors and products nor will the Executive
intentionally disparage or injure the reputation of the Company by
making any material negative statements about the Company's methods of
doing business, the effectiveness of its business policies and the
quality of its products or personnel.
(b) The Executive agrees to keep the terms of this Agreement
in strict confidence, except that the Executive may disclose the terms
of this Agreement to family members and professional advisors who
understand the confidentiality of such terms.
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(c) The Executive hereby agrees that during the Executive's
employment by the Company and for a period of twenty-four months
following termination of the Executive's employment during the
Employment Period either (i) by the Company other than for Cause, death
or Disability or (ii) by the Executive for Good Reason or after the
first anniversary date of the Effective Date for any reason or no
reason, the Executive shall not act in any manner or capacity, directly
or indirectly, in any individual or representative capacity, whether as
principal, agent, partner, officer, director, employee, joint venturer,
member of any business entity, consultant, advisor or investor (except
that the Executive shall have the right hereunder to own up to 2% of
one or more public companies having a class of equity securities
registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended) or otherwise, in or for
any business entity or enterprise which competes with the Company in
any geographic area served by the Company at the time of the
Executive's termination and engages as its primary line of business in
the sale of automotive parts or accessories to retail customers or to
commercial auto repair outlets (the "Business");
(d) The Executive hereby agrees that during the Executive's
employment by the Company and for a period of twenty-four months
following the termination of the Executive's employment, the Executive
shall not:
(i) without the prior written consent of the Company,
divulge, disclose or make accessible to any other person,
firm, partnership or company or other entity any Confidential
Information which shall not include information known
generally or available to the public or of information not
considered confidential by persons engaged in the business
conducted by the Company or from disclosure required by law or
court order pertaining to the Business except (x) while
employed by the Company in the Business and for the benefit of
the Company or (y) when required to do so by a court of
competent jurisdiction, by any governmental agency, or by any
administrative body or legislative body (including a committee
thereof) with purported or apparent jurisdiction to order the
Executive to divulge, disclose or make accessible such
information.
(ii) without the prior written consent of the Company
solicit or hire away any person who is then an employee of the
Company and was an employee of the Company at any time after
the Effective Date and prior to termination of the Executive's
employment.
(e) The Executive also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of
an officer authorized to act in the matter by the Board, any drawing,
blueprint, business strategies, budgets, projections, nonpublic
financial information, manuals, policies or other document of the
Company, its subsidiaries, affiliates and divisions.
(f) If the scope of any restriction contained in Section 9(c)
or (d) hereof is too broad to permit enforcement of such restriction to
its full extent, then such restriction shall be enforced to the maximum
extent permitted by law, and the Executive hereby consents and agrees
that such scope may be judicially modified accordingly in any
proceedings brought to enforce such restrictions.
(g) The Executive acknowledges and agrees that the Company's
remedy at law for any breach of the Executive's obligations under this
Section 9 (other than Section 9(c)) may be inadequate, and agrees and
consents that temporary and/or permanent injunctive relief may be
granted in any proceeding which may be brought to enforce any provision
hereof (other than Section 9(c)), without the necessity of proof of
actual
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damage. In the event of any breach of the provisions of Section 9(c)
hereof, as liquidated damages and in lieu of any other damages,
payments to or actions by the Company, the Executive shall pay to the
Company an amount equal to the product of (i) any lump sum payment made
to Executive under this Agreement divided by twenty-four multiplied by
(ii) twenty-four minus the number of months (including as a whole month
any portion thereof) since the Executive's Date of Termination.
10. REVIEW BY COUNSEL. The Executive has had sufficient time and the
opportunity, whether or not exercised, to have this Agreement reviewed by
counsel of the Executive's choosing and to be advised as to the Executive's
rights and obligations hereunder.
11. SUCCESSORS.
(a) This Agreement shall not be assignable by either party
without the consent of the other party.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.
(c) In the event of a Change of Control of the Company, any
successor shall, by an agreement in form and substance satisfactory to
the Executive, expressly assume and agree to perform this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) Executive shall not be required to mitigate the amount of
any payment or benefit provided for herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by you as a result of
employment by another employer after the Date of Termination, or
otherwise.
(c) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
overnight courier or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
IF TO THE COMPANY: Hi-Lo Automotive, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
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or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(d) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(e) The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(f) This Agreement contains the entire understanding of the
Company and the Executive with respect to the subject matter hereof.
(g) Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in
Houston, Texas in accordance with the rules of the American Arbitration
Association then in effect; provided that all arbitration expenses
shall be borne by the Company. Notwithstanding the pendency of any
dispute or controversy concerning termination or the effects thereof,
the Company will continue to pay Executive semi-monthly the full
compensation in effect immediately before any Notice of Termination
giving rise to the dispute was given (including, but not limited to,
Base Salary and bonus or incentive pay) and continue Executive as a
participant in all compensation, benefit and insurance plans in which
the Executive was then participating, until the dispute is finally
resolved. Amounts paid under this paragraph are in addition to all
other amounts due under this Agreement and shall not be offset against
or reduce any other amounts due under this Agreement except as
otherwise determined by the arbitrator based upon the facts and
circumstances giving rise to the arbitration. Judgment may be entered
on the arbitrators' award in any court having jurisdiction; PROVIDED,
HOWEVER, that Executive shall be entitled to seek specific performance
of his right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection
with this Agreement.
(h) The Executive and the Company acknowledge that this
Agreement shall have no force and effect, and is no intended to alter
in any way the current relationship of the Executive and the Company,
prior to the Effective Date. This Agreement shall terminate and there
shall be no further rights or liabilities hereunder upon a termination
of the Executive's employment prior to the Effective Date.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Hi-Lo Automotive, Inc.
By: /S/ K. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: K. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President and General Counsel
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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