EXHIBIT 10.23
EMPLOYMENT AND NONCOMPETITION AGREEMENT
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THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement") is made and
entered into as of the ________________, 1998 by and between Advance Stores
Company, Incorporated, a Virginia corporation (the "Company"), and
__________________ (the "Executive").
W I T N E S S E T H:
A. Pursuant to that certain Agreement and Plan of Merger dated as of
March 4, 1998, (the "Merger Agreement") by and among AHC Corporation
("Investor"), a Virginia corporation and Advance Holding Corporation, parent of
the Company, with FS Equity Partners III, L.P., a Delaware limited partnership,
FS Equity Partners IV, L.P., a Delaware limited partnership, and FS Equity
Partners International, L.P., a Delaware limited partnership (collectively,
"FS"), as Guarantors, Investor will merge with and into the Company (the
"Merger").
B. Immediately upon consummation of the Merger, the Company desires to
continue to employ Executive as ________________________________ of the Company
on the terms and conditions hereinafter set forth, and Executive is desirous of
accepting said employment.
C. The Company is engaged in the highly competitive business of marketing
and sale of automotive parts, accessories, and services. During his continued
employment with the Company, Executive will have obligations relating to the
business operations of the Company.
D. Executive is recognized as having significant expertise in the retail
automotive parts and accessories industry. Executive's industry experience and
knowledge is greatly valued by the Company and would be extremely valuable to
competitors of the Company.
E. For purposes of this Agreement, "Confidential Information" means any
data or information with respect to the business conducted by the Company, that
is material to the Company's business operations and is not generally known by
the public, including business and trade secrets. To the extent consistent with
the foregoing definition, Confidential Information includes without limitation:
(a) reports, pricing, sales manuals and training manuals, selling, purchasing,
and pricing procedures, and financing methods of the Company, together with any
techniques utilized by the Company in designing, developing, testing or
marketing its products, designing stores, locating stores, product mix and
supplier information or in performing services for clients, customers and
accounts of the Company; and (b) the business plans and financial statements,
reports and projections of the Company. The Company will grant Executive access
to and knowledge of the Company's Confidential Information during the course of
his employment with the Company. Executive recognizes and acknowledges that the
Confidential Information which he will acquire in the course of his employment
is utilized by the Company in all geographic areas in which the Company does
business. Further, the Confidential Information will also be utilized in all
geographic areas into which the Company expands its business. Thus,
Executive acknowledges that he will be a formidable competitor in all areas
where the Company conducts business. Executive also acknowledges that the
restrictive covenants in this Agreement serve to protect the Company's
investment in the Confidential Information.
F. Each of the Executive and the Company are sophisticated parties
experienced in business transactions of this type, and fully understand (i) the
ramifications of the noncompetition, non-solicitation and confidentiality
restrictions of this Agreement and (ii) that the laws of each state with respect
to the enforceability of such provisions vary. The parties are specifically
selecting the internal laws of the Commonwealth of Virginia to govern this
Agreement in order that it be enforceable against each of them.
NOW, THEREFORE, in consideration of Executive's continued employment with
the Company, the mutual terms and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Employment and Term. Subject to the terms and conditions of this
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Agreement, the Company agrees to employ the Executive for a term commencing on
the effective date of the Merger (the "Effective Date") and ending April 15,
2000 (the "Initial Term") or such other date on which such employment shall
terminate as provided herein. The term of this Agreement and Executive's
employment hereunder will automatically be extended for an additional one-year
period following the expiration of the Initial Term and following each year of
employment hereunder after the Initial Term (each, a "Renewal Date"), without
further action by Executive or the Company unless written notice not to renew
for an additional one-year period is given by either the Company or Executive to
the other not less than sixty (60) days prior to the expiration of the Initial
Term or any Renewal Date, as applicable. In the event a notice not to renew is
given by one party to the other as provided in the immediately preceding
sentence, then the automatic extension of the term of this Agreement shall
thereafter no longer be of any further force or effect. Executive will carry out
faithfully and to the best of his abilities such duties and have such
responsibilities as would normally be carried out by the
_________________________________of a Company, subject to the control of and in
accordance with the directives and policies of the Board of Directors and Chief
Executive Officer of the Company. The employment of Executive shall be on an
exclusive basis, but the Executive may be a passive investor or otherwise have a
passive interest in other businesses, partnerships and entities so long as such
other activities of the Executive do not interfere with the performance of his
duties hereunder and so long as such other businesses, partnerships and entities
do not cause the Executive to violate the non-competition, non-solicitation, and
confidentiality restrictions of this Agreement.
2. Compensation.
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2.1 The Company shall provide Executive with an annual salary equal
to $_______ payable in equal monthly installments, or such other schedule
established by the Company, less required withholding. The annual salary may,
at the option of the Board of
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Directors, be subject to annual increases upon review by the Board of Directors.
Any such reviews will be made after completion of the Company's fiscal year, and
shall be in the sole discretion of the Board of Directors.
2.2 The Executive shall be reimbursed in accordance with the policies
of the Company as adopted by the Board from time to time for his reasonable
travel, entertainment, business, meeting and similar expenditures, incurred for
the benefit of the Company and subject to approval of the Board. As an
additional condition to the reimbursement of such expenses by the Company to the
Executive, the Executive shall provide the Company with copies of all available
invoices and receipts, and otherwise account to the Company in sufficient detail
and with adequate documentation to allow the Company to confirm the business
nature of the expenses and claim an income tax deduction for such paid items, if
such items are deductible.
3. Bonus Program and Other Benefits. Executive shall be eligible to
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participate in a manner commensurate with other senior management executives of
the Company in all benefits or other programs generally available to such
executives to the extent such exist or are sponsored by the Company, at a level
consistent in overall terms with such bonus and benefit programs on the date
hereof. Without limiting the generality of the foregoing, Executive shall be
entitled to receive an incentive bonus as determined by the Board of Directors
and Chief Executive Officer of the Company, which may be based upon achievement
of targeted annual earnings goals for the Company or other factors deemed
relevant by the Board of Directors and Chief Executive Officer.
4. Termination of Employment.
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4.1 Termination By The Company. The Company may terminate
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Executive's employment upon the occurrence of any of the following:
(a) At the election of the Company for cause, immediately upon written
notice by the Company to Executive. For the purpose of this Section 4.1(a),
"cause" for termination shall be deemed to exist in the event of: (A) the
engaging by Executive in conduct which is demonstrably and materially injurious
to the Company, including fraud, embezzlement or other material illegal conduct,
(B) the conviction of Executive of, or the entry of a pleading of guilty or nolo
contendere by Executive to, any crime involving moral turpitude or any felony,
(C) material breach by Executive of any of the terms of this Agreement, which,
if curable, is not cured by Executive within fourteen (14) days of written
notice by the Company to Executive of such breach, (D) gross negligence or
willful misconduct by Executive in the performance of his duties, which, if
curable, is not cured by Executive within fourteen (14) days of written notice
by the Company to Executive of such non-performance, or (E) Executive's material
failure to perform duties assigned to him by the Board of Directors or the Chief
Executive Officer or to comply with the Company's standard policies and
procedures generally applicable to employees, which failure, if curable, is not
cured by Executive within fourteen (14) days of written notice by the Company to
Executive of such failure to so perform or comply.
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(b) Upon death or upon determination of disability of Executive.
As used in this Section 4, the term "disability" or "disabled" shall mean the
failure of Executive, due to a physical or mental disability, despite reasonable
accommodation made by the Company for a period of 180 days, during any
consecutive 12-month period to substantially perform the services contemplated
under this Agreement.
(c) At the election of the Company at any time, without cause,
subject to the provisions of Section 4.3(a).
4.2 Termination By The Executive. The Executive may terminate his
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employment upon 30 days' notice to the Company for any reason. If Executive
terminates his employment for "Good Reason" the termination shall be treated as
a termination under Section 4.1(c) for purposes of determining the Executive's
benefits under this Agreement. For purposes of this Agreement, "Good Reason"
shall mean that, without Executive's express written consent, the occurrence of
any of the following circumstances:
(a) The assignment to Executive of any duties materially
inconsistent (except in the nature of a promotion) with the position in the
Company that he held immediately prior to the reassignment or a substantial
adverse alteration in the nature or status of his position or responsibilities
from those in effect immediately prior to the reassignment;
(b) A reduction by the Company in Executive's annual base salary
as in effect on the date hereof or as the same may be increased from time to
time;
(c) The Company's requiring Executive to be based more than 50
miles from the Company's office at which he was principally employed immediately
prior to the date of the relocation; or
(d) A material breach by the Company of its duties under this
Agreement.
4.3 Effect of Termination.
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(a) In the event Executive's employment is terminated without
cause or should the Executive terminate his employment with Good Reason, (i) the
Company shall pay to Executive the then applicable salary payable to him under
Section 2 (in monthly installments, less required withholding) through the later
of (A) the remainder of the term of employment hereunder or (B) one year after
the effective date of termination; provided, however, that in the event that,
subsequent to termination, Executive engages in other employment, Executive
shall receive the difference, if any, between his salary with the Company and
his new salary, (ii) Executive shall receive a pro rata portion of any bonus due
to him with respect to all periods prior to termination of employment and (iii)
if possible under the provisions of such plan, the Company shall continue
Executive's medical insurance coverage through the later of (A) the remainder of
the term of this
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Agreement or (B) until he engages in other employment. In the event Executive is
ineligible under such plan, the Company shall arrange to provide Executive with
substantially similar benefits until he engages in other employment.
(b) If Executive's employment is terminated by death or because of
disability pursuant to Section 4.1(b), the Company shall pay to the estate of
the Executive or to Executive, as the case may be, one year's salary in 12 equal
monthly installments (less any amounts paid Executive under any disability plan
maintained by the Company), plus the pro rata portion of any bonus, if any,
payable for the portion of the fiscal year in which death or disability occurred
that Executive was still employed.
(c) If Executive is terminated for cause or if Executive terminates
his employment without Good Reason, Executive is entitled to no salary or
benefits beyond the effective date of termination and Executive shall not be
entitled to any bonus or incentive compensation payments whatsoever.
5. Covenants.
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5.1 Definitions.
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(a) The term "Person" shall mean any corporation, partnership,
joint venture, trust, sole proprietorship, limited liability company,
unincorporated business association, natural person, and any other entity that
may be treated as a person under applicable law.
(b) The term "Affiliate" shall mean an affiliate as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act").
(c) The term "Control" shall mean control as such term is defined
in Rule 12b-2 under the Exchange Act.
(d) The term "Prohibited Business" shall mean any Person that
sells or offers to sell automotive parts, accessories, or services in
competition with the automotive parts, accessories, or services sold or offered
to be sold by the Company (whether conducted by the Company or any subsidiary or
Affiliate of the Company, or any person, corporation, partnership, trust or
other organization or entity deriving title from the Company). The term
includes, but is not limited to Persons engaged in competition with the Company
as a chain of automotive parts and accessories stores or chain of automotive
service facilities, including any retail chain offering other products and
services that engages in a significant line of business of offering automotive
parts, accessories or services. Such a Person is engaged in a significant line
of business competitive with the Company if the sale of automotive parts,
accessories or services exceeds the lesser of 10% of the revenues or $10 million
in revenue of such Person. Nothing herein shall be
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construed as prohibiting Executive from working for a Prohibited Business in any
division, subsidiary or aspect of that business that is not competitive with the
Company.
(e) The term "directly or indirectly carry on or participate in a
Prohibited Business" shall include the Executive, directly or indirectly, doing
any of the following listed acts:
(i) Whether or not for compensation, directly or indirectly
engaging in any Prohibited Business, or any part thereof, whether as a
director, officer, employee, consultant, adviser, independent contractor or
otherwise, or assisting any other Person in such Person's conduct of a
Prohibited Business, or any part thereof; or
(ii) Holding legal or beneficial interest in any Person that is
engaged in any Prohibited Business, or any part thereof, whether such
interest is as an owner, investor, partner, creditor, joint venturer or
otherwise; provided, however, that Executive may acquire and own up to two
percent (2%) of the outstanding securities of any corporation which is a
publicly traded reporting corporation under the Exchange Act; or
(iii) As agent or principal carrying on or engaging in any
activities or negotiations with respect to the acquisition or the
disposition of any Prohibited Business; or
(iv) Giving advice to any other Person, firm or association
engaging in any Prohibited Business; or
(v) Lending or allowing his name or reputation to be used in
or associated with any Prohibited Business; or
(vi) Soliciting, diverting or attempting to divert from the
Company any business constituting, or any customer of, or any supplier
of, any part of the business conducted by the Company; or
(vii) Allowing his skill, knowledge or experience to be used in
any Prohibited Business.
(f) The term "Covenant Period" shall mean the period extending to the
later of (i) April 15, 2001 or (ii) the one year anniversary of the effective
date of termination of employment of Executive which includes the non-renewal of
the term of this Agreement by either party pursuant to Section 1.
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5.2 Agreement Not to Compete Nationally. Executive acknowledges that the
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Company intends to extend its business operations throughout the United States
of America. Therefore, during the Covenant Period, Executive agrees that he
shall not directly or indirectly carry on or participate in any Prohibited
Business anywhere within the United States of America.
5.3 Agreement Not to Compete Where the Company Does Business. Independent
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of the preceding provision, Executive agrees that, during the Covenant Period,
he shall not directly or indirectly carry on or participate in a Prohibited
Business which sells or offers to sell products or services (in competition with
the Company) within any county or city in which the Company, during the Covenant
Period, sells or offers to sell its products or services.
5.4 Non-Recruitment. Independent of the foregoing provisions, Executive
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agrees that, during the Covenant Period, Executive shall not, directly or
indirectly, cause any person engaged or employed by the Company or its
Affiliates (whether part-time or full-time and whether as an officer, employee,
consultant, agent, adviser or independent contractor) (an "Employee") to
voluntarily leave the employ of or engagement with the Company or its
Affiliates, as the case may be, or to cease providing the services to or on
behalf of the Company or its Affiliates, as the case may be, then provided by
such Employee. Executive further agrees that, during the same time period, he
will not in any manner seek to engage or employ any such Employee (whether or
not for compensation) as an officer, employee, consultant, agent, adviser or
independent contractor for any Person other than the Company.
5.5 Non-Solicitation. Independent of the foregoing provisions, Executive
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agrees that, during the Covenant Period, Executive shall not, other than in
connection with his employment, directly or indirectly, sell or offer to sell
automotive parts, accessories, or services (or directly or indirectly carry on
or participate in a Prohibited Business that sells or offers to sell automotive
parts, accessories, or services) to any Person who is a customer of the Company.
Executive also agrees that, during the Covenant Period, Executive shall not,
directly or indirectly, interfere, in any way, with the business relationship
between the Company or its Affiliates and any business which supplies automotive
parts, accessories, or services to the Company.
5.6 Confidential Information. This covenant is independent of, and in
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addition to, those set forth above.
(a) Executive hereby covenants and agrees that, during the Covenant
Period and at all times thereafter, he will not use or disclose any Confidential
Information, except for the benefit of the Company and to authorized
representatives of the Company or except as required by any governmental or
judicial authority; provided, however, that the foregoing restrictions shall not
apply to items that, through no fault of Executive's, have entered the public
domain.
(b) Executive acknowledges that all Confidential Information is and
shall remain the sole, exclusive and valuable property of the Company and that
Executive has and shall acquire no right, title or interest therein. Any and
all printed, typed, written or other material which
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Executive has or may obtain with respect to Confidential Information (including
without limitation all copyrights therein) shall be and remain the exclusive
property of the Company, and any and all material (including any copies) shall,
upon request of the Company, be promptly delivered by Executive to the Company.
(c) Executive hereby assigns to the Company all right, title and
interest in and to any ideas, inventions, original works or authorship,
developments, improvements or trade secrets which Executive solely or jointly
have conceived or reduced to practice, or will conceive or reduce to practice,
or cause to be conceived or reduced to practice, during the Covenant Period.
All original works of authorship which are made by Executive (solely or jointly
with others) within the scope of Executive's services hereunder and which are
protectable by copyright are "works made for hire," as that term is defined in
the United States Copyright Act.
5.7 Representation and Warranties. Executive represents and warrants to,
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and agrees with, the Company and its Affiliates that:
(a) Executive has carefully reviewed the restrictive covenants
contained in this Section 5 and considered all of its terms, and agrees that its
scope, duration and terms are reasonable; and
(b) This Agreement constitutes the legal, valid and binding obligation
of Executive enforceable in accordance with its terms.
5.8 Scope and Reasonableness. The parties agree that it is not their
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intention to violate any public policy or statutory or common law. The parties
intend that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought.
6. Validity of Covenants. Executive agrees that the restrictive
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covenants contained in this Agreement are reasonably necessary to protect the
legitimate business and other interests of the Company, are reasonable with
respect to time and territory, and do not interfere with the interests of the
public.
7. Specific Performance. Executive acknowledges that it would be
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impossible to determine the amount of damages that would result from any breach
of any of the provisions of this Agreement and that the remedy at law for any
breach, or threatened breach, of any of the provisions of this Agreement would
likely be inadequate and, accordingly, agrees that the Company and its
Affiliates shall, in addition to any other rights or remedies which they may
have, be entitled to seek such equitable and injunctive relief as may be
available from any court of competent jurisdiction to restrain Executive from
violating any of the provisions of this Agreement. In connection with any
action or proceeding for injunctive relief, Executive hereby waives the claim or
defense that a remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have each provision of this Agreement specifically enforced
against
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him, without the necessity of posting bond or other security against him, and
consents to the entry of injunctive relief against him enjoining or restraining
any breach or threatened breach of this Agreement. If Executive takes action in
violation of a restrictive covenant set forth in Section 5 of this Agreement,
Executive acknowledges that the effective period for the restrictive covenants
which are violated will be extended for a period of time equivalent to the
period of time during which Executive is in violation of the restrictive
covenants.
8. Notices. Any and all notices, designations, consents, offers,
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acceptances, or any other communications provided for herein shall be given in
writing and shall be deemed given on the date received if sent by registered or
certified mail, return receipt requested; or on the date actually received if
sent by express mail or other similar overnight delivery or if hand delivered or
if sent via facsimile, which shall be addressed:
If to the Company:
Advance Holding Corporation
c/o Xxxxxxx Xxxxxx & Co. Incorporated
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Executive:
________________
________________
________________
9. Governing Law. This Agreement shall be subject to and governed by the
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laws of the Commonwealth of Virginia.
10. Severability. The restrictive covenants set forth in Section 5 are
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separate and independent contractual provisions. The invalidity or
unenforceability of any particular restrictive covenant or any other provision
of this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
11. Successors and Assigns Binding Effect. This Agreement shall be
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binding upon and inure to the benefit of the Company and Executive and their
respective heirs, legal representatives, executors, administrators, successors
and assigns, provided that Executive may not assign his
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rights or delegate his obligations hereunder. The Company may assign its rights
under the restrictive covenants in Section 5 to any beneficial owner of 10% or
more of the Company or any other Affiliate.
12. No Waiver. The failure by the Company or any Affiliate to enforce any
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of its rights hereunder shall not be deemed to be a waiver of such rights,
unless such waiver is in writing and signed by the waiving party, and, in the
case of any corporation, approved by its Board of Directors, or in the case of a
partnership, approved by the Board of Directors of its corporate general
partner. Waiver of any one breach shall not be deemed to be a waiver of any
other breach of the same or any other provision hereof.
13. No Construction Against Any Party. This Agreement was reviewed by
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legal counsel for each of Executive and the Company. This Agreement is the
product of informed negotiations among Executive and the Company and if any part
of this Agreement is deemed to be unclear or ambiguous, it shall be construed as
if it were drafted jointly by all parties. Moreover, Executive and the Company
each acknowledge that no party was in a superior bargaining position regarding
the substantive terms of this Agreement.
14. Disputes. In the event of any dispute between the parties arising out
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of this Agreement, the prevailing party shall be entitled to recover from the
nonprevailing party the reasonable expenses of the prevailing party including,
without limitation, reasonable attorneys' fees.
15. Effectiveness. This Agreement shall become effective upon the
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Effective Date.
16. Entire Agreement.
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(a) This Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes any and all other
agreements, either oral or in writing, among the parties hereto with respect to
the subject matter hereof (including any employment agreement in effect prior to
the date hereof).
(b) This Agreement may not be changed orally, but may be amended,
revoked, changed or modified at any time by a written agreement executed by the
Executive and the Company upon approval of the Board of Directors.
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IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year set forth above.
ADVANCE HOLDING CORPORATION
By:_____________________________________________
Title:__________________________________________
EXECUTIVE
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