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EXHIBIT 10.02
EMPLOYMENT AGREEMENT
This Employment Agreement ("this Agreement") is made and entered into
as of November 1, 1996 (the "Effective Date"), by and between CSK Auto, Inc.,
an Arizona corporation (the "Company"), and Xxxxx Xxxxxx ("Executive").
The Company hereby agrees to employ Executive, and Executive hereby
accepts such employment, on the terms and conditions hereinafter set forth.
1. POSITION.
From the Effective Date until the termination of Executive's
employment hereunder (the "Period of Employment"), Executive shall serve as
President, Chief Operating Officer and Chief Financial Officer of the Company,
and shall have the normal duties and responsibilities of a chief operating
officer and a chief financial officer. Executive shall be subject to the
customary oversight and direction of, and shall report solely to, the Board of
Directors of the Company (the "Board"). During the Period of Employment,
Executive will (a) during normal business hours, devote his full time and
exclusive attention to, and use his best efforts to advance, the business and
welfare of the Company, and (b) not engage in any other employment activities
for any direct or indirect remuneration without the concurrence of the Board,
provided, however, Executive may serve on corporate, charitable and community
boards so long as such activities do not unreasonably interfere with the
performance of his duties under this Agreement and provided that any such
activities are approved in advance by the Board, which approval will not be
unreasonably withheld.
2. PLACE OF EMPLOYMENT.
Executive's office shall be at the Company's principal executive
offices in Phoenix, Arizona.
3. COMPENSATION.
3.1 Base Salary. During the Period of Employment, the Company
shall pay Executive a Base Salary at the rate of Four Hundred Thousand Dollars
($400,000) per annum payable at
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least as frequently as monthly and subject to payroll deductions as may be
necessary or customary in respect of the Company's salaried employees in
general. The amount of Executive's Base Salary shall not be changed through
the Company's fiscal year ending February 1998, and thereafter Executive's Base
Salary hereunder shall be subject to annual review by the Board, provided that
the level of such Base Salary shall not be subject to reduction.
3.2 Performance Based Compensation. In addition to the Base Salary
provided for in Section 3.1 hereof, Executive shall be eligible to receive a
cash bonus in an amount equal to a percentage of his Base Salary if the
Company's consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA"), as defined in Exhibit 1 hereto, equals or exceeds the
percentages of target annual EBITDA with respect to such fiscal year in
accordance with the chart set forth below:
Percentage of Bonus Amount as a
EBITDA Target Achieved Percentage of Base Salary
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100% or greater 90%
95% or greater, but less than 100% 70%
90% or greater, but less than 95% 50%
Less than 90% 0%
For the Company's fiscal year ending in February 1998, the EBITDA target shall
be $70 million. For fiscal years thereafter, the EBITDA target shall be set by
the Company's Board of Directors as part of its annual budgeting process.
Executive shall also be eligible to receive an annual cash bonus of up
to 20% of his Base Salary at the discretion of the Board based upon the Board's
evaluation of Executive's performance for each fiscal year of the Company
during the Period of Employment.
4. BENEFITS.
During the Period of Employment, Executive shall be entitled to
participate in all benefit plans and programs maintained by the Company which
are available to its executive officers,
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including any and all perquisites, provided that Executive's right to
participate in such plans and programs shall not affect the Company's right to
amend or terminate the general applicability of such plans and programs, and
Executive acknowledges that he shall have no vested rights under or to
participate in any such plan or program except as expressly provided under the
terms thereof. Commencing on the Effective Date, Executive shall be entitled
to five (5) weeks of vacation annually (or such greater amount as is provided
to senior executives of the Company generally) with carryovers in accordance
with Company policy. Executive also shall be entitled to the business and
personal use of an automobile provided by the Company and the reimbursement of
all expenses of operating and maintaining such automobile. The Company shall
provide Executive with office space, stenographic assistance and such other
facilities and services as shall be suitable to Executive's position and
adequate for the performance of his duties hereunder.
5. EXPENSES; TAXES.
Upon presentation of acceptable substantiation therefor, the Company
will pay or reimburse Executive for such reasonable travel, entertainment and
other expenses as he may incur during the Period of Employment in connection
with the performance of his duties hereunder. Federal, state and local income
taxes shall be withheld on all cash and in-kind payments made by the Company to
Executive in accordance with applicable tax laws and regulations.
6. TERMINATION OF EMPLOYMENT.
The provisions of this Section 6 shall apply upon termination of
Executive's employment hereunder. In connection with any termination of
Executive's employment hereunder, Executive or his beneficiaries shall be
entitled to receive, pro-rated as appropriate, earned but unpaid Base Salary,
unreimbursed amounts pursuant to Section 5 hereof, and unpaid and unreimbursed
payments and benefits under, and in accordance with the terms of, applicable
benefit plans and programs, said payments being collectively referred to as
Standard Termination Payments.
6.1 For Cause or Not for Good Reason. If the Company terminates
Executive's employment for Cause (as hereinafter defined) or if Executive
terminates his employment other than for Good Reason (as defined in Section
6.3), the Company's obligations to compensate Executive shall in all respects
cease as of the date of such termination, except for Standard
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Termination Payments. Termination of Executive's employment for "Cause" shall
mean termination by the Company because Executive:
(i) has been convicted of a felony or a crime involving
moral turpitude, or
(ii) has used alcohol or drugs on an ongoing basis to an
extent that materially interferes with the performance by Executive of his
duties under this Agreement, or
(iii) has embezzled or misappropriated Company funds or
property, or
(iv) has willfully and knowingly violated Section 7.1,
Section 7.2 or Section 7.3 hereof, or
(v) has willfully and continually failed to substantially
perform his duties hereunder (other than any such failure resulting from mental
or physical illness) after written demand for substantial performance is
delivered by the Board which specifically identifies the manner in which the
Board believes Executive has not substantially performed his duties and
Executive fails to cure his nonperformance within fifteen (15) business days of
receiving such notice.
Notwithstanding the occurrence of any event listed in clauses (i)
through (v) above, Executive shall not be deemed to have been terminated for
Cause without (a) reasonable notice to Executive setting forth the reasons for
the Company's intention to terminate for Cause, (b) an opportunity for
Executive, together with his counsel, to be heard before the Board, and (c)
delivery to Executive of a notice of termination from the Board finding that in
the good faith opinion of a majority of the Board (exclusive of Executive),
Executive was guilty of the conduct referred to in such notice.
6.2 Upon Death or Permanent Disability. If Executive's employment
is terminated as a result of death or Permanent Disability (as hereinafter
defined), the Company's obligation to compensate Executive shall in all
respects cease as of the date of such termination, except for Standard
Termination Payments including, without limitation, all disability benefits to
which Executive was entitled on the date of such termination, regardless of
when such benefits would be
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payable. The Company may terminate Executive's employment hereunder
attributable to the "Permanent Disability" of Executive if Executive becomes
physically or mentally incapacitated or disabled so that he is unable to
perform for the Company substantially the same services as he performed prior
to incurring such incapacity or disability (the Company, at its option and
expense, is entitled to retain a physician reasonably acceptable to Executive
to confirm the existence of such incapacity or disability, and the
determination of such physician shall be binding upon the Company and
Executive), and such incapacity or disability exists for an aggregate of six
(6) calendar months in any twelve (12) calendar month period.
6.3 Not For Cause or For Good Reason. If (i) Executive's
employment is terminated by the Company for a reason other than Cause,
Executive's death or Executive's Permanent Disability, or (ii) Executive
terminates his employment for Good Reason (as hereinafter defined), the
Company's obligation to compensate Executive shall in all respects cease as of
the date of such termination, except (a) for Standard Termination Payments, (b)
that the Company will, for a period of twelve (12) months following said date
of termination, pay to Executive each month an amount equal to Executive's Base
Salary in effect at the time of such termination divided by twelve (12), (c)
that the Company will, at the time it normally pays year-end bonuses to other
employees based upon the Company's performance in the prior fiscal year, pay to
Executive with respect to the year in which his employment terminated a
prorated bonus based upon the number of months in such fiscal year for which
the Executive was employed multiplied by the lower of the bonus Executive would
have received if his employment had continued throughout such year and the
bonus that the Executive received for the fiscal year immediately preceding the
fiscal year in which his employment terminated, and (d) that the Company will,
for a period of twelve (12) months following said date of termination, provide
Executive with welfare benefits, including any life insurance, hospitalization,
medical and disability benefits, substantially similar to those provided to
Executive as of the date of termination, provided that such benefits shall be
discontinued to the extent Executive receives similar benefits from subsequent
employment. For purposes of this Agreement, "Good Reason" shall exist if (x) a
significant adverse change to the employment responsibilities or authority of
Executive occurs and is promptly objected to by Executive in writing, (y) the
Company shall fail to pay to Executive or, if applicable, Executive's heirs,
any portion of his compensation or benefits when due, and (z) the Company shall
require
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Executive to be based at any location outside of the greater Phoenix
metropolitan area; provided that Good Reason shall not exist unless Executive
shall have first provided the Company and the Board with written notice of the
event identified in any of the preceding clauses (x) through (z) and the
Company shall have failed to remedy or cure such event within fifteen (15) days
following receipt of such notice.
6.4 Release and Satisfaction. At the time of termination of
Executive's employment, Executive and the Company agree to execute mutual
releases whereby (a) Executive will release, relinquish and forever discharge
the Company and any director, officer, employee, shareholder, controlling
person or agent of the Company from any and all claims, damages, losses, costs,
expenses, liabilities or obligations, whether known or unknown (other than any
such claims, damages losses, costs, expenses, liabilities or obligations
arising under (i) any indemnification arrangement of the Company with respect
to Executive, (ii) any employee benefit plan or program (whether or not
tax-qualified) covering Executive, (iii) any stock purchase or stock option
plan or agreement to which the Company and Executive are parties (or any
document executed in connection therewith) or (iv) this Agreement, to the
extent the Company or any such person has continuing obligations pursuant to
the express provisions hereof following such termination), which Executive has
incurred or suffered or may incur or suffer as a result of Executive's
employment by the Company or the termination of such employment, and (b) the
Company will release, relinquish and forever discharge Executive and his heirs,
successors and assigns from any and all claims, damages, losses, costs,
expenses, liability or obligations, whether known or unknown (except as set
forth in Section 6.5 hereof and other than any such claims, damages, losses,
costs, expenses, liabilities or obligations arising under any of the
arrangements or agreements referred to in clauses (i) through (iii) in the
preceding clause (a) of this Section 6.4 or under this Agreement to the extent
Executive or any such person has continuing obligations pursuant to the express
provisions hereof following such termination), which the Company has incurred
or suffered or may incur or suffer as a result of the Company's employment of
Executive or the termination of such employment.
6.5 Effect on This Agreement. The termination of Executive's
employment shall not affect the continuing operation and effect of Sections 6.4
and 7 hereof, nor affect any obligation
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of the Company to make payments pursuant to Section 6 hereof, which shall
continue in full force and effect upon the Company and Executive, and its and
his heirs, successors and assigns. Nothing in Section 6.1 or 6.4 hereof shall
be deemed to operate or shall operate as a release, settlement or discharge of
any liability of Executive to the Company (a) from any act or omission by
Executive enumerated in Section 6.1 which constituted a reason for termination
of Executive's employment for Cause or (b) in connection with any amount
Executive owes to the Company pursuant to a loan or other advance.
6.6 Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise nor will any payments provided for herein be subject to
offset in respect of any claims which the Company may have against Executive
and, except as specifically provided herein, the amount of any payment or
benefit provided for in this Agreement shall not be reduced by any compensation
earned or benefits received by Executive as the result of employment by a
future employer, by offset against any amount claimed to be owed by him to the
Company, or otherwise.
7. NON-DISCLOSURE OF PROPRIETARY INFORMATION, SURRENDER OF RECORDS;
INVENTIONS AND PATENTS.
7.1 Proprietary Information. Executive agrees that he shall not
use for his own purpose or for the benefit of any person or entity other than
the Company or its shareholders or affiliates, nor otherwise disclose to any
individual or entity at any time while he is employed by the Company or
thereafter any proprietary information of the Company unless such disclosure
(a) has been authorized by the Board, (b) is in the good faith judgment of
Executive required in the course of Executive's employment hereunder, (c) is in
the course of such individual's or entity's employment or retention by the
Company, or (d) is required by law, a court of competent jurisdiction or a
governmental or regulatory agency. For purposes of this Agreement, the term
"proprietary information" shall mean: (a) the name or address of any customer,
supplier or affiliate of the Company or any information concerning the
transactions or relations of any customer, supplier or affiliate of the Company
or any of its shareholders; (b) any information concerning any product,
technology or procedure employed by the Company, but not generally known to its
customers, suppliers or competitors, or under development by or being tested by
the
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Company, but not at the time offered generally to customers or suppliers; (c)
any information relating to the marketing methods, sales margins, discounts,
rebates, supplier incentives, or the like, the capital structure, or results of
any business plan of the Company; (d) any information contained in the
Company's policies and procedures or employees' manual; (e) any inventions,
innovations, trade secrets or other items covered by Section 7.3 below; and (f)
any other information which the Board has determined by resolution and
communicated to Executive to be confidential or proprietary. However,
proprietary information shall not include any information that is or becomes
generally known to the industries in which the Company competes other than
through actions of Executive in violation of Sections 7.1 or 7.2 hereof.
7.2 Confidentiality and Surrender of Records. Executive agrees
that, while he is employed by the Company or at any time thereafter, he shall
not except as required by law give any "confidential records" (as hereinafter
defined) to, or permit any inspection or copying of confidential records by,
any individual or entity other than in the course of such individual's or
entity's employment or retention by the Company or as required by law, a court
of competent jurisdiction, or a governmental or regulatory agency, nor shall he
retain any of the same following termination of this employment, without the
prior approval of the Board. For purposes hereof, "confidential records" means
all correspondence, memoranda, files, manuals, financial, operating or
marketing records, magnetic tape, or electronic or other media of any kind
which may be in Executive's possession or under his control or accessible to
him which contain any proprietary information as defined in Section 7.1 above.
7.3 Inventions and Patents. Executive agrees that all inventions,
innovations, trade secrets, patents and processes developed by him alone or in
conjunction with others at any time during his employment by the Company shall
belong to the Company. Executive will use his best efforts to perform all
actions reasonably requested by the Board to establish and confirm such
ownership by the Company.
7.4 Definition of Company. For purposes of this Section 7, the
term "Company" shall include the Company and any and all of its subsidiaries,
ventures or affiliates, whether currently existing or hereafter formed.
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7.5 Enforcement. The parties hereto agree that the duration and
area for which the covenants set forth in Section 7 are to be effective are
reasonable. In the event that any court or arbitrator determines that the time
period or the area, or both of them, are unreasonable and that any of the
covenants are to that extent unenforceable, the parties hereto agree that such
covenants will remain in full force and effect, first, for the greatest time
period, and second, in the greatest geographical area that would not render
them unenforceable. The parties intend that this Agreement will be deemed to
be a series of separate covenants, one for each and every county of each and
every state of the United States of America. Executive agrees that damages are
an inadequate remedy for any breach of the covenants in this Section 7 and that
the Company will, whether or not it is pursuing any potential remedies at law,
be entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this Agreement.
8. MISCELLANEOUS.
8.1 Notice. Any notice required or permitted to be given
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage prepaid, addressed to the addressee at his or its address last
provided the sender in writing by the addressee for purposes of receiving
notices hereunder or, unless or until such address shall be so furnished, to
the address indicated opposite his or its signature to this Agreement. Each
party may also provide notice by sending the other party a facsimile at a
number provided by such other party.
8.2 Modification and No Waiver of Breach. No waiver or
modification of this Agreement shall be binding unless it is in writing signed
by the parties hereto. No waiver by a party of a breach hereof by the other
party shall be deemed to constitute a waiver of a future breach, whether of a
similar or dissimilar nature, except to the extent specifically provided in any
written waiver under this Section 8.2.
8.3 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New York,
and all questions relating to the validity and performance hereof and remedies
hereunder shall be determined in accordance with such law.
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8.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
8.5 Captions. The captions used herein are for ease of reference
only and shall not define or limit the provisions hereof.
8.6 Entire Agreement. This Agreement together with any agreement,
plans or other documents implementing the terms of this Agreement constitute
the entire agreement between the parties hereto relating to the matters
encompassed hereby and supersede any prior oral or written agreements.
8.7 Assignment. The rights of the Company under this Agreement
may, without the consent of Executive, be assigned by the Company, in its sole
and unfettered discretion, to any person, firm, corporation or other business
entity which at any time, whether by purchase, merger, or otherwise, directly
or indirectly, acquires all or substantially all of the stock, assets or
business of the Company.
8.8 Non-Transferability of Interest. None of the rights of
Executive to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Executive. Any attempted assignment, transfer, conveyance, or other
disposition (other than as aforesaid) of any interest in the rights of
Executive to receive any form of compensation to be made by the Company
pursuant to this Agreement shall be void.
8.9 Arbitration. Any dispute arising under this Agreement shall
be resolved by binding arbitration conducted under the auspices and pursuant to
the rules of the American Arbitration Association and held in Phoenix, Arizona
or such other place as the parties may mutually agree. Each party shall bear
its or his own costs and expenses in any such arbitration and one-half of the
arbitrator's fees and expenses.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first written above.
CSK AUTO, INC.
By: /s/
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Name:
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Address for Notices: Title:
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000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
With a copy to:
CSK Group Ltd.
c/o Investcorp International Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
EXECUTIVE
/s/
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Xxxxx Xxxxxx
Address for Notices:
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