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EXHIBIT 10.02
EMPLOYMENT AGREEMENT
(as Amended and Restated as of June 12, 1998)
This Employment Agreement ("this Agreement") is made and entered into
as of June 12, 1998 (the "Effective Date"), by and between CSK Auto, Inc., an
Arizona corporation (the "Company"), and Xxxxxxx Xxxxxxx ("Executive").
WHEREAS, the Company and Executive are party to a certain Employment
Agreement, dated as of January 27, 1997 (the "Old Employment Agreement"); and
WHEREAS, Employer and Employee desire to amend certain provisions of
the Old Employment Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree that, as of the Effective Date, the terms and conditions of the Old
Employment Agreement be, and they hereby, are amended and restated in their
entirety, and 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 Chief Executive
Officer of the Company, and shall have the normal duties and responsibilities of
a chief executive 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"). Executive shall become both the Chairman of the Board and
the Chairman of the Board of Directors (the "Parent Board") of the corporate
parent of the Company, if there be such a corporate parent (the "Parent"), as of
the Effective Date and thereafter during the Period of Employment shall remain
the Chairman of the Board and the Parent 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.
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3. COMPENSATION.
3.1 Base Salary. During the Period of Employment, the Company shall pay
Executive a Base Salary at the rate of Six Hundred Thousand Dollars ($600,000)
per annum payable at 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 in January 1999, 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 respect of each fiscal year during the Period of Employment (the
"Performance Bonus"). The Performance Bonus for any fiscal year shall be in an
amount equal to a percentage of his Base Salary and shall be determined by the
Company's Board of Directors based upon the Company's financial performance in
such fiscal year, with reference to a financial target (in terms of net income,
earnings per share or other measure) set by the Board as part of its annual
budgeting process.
4. BENEFITS.
4.1 Executive. 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, 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. In addition, if the
standard life insurance program provided by the Company does not provide at
least $1,500,000 of insurance on the life of Executive, the Company will at its
own cost, but subject to the availability of such insurance, provide Executive
with supplemental life insurance with a death benefit equal in amount to the
difference between $1,500,000 and the death benefit provided for Executive under
the Company's standard life insurance program; provided, however, that the
Company will not be obligated to pay any amount per annum in excess of
$10,000.00 in additional premiums to secure such supplemental life insurance.
Any insurance policy maintained by the Company on the life of the Executive
shall be made payable to such beneficiary or beneficiaries as the Executive may
designate by written notice to the Company. 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 shall also 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. Such automobile shall be provided by the Company to Employee by the
Company (i) assuming the lease payments due on Executive's existing automobile
lease, (ii) purchasing Executive's existing leased automobile from the lessor
thereof and making such automobile available to Employee, or (iii) if neither of
such alternatives is available, leasing or purchasing a similar automobile for
Executive's use. The Company shall provide Executive with office space,
stenographic
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assistance, and such other facilities and services as shall be suitable to
Executive's position and adequate for the performance of his duties hereunder.
4.2 Additional Benefits. During the Period of Employment, Executive
shall be entitled to designate one additional person who will be permitted to be
enrolled, at the sole cost of Executive, in any health care insurance program of
the Company in which Executive is enrolled, provided that such person's right to
participate in such plan shall not affect the Company's right to amend or
terminate the general applicability of such plan, and such person shall have no
vested rights under or to participate in any such plan except as expressly
provided under the terms thereof.
5. EXPENSES; TAXES.
5.1 Employment Expenses. 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.
5.2 Moving Expenses. Upon presentation of acceptable substantiation
therefor, the Company will reimburse Executive for all costs and expenses up to
$50,000, incurred in relocating Executive's principal residence from the San
Jose, California area to the Phoenix area (the "Reimbursed Amount"), plus, in
recognition of the taxable nature of the Reimbursed Amount, an additional amount
designed to fully gross-up Executive for all state and federal income taxes
payable on the Reimbursed Amount and any other amounts payable under this
Section 5.2.
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, prorated as appropriate, earned but unpaid salary
(excluding the Performance Bonus, except as specifically provided below),
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 hereafter 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 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
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(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 non-performance 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 and, except that if such death or Permanent Disability occurred during
(a) the first half of a fiscal year, 50% of the Performance Bonus (if any) that
would have been payable to Executive with respect to such fiscal year based on
the Company's financial performance for such fiscal year, and (b) the second
half of a fiscal year, the Performance Bonus (if any) that would have been
payable to Executive with respect to said fiscal year based on the Company's
financial performance for such fiscal year. 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 Executive's employment is
terminated by the Company for a reason other than Cause or Executive's death or
Permanent Disability, or if Executive terminates his employment for Good Reason
(as hereinafter defined), the Company's
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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 twenty-four (24) months following said date of
termination (the "Twenty-Four Month Period"), pay to Executive each month an
amount equal to Executive's Base Salary in effect at the time of such
termination (or the Base Salary in effect prior to any Base Salary reduction, if
such reduction constituted Good Reason (as hereinafter defined)) divided by
twelve (12), (c) that the Company shall pay to Executive within thirty (30) days
of the date of such termination an amount equal to the Performance Bonus which
would have been payable to Executive with respect to the Twenty-Four Month
Period if the financial targets for such fiscal years had been achieved, and (d)
that the Company will, for a period of six (6) 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 (or the
benefits in effect prior to any reduction in benefits, if such reduction
constituted Good Reason), 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 (a) the Company shall
have effected a significant adverse change to the employment responsibilities or
authority of Executive or effected any reduction in the level of Executive's
Base Salary or Performance Bonus, (b) the Company shall fail to pay to Executive
any portion of his compensation when due, (c) the Company shall breach a
material term of this Agreement, (d) Executive shall cease to be a member of the
Board or the Parent Board (other than due to (i) Executive's death or Permanent
Disability, (ii) termination of Executive's employment by the Company for Cause,
(iii) termination of Executive's employment by Executive other than for Good
Reason or (iv) Executive's voluntary resignation from the Board or Parent
Board), or (e) the Company is acquired in a single transaction or a series of
related transactions (whether by merger, purchase of all outstanding equity
securities or purchase of assets) by a purchaser which had not previously been a
shareholder of the Company or the Parent, 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 (a)
through (d) 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
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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 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
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
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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 with which the Company competes other
than through actions of Executive in violation of Section 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.
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.
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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.
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 constitutes the
entire agreement between the parties hereto relating to the matters encompassed
hereby and supersedes any prior oral or written agreements, including, without
limitation, that certain memorandum and term sheet dated December 3, 1996.
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.
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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:
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Name: Xxxxx X. Xxxxxx
Title: President and Chief Operating Officer
Address for Notices:
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
With a copy to:
CSK Auto Corporation
c/o Investcorp International Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxxxx
EXECUTIVE
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Xxxxxxx Xxxxxxx
Address for Notices:
0000 X. Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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