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Exhibit 10.1
[SECOND] AMENDED AND RESTATED SEVERANCE AND
RETENTION AGREEMENT
[SECOND] AMENDED AND RESTATED
SEVERANCE AND RETENTION AGREEMENT (this " Agreement ") dated
as of ___, 2007, by and between CSK Auto, Inc., an Arizona
corporation (the " Company "), and ___ (the "
Executive ").
RECITALS
The Company considers it essential
and in the best interest of its stockholders to foster the
continuous employment of key management personnel. The Company
further recognizes that, as in the case of many publicly held
corporations, the possibility of a change of control of the Company
may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may create concerns
for, and the distraction of, management personnel and may even
result in departures which might have otherwise not have taken
place, all to the detriment of the Company and its stockholders.
The Company now desires to take steps to reinforce and encourage
the continued attention and dedication of members of the
Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
of Control (as defined below) of the Company.
AGREEMENT
1. Definitions
1.1.
An " Affiliate " of the Company is an entity controlling,
controlled by or under common control with the Company as defined
in Rule 405 of the Securities and Exchange Commission under
the Securities Act of 1933, as amended.
1.2.
" Base Salary " shall mean the Executive’s regular
annual rate of base pay as of the date in question.
1.3.
" Cause " shall mean that Executive: (i) has been
convicted of a felony, or has entered a plea of guilty or nolo
contendere to a felony; (ii) has committed an act of fraud
or dishonesty which is injurious to the Company or any of its
subsidiaries; (iii) has willfully and continually refused to
substantially perform his duties with the Company or any of its
subsidiaries (other than any such refusal resulting from his
incapacity due to mental illness or physical illness or injury),
after a demand for substantial performance has been delivered to
the Executive by the Board of Directors of the Company, where such
demand reasonably identifies the manner in which the Board of
Directors believes that the Executive has refused to substantially
perform his duties and the passage of a reasonable period of time
as specified by the Board of Directors for Executive to comply with
such demand; or (iv) has willfully engaged in gross misconduct
injurious to the Company or any of its subsidiaries.
1.4.
A " Change of Control " shall be deemed to have taken place
if, after the date hereof:
(a) any person, corporation, or
other entity or group, including any "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, other
than any employee benefit plan then maintained by CSK Auto
Corporation (" Parent "), becomes the beneficial owner of
shares of Parent having 50% or more of the total number of votes
that may be cast for the election of directors of Parent (including
any shares owned by such beneficial owner or members of its "group"
as of the date hereof);
(b) as the result of, or in
connection with, any contested election for the Board of Directors
of Parent, or any tender or exchange offer, merger or other
business combination or sale of assets, or any combination of the
foregoing (a "Transaction"), the persons who were directors of
Parent before the Transaction shall cease to constitute a majority
of the Board of Directors of Parent or any successor to Parent or
its assets;
(c) at any time Parent shall
consolidate or merge with any other Person and Parent shall not be
the continuing or surviving corporation, or any Person shall
consolidate or merge with Parent and Parent shall be the continuing
or surviving corporation, and in connection therewith, all or part
of the outstanding Parent stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any
other property;
(d) Parent shall be a party to a
statutory share exchange with any other Person after which Parent
is a subsidiary of any other Person; or
(e) Parent shall sell or otherwise
transfer all or substantially all of the assets or earning power of
Parent and its subsidiaries (taken as a whole) to any Person or
Persons.
1.5.
The " Change of Control Date " shall mean the date
immediately prior to the consummation of the Change of Control.
1.6.
The Executive shall have " Good Reason " to terminate
employment if, without the Executive’s consent:
(a) the Executive’s duties,
responsibilities or authority are materially reduced or diminished
(provided, however, that neither (i) a change in the
Executive’s reporting relationships, nor (ii) an
adjustment in the nature of the Executive’s duties and
responsibilities that, in either case, does not remove from him the
authority with respect to the Company’s functional area,
employees or products and services that the Executive had
immediately prior to such change or adjustment shall constitute
Good Reason);
(b) the Executive’s
compensation or benefits are reduced;
(c) the Company reduces the
potential earnings of the Executive under any performance-based
bonus or incentive plan of the Company;
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(d) the Company requires that the
Executive’s employment be based at a location outside a 50
mile radius from the location of the Executive’s employment
location as of the date hereof or the Executive’s employment
location immediately prior to a Change of Control Date, as the case
may be;
(e) any purchaser, assign,
continuing or surviving corporation, or successor of the Company or
its business or assets (whether by acquisition, merger,
liquidation, consolidation, reorganization, sale or transfer of
assets or business, or otherwise) fails or refuses to expressly
assume in writing this Agreement and all of the duties and
obligations of the Company hereunder pursuant to Section 9
hereof; or
(f) the Company breaches any of
the material provisions of this Agreement or the Executive’s
employment agreement, if any.
Notwithstanding
the foregoing, none of the events referred to in (a) through
(f) above shall constitute Good Reason unless the Executive
gives written notice to the Company of his election to terminate
his employment for such reason within 15 days after he becomes
aware of the existence of facts or circumstances constituting Good
Reason. Such notice shall set forth in reasonable detail the facts
and circumstances constituting the Good Reason and, if the Good
Reason is a curable condition (in the good faith determination of
the Company), shall provide the Company with 30 days to cure
such condition. The notice shall also specify the date when the
termination of employment is to become effective (if the Good
Reason is not curable or is curable, but not cured within the
30 days), which date shall be not less than 45 days and
not more than 90 days from the date the notice is given;
provided, however, that after receiving such notice, the Company
shall be permitted to terminate the Executive’s employment
prior to the termination date specified by Executive without
payment of additional compensation to the Executive (other than the
Company shall still be obligated for payment of Standard Severance
Benefits in accordance with the terms and conditions herein).
1.7.
" Person " shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and
used in Sections 13(d) and 14(d) thereof, including a "group" as
defined in Section 13(d).
1.8.
" Target Bonus " shall mean the target bonus (100% level)
established for the Executive for the year in question under the
Company’s "Annual Incentive Plan" or "Performance Unit Plan,"
as applicable.
2. Retention Bonus .
If a Change of Control occurs and (i) the Executive remains
continuously employed by the Company or its Affiliates or the
continuing or surviving corporation in the case of Section 1.4
hereof on a full-time basis through the date that is six months
following the Change of Control Date or (ii) the
Executive’s employment with the Company is terminated
(a) by the Company without Cause or (b) by the Executive
for Good Reason, in each case before the date that is six months
following the Change of Control Date, the Company shall pay to the
Executive a gross lump sum cash amount equal to three
(3) months of the Executive’s then current Base Salary
(the " Retention Bonus "). The Retention Bonus, if earned in
accordance with the preceding sentence, shall be paid to the
Executive within 10 days following the date that is six months
following a Change of Control Date. Any payment of the
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Retention Bonus shall be paid net of any applicable withholding
required under federal, state or local law.
3. Change of Control
Severance Benefits
3.1.
Eligibility for Change of Control Severance Benefits . The
Executive shall be eligible for the benefits described in
Section 3.2 (the " Change of Control Severance Benefits
") if there has been a Change of Control and during the twelve
(12) month period commencing on the Change of Control Date
(the " Post Change of Control Period "), the
Executive’s employment with the Company is terminated
(i) by the Company without Cause or (ii) by the Executive
for Good Reason.
3.2.
Severance Benefit . Upon satisfaction of the terms and
conditions of this Agreement, and subject to Section 5, the
Executive shall be entitled to the following Change of Control
Severance Benefits:
(a) Cash Payments . The
Executive shall be entitled to receive an amount in cash equal to
the sum of:
(i)
100% of the greater of (x) the sum of the Executive’s
Base Salary and Target Bonus, in each case as in effect upon the
date Executive’s employment was terminated, or (y) the
sum of the Executive’s Base Salary and Target Bonus, in each
case as in effect on the Change of Control Date; and
(ii)
accrued and unused vacation.
The payment shall be made in equal monthly installments over a
twelve (12) month period (the "severance period") and shall be
paid net of any applicable withholding required under federal,
state or local law. Any such payment shall be in lieu of any
payment otherwise due under the Company’s "Annual Incentive
Plan" or "Performance Unit Plan" for the year in which the
Executive’s termination occurs.
(b) Benefits Continuation .
During the severance period, the Company shall provide the
Executive (and his eligible dependents, to the extent applicable
and comparable to coverage afforded prior to termination of
employment) with continued coverage under the Company’s
medical, dental, vision and Exec-U-Care benefit plans, in each
case, in accordance with the terms thereof and with the same level
of coverage (and related cost to the Executive) as if the Executive
had remained employed during such period. In no event shall the
Executive be entitled to participation in any other employee
benefit plans or arrangements or perquisites provided by the
Company from and after the date the Executive’s employment is
terminated, except as set forth herein.
(c) Outplacement Services .
The Company shall provide reimbursement to the Executive for
outplacement counseling services from an outplacement firm of
national reputation engaged by the Executive to assist the
Executive in obtaining new employment, provided that the amount
required to be reimbursed for such services by the
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Company shall not exceed 15% of the greater of Executive’s
Base Salary as in effect upon the date Executive’s employment
was terminated or as in effect on the Change of Control Date.
(d) If the Company determines
(i) that on the date the Executive’s employment with the
Company terminates or at such other time that the Company
determines to be relevant, the Executive is a "specified employee"
(as such term is defined under Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code")) of the Company and
(ii) that payment of the amounts set forth in
Section 3.2(a)(i) or other such payments provided hereunder
would be considered "deferred compensation" under Section 409A
of the Code subject to the additional tax under
Section 409A(a)(1)(B) of the Code if provided at the time
otherwise required under this Agreement, then commencement of such
payments shall be delayed until the earlier of (A) the
Executive’s death or disability (within the meaning of
Section 409A of the Code) or (B) the date that is six
months following the Executive’s "separation from service"
with the Company (within the meaning of Section 409A of the
Code). Any installment payments that are delayed pursuant to the
preceding sentence shall be paid in lump sum on the first date such
payments become payable pursuant to the preceding sentence, after
which time the remainder of the payments shall be made in equal
monthly installments pursuant to Section 3.2.
4. Standard Severance
Benefits
4.1.
Eligibility for Standard Severance Benefits . If the
Executive’s employment with the Company is terminated
(i) by the Company without Cause or (ii) by the Executive
for Good Reason, in each case other than during the Post Change of
Control Period, the Executive shall be eligible for the benefits
described in Section 4.2 (the " Standard Severance
Benefits ").
4.2.
Severance Benefit . Upon satisfaction of the terms and
conditions of this Agreement, and subject to Section 5, the
Executive shall be entitled to the following Standard Severance
Benefits:
(a) Cash Payments . The
Executive shall be entitled to receive an amount in cash equal to
the sum of:
(i)
100% of the greater of (x) the sum of Executive’s Base
Salary and Target Bonus, in each case as in effect upon the date
Executive’s employment was terminated, or (if applicable)
(y) the sum of Executive’s Base Salary and Target Bonus,
in each case as in effect on the date Executive gives notice,
pursuant to Section 1.6, in the case of a termination for Good
Reason; and
(ii)
accrued and unused vacation.
The payment shall be made in equal monthly installments over a
twelve (12) month period (the "severance period") and shall be
paid net of any applicable withholding required under federal,
state or local law. Any such payment shall be in lieu of any
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payment otherwise due under the Company’s "Annual
Incentive Plan" or "Performance Unit Plan" for the year in which
the Executive’s termination occurs.
(b) Benefits Continuation .
During the severance period, the Company shall provide the
Executive (and his eligible dependents, to the extent applicable
and comparable to coverage afforded prior to termination of
employment) with continued coverage under the Company’s
medical, dental, vision and Exec-U-Care benefit plans, in each
case, in accordance with the terms thereof and with the same level
of coverage (and related cost to the Executive) as if the Executive
had remained employed during such period. In no event shall the
Executive be entitled to participation in any other employee
benefit plans or arrangements or perquisites provided by the
Company from and after the date the Executive’s employment is
terminated, except as set forth herein.
(c) Outplacement Services .
The Company shall provide reimbursement to the Executive for
outplacement counseling services from an outplacement firm of
national reputation engaged by the Executive to assist the
Executive in obtaining new employment, provided that the amount
required to be reimbursed for such services by the Company shall
not exceed 15% of the greater of Executive’s Base Salary as
in effect upon the date Executive’s employment was terminated
or Executive’s Base Salary in effect on the date Executive
gives notice pursuant to Section 1.6, in the case of a
termination for Good Reason.
(d) If the Company determines
(i) that on the date the Executive’s employment with the
Company terminates or at such other time that the Company
determines to be relevant, the Executive is a "specified employee"
(as such term is defined under Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code")) of the Company and
(ii) that payment of the amounts set forth in
Section 4.2(a)(i) or other such payments provided hereunder
would be considered "deferred compensation" under Section 409A
of the Code subject to the additional tax under
Section 409A(a)(1)(B) of the Code if provided at the time
otherwise required under this Agreement, then commencement of such
payments shall be delayed until the earlier of (A) the
Executive’s death or disability (within the meaning of
Section 409A of the Code) or (B) the date that is six
months following the Executive’s "separation from service"
with the Company (within the meaning of Section 409A of the
Code). Any installment payments that are delayed pursuant to the
preceding sentence shall be paid in lump sum on the first date such
payments become payable pursuant to the preceding sentence, after
which time the remainder of the payments shall be made in equal
monthly installments pursuant to Section 4.2.
5. Release .
Notwithstanding anything in this Agreement to the contrary, neither
the Retention Bonus, the Change of Control Severance Benefits nor
the Standard Severance Benefits shall be payable to the Executive
pursuant to this Agreement unless and until the eighth (8th) day
after the Executive executes (and does not subsequently revoke), in
each case, a general release in the form of Exhibit A
attached hereto (the " Release ").
6. Tax Indemnity
Payments.
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(a) Notwithstanding anything in
this Severance Agreement or any other agreement between the
Executive and the Company to the contrary, in the event that it
shall be determined that the aggregate payments or distributions by
the Company, any purchaser, successor, or assign thereof, or any of
its or their affiliates to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to
the terms hereof, the LTIP or otherwise, but determined without
regard to any additional payments required under this
Section 6 (each a " Payment "), constitute "parachute
payments" (as such term is defined under Section 280G of the
Code or any successor provision, and the regulations promulgated
thereunder (collectively, " Section 280G ")) subject to
the excise tax imposed by Section 4999 of the Code or any
successor provision (collectively, " Section 4999 ") or any
interest or penalties with respect to such excise tax (the total
excise tax, together with any interest and penalties, are
hereinafter collectively referred to as the " Excise Tax
")), then the Executive shall be entitled to receive an additional
payment (a " Gross-Up Payment ") in an amount such that
after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including,
without limitation, any federal, state or local income and
self-employment taxes and Excise Tax (and any interest and
penalties imposed with respect to any such taxes) imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of
Section 6(c) h
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