EMPLOYMENT AGREEMENT First Amendment
Exhibit
10.32
First
Amendment
FIRST
AMENDMENT, dated as of June 4, 2008 (“First Amendment”) to the EMPLOYMENT
AGREEMENT, dated as of January 7, 2008, between Advance Auto Parts, Inc.
(“Advance” or the “Company”), a Delaware corporation, and Xxxxxx X. Xxxxxxx (the
“Executive”) (the “Agreement”).
The
Company and the Executive agree as follows:
1. Amendment
of Section 4(a) of the Agreement. Effective upon execution of
this First Amendment by the Company and the Executive, Section 4(a) of the
Agreement shall be amended to provide, in the event of the Executive’s death,
for the immediate vesting of all shares of Restricted Stock granted to the
Executive after the Commencement Date of the Agreement and the immediate
exercisability of all Stock Options and Stock Appreciation Rights granted to the
Executive after the Commencement Date of the Agreement, and said Section 4(a) is
hereby deleted in its entirety and the following is inserted in lieu
thereof:
4. Termination
of Employment.
(a) Death. In the event of
the death of the Executive during the Employment Term, Executive’s employment
shall be automatically terminated as of the date of death and a lump sum amount,
equivalent to the Executive’s annual Base Salary and Target Bonus then in
effect, shall be paid, within 60 days after the date of the Executive’s death,
to the Executive’s designated beneficiary, or to the Executive’s estate or other
legal representative if no beneficiary was designated at the time of Executive’s
death. In the event of the death of the Executive during the
Employment Term, the shares of Restricted Stock granted pursuant to Section
3(c)(i) of this Agreement shall vest immediately and the Stock Appreciation
Rights granted pursuant to Section 3(c)(ii) of this Agreement shall become
exercisable upon the date of the Executive’s death for all of the SARs if not
then exercisable in full. In the event of the death of the Executive
during the Employment Term, any shares of Restricted Stock granted to the
Executive after the Commencement Date of this Agreement shall vest immediately
and all Stock Options or Stock Appreciation Rights granted to Executive after
the Commencement Date of this Agreement shall become exercisable upon the date
of the Executive’s death for all such Stock Options and Stock Appreciation
Rights if not then exercisable in full. The foregoing benefit will be
provided in addition to any death, disability or other benefits provided under
the Company’s benefit plans and programs in which the Executive was
participating at the time of his death. Except in accordance with the
terms of the Company’s benefit programs and other plans and programs then in
effect (including the 2004 LTIP or any successor plan thereto, as it relates to
the equity grants referenced in Section 3(c)
hereof),
after the date of Executive’s death, Executive shall not be entitled to any
other compensation or benefits from the Company or hereunder.
2. Amendment
of Section 4(b) of the Agreement. Effective upon execution of
this First Amendment by the Company and the Executive, Section 4(b) of the
Agreement shall be amended to provide, in the event of Executive’s Disability,
for the payment of the Executive’s Target Bonus amount, as that term is defined
in the Agreement, for the immediate vesting of all shares of Restricted Stock
granted to the Executive after the Commencement Date of the Agreement, and for
the immediate exercisability of all Stock Options and SARs granted to the
Executive after the Commencement Date of the Agreement, and said Section 4(b) is
hereby deleted in its entirety and the following is inserted in lieu
thereof:
4. Termination
of Employment.
(b) Disability. In the event of
the Executive’s Disability as hereinafter defined, the employment of the
Executive may be terminated by the Company, effective upon the Disability
Termination Date (as defined below). In such event, the Company shall
pay the Executive an amount equivalent to thirty percent (30%) of the
Executive’s Base Salary for a one year period, which amount shall be paid in one
lump sum within forty-five days following the Executive’s “separation from
service,” as that term is defined in Section 409A of the Code and regulations
promulgated thereunder, from the Company (his “Separation From Service”),
provided that the Executive or an individual duly authorized to execute legal
documents on the Executive’s behalf executes and does not revoke within any
applicable revocation period the release described in Section
4(j)(ii)(B). The Company shall also pay to the Executive a lump sum
amount equivalent to the Executive’s Target Bonus Amount then in effect, which
amount shall be paid in one lump sum within forty-five days following the
Executive’s Separation from Service, provided that the Executive or an
individual duly authorized to execute legal documents on the Executive’s behalf
executes and does not revoke within any applicable revocation period the release
described in Section 4(j)(ii)(B). In the event of the Executive’s
Disability during the Employment Term, the shares of Restricted Stock granted
pursuant to Section 3(c)(i) of this Agreement shall vest immediately upon the
date of the Executive’s Separation from Service and the Stock Appreciation
Rights granted pursuant to Section 3(c)(ii) of this Agreement shall become
exercisable upon the date of the Executive’s Separation from Service for all of
the SARs if not then exercisable in full. In the event of the
Executive’s Disability during the Employment Term, any shares of Restricted
Stock granted to the Executive after the Commencement Date of this Agreement
shall vest immediately upon the date of the Executive’s Separation from Service
and all Stock Options or Stock Appreciation Rights granted to the Executive
after the
Commencement Date of this Agreement shall become exercisable upon the date of
the Executive’s Separation from Service for all such Stock Options and Stock
Appreciation Rights if not then exercisable in full. The foregoing
benefit will be provided in addition to any disability or other benefits
provided under the Company’s benefit plans in which the Executive
participates. The purpose and intent of the preceding two sentences
is to ensure that the Executive receives a combination of insurance benefits and
Company payments following the Disability Termination Date equal to 100% of his
then-applicable Base Salary for such one-year period. Otherwise,
after the Disability Termination Date, except in accordance with the Company’s
benefit programs and other plans then in effect, Executive shall not be entitled
to any compensation or benefits from the Company or hereunder.
“Disability,”
for purposes of this Agreement, shall mean the Executive’s incapacity due to
physical or mental illness causing the Executive’s complete and full-time
absence from the Executive’s duties, as defined in Paragraph 2, for either a
consecutive period of more than six months or at least 180 days within any
270-day period. Any determination of the Executive’s Disability made
in good faith by the Company shall be conclusive and binding on the Executive,
unless within 10 days after written notice to Executive of such determination,
the Executive elects by written notice to the Company to challenge such
determination, in which case the determination of Disability shall be made by
arbitration pursuant to Paragraph 10 below. Except as provided in
this Subsection 4(b), the Company shall not be required to provide the Executive
any compensation or benefits after the determination by the Company unless the
arbitration results in a determination that the Executive is not disabled, in
which case the Company shall pay to the Executive within 10 days after such
arbitration decision all compensation due through the date of such arbitration
decision. The Company shall not be deemed to have breached its
obligations related to such compensation and benefits under this Agreement if it
makes such payment within 10 days after such arbitration
decision. The “Disability Termination Date” shall be the date on
which the Company makes such determination of the Executive’s Disability unless
the arbitration, if any, results in a determination that the Executive is not
disabled. The Executive shall have a legally binding right to the
disability salary continuation benefit as of the Disability Termination
Date.
3. Amendment
of Section 4(f) of the Agreement. Effective upon
execution of this First Amendment by the Company and the Executive, Section 4(b)
of the Agreement shall be amended by adding a new section 4(f)(v)(F), which
shall read its entirety as follows:
(F) All
Gross-Up Payments, including any additional Gross-Up Payments under Section
4(f)(v)(C) and (E), shall be made to the Executive by the end of the calendar
year next following the year in which the Executive remits the related taxes to
the relevant Taxing Authorities. Payment pursuant to Section
4(f)(v)(E) of amounts indemnifying the Executive against any loss in connection
with, and all costs and expenses which may be incurred as a result of
contesting, a claim made against the Executive by a Taxing Authority, shall be
made to the Executive by the end of the calendar year following the year in
which the taxes which are the subject of the claim are remitted to the relevant
Taxing Authority, or where, as a result of the claim, no taxes are remitted, by
the end of the calendar year following the year in which there is a final
nonappealable settlement or other resolution of the claim.
4. Amendment
of Section 18(f) of the Agreement. Effective upon
execution of this First Amendment by the Company and the Executive, Section 4(b)
of the Agreement shall be amended by revising section 18(f) to clarify that the
covenants not to compete applies only to businesses or divisions of
multi-division business that derives more than 15% of its revenues from the
Restricted Activities and which shall now read in its entirety as
follows:
(f) Covenants
Not to Compete.
(i) Non-Competition. Executive
covenants and agrees that during the period from the date hereof until, two (2)
years immediately following the termination, for any reason, of Executive’s
employment with the Company (the “Non-Compete Period”), Executive
will not, directly or indirectly:
(A) own or
hold, directly or beneficially, as a shareholder (other than as a shareholder
with less than 5% of the outstanding common stock of a publicly traded
corporation), option holder, warrant holder, partner, member or other equity or
security owner or holder of any company or business that derives more than 15%
of its revenue from the Restricted Activities (as defined below) within the
Restricted Area (as defined below), or any company or business controlling,
controlled by or under common control with any company or business directly
engaged in such Restricted Activities within the Restricted Area (any of the
foregoing, a “Restricted Company”) or
(B) engage or
participate as an employee, director, officer, manager, executive, partner,
independent contractor, consultant or technical or business advisor (or any
foreign equivalents of the foregoing) with any Restricted Company in the
Restricted Activities within the Restricted Area.
(ii) Restricted
Activities/Restricted Area. For purposes of
this Agreement, the term “Restricted Activities” means the retail, wholesale or
commercial sale of aftermarket auto parts and accessories. The term
“Restricted Area” means the United States of America, including its territories
and possessions.
(iii) Association
with Restricted Company. In the event that
the Executive intends to associate (whether as an employee, consultant,
independent contractor, officer, manager, advisor, partner, executive or
director) with any Restricted Company during the Non-Compete Period, the
Executive must provide information in writing to the Company relating to the
activities proposed to be engaged in by the Executive for such Restricted
Company. All such current associations are set forth on Exhibit B to this
Agreement. In the event that the Company consents in writing to the
Executive’s engagement in such activity, the engaging in such activity by the
Executive shall be conclusively deemed not to be a violation of this Subsection
18(f). Such consent is not intended and shall not be deemed to be a
waiver or nullification of the covenant of non-competition of the Executive or
other similarly bound executives.
(iv) Permitted
Employment with Multi-Division Company. Nothing in this
Subsection 18(f) shall preclude the Executive from accepting employment with a
multi-division company so long as (A) the Executive’s employment is not within a
division of the new employer that engages in and derives more than 15% of its
revenues from the Restricted Activities within the Restricted Area, (B) during
the course of such employment, the Executive does not communicate related to
Restricted Activities with any division of Executive’s new employer that is
engaged in and derives more than 15% of its revenues from the Restricted
Activities within the Restricted Area and (C) the Executive does not engage in
the Restricted Activities within the Restricted Area.
5. Addition
of New
Section 21 to the Agreement. Effective upon
execution of this First Amendment by the Company and the Executive, the
Agreement shall be amended by adding a new section 21, which shall read its
entirety as follows:
21. Accelerated
Vesting of Equity Awards Upon Change In Control. In the event
of a Change in Control as defined hereinabove, the restrictions and deferral
limitations applicable to any Restricted Stock or any Other Stock Unit Awards
granted to the Executive shall lapse and such Restricted Stock or Other Stock
Unit Awards shall become fully vested and transferable to the full extent of the
original grant as of the date such Change In Control is determined to have
occurred; and any Stock Options or SARs granted to the Executive that are
outstanding as of the date of such Change In Control shall become fully
exercisable and vested
to the
extent of the original grant as of the date such Change In Control is determined
to have occurred.
6. Full
Force and Effect. Except for those terms and provisions
amended herein, all other terms and conditions in the Agreement shall remain
unchanged and in full force and effect.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company and Executive have executed this Agreement as of
the date first written above.
| Advance Auto Parts, Inc. | |||||
| By: | (SEAL) | ||||
| Print Name: | |||||
| Title: | |||||
| Address: | |||||
| Executive | |||||
| Print Name: | Xxxxxx Xxxxxxx | ||||
| Signature: | |||||
| Address: | |||||
