SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
February
15, 2008
(February
13, 2008)
Date of
Report
(Date of
earliest event reported)
AUTOZONE,
INC.
(Exact
name of registrant as specified in its charter)
|
Nevada
(State
or other jurisdiction of incorporation or organization)
|
1-10714
(Commission
File Number)
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62-1482048
(IRS
Employer Identification No.)
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123
South Front Street
Memphis,
Tennessee 38103
(Address
of principal executive offices) (Zip Code)
(901)
495-6500
Registrant's
telephone number, including area code
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
[
]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
]
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Precommencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
]
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Precommencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01 Entry Into a Material Definitive Agreement.
AutoZone, Inc. Enhanced
Severance Pay Plan
On
February 13, 2008, the Compensation Committee of the Board of Directors of
AutoZone, Inc. (“AutoZone”) adopted the AutoZone, Inc. Enhanced Severance
Pay Plan (the “Plan”).
The
purpose of the Plan is to provide severance pay to key AutoZone employees who
have executed a non-compete agreement with AutoZone and whose employment
subsequently is terminated without cause (as defined in the non-compete
agreement), other than as a result of death, total disability, or any voluntary
resignation or termination; provided such employee is not eligible for severance
benefits under any other AutoZone plan or agreement and that he or she executes
a release satisfactory in form and substance to AutoZone at the time of
termination.
Under the
Plan, a participating employee is eligible to receive periodic severance
payments in the form of salary continuation for a period of time determined by
his or her position and years of service at the time of
termination. Executive officers are eligible to receive periodic
severance payments for 12 to 24 months, vice presidents for 6 to 12 months, and
other key employees for 3 to 9 months, depending in each case upon their years
of service.
The
foregoing description is qualified in its entirety by reference to the
provisions of the Plan which is filed as Exhibit 99.1 to this report and
incorporated herein by reference.
Executive Officer
Non-Compete and
Non-Solicitation Agreements
On
February 14, 2008, ten of the executive officers of AutoZone entered into a
non-compete and non-solicitation agreement (“Executive Officer Agreement”) with
the Company. The executive officers who entered into an Executive Officer
Agreement are Jon A. Bascom, Timothy W. Briggs, Mark A. Finestone, William T.
Giles, William W. Graves, Lisa R. Kranc, Thomas B. Newbern, Charlie Pleas III,
Larry M. Roesel and James A. Shea.
The
Executive Officer Agreement provides that, during the executive’s employment
with AutoZone and for a period of two years thereafter, the executive shall not
(a) directly or indirectly own or work for any business that competes with
AutoZone, (b) solicit, divert or influence (or attempt to solicit, divert or
influence) any customer of AutoZone, or (c) solicit or attempt to solicit the
employees of AutoZone or seek to cause them to resign their employment with
AutoZone. The Executive Officer Agreement also includes provisions
precluding the executive from disclosing confidential information belonging to
AutoZone.
In the
event the executive’s employment is terminated by AutoZone without cause (as
defined in the Executive Officer Agreement), and provided that at that time, the
executive executes a release of all claims against AutoZone accrued as of the
date of such release, the executive will be entitled to certain severance
benefits. The executive will not be entitled to the severance
benefits in the event of his or her voluntary resignation, including retirement,
death or disability. Such severance benefits consist of periodic
severance pay in accordance with the Plan, continuation of medical, vision and
dental insurance coverage during the severance period (up to a maximum of 18
months) at the same cost to the executive as he or she was paying prior to
termination, a lump-sum, prorated share of any bonus incentives earned during
the period prior to the executive’s termination to be paid when such incentives
are paid generally to similarly-situated employees, and an appropriate level of
outplacement services as determined by AutoZone. The executive’s
applicable Stock Option Agreements govern treatment of stock options upon
termination of employment.
The
foregoing description is qualified in its entirety by reference to the
provisions of the form of Executive Officer Agreement which is filed as Exhibit
99.2 to this report and incorporated herein by reference.
Officer Non-Compete and
Non-Solicitation Agreements
On
February 13, 2008, the Compensation Committee of the Board of Directors of
AutoZone approved a form of non-compete and non-solicitation agreement (“Officer
Agreement”) to be entered into by non-executive officers of
AutoZone.
The
Officer Agreement provides that, during the officer’s employment with AutoZone
and for a period of one year thereafter, the officer shall not (a) directly or
indirectly own or work for any business that competes with AutoZone, (b)
solicit, divert or influence (or attempt to solicit, divert or influence) any
customer of AutoZone, or (c) solicit or attempt to solicit the employees of
AutoZone or seek to cause them to resign their employment with
AutoZone. The Officer Agreement also includes provisions precluding
the officer from disclosing confidential information belonging to
AutoZone.
In the
event the officer’s employment is terminated by AutoZone without cause (as
defined in the Officer Agreement), and provided that at that time, the officer
executes a release of all claims against AutoZone accrued as of the date of such
release, the officer will be entitled to certain severance
benefits. The officer will not be entitled to the severance benefits
in the event of his or her voluntary resignation, including retirement; death or
disability. Such severance benefits consist of periodic severance pay
in accordance with the Plan, continuation of medical, vision and dental
insurance coverage during the severance period (up to a maximum of 18 months) at
the same cost to the officer as he or she was paying prior to termination, a
lump-sum, prorated share of any bonus incentives earned during the period prior
to the officer’s termination to be paid when such incentives are paid generally
to similarly-situated employees, and an appropriate level of outplacement
services as determined by AutoZone. The officer’s applicable Stock
Option Agreements govern treatment of stock options upon termination of
employment.
The
foregoing description is qualified in its entirety by reference to the
provisions of the form of Officer Agreement which is filed as Exhibit 99.3 to
this report and incorporated herein by reference.
Non-Compete and
Non-Solicitation Agreement with Mr. Rhodes
On
February 14, 2008, William C. Rhodes, III, Chairman, President and Chief
Executive Officer of AutoZone entered into a non-compete and non-solicitation
agreement (“CEO Agreement”) with AutoZone. The CEO Agreement provides
that, during Mr. Rhodes’ employment with AutoZone and for a period of three
years thereafter, Mr. Rhodes shall not (a) directly or indirectly own or work
for any business that competes with AutoZone, (b) solicit, divert or influence
(or attempt to solicit, divert or influence) any customer of AutoZone, or (c)
solicit or attempt to solicit the employees of AutoZone or seek to cause them to
resign their employment with AutoZone. The CEO Agreement also
includes provisions precluding Mr. Rhodes from disclosing confidential
information belonging to AutoZone.
In the
event Mr. Rhodes’ employment is terminated by AutoZone without cause (as defined
in the CEO Agreement), and provided that at that time, Mr. Rhodes executes a
release of all claims against AutoZone accrued as of the date of such release,
he will be entitled to certain severance benefits. Mr. Rhodes will
not be entitled to the severance benefits in the event of his voluntary
resignation, including retirement; death or disability. Such
severance benefits consist of an amount equal to 2.99 times his then-current
base salary, continuation of medical, vision and dental insurance coverage up to
a maximum of 18 months at the same cost as he was paying prior to termination, a
lump-sum, prorated share of any bonus incentives earned during the period prior
to his termination to be paid when such incentives are paid generally to
similarly-situated employees, and an appropriate level of outplacement services
as determined by AutoZone. Mr. Rhodes’ applicable Stock Option
Agreements govern treatment of stock options upon termination of his
employment.
The
foregoing description is qualified in its entirety by reference to the
provisions of the CEO Agreement which is filed as Exhibit 99.4 to this report
and incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
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99.1
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AutoZone,
Inc. Enhanced Severance Pay Plan
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99.2
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Form
of non-compete and non-solicitation Agreement signed by each of the
following executive officers: Jon A. Bascom, Timothy W. Briggs,
Mark A. Finestone, William T. Giles, William W. Graves, Lisa R. Kranc,
Thomas B. Newbern, Charlie Pleas III, Larry M. Roesel and James A. Shea;
and by AutoZone, Inc., with an effective date of February 14, 2008,
for each.
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99.3
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Form
of non-compete and non-solicitation Agreement approved by AutoZone’s
Compensation Committee for execution by non-executive
officers.
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99.4
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Agreement
dated February 14, 2008, between AutoZone, Inc. and William C. Rhodes,
III
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
AUTOZONE, INC.
By: /s/ Harry L.
Goldsmith
Harry L.
Goldsmith
Executive
Vice President,
General
Counsel & Secretary
Dated: February
15, 2008
EXHIBIT
INDEX
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99.1
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AutoZone,
Inc. Enhanced Severance Pay Plan
|
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99.2
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Form
of non-compete and non-solicitation Agreement signed by each of the
following executive officers: Jon A. Bascom, Timothy W. Briggs,
Mark A. Finestone, William T. Giles, William W. Graves, Lisa R. Kranc,
Thomas B. Newbern, Charlie Pleas III, Larry M. Roesel and James A. Shea;
and by AutoZone, Inc., with an effective date of February 14, 2008,
for each.
|
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99.3
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Form
of non-compete and non-solicitation Agreement approved by AutoZone’s
Compensation Committee for execution by non-executive
officers.
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99.4
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Agreement
dated February 14, 2008, between AutoZone, Inc. and William C. Rhodes,
III
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EXHIBIT 99.1
AUTOZONE,
INC. ENHANCED SEVERANCE PAY PLAN
AutoZone,
Inc. (hereinafter the "Company") hereby adopts the AutoZone, Inc. Enhanced
Severance Pay Plan (the "Plan"), effective upon the date of its
execution.
Section
1: Purpose; Definitions
1.1 Purpose. The purpose of the Plan
is to provide severance pay to eligible employees of the Company and its
Designated Subsidiaries in the circumstances and on the conditions
specified. The Plan is an "employee welfare benefit plan" within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended, (hereinafter "ERISA"). Neither the receipt nor the amount
of any severance payment is contingent, directly or indirectly, on an employee's
retirement. Severance payments are contingent, prospective payments
that may be provided under the circumstances and conditions
described.
1.2 Definitions.
a. Cause. With
respect to any Participant, Cause shall have the meaning set forth in the
noncompete agreement between or among the Company, the Designated Subsidiary and
the Participant, as applicable.
b. Code. The Internal
Revenue Code of 1986, as amended from time to time, or any successor
thereto.
c. Covered
Employer. For purposes of the Plan, the term "Covered
Employer" is defined to mean the Company or one of the Company’s Designated
Subsidiaries.
d. Designated Subsidiaries. For
purposes of the Plan, the term "Designated Subsidiaries" means those companies
listed on Appendix "A" hereto.
e. Eligible Employee. An
individual designated by the Company or a Designated Subsidiary, who (i) has
executed a noncompete agreement in a form acceptable to the Company or the
Designated Subsidiary, (ii) is not eligible for severance benefits under any
other plan, program, policy, procedure or agreement of or with the Company or
the Designated Subsidiary, (iii) incurs a Separation From Service without Cause,
by action of the Company or Designated Subsidiary, other than as a result of
death, total disability as contemplated by a long term disability plan of the
Company or Designated Subsidiary, or any voluntary resignation or termination,
and (iv) executes a Final Release, at the time of Separation From
Service.
f. Final Release. A general
release effective between or among the Company and/or Designated Subsidiary and
the Participant, which is satisfactory in form and substance to the Company
and/or the Designated Subsidiary, as applicable, and for which the period has
expired for the exercise of any revocation rights of the Participant with
respect thereto.
g. Other Key
Employees. Any Eligible Employee other than a Senior Officer
or a Vice President.
h. Participant. Each
Eligible Employee.
i. Plan Administrator. The Company is the Plan
Administrator. The Company may delegate its authority under the Plan
to such person(s) as it deems necessary or appropriate from time to time, and
any such delegation shall carry with it the Plan Administrator’s discretionary
authority.
j. Plan Year. The
Plan Year is the 12-month period beginning each January 1 and ending the next
following December 31.
k. Separation From
Service. A termination of substantial services for the Company
and any affiliate thereof within the contemplation of Code Sections 414(b) and
414(c). An individual will not be treated as having incurred a
Separation From Service where the individual’s level of future services for the
Company and any affiliate is reasonably anticipated by the Employer to exceed
20% of the average level of bona fide services provided by that individual in
any capacity for the prior 36 month period, or the prior period of services if
less, but will be treated as having incurred a Separation From Service at any
time when such reasonably anticipated level of future services is equal to or
less than such 20% average level of prior services.
l. Senior Officer. An
officer of the Company above the level of Vice President, including, without
limitation, the President, Senior Vice Presidents, Executive Vice Presidents,
the Chief Operating Officer and the Chief Executive Officer.
m. Specified
Employee. Any service provider who, as of the date of a
Separation From Service, is a key employee of the Company within the
contemplation of Code Section 416(i)(1)(A)(i), (ii), or (iii) at any time during
the 12-month period ending on a specified employee identification
date. The Specified Employee identification date is December
31. The Specified Employee effective date is the first day of the
fourth month following the Specified Employee identification date.
n. Standard Severance
Policy. The severance policy generally applicable to employees
of the Company or the Designated Subsidiary, as applicable.
o. Vice President. A
Vice President of the Company.
p. Year of Service. A
calendar year in which an individual is credited with not fewer than one
thousand (1,000) hours of service, as determined under Department of Labor
Regulation 2530.200b-2(b) and (c).
Section
2: Eligibility
Each
individual is a Participant in the Plan as of the date the individual satisfies
all elements of the definition of an Eligible Employee. No other
persons have any rights under the Plan or to receive any benefit under the
Plan.
Section
3: Plan Benefits
3.1 Benefits. A Participant is
eligible to receive periodic severance payments based upon employment status at
the time of a Separation From Service, in accordance with the applicable
following schedule:
Senior
Officers:
|
Years
of Service
|
Duration
of
Periodic
Severance
|
|
0-1
|
12
months
|
|
1-5
|
18
months
|
|
5+
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24
months
|
Vice
Presidents:
|
Years
of Service
|
Duration
of
Periodic
Severance
|
|
0-2
|
6
months
|
|
2-5
|
9
months
|
|
5+
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12
months
|
Other Key
Employees:
|
Years
of Service
|
Duration
of
Periodic
Severance
|
|
0-2
|
3
months
|
|
2-5
|
6
months
|
|
5+
|
9
months
|
3.2 Payment of
Benefits. Except as provided in section 5.3 with respect to
certain death benefits, Plan benefits will be paid for the appropriate duration,
using the payroll date frequency in effect for the Participant as of the date
the individual incurs a Separation From Service. Payments generally
will begin on the payroll date for the first payroll period which begins after
the date of the Separation From Service. Provided, however, that in
the case of any Specified Employee any payment which would otherwise be made
within the six (6) month period after the date of the Participant’s Separation
From Service will be accumulated and paid on the first business date which
occurs after the expiration of such six (6) month period.
3.3 Deductions. The
employer will effect all legally required deductions.
Section
4: Financing Plan Benefits
All Plan
benefits shall be paid directly by the Company or Designated Subsidiary out of
its general assets. All Plan benefits are unfunded and unsecured until
paid.
Section
5: Miscellaneous
5.1 Employment
Rights. The
Plan does not constitute a contract of employment. Participation does not give
any person the right to be rehired or retained.
5.2 Controlling
Law. ERISA shall be controlling in all matters relating to the
Plan. The provisions of this Plan are intended to be applied in a
manner consistent with Code Section 409A, but neither the Company nor
any affiliate thereof shall be liable for any determination by any person(s)
that the arrangement or the administration thereof is subject to the tax
provisions of Code Section 409A.
5.3 Interests Not
Transferable. The
interests of persons entitled to benefits under the Plan may not be sold,
transferred, alienated, assigned nor encumbered; provided, however, that upon
the death of a Participant in pay status under the Plan, the sum of any
remaining scheduled benefit payments will be paid in a lump sum to the surviving
spouse of the Participant, if any, or if none then to the estate of the
Participant.
5.4 Headings. The
headings of sections and subsections herein are for convenience of reference
only and shall not be construed or interpreted as part of the Plan.
5.5 Severability. If
any provision of the Plan shall be held to be illegal or invalid for any reason,
such illegality or invalidity shall not affect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if such illegal or invalid
provision had never been contained in the Plan.
5.6 Administration. The
Plan Administrator shall have the sole and final power, duty, discretion,
authority and responsibility of directing and administering the
Plan. All directions by the Plan Administrator shall be conclusive on
all parties concerned. The Plan Administrator shall have the sole,
absolute and final right and power to construe, interpret and administer the
provisions of the Plan including, but not limited to, the power (i) to construe
any ambiguity and interpret any provision of the Plan or supply any omission or
reconcile any inconsistencies in such manner as it deems proper, (ii) to
determine eligibility to become a Participant in the Plan in accordance with its
terms, (iii) to decide all questions of eligibility for, and determine the
amount, manner, and time of payment of, any benefits hereunder, and (iv) to
establish uniform rules and procedures to be followed in any matters required to
administer the Plan.
Section
6: Amendment and Termination
The
Company reserves the right, in its sole discretion, to amend the Plan from time
to time or to terminate the Plan, all without prior notice. No
representation by anyone can extend the Company’s severance pay policies to
provide for severance payments that are not covered by the Plan.
IN
WITNESS WHEREOF, AutoZone, Inc. has caused the Plan to be executed this 14th day of
February, 2008.
AUTOZONE,
INC.
By: /s/ William C.
Rhodes
Title: William C.
Rhodes
President & CEO
By: /s/ Harry L.
Goldsmith
Title: Harry
L. Goldsmith
Executive Vice President, General
Counsel and
Secretary
APPENDIX
A
LIST OF
DESIGNATED SUBSIDIARIES
AutoZoners,
LLC
AutoZone
Puerto Rico, Inc.
AutoZone
West, Inc.
AZ
California, LLC
AZ Texas,
LLC
ServiceZone
S. de RL de CV
EXHIBIT
99.2
FORM OF
AGREEMENT
This
Agreement is made this 14th day of
February, 2008, by and between AutoZone, Inc. (“AutoZone”) and _________________
(“Executive”).
1. Employment. Executive
is employed by a subsidiary of AutoZone. Executive acknowledges that his
employment is at will.
2. Severance. In
the event that Executive’s employment is terminated by AutoZone without Cause
(defined below), and provided that at that time, Executive executes a release of
all claims against AutoZone accrued as of the date of such release in a form
acceptable to AutoZone and such release has become irrevocable, Executive will
be entitled to the severance benefits set forth in Exhibit A to this Agreement
(the “Enhanced Severance”). Executive acknowledges that the Enhanced
Severance benefits are greater than those to which he would be entitled under
AutoZone’s standard severance policy, and that he is not eligible for severance
under AutoZone’s standard severance policy. Executive (or his estate)
will not be entitled to the Enhanced Severance in the event of (i) his
termination for Cause (defined below); (ii) his voluntary resignation, including
retirement; (iii) his death; or (iv) a determination by AutoZone that he is
“totally disabled,” as that term is defined in AutoZone’s long term disability
plan.
3. Covenants. In
consideration of Executive’s employment or continued employment, and the
Enhanced Severance benefits provided herein, Executive and AutoZone hereby agree
as follows:
(a) Non-Competition. Executive
acknowledges that because of his skills, Executive’s position with AutoZone, and
the customer relationships and/or confidential information to which Executive
shall have access on account of such employment with AutoZone, competition by
Executive with AutoZone would damage AutoZone in a manner which could not be
adequately compensated by damages or an action at law. In view of
such circumstances, Executive agrees that, during his employment with AutoZone
and for a period of two (2) years thereafter (the “Non-Compete Term”), Executive
shall not, directly or indirectly, own, manage, operate, control, be employed
by, consult for, participate in or be connected in any manner with the
ownership, management, operation or control of any business that derives
revenues from the retail, wholesale, or commercial sale, manufacture, or
distribution of aftermarket automobile parts and accessories, motor oil or
related chemicals in any state, province, territory or foreign country in which
AutoZone operates during the Non-Compete Term , including, but not limited to,
Advance Auto Parts, Inc., CSK Auto, Inc. (Checkers/Schucks/Kragen), General
Parts, Inc. (CARQUEST Auto Parts), Genuine Parts Corporation (NAPA), O’Reilly
Automotive, Inc., The Pep Boys – Manny, Moe & Jack, and Wal-Mart Stores,
Inc. Nothing in this Subsection 3(a) shall preclude Executive from
accepting employment with a company that derives less than five percent (5%) of
its annual gross revenues from the retail, wholesale or commercial sale,
manufacture or distribution of aftermarket automobile parts and accessories,
motor oil or related chemicals (other than those companies specifically listed
above), provided that Executive does not provide advice and consultation to such
company concerning the retail, wholesale or commercial sale, manufacture or
distribution of aftermarket automobile parts and accessories, motor oil or
related chemicals.
(b) Non-Solicitation. Executive
further agrees that, during Executive’s employment with AutoZone, and for a
period of two (2) years thereafter, Executive shall not, directly or indirectly,
whether on his own behalf or on behalf of a third party, solicit, divert,
influence, or attempt to divert or influence any customer of AutoZone or seek to
cause any customer of AutoZone to refrain from doing business with or
patronizing AutoZone. Executive also agrees that, during Executive’s
employment with AutoZone, and for a period of two (2) years thereafter, he shall
not, directly or indirectly, whether on his own behalf or on behalf of a third
party, solicit or attempt to solicit the employees of AutoZone or seek to cause
them to resign their employment with AutoZone.
(c) Confidentiality. Executive acknowledges
that he possesses and will continue to possess information which has been
created, discovered or developed by AutoZone in the conduct of its business that
is valuable, special and unique to AutoZone and not generally known by third
parties, including but not limited to, its methods of operations, its lists of
customers and employees, its pricing lists, its pricing and purchasing
strategies, and other information Executive has reason to know AutoZone would
like to treat as confidential. Unless previously authorized in
writing by AutoZone, Executive will not, at any time, disclose to others, or
use, or allow anyone else to disclose or use, any confidential information
except as may be necessary in the performance of Executive’s employment with
AutoZone.
4. Reasonable
Limitations. Given the nature of the position Executive holds
with AutoZone, the nature of AutoZone’s business, and the sensitive nature of
the information and duties Executive will have with AutoZone, the parties
acknowledge that the limitations provided for herein, including but not limited
to, the scope of activities prohibited, the geographic area covered, and the
time limitations, are reasonable and have been specifically negotiated by
sophisticated commercial parties.
5. Remedies
for Breach. In the event of an actual or threatened breach by
Executive of any of the covenants of this Agreement, AutoZone, in addition to
any other rights and remedies existing in its favor, shall be entitled to
obtain, without the necessity for any bond or other security, specific
performance and/or injunctive relief in order to enforce or prevent the breach
of any of the covenants of this Agreement. Further, if Executive
violates any of the covenants of this Agreement, his entitlement to the
severance benefits set forth on Exhibit A shall immediately cease, and the term
and covenant violated shall be automatically extended to a like period of time
from the date on which Executive ceases such violation or from the date of the
entry by a court of competent jurisdiction of an order or judgment enforcing
such covenants, whichever period is later. In the event Executive is
found by a court of competent jurisdiction to be in breach of any of the
covenants of this Agreement, AutoZone shall be entitled to its costs and
reasonable attorney’s fees associated with enforcing such covenant or
covenants.
6. Reaffirmation
of Scope or Duration. The parties hereto intend that this
Agreement be enforced as written. However, if any provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties hereto agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and/or delete specific words or phrases and in its
reduced or revised form, such provision shall then be enforceable and shall be
enforced.
7. Definition
of Cause. For purposes of this Agreement, “Cause” shall be
defined as the willful engagement in conduct which is demonstrably or materially
injurious to AutoZone, monetarily or otherwise; provided, however, no act or
failure to act will be considered "willful" unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of AutoZone.
8. Compliance
with Section 409A. For purposes of this Agreement and the
Enhanced Severance described in Exhibit A, in the event that Executive is
terminated by AutoZone without Cause, AutoZone and Executive reasonably
anticipate that Executive will either (i) perform no further services for
AutoZone, whether as an employee, independent contractor, or otherwise, after
the effective date of such termination, or (ii) after the effective date of such
termination, permanently decrease the level of services performed by Executive
for AutoZone to no more than twenty percent (20%) of the average level of
services performed for AutoZone in any capacity, whether as an employee,
independent contractor or otherwise, over the immediately preceding 36-month
period (or the full period of services if Executive has been providing services
to AutoZone for less than thirty-six (36) months).
9. Governing
Law. This Agreement shall be construed in accordance with and
governed by the laws of the state of Tennessee, without regard to its choice of
law provisions. Executive agrees that the exclusive venue for any
disputes arising out of or related to this Agreement shall be the state or
federal courts located in Memphis, Tennessee.
10. Entire
Agreement; Amendment. This Agreement, with Exhibit A, contains
the entire agreement of the parties and supersedes any prior understandings and
agreements between them respecting the subject matter of this
Agreement. It may not be changed orally, but only by agreement in
writing signed by the parties hereto.
11. Waiver of
Breach; Severability. The waiver by AutoZone of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. In the event any provision of this Agreement
is found to be invalid or unenforceable, it may be severed from the Agreement
and the remaining provisions of the Agreement shall continue to be binding and
effective.
12. Non-Assignability. This
Agreement and the benefits hereunder are personal to AutoZone and are not
assignable or transferable by Executive, nor may the services to be performed
hereunder be assigned by AutoZone to any person, firm or corporation, except a
parent or affiliate of AutoZone; provided, however, that this Agreement and the
benefits hereunder may be assigned by AutoZone to any person, firm or
corporation acquiring all or substantially all of the assets of AutoZone or its
subsidiary or to any corporation or other entity into which AutoZone or its
subsidiary may be merged or consolidated and this Agreement and the benefits
hereunder will be deemed automatically assigned to any such corporation or
entity.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first stated above.
EXECUTIVE
____________________________________
AUTOZONE,
INC.
By:
Its:
By:
Its:
EXHIBIT
A
To
Agreement dated February 14, 2008
Between
AutoZone, Inc.
and
__________ (“the Agreement”)
|
1.
|
General.
|
The
benefits afforded to Executive hereunder will be in lieu of benefits under any
other plan, program or agreement, including without limitation, AutoZone’s
standard severance policy.
|
2.
|
Commencement of
Benefits.
|
Enhanced
Severance benefits will commence as of the date of termination of employment
unless
Executive is deemed by AutoZone to be or have been a “specified employee” within
the meaning of Internal Revenue Code Section 409A at any relevant time, in which
case payment of all or a portion of the Enhanced Severance benefits will be
delayed until the date that is at least six months and one day after the date of
Executive’s termination. All amounts that would otherwise have been
paid during such six-month period shall instead be paid in a lump sum on the
first pay day following such six-month period.
Except as
otherwise provided in the Agreement, all compensation and benefits end upon
termination of employment.
|
3.
|
Severance
Payments.
|
Periodic
severance will be paid to Executive in accordance with AutoZone’s Enhanced
Severance Policy (the “Policy”) in effect as of the date of execution of this
Agreement, as applicable to Executive’s position at the time of termination of
employment. The Policy is hereby incorporated by reference into the
Agreement, and a copy of the Policy has been provided to Executive.
Pursuant
to the Policy, Executive will receive the periodic severance paid bi-weekly in
the same amount and manner as Executive’s base salary prior to termination for
the following time periods (“Severance Period”):
|
Years
of Service
|
Duration
of
Periodic
Severance
|
|
0-1
|
12
months
|
|
1-5
|
18
months
|
|
5+
|
24
months
|
|
4.
|
Medical, Vision and
Dental Benefits.
|
Medical,
vision and dental insurance coverage may be continued during the Severance
Period, up to a maximum of 18 months, if Executive makes a COBRA
election. The cost to Executive for this coverage during the lesser
of the Severance Period or 18 months will be the same as he was paying
immediately prior to termination, subject to increases affecting plan
participants generally. AutoZone will pay the difference between
Executive’s cost and the amount of the COBRA premiums during the lesser of the
Severance Period or 18 months; thereafter, COBRA premium payments, if any, will
be the sole responsibility of Executive.
|
5.
|
Stock
Options.
|
The terms
of the applicable Stock Option Agreements govern treatment of stock options upon
termination of employment. Stock Option Agreements generally provide
that options remain exercisable for 30 days from the date of termination without
Cause, and that stock options that are unvested as of the termination date will
be forfeited.
|
6.
|
Bonus
Incentives.
|
A
lump-sum, prorated share of any bonus incentives earned during the period prior
to Executive’s termination will be paid to Executive when incentives are paid
generally to similarly-situated employees. Eligibility for additional
bonuses ceases upon termination. See individual plan documentation
for detailed information about eligibility and when incentives are
earned.
|
7.
|
Other
Benefits.
|
An
appropriate level of outplacement services, as determined by AutoZone in its
discretion, will be provided to Executive based on his individual
circumstances.
Some
optional life and disability insurance policies may have portability features
which allow Executive to continue the coverage at Executive’s cost.
|
8.
|
Internal Revenue Code
Section 409A.
|
To the
extent applicable, this Program shall be interpreted in accordance with Internal
Revenue Code Section 409A. AutoZone may, in its sole discretion, take
any actions it deems necessary or appropriate, including without limitation,
amendment or termination of this Program, to (a) exempt these payments and
benefits from the application of Code Section 409A, or (b) comply with the
requirements of Code Section 409A.
|
9.
|
Amendments and
Administration.
|
AutoZone
reserves the right to terminate, suspend, withdraw, amend or modify the benefits
contained in the Policy, but any such action will not affect the benefits for
Executive under the Agreement. The plan administrator has sole authority to
interpret the provisions of the Policy and otherwise construe AutoZone’s intent
in case of any dispute.
EXHIBIT
99.3
FORM OF
AGREEMENT
This
Agreement is made this ____ day of _________, 200_, by and between AutoZone,
Inc. (“AutoZone”) and _________________ (“Officer”).
1. Employment. Officer
is employed by a subsidiary of AutoZone. Officer acknowledges that his
employment is at will.
2. Severance. In
the event that Officer’s employment is terminated by AutoZone without Cause
(defined below), and provided that at that time, Officer executes a release of
all claims against AutoZone accrued as of the date of such release in a form
acceptable to AutoZone and such release has become irrevocable, Officer will be
entitled to the severance benefits set forth in Exhibit A to this Agreement (the
“Enhanced Severance”). Officer acknowledges that the Enhanced
Severance benefits are greater than those to which he would be entitled under
AutoZone’s standard severance policy, and that he is not eligible for severance
under AutoZone’s standard severance policy. Officer (or his estate)
will not be entitled to the Enhanced Severance in the event of (i) his
termination for Cause (defined below); (ii) his voluntary resignation, including
retirement; (iii) his death; or (iv) a determination by AutoZone that he is
“totally disabled,” as that term is defined in AutoZone’s long term disability
plan.
3. Covenants. In
consideration of Officer’s employment or continued employment, and the Enhanced
Severance benefits provided herein, Officer and AutoZone hereby agree as
follows:
(a) Non-Competition. Officer
acknowledges that because of his skills, Officer’s position with AutoZone, and
the customer relationships and/or confidential information to which Officer
shall have access on account of such employment with AutoZone, competition by
Officer with AutoZone would damage AutoZone in a manner which could not be
adequately compensated by damages or an action at law. In view of
such circumstances, Officer agrees that, during his employment with AutoZone and
for a period of one (1) year thereafter (the “Non-Compete Term”), Officer shall
not, directly or indirectly, own, manage, operate, control, be employed by,
consult for, participate in or be connected in any manner with the ownership,
management, operation or control of any business that derives revenues from the
retail, wholesale, or commercial sale, manufacture, or distribution of
aftermarket automobile parts and accessories, motor oil or related chemicals in
any state, province, territory or foreign country in which AutoZone operates
during the Non-Compete Term , including, but not limited to, Advance Auto Parts,
Inc., CSK Auto, Inc. (Checkers/Schucks/Kragen), General Parts, Inc. (CARQUEST
Auto Parts), Genuine Parts Corporation (NAPA), O’Reilly Automotive, Inc., The
Pep Boys – Manny, Moe & Jack, and Wal-Mart Stores, Inc. Nothing
in this Subsection 3(a) shall preclude Officer from accepting employment with a
company that derives less than five percent (5%) of its annual gross revenues
from the retail, wholesale or commercial sale, manufacture or distribution of
aftermarket automobile parts and accessories, motor oil or related chemicals
(other than those companies specifically listed above), provided that Officer
does not provide advice and consultation to such company concerning the retail,
wholesale or commercial sale, manufacture or distribution of aftermarket
automobile parts and accessories, motor oil or related chemicals.
(b) Non-Solicitation. Officer
further agrees that, during Officer’s employment with AutoZone, and for a period
of one (1) year thereafter, Officer shall not, directly or indirectly, whether
on his own behalf or on behalf of a third party, solicit, divert, influence, or
attempt to divert or influence any customer of AutoZone or seek to cause any
customer of AutoZone to refrain from doing business with or patronizing
AutoZone. Officer also agrees that, during Officer’s employment with
AutoZone, and for a period of one (1) year thereafter, he shall not, directly or
indirectly, whether on his own behalf or on behalf of a third party, solicit or
attempt to solicit the employees of AutoZone or seek to cause them to resign
their employment with AutoZone.
(c) Confidentiality.
Officer acknowledges that he possesses and will continue to possess information
which has been created, discovered or developed by AutoZone in the conduct of
its business that is valuable, special and unique to AutoZone and not generally
known by third parties, including but not limited to, its methods of operations,
its lists of customers and employees, its pricing lists, its pricing and
purchasing strategies, and other information Officer has reason to know AutoZone
would like to treat as confidential. Unless previously authorized in
writing by AutoZone, Officer will not, at any time, disclose to others, or use,
or allow anyone else to disclose or use, any confidential information except as
may be necessary in the performance of Officer’s employment with
AutoZone.
4. Reasonable
Limitations. Given the nature of the position Officer holds
with AutoZone, the nature of AutoZone’s business, and the sensitive nature of
the information and duties Officer will have with AutoZone, the parties
acknowledge that the limitations provided for herein, including but not limited
to, the scope of activities prohibited, the geographic area covered, and the
time limitations, are reasonable and have been specifically negotiated by
sophisticated commercial parties.
5. Remedies
for Breach. In the event of an actual or threatened breach by
Officer of any of the covenants of this Agreement, AutoZone, in addition to any
other rights and remedies existing in its favor, shall be entitled to obtain,
without the necessity for any bond or other security, specific performance
and/or injunctive relief in order to enforce or prevent the breach of any of the
covenants of this Agreement. Further, if Officer violates any of the
covenants of this Agreement, his entitlement to the severance benefits set forth
on Exhibit A shall immediately cease, and the term and covenant violated shall
be automatically extended to a like period of time from the date on which
Officer ceases such violation or from the date of the entry by a court of
competent jurisdiction of an order or judgment enforcing such covenants,
whichever period is later. In the event Officer is found by a court
of competent jurisdiction to be in breach of any of the covenants of this
Agreement, AutoZone shall be entitled to its costs and reasonable attorney’s
fees associated with enforcing such covenant or covenants.
6. Reaffirmation
of Scope or Duration. The parties hereto intend that this
Agreement be enforced as written. However, if any provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties hereto agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and/or delete specific words or phrases and in its
reduced or revised form, such provision shall then be enforceable and shall be
enforced.
7. Definition
of Cause. For purposes of this Agreement, “Cause” shall be
defined as the willful engagement in conduct which is demonstrably or materially
injurious to AutoZone, monetarily or otherwise; provided, however, no act or
failure to act will be considered "willful" unless done, or omitted to be done,
by Officer not in good faith and without reasonable belief that his action or
omission was in the best interest of AutoZone.
8. Compliance
with Section 409A. For purposes of this Agreement and the
Enhanced Severance described in Exhibit A, in the event that Officer is
terminated by AutoZone without Cause, AutoZone and Officer reasonably anticipate
that Officer will either (i) perform no further services for AutoZone, whether
as an employee, independent contractor, or otherwise, after the effective date
of such termination, or (ii) after the effective date of such termination,
permanently decrease the level of services performed by Officer for AutoZone to
no more than twenty percent (20%) of the average level of services performed for
AutoZone in any capacity, whether as an employee, independent contractor or
otherwise, over the immediately preceding 36-month period (or the full period of
services if Officer has been providing services to AutoZone for less than
thirty-six (36) months).
9. Governing
Law. This Agreement shall be construed in accordance with and
governed by the laws of the state of Tennessee, without regard to its choice of
law provisions. Officer agrees that the exclusive venue for any
disputes arising out of or related to this Agreement shall be the state or
federal courts located in Memphis, Tennessee.
10. Entire
Agreement; Amendment. This Agreement, with Exhibit A, contains
the entire agreement of the parties and supersedes any prior understandings and
agreements between them respecting the subject matter of this
Agreement. It may not be changed orally, but only by agreement in
writing signed by the parties hereto.
11. Waiver of
Breach; Severability. The waiver by AutoZone of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. In the event any provision of this Agreement
is found to be invalid or unenforceable, it may be severed from the Agreement
and the remaining provisions of the Agreement shall continue to be binding and
effective.
12. Non-Assignability. This
Agreement and the benefits hereunder are personal to AutoZone and are not
assignable or transferable by Officer, nor may the services to be performed
hereunder be assigned by AutoZone to any person, firm or corporation, except a
parent or affiliate of AutoZone; provided, however, that this Agreement and the
benefits hereunder may be assigned by AutoZone to any person, firm or
corporation acquiring all or substantially all of the assets of AutoZone or its
subsidiary or to any corporation or other entity into which AutoZone or its
subsidiary may be merged or consolidated and this Agreement and the benefits
hereunder will be deemed automatically assigned to any such corporation or
entity.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first stated above.
OFFICER
____________________________________
AUTOZONE,
INC.
By:
Its:
By:
Its:
EXHIBIT
A
To
Agreement dated ________
Between
AutoZone, Inc.
and
__________ (“the Agreement”)
|
1.
|
General.
|
The
benefits afforded to Officer hereunder will be in lieu of benefits under any
other plan, program or agreement, including without limitation, AutoZone’s
standard severance policy.
|
2.
|
Commencement of
Benefits.
|
Enhanced
Severance benefits will commence as of the date of termination of employment
unless Officer
is deemed by AutoZone to be or have been a “specified employee” within the
meaning of Internal Revenue Code Section 409A at any relevant time, in which
case payment of all or a portion of the Enhanced Severance benefits will be
delayed until the date that is at least six months and one day after the date of
Officer’s termination. All amounts that would otherwise have been
paid during such six-month period shall instead be paid in a lump sum on the
first pay day following such six-month period.
Except as
otherwise provided in the Agreement, all compensation and benefits end upon
termination of employment.
|
3.
|
Severance
Payments.
|
Periodic
severance will be paid to Officer in accordance with AutoZone’s Enhanced
Severance Policy (the “Policy”) in effect as of the date of execution of this
Agreement, as applicable to Officer’s position at the time of termination of
employment. The Policy is hereby incorporated by reference into the
Agreement, and a copy of the Policy has been provided to Officer.
Pursuant
to the Policy, Officer will receive the periodic severance paid bi-weekly in the
same amount and manner as Officer’s base salary prior to termination for the
following time periods (“Severance Period”):
|
Years
of Service
|
Duration
of
Periodic
Severance
|
|
0-2
|
6
months
|
|
2-5
|
9
months
|
|
5+
|
12
months
|
|
4.
|
Medical, Vision and
Dental Benefits.
|
Medical,
vision and dental insurance coverage may be continued during the Severance
Period, up to a maximum of 18 months, if Officer makes a COBRA
election. The cost to Officer for this coverage during the Severance
Period will be the same as he was paying immediately prior to termination,
subject to increases affecting plan participants generally. AutoZone
will pay the difference between Officer’s cost and the amount of the COBRA
premiums during the Severance Period. After the Severance Period
ends, COBRA premium payments, if any, will be the sole responsibility of
Officer.
|
5.
|
Stock
Options.
|
The terms
of the applicable Stock Option Agreements govern treatment of stock options upon
termination of employment. Stock Option Agreements generally provide
that options remain exercisable for 30 days from the date of termination without
Cause, and that stock options that are unvested as of the termination date will
be forfeited.
|
6.
|
Bonus
Incentives.
|
A
lump-sum, prorated share of any bonus incentives earned during the period prior
to Officer’s termination will be paid to Officer when incentives are paid
generally to similarly-situated employees. Eligibility for additional
bonuses ceases upon termination. See individual plan documentation
for detailed information about eligibility and when incentives are
earned.
|
7.
|
Other
Benefits.
|
An
appropriate level of outplacement services, as determined by AutoZone in its
discretion, will be provided to Officer based on his individual
circumstances.
Some
optional life and disability insurance policies may have portability features
which allow Officer to continue the coverage at Officer’s cost.
|
8.
|
Internal Revenue Code
Section 409A.
|
To the
extent applicable, this Program shall be interpreted in accordance with Internal
Revenue Code Section 409A. AutoZone may, in its sole discretion, take
any actions it deems necessary or appropriate, including without limitation,
amendment or termination of this Program, to (a) exempt these payments and
benefits from the application of Code Section 409A, or (b) comply with the
requirements of Code Section 409A.
|
9.
|
Amendments and
Administration.
|
AutoZone
reserves the right to terminate, suspend, withdraw, amend or modify the benefits
contained in the Policy, but any such action will not affect the benefits for
Officer under the Agreement. The plan administrator has sole authority to
interpret the provisions of the Policy and otherwise construe AutoZone’s intent
in case of any dispute.
EXHIBIT
99.4
AGREEMENT
This
Agreement is made this 14th day of February, 2008, by and between AutoZone, Inc.
(“AutoZone”) and William C. Rhodes, III (“Executive”).
1. Employment. Executive
is the Chairman of the Board, President and Chief Executive Officer of AutoZone
and is employed by a subsidiary of AutoZone. Executive acknowledges that his
employment is at will and his service on the Board of Directors is subject to
his election as a director by AutoZone’s stockholders.
2. Severance. In
the event that Executive’s employment is terminated by AutoZone without Cause
(defined below), and provided that at that time, Executive executes a release of
all claims against AutoZone accrued as of the date of such release in a form
acceptable to AutoZone and such release has become irrevocable, Executive will
be entitled to the severance benefits set forth in Exhibit A to this Agreement
(the “Enhanced Severance”). Executive acknowledges that the Enhanced
Severance benefits are greater than those to which he would be entitled under
AutoZone’s standard severance policy, and that he is not eligible for severance
under AutoZone’s standard severance policy. Executive (or his estate)
will not be entitled to the Enhanced Severance in the event of (i) his
termination for Cause (defined below); (ii) his voluntary resignation, including
retirement; (iii) his death; or (iv) a determination by AutoZone that he is
“totally disabled,” as that term is defined in AutoZone’s long term disability
plan.
3. Covenants. In
consideration of Executive’s employment or continued employment, and the
Enhanced Severance benefits provided herein, Executive and AutoZone hereby agree
as follows:
(a) Non-Competition. Executive
acknowledges that because of his skills, Executive’s position with AutoZone, and
the customer relationships and/or confidential information to which Executive
shall have access on account of such employment with AutoZone, competition by
Executive with AutoZone would damage AutoZone in a manner which could not be
adequately compensated by damages or an action at law. In view of
such circumstances, Executive agrees that, during his employment with AutoZone
and for a period of three (3) years thereafter (the “Non-Compete Term”),
Executive shall not, directly or indirectly, own, manage, operate, control, be
employed by, consult for, participate in or be connected in any manner with the
ownership, management, operation or control of any business that derives
revenues from the retail, wholesale, or commercial sale, manufacture, or
distribution of aftermarket automobile parts and accessories, motor oil or
related chemicals in any state, province, territory or foreign country in which
AutoZone operates during the Non-Compete Term, including, but not limited to,
Advance Auto Parts, Inc., CSK Auto, Inc. (Checkers/Schucks/Kragen), General
Parts, Inc. (CARQUEST Auto Parts), Genuine Parts Corporation (NAPA), O’Reilly
Automotive, Inc., The Pep Boys – Manny, Moe & Jack, and Wal-Mart Stores,
Inc. Nothing in this Subsection 3(a) shall preclude Executive from
accepting employment with a company that derives less than five percent (5%) of
its annual gross revenues from the retail, wholesale or commercial sale,
manufacture or distribution of aftermarket automobile parts and accessories,
motor oil or related chemicals (other than those companies specifically listed
above), provided that Executive does not provide advice and consultation to such
company concerning the retail, wholesale or commercial sale, manufacture or
distribution of aftermarket automobile parts and accessories, motor oil or
related chemicals.
(b) Non-Solicitation. Executive
further agrees that, during Executive’s employment with AutoZone, and for a
period of three (3) years thereafter, Executive shall not, directly or
indirectly, whether on his own behalf or on behalf of a third party, solicit,
divert, influence, or attempt to divert or influence any customer of AutoZone or
seek to cause any customer of AutoZone to refrain from doing business with or
patronizing AutoZone. Executive also agrees that, during Executive’s
employment with AutoZone, and for a period of three (3) years thereafter, he
shall not, directly or indirectly, whether on his own behalf or on behalf of a
third party, solicit or attempt to solicit the employees of AutoZone or seek to
cause them to resign their employment with AutoZone.
(c) Confidentiality. Executive
acknowledges that he possesses and will continue to possess information which
has been created, discovered or developed by AutoZone in the conduct of its
business that is valuable, special and unique to AutoZone and not generally
known by third parties, including but not limited to, its methods of operations,
its lists of customers and employees, its pricing lists, its pricing and
purchasing strategies, and other information Executive has reason to know
AutoZone would like to treat as confidential. Unless previously
authorized in writing by AutoZone, Executive will not, at any time, disclose to
others, or use, or allow anyone else to disclose or use, any confidential
information except as may be necessary in the performance of Executive’s
employment with AutoZone.
4. Reasonable
Limitations. Given the nature of the position Executive holds
with AutoZone, the nature of AutoZone’s business, and the sensitive nature of
the information and duties Executive will have with AutoZone, the parties
acknowledge that the limitations provided for herein, including but not limited
to, the scope of activities prohibited, the geographic area covered, and the
time limitations, are reasonable and have been specifically negotiated by
sophisticated commercial parties.
5. Remedies
for Breach. In the event of an actual or threatened breach by
Executive of any of the covenants of this Agreement, AutoZone, in addition to
any other rights and remedies existing in its favor, shall be entitled to
obtain, without the necessity for any bond or other security, specific
performance and/or injunctive relief in order to enforce or prevent the breach
of any of the covenants of this Agreement. Further, if Executive
violates any of the covenants of this Agreement, his entitlement to the
severance benefits set forth on Exhibit A shall immediately cease, and the term
and covenant violated shall be automatically extended to a like period of time
from the date on which Executive ceases such violation or from the date of the
entry by a court of competent jurisdiction of an order or judgment enforcing
such covenants, whichever period is later. In the event Executive is
found by a court of competent jurisdiction to be in breach of any of the
covenants of this Agreement, AutoZone shall be entitled to its costs and
reasonable attorney’s fees associated with enforcing such covenant or
covenants.
6. Reaffirmation
of Scope or Duration. The parties hereto intend that this
Agreement be enforced as written. However, if any provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties hereto agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and/or delete specific words or phrases and in its
reduced or revised form, such provision shall then be enforceable and shall be
enforced.
7. Definition
of Cause. For purposes of this Agreement, “Cause” shall be
defined as the willful engagement in conduct which is demonstrably or materially
injurious to AutoZone, monetarily or otherwise; provided, however, no act or
failure to act will be considered "willful" unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of AutoZone.
8. Compliance
with Section 409A. For purposes of this Agreement and the
Enhanced Severance described in Exhibit A, in the event that Executive is
terminated by AutoZone without Cause, AutoZone and Executive reasonably
anticipate that Executive will either (i) perform no further services for
AutoZone, whether as an employee, independent contractor, or otherwise, after
the effective date of such termination, or (ii) after the effective date of such
termination, permanently decrease the level of services performed by Executive
for AutoZone to no more than twenty percent (20%) of the average level of
services performed for AutoZone in any capacity, whether as an employee,
independent contractor or otherwise, over the immediately preceding 36-month
period (or the full period of services if Executive has been providing services
to AutoZone for less than thirty-six (36) months).
9. Governing
Law. This Agreement shall be construed in accordance with and
governed by the laws of the state of Tennessee, without regard to its choice of
law provisions. Executive agrees that the exclusive venue for any
disputes arising out of or related to this Agreement shall be the state or
federal courts located in Memphis, Tennessee.
10. Entire
Agreement; Amendment. This Agreement, with Exhibit A, contains
the entire agreement of the parties and supersedes any prior understandings and
agreements between them respecting the subject matter of this
Agreement. It may not be changed orally, but only by agreement in
writing signed by the parties hereto.
11. Waiver of
Breach; Severability. The waiver by AutoZone of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. In the event any provision of this Agreement
is found to be invalid or unenforceable, it may be severed from the Agreement
and the remaining provisions of the Agreement shall continue to be binding and
effective.
12. Non-Assignability. This
Agreement and the benefits hereunder are personal to AutoZone and are not
assignable or transferable by Executive, nor may the services to be performed
hereunder be assigned by AutoZone to any person, firm or corporation, except a
parent or affiliate of AutoZone; provided, however, that this Agreement and the
benefits hereunder may be assigned by AutoZone to any person, firm or
corporation acquiring all or substantially all of the assets of AutoZone or its
subsidiary or to any corporation or other entity into which AutoZone or its
subsidiary may be merged or consolidated and this Agreement and the benefits
hereunder will be deemed automatically assigned to any such corporation or
entity.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first stated above.
EXECUTIVE
/s/ William C. Rhodes,
III
William
C. Rhodes, III
AUTOZONE,
INC.
By: /s/ Harry L.
Goldsmith
Its: Harry
L. Goldsmith, Executive Vice President, General Counsel and Secretary
By: /s/ Timothy W.
Briggs
Its: Tim Briggs, SVP
EXHIBIT
A
To
Agreement dated February 14, 2008
Between
AutoZone, Inc.
and
William C. Rhodes, III (“the Agreement”)
|
1.
|
General.
|
The
benefits afforded to Executive hereunder will be in lieu of benefits under any
other plan, program or agreement, including without limitation, AutoZone’s
standard severance policy.
|
2.
|
Commencement of
Benefits.
|
Enhanced
Severance benefits will commence as of the date of termination of employment
unless
Executive is deemed by AutoZone to be or have been a “specified employee” within
the meaning of Internal Revenue Code Section 409A at any relevant time, in which
case payment of all or a portion of the Enhanced Severance benefits will be
delayed until the date that is at least six months and one day after the date of
Executive’s termination. All amounts that would otherwise have been
paid during such six-month period shall instead be paid in a lump sum on the
first pay day following such six-month period.
Except as
otherwise provided in the Agreement, all compensation and benefits end upon
termination of employment.
|
3.
|
Severance
Payments.
|
Executive
will receive a severance payment in an amount equal to 2.99 times his
then-current base salary.
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4.
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Medical, Vision and
Dental Benefits.
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Medical,
vision and dental insurance coverage may be continued up to a maximum of 18
months after the date of termination of employment if Executive makes a COBRA
election. The cost to Executive for this coverage will be the same as
he was paying immediately prior to termination, subject to increases affecting
plan participants generally. AutoZone will pay the difference between
Executive’s cost and the amount of the COBRA premiums.
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5.
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Stock
Options.
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The terms
of the applicable Stock Option Agreements govern treatment of stock options upon
termination of employment. Stock Option Agreements generally provide
that options remain exercisable for 30 days from the date of termination without
Cause, and that stock options that are unvested as of the termination date will
be forfeited.
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6.
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Bonus
Incentives.
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A
lump-sum, prorated share of any bonus incentives earned during the period prior
to Executive’s termination will be paid to Executive when incentives are paid
generally to similarly-situated employees. Eligibility for additional
bonuses ceases upon termination. See individual plan documentation
for detailed information about eligibility and when incentives are
earned.
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7.
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Other
Benefits.
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An
appropriate level of outplacement services, as determined by AutoZone in its
discretion, will be provided to Executive based on his individual
circumstances.
Some
optional life and disability insurance policies may have portability features
which allow Executive to continue the coverage at Executive’s cost.
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8.
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Internal Revenue Code
Section 409A.
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To the
extent applicable, this Program shall be interpreted in accordance with Internal
Revenue Code Section 409A. AutoZone may, in its sole discretion, take
any actions it deems necessary or appropriate, including without limitation,
amendment or termination of this Program, to (a) exempt these payments and
benefits from the application of Code Section 409A, or (b) comply with the
requirements of Code Section 409A.
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9.
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Amendments and
Administration.
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AutoZone
reserves the right to terminate, suspend, withdraw, amend or modify the benefits
contained in the Policy, but any such action will not affect the benefits for
Executive under the Agreement. The plan administrator has sole authority to
interpret the provisions of the Policy and otherwise construe AutoZone’s intent
in case of any dispute.