FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended February 29, 2000
Commission file number 1-11276
DISCOUNT AUTO PARTS, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-1447420
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
4900 Frontage Road, South
Lakeland, Florida 33815
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(Address of principal executive offices) (zip code)
(863) 687-9226
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock $.01 Par Value - 16,695,545 shares as of February 29, 2000
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Discount Auto Parts, Inc.
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - February 29, 2000 and June 1, 1999.....3
Condensed Consolidated Statements of Income - for the thirteen and thirty-nine
weeks ended February 29, 2000 and March 2, 1999................................4
Condensed Consolidated Statements of Cash Flows -for the thirty-nine weeks ended
February 29, 2000 and March 2, 1999 ...........................................5
Notes to Condensed Consolidated Financial Statements...........................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations..........................................................8
Item 3. Quantitative and Qualitative Disclosures about Market Risk............12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.....................................................12
Item 6. Exhibits and Reports on Form 8-K......................................13
SIGNATURES ...................................................................14
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Discount Auto Parts, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
February 29 June 1
2000 1999
------------------- ------------------
ASSETS (In thousands)
Current assets:
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Cash $ 6,494 $ 8,795
Inventories 246,366 209,028
Prepaid expenses and other current assets 20,025 22,773
------------------- ------------------
Total current assets 272,885 240,596
Property and equipment 508,204 457,994
Less allowances for depreciation and amortization (99,353) (83,417)
------------------- ------------------
408,851 374,577
Other assets 5,520 5,141
------------------- ------------------
Total assets $ 687,256 $ 620,314
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 76,876 $ 87,867
Other current liabilities 17,382 21,390
Current maturities of long-term debt 2,400 2,400
------------------- ------------------
Total current liabilities 96,658 111,657
Deferred income taxes 8,061 7,091
Long-term debt 286,485 224,800
Stockholders' equity:
Preferred stock
- -
Common stock 167 167
Additional paid-in capital 142,337 142,230
Retained earnings 153,548 134,369
------------------- ------------------
Total stockholders' equity 296,052 276,766
------------------- ------------------
Total liabilities and stockholders' equity $ 687,256 $ 620,314
=================== ==================
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Discount Auto Parts, Inc.
Condensed Consolidated Statements of Income (Unaudited)
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
------------ ------------ ------------- ------------
February 29 March 2 February 29 March 2
2000 1999 2000 1999
------------ ------------ ------------- ------------
(In Thousands, Except Per Share Amounts)
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Net sales $ 147,374 $ 127,380 $ 433,642 $ 370,709
Cost of sales, including distribution costs 88,691 74,507 257,985 219,636
------------ ------------ ------------- ------------
Gross profit 58,683 52,873 175,657 151,073
Selling, general and administrative expenses 45,996 39,017 134,693 110,862
------------ ------------ ------------- ------------
Income from operations 12,687 13,856 40,964 40,211
Other income, net 1,679 280 2,490 411
Interest expense (5,143) (3,552) (12,951) (9,279)
------------ ------------ ------------- ------------
Income before income taxes and cumulative effect of
change in accounting principle 9,223 10,584 30,503 31,343
Income taxes 3,410 4,086 11,324 12,099
------------ ------------ ------------- ------------
Income before cumulative effect of change
in accounting principle 5,813 6,498 19,179 19,244
Cumulative effect of change in accounting principle, net
of income tax benefit - - - (8,245)
------------ ------------ ------------- ------------
Net income $ 5,813 $ 6,498 $ 19,179 $ 10,999
============ ============ ============= ============
Net income per basic share from:
Income before cumulative effect of change
in accounting principle $ $ $ $
0.35 0.39 1.15 1.16
Cumulative effect of change in accounting principle - - -
(0.50)
============ ============ ============= ==========
Net income $ $ $ $
0.35 0.39 1.15 0.66
============ ============ ============= ==========
Net income per diluted share from:
Income before cumulative effect of change
in accounting principle $ $ $ $
0.35 0.39 1.15 1.14
Cumulative effect of change in accounting principle - - -
(0.49)
------------ ------------ ------------- ------------
Net income $ $ $ $
0.35 0.39 1.15 0.65
============ ============ ============= ============
Average common shares outstanding
16,696 16,648 16,693 16,641
Dilutive effect of stock options
1 123 39 159
------------ ------------ ------------- ------------
Average common shares outstanding - assuming dilution 16,697 16,771 16,732 16,800
============ ============ ============= ============
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See accompanying notes.
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Discount Auto Parts, Inc.
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
--------------------------------------------
February 29 March 2
2000 1999
-------------------- -----------------
Operating activities (In thousands)
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Net income $ 19,179 $ 10,999
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Cumulative effect of change in accounting principle - 8,245
Deferred income tax benefit 970 982
Depreciation and amortization 16,614 13,404
Gain on disposals of property and equipment (2,342) (252)
Changes in operating assets and liabilities:
Increase in inventories (37,338) (34,307)
Decrease in prepaid expenses and other
current assets 2,748 552
(Increase) decrease in other assets (692) 125
(Decrease) increase in trade accounts payable (10,991) 367
Decrease in other current liabilities (4,008) (3,994)
-------------------- -----------------
Net cash used in operating activities (15,860) (3,879)
Investing activities
Proceeds from sales of property and equipment 4,654 3,396
Purchases of property and equipment (52,887) (61,974)
Business acquisition - (8,225)
-------------------- -----------------
Net cash used in investing activities (48,233) (66,803)
Financing activities
Proceeds from short-term borrowings and long-term debt 81,425 95,359
Payments of short-term borrowings and long-term debt (19,740) (23,198)
Proceeds from other issuances of common stock 107 464
-------------------- -----------------
Net cash provided by financing activities 61,792 72,625
Net (decrease) increase in cash (2,301) 1,943
Cash at beginning of period 8,795 5,064
-------------------- -----------------
Cash at end of period $ 6,494 $ 7,007
==================== =================
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Discount Auto Parts, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
February 29, 2000
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Discount Auto Parts, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended June 1,
1999.
Operating results for the thirteen and thirty-nine week periods ended February
29, 2000 are not necessarily indicative of the results that may be expected for
the entire fiscal year.
2. Long-Term Debt
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Long-term debt consists of the following (in thousands):
February 29 June 1
2000 1999
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Revolving credit agreements $ 232,885 $ 170,000
Senior term notes 50,000 50,000
Senior secured notes 6,000 7,200
--------------- -----------------
288,885 227,200
Less current maturities (2,400) (2,400)
=============== =================
$ 286,485 $ 224,800
=============== =================
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Effective July 16, 1997, the Company entered into a three year $175 million
unsecured revolving credit agreement (the "Revolver") due in fiscal year 2001.
The rate of interest payable under the Revolver was a function of LIBOR or the
prime rate of the lead agent bank, at the option of the Company. During the term
of the Revolver, the Company was obligated to pay a fee of .125% per annum for
the unused portion of the Revolver.
Effective January 29, 1999, the Company entered into a separate $20 million
unsecured revolving credit agreement with a financial institution. The facility
was scheduled to mature September 1, 1999. The rate of interest payable under
the facility was a function of LIBOR.
Effective July 29, 1999, the Company entered into a new five year $265 million
unsecured revolving credit agreement (the "New Revolver"). The New Revolver
replaces both of the aforementioned revolving credit facilities. The rate of
interest payable under the New Revolver is a function of LIBOR or the prime rate
of the lead agent bank, at the option of the Company. During the term of the New
Revolver, the Company is also obligated to pay a fee, which fluctuates based on
the Company's debt-to-capitalization ratio, for the unused portion of the New
Revolver.
Effective August 8, 1997, the Company issued $50 million senior term notes
facility (the "Notes"). The Notes provide for interest at a fixed rate of 7.46%,
payable semi-annually, with semi-annual principal payments of $7.1 million,
beginning on July 15, 2004.
At February 29, 2000 and June 1, 1999, the Company's weighted average interest
rate on its borrowing under its revolving lines of credit was 7.0% and 5.3%,
respectively.
As of February 29, 2000, the Company had approximately $32.1 million of
available borrowings under the New Revolver.
The Company has issued two senior secured notes, each for an original principal
amount of $12 million, to an insurance company. The notes are collateralized by
a first mortgage on certain store properties, equipment and fixtures. The
agreements provide for interest at fixed rates of 10.11% and 9.8%, payable
quarterly, with annual principal payments of $1.2 million on each December 15
and May 31.
The Company's debt agreements contain various restrictions, including the
maintenance of certain financial ratios and restrictions on dividends, with
which the Company was in compliance as of February 29, 2000.
3. Business Acquisition
Effective September 28, 1998, the Company acquired, pursuant to a definitive
purchase agreement dated September 21, 1998, all the Rose Auto Parts stores
through an asset purchase from Eastern Automotive Warehouse, Inc., a
wholly-owned subsidiary of National Auto Parts Warehouse, Inc. The total
purchase price was approximately $8.2 million. The acquisition included 39
leased retail store locations, primarily located in south Florida, and a leased
warehouse facility in Miami, Florida. The acquisition involved the purchase of
inventory and furniture and equipment at these various locations and the
assumption of the respective leases. At February 29, 2000, 26 of the 39 Rose
retail locations were in operation. Discount Auto Parts has discontinued
operations in the remaining 13 stores.
The acquisition has been accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets purchased
and the liabilities assumed based upon the fair values at the date of
acquisition. Operating results of the acquired business have been included in
operations since the date of the acquisition. Goodwill of $2.7 million,
resulting from the acquisition, is being amortized over twenty years.
The pro forma impact of the acquired business on results of operation is not
material.
4. Accounting Change
During the fourth quarter of fiscal year 1999, the Company changed its method of
accounting for store inventories from the first-in, first-out retail inventory
method to the weighted average cost method. The new method for computing
inventories is preferable because it more accurately measures the cost of the
Company's merchandise and produces a better matching of revenues and expenses.
The third quarter and first nine months of fiscal 1999 have been restated to
give effect to the change in the Company's method of accounting for inventories.
The effect of the change as of the beginning of fiscal 1999 (i.e. June 3, 1998)
has been presented as a cumulative effect of a change in accounting method, net
of a $5,190,000 income tax benefit, of $8,245,000, and has been recorded as of
such date. In addition, the effect of this change on operations for the third
quarter and the first thirty-nine weeks of fiscal year 1999 was to decrease
income before cumulative effect of change in accounting principle by $203,000
($.01 per diluted share), and $621,000 ($.04 per diluted share), respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations Results of OperationsThirteen Weeks and Thirty-Nine Weeks
Ended February 29, 2000 Compared to Thirteen Weeks and Thirty-Nine Weeks Ended
March 2, 1999
Total sales for the third quarter of fiscal 2000 increased 15.7% to $147.4
million, as compared to $127.4 million a year earlier. Comparable store sales
increased 5.6% for the third quarter of fiscal 2000 as compared to the third
quarter of fiscal 1999. Total sales for the first nine months of fiscal 2000
increased 17.0% to $433.6 million, from $370.7 million a year earlier.
Comparable store sales increased 2.7% for the first nine months of fiscal 2000
as compared to the first nine months of fiscal 1999. Comparable store sales
results include sales from the Company's commercial delivery program. The
balance of the increase in total sales for the third quarter and the first nine
months of fiscal 2000 were attributable to net sales from new stores opened
since the beginning of the respective periods in fiscal 1999.
At February 29, 2000, the Company had 621 stores in operation, compared with 558
stores at June 1, 1999 and 537 stores at March 2, 1999.
Gross profit for the third quarter of fiscal 2000 increased 11.0% to $58.7
million as compared to $52.9 million for the third quarter of fiscal 1999. As a
percentage of sales, gross profit was 39.8% for the third quarter of fiscal 2000
as compared to 41.5% for the third quarter of fiscal 1999. Gross profit for the
third quarter of fiscal 1999 included additional vendor incentives associated
with the Company's fiscal 1999 purchase of the Rose Automotive stores. Gross
profit for the third quarter of fiscal 2000 was impacted by higher product
distribution cost (at both the Company's Lakeland, Florida distribution center
and its Parts Express warehouse network), and higher inventory shrinkage expense
at the Company's retail stores. Gross profit for the first nine months of fiscal
2000 increased 16.3% to $175.7 million as compared to $151.1 million a year
earlier. As a percentage of sales, gross profit was 40.5% for the first nine
months of fiscal 2000 as compared to 40.8% a year earlier.
Selling, general and administrative ("SG&A") expenses increased as a percentage
of sales from 30.6% in the third quarter of fiscal 1999 to 31.2% in the third
quarter of fiscal 2000. SG&A expenses increased as a percentage of sales from
29.9% for the first nine months of fiscal 1999 to 31.1% for the first nine
months of fiscal 2000. The increase is primarily due to the expenses incurred
related to the continued implementation and expansion of the Company's
commercial delivery program for the fiscal 2000 periods as compared to the
fiscal 1999 periods, as well as the Company's inability to leverage certain
expenses during December 1999 and January 2000 as a result of lower than
anticipated sales.
Income from operations for the third quarter of fiscal 2000 was $12.7 million as
compared to $13.9 million for the third quarter of fiscal 1999. Income from
operations for the first nine months of fiscal 2000 was $41.0 million as
compared to $40.2 million for the first nine months of fiscal 1999.
For the reasons set forth above, operating margins for the third quarter of
fiscal 2000 were 8.6% as compared to 10.9% for the third quarter of fiscal 1999.
Operating margins for the first nine months of fiscal 2000 were 9.4% as compared
to 10.8% for the first nine months of fiscal 1999.
Interest expense for the third quarter of fiscal 2000 was $5.1 million as
compared to $3.6 million for the third quarter of fiscal 1999. Interest expense
for the first nine months of fiscal 2000 was $13.0 million as compared to $9.3
million during the first nine months of fiscal 1999. The increase was primarily
the result of increased borrowings associated with new store growth and
inventory growth and higher interest rates on the Company's variable rate debt.
Income before the cumulative effect of a change in accounting method for the
third quarter of fiscal 2000 was $5.8 million or $.35 per diluted share as
compared to $6.5 million or $.39 per diluted share reported for the third
quarter of fiscal 1999. Income before the cumulative effect of a change in
accounting method for the first nine months of fiscal 2000 was $19.2 million or
$1.15 per diluted share as compared to $19.2 million or $1.14 per diluted share
for the first nine months of fiscal 1999.
During the fourth quarter of fiscal 1999, the Company implemented a change in
its method of accounting for store inventories from the first-in, first-out
method calculated using a form of the retail inventory method to the weighted
cost method. The Company believes the new method for computing inventory is
preferable because it provides for better matching of revenues and expenses. The
Company made this change in connection with new store-level perpetual inventory
systems installed throughout fiscal 1999. Accordingly, it is believed that the
new inventory valuation method will better correspond with the Company's current
operating practices for store inventory management. As a result of this change
in accounting method, the Company reported a non-cash, fiscal 1999 after tax
charge of $8.2 million, or $.49 per diluted share which is reflected as of the
beginning of the first quarter of fiscal 1999 and which represents the beginning
of the 1999 fiscal year impact of the change in accounting method.
The Company's effective tax rate for the third quarter of fiscal 2000 was 37.0%
as compared to 38.6% for the third quarter of fiscal 1999. The Company's
effective tax rate for the first nine months of fiscal 2000 was 37.1% as
compared to 38.6% for the first nine months of fiscal 1999. The lower tax rate
primarily is the result of state tax planning and restructuring initiatives,
which were implemented as of the end of the second quarter of fiscal 2000.
Taking into account all of the above described factors, the Company reported net
income for the third quarter of fiscal 2000 of $5.8 million or $.35 per diluted
share as compared to $6.5 million of $.39 per diluted share for third quarter of
fiscal 1999. Net income for the first nine months of fiscal 2000 was $19.2
million or $1.15 per diluted share as compared to $11.0 million or $.65 per
diluted share for the first nine months of fiscal 1999.
Liquidity and Capital Resources
For the thirty-nine weeks ended February 29, 2000, net cash of $15.9 million was
used in the Company's operations versus $3.9 million used by the Company's
operations for the comparable thirty-nine week period of fiscal 1999. During the
thirty-nine weeks ended February 29, 2000, this net use of cash was due
primarily to a reduction in trade accounts payable and an increase in
inventories resulting primarily from new store growth and additional inventory
added to commercial designated stores. These uses of cash were offset in part by
current period earnings and depreciation. The variance between the $15.9 million
net cash used in operations for fiscal 2000 and the $3.9 million net cash used
by operations for the fiscal 1999 period is primarily due to the decrease in
accounts payable for the fiscal 2000 period. This change is primarily due to
timing of payments, and the implementation of the Company's excess inventory
redistribution plan implemented with respect to its stores. Such plan takes
excess inventory from selected stores and redistributes such inventory to those
stores that are in need of the inventory in lieu of purchasing additional
inventory from the Company's vendors. While this program tends to impact
inventory management levels favorably, because of timing issues, it has a more
immediate impact (reduction) on accounts payable. In addition, during the fiscal
1999 period, the Company had also received additional extended terms from
certain of its vendors on larger commercial inventory related purchase orders.
Capital expenditures for the thirty-nine weeks ended February 29, 2000 were
$52.9 million. The majority of the capital expenditures related to the 63 stores
opened during that period. For all of fiscal 2000, the Company expects to open
approximately 80 to 90 new stores.
The Company is currently in the process of planning and developing a second
distribution center. The second distribution center is expected to be
approximately 400,000 square feet and, ultimately, support approximately 450
stores. Groundbreaking for the new distribution center, to be located in Copiah
County Mississippi, is scheduled to occur before the end of April 2000. The new
distribution center is expected to be opened and operational early in calendar
year 2001. Capital expenditures associated with the second distribution center
are expected to be approximately $25 million to $30 million. The Company is
currently working with a large financial institution to finance the construction
of the second distribution center through a synthetic lease arrangement. Such
agreement is expected to be completed by the end of fiscal 2000. The
construction of the second distribution center will be funded by a bridge
financing arrangement through the same financial institution until the synthetic
lease is completed.
The Company also continued the roll-out of a commercial delivery service, which
began in the third quarter of fiscal 1998. The Company's commercial delivery
service consists of a program whereby commercial customers (such as auto service
centers, commercial mechanics, garages and the like) establish commercial
accounts with the Company and order automotive parts from the Company and such
parts will be delivered from, or can be picked up from, nearby Discount Auto
Parts stores. The commercial delivery program requires the Company to extend
trade credit to certain of the commercial account customers as part of the
ordinary course of business. The extension of such trade credit increases the
capital requirements associated with the roll-out of the program and exposes the
Company to credit risk from uncollectible accounts. The Company has established
systems to manage and control such credit risk. The amount of capital that is
needed to cover extension of trade credit will be dependent in large part upon
the success of the commercial delivery service roll-out and how quickly the
commercial business develops. Because this is a relatively new aspect of the
auto parts supply business for the Company, there are risks associated with the
Company's entry into this new aspect of the business and there can be no
assurance as to if or when the commercial delivery service business will be
profitable or as to whether the Company will experience any financial or other
challenges in managing and controlling the credit risk.
The Company anticipates that total capital expenditures for all of fiscal 2000
including the costs associated with the addition of 80 to 90 new stores, initial
construction of the second distribution center and the working capital costs
associated with the continued expansion of the commercial delivery service, will
be in the range of $70 million to $75 million.
As of February 29, 2000, the Company had $32.1 million of additional
availability under its existing financing agreements.
The Company has historically been able to finance most of its new store growth
through unsecured lines of credit and medium and longer term mortgage financing
provided by banks and other institutional lenders, and through cash flow from
operations. Consistent with its historical practice, the Company expects to
finance much of its short and long-term liquidity needs for new store growth, as
to land and buildings, primarily through these lines of credit and mortgage
financing (renewals and replacements thereof), and as to equipment and fixtures,
primarily through cash flow from operations. In addition, the Company is in the
process of negotiating and evaluating sale/leaseback arrangements and synthetic
leases to secure additional liquidity and to address new store growth.
During January 2000, the Company announced that it had retained the services of
a national financial services organization to assist it in completing a
sale/leaseback of approximately 140 to 150 properties. Discussions have been
held with several potential sale/leaseback providers. Closing of the transaction
is expected to occur in May or June 2000, and is expected to provide the Company
with approximately $75 to $80 million of net proceeds. Proceeds from the
sale/leaseback transaction will be used to reduce indebtedness under the
Company's revolving credit agreement.
The Company's new store development program also requires significant working
capital, principally for inventories. The Company has historically used trade
credit to partially finance new store inventories and has been successful in
negotiating extended payment terms and incentives from many suppliers through
volume purchases. The Company believes that it will be able to continue
financing some of its inventory growth through the extension of favorable
payment terms and incentives from its vendors, but there can be no assurance
that the Company will be successful in doing so. The additional funding for
inventory expansion has been provided in large part from cash flow from
operations.
The Company believes that the expected cash flows from operations, available
bank borrowings and trade credit, will be sufficient to fund the capital and
liquidity needs of the Company through the fall of 2000. The Company expects
that by the fall of 2000 additional funding sources, such as the sale/leaseback
arrangement and synthetic lease, will need to have been put in place to
supplement the new revolving credit facility.
Inflation and Seasonality
The Company does not believe its operations have been materially affected by
inflation. The Company has been successful, in many cases, in reducing the
effects of merchandise cost increases principally by taking advantage of vendor
incentive programs, economies of scale resulting from increased volumes or
purchases, and selective forward buying.
Although sales have historically been somewhat higher in the Company's fourth
quarter (March through May), the Company does not consider its business to be
seasonal.
Forward Looking Statements
The Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this quarterly report contain forward looking
statements that are based on the current expectations, estimates and projections
about the industry in which the Company operates, management's beliefs and the
assumptions made by management. These statements include the words
"anticipates", "expects", "expected", "should" and "believes", variations of
such words, and similar expressions which are intended to identify such forward
looking statements. These forward looking statements are subject to potential
risks and uncertainties that could cause actual results to differ materially
from historical results or those currently anticipated.
These potential risks and uncertainties include, but are not limited to,
increased competition, extent of the market demand for auto parts, availability
of inventory supply, inventory shrinkage, propriety of inventory mix, adequacy
and perception of customer service, product quality and defect experience,
availability of and ability to take advantage of vendor pricing programs and
incentives, sourcing availability, rate of new store openings, cannibalization
of store sites, mix and types of merchandise sold, governmental regulation of
products, new store development and the like, performance of information
systems, effectiveness of deliveries from the distribution center, ability to
hire, train and retain qualified team members, availability of quality store
sites, ability to successfully implement the commercial delivery service, credit
risk associated with the commercial delivery service, environmental risks,
availability of expanded and extended credit facilities, expenses associated
with investigations concerning freon matters, potential for liability with
respect to these matters and other risks.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to changes in interest rates, primarily from its
revolving credit agreement. The Company also has long term debt that bears a
fixed rate. As to the fixed rate debt, there is a risk that market rates will
decline and the required payments will exceed those based on current market
rates on the long-term debt.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Coalition for a Level Playing Field, et. al. V. AutoZone, Inc. et. al, Case
No. 00-0953 in and for the United District Court, Eastern District of New York.
In February 2000, the Coalition for a Level Playing Field ("Coalition") and one
hundred twenty-one independent automotive parts and accessories aftermarket
warehouse distributors and and/or jobbers filed a lawsuit in the United States
District for the Eastern District of New York against the Company and other
retailers alleging violations of the Robinson-Patman Act. The Complaint seeks
injunctive and declaratory relief, unspecified treble damages on behalf of each
of the plaintiffs, as well as attorney fees and costs. The Company believes the
claims to be without merit and intends to vigorously defend the action.
The Company is currently involved in litigation with its insurance carrier
pursuant to which the Company is seeking recovery under its insurance policy of
certain amounts incurred in connection with the previously reported Airgas, Inc.
litigation and the settlement thereof. Recently, the separate motions for
summary judgment by the Company and by the insurance carrier were denied and the
litigation is proceeding. The ultimate outcome of such litigation or an estimate
of the amount of potential insurance recoveries, if any, cannot be determined at
this time. No benefit for any recovery, which may result, has been reflected in
the Company's fiscal year 2000 financial statements.
Discount Auto Parts is not a party to any other legal proceedings, other than
various claims and lawsuits arising in the normal course of the Company's
business. The Company does not believe that such claims and lawsuits,
individually or in the aggregate, will have a material adverse effect on its
financial condition or results of operations.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.20 First Amendment to Revolving Credit Agreement dated as of January 12, 2000
by and among Discount Auto Parts, Inc., the Lenders, and SunTrust Bank.
10.21 Change of Control Employment Agreement with William C. Perkins dated
January 17, 2000.
10.22 Change of Control Employment Agreement with C. Michael Moore dated January
17, 2000.
10.23 Form of Change of Control Agreement with each of Clement Bottino, Don
Casey, Michael D. Harrah, David Viele and Steven Joiner.
10.24 Severance Protection and Change of Control Benefits Program.
10.25 Agreement and General Release with Steven C. Bair dated March 1, 2000.
27 Financial Data Schedule (For SEC Use Only)
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the thirteen
week period ended February 29, 2000.
<PAGE>
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 thereunto duly authorized.
DISCOUNT AUTO PARTS, INC.
Date: April 14, 2000 By: /s/ Peter J. Fontaine
-------------- ---------------------
Peter J. Fontaine
Chief Executive Officer
(Principal Executive Officer)
Date: April 14, 2000 By: /s/ C. Michael Moore
-------------- --------------------
C. Michael Moore
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT 10.20
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (the "First
Amendment") dated as of January 12, 2000, by and among DISCOUNT AUTO PARTS,
INC., a Florida corporation (the "Borrower"), the Lenders signatories to the
Credit Agreement (the "Lenders") and SUNTRUST BANK, a Georgia corporation,
successor by merger to SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, a
national banking association, as Administrative Agent (the "Administrative
Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Administrative Agent have
entered into that certain Revolving Credit Agreement dated as of July 29, 1999
(the "Credit Agreement"); and
WHEREAS, the Borrower has requested the Lenders to revise one of
the financial covenants contained in the Credit Agreement; and
WHEREAS, the Lenders and the Administrative Agent have agreed to amend
the Credit Agreement to provide for the foregoing, subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments to Credit Agreement. The Credit Agreement is hereby amended
as follows:
Section 7.8(a) of the Credit Agreement is hereby deleted in its
entirety and, in lieu thereof, the following is substituted:
"(a) Interest Coverage Ratio. Maintain as at the last day of
each fiscal quarter, a ratio of (i) Consolidated EBITR to (ii)(y)
Consolidated Interest Expense plus (z) Consolidated Rental Expense of
at least (A) 3.0:1.0 for the period from July 29, 1999 to November 29,
1999; (B) 2.5:1.0 for the period from November 30, 1999 to May 30,
2000; (C) 2.75:1.0 for the period from May 31, 2000 to May 29, 2001;
and (D) 3.0:1.0 from and after May 30, 2001, computed on a rolling
four-quarter basis, based on information contained in the Borrower's
current financial statement and its financial statements for the
preceding three quarters."
2. Counterparts. This First Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and permitted assigns.
3. Capitalized Terms. All capitalized terms contained herein shall have the
meanings assigned to them in the Credit Agreement unless the context herein
otherwise dictates or unless different meanings are specifically assigned to
such terms herein.
4. Representations and Warranties. The Borrower hereby reaffirms all of its
representations and warranties contained in the Credit Agreement as though made
and given in connection with the execution and delivery of this First Amendment
and further certifies that all such representations and warranties are true and
correct on and as of the date hereof (except to the extent that such
representations and warranties expressly relate to an earlier date).
5. Ratification of Credit Documents; Miscellaneous. Except for any modification
of and/or amendment to the Credit Agreement as herein provided, no other term,
condition or provision of the Credit Agreement shall be considered to be altered
or amended, and this First Amendment shall not be deemed a novation. The Credit
Agreement as amended hereby, and all other Credit Documents shall remain in full
force and effect. Each and every reference to the Credit Agreement in any other
Credit Document shall be deemed to refer to the Credit Agreement as amended by
this First Amendment. The Borrower hereby acknowledges and agrees that the
Credit Documents are, as of the date hereof, valid and enforceable in accordance
with their respective terms and that all amounts extended by the Lenders to the
Borrower pursuant thereto are absolutely and unconditionally due and owing to
the Lenders, and are not subject to any defenses, counterclaims or rights of
set-off whatsoever.
6. Governing Law. THIS FIRST AMENDMENT SHALL BE EFFECTIVE UPON EXECUTION BY THE
REQUIRED LENDERS AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the day and year first above written.
BORROWER:
DISCOUNT AUTO PARTS, INC.
By:/s/ C. Michael Moore
C. Michael Moore,
Chief Financial Officer/Secretary
<PAGE>
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
SUNTRUST BANK, individually,
and as Administrative Agent
By: /s/ William C. Barr, III
William C. Barr, III, Vice President
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
BANK OF AMERICA, N.A.,
individually and as Syndication Agent
By: /s/ Timothy H. Spanos
Timothy H. Spanos, Managing Director
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
BANK ONE, NA (formerly known as THE FIRST
NATIONAL BANK OF CHICAGO,
individually and as Documentation Agent
By: /s/ Catherine A. Muszynski
Catherine A. Muszynski, Vice President
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By: /s/ Michael J. Miller
Michael J. Miller, Vice President
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
AMSOUTH BANK
By: /s/ Anthony Stiffler
Anthony Stiffler, Vice President
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
REGIONS BANK
By: /s/ Anthony D. Nigro
Anthony D. Nigro, Vice President
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
HIBERNIA NATIONAL BANK
By: /s/ Angela Bentley
Angela Bentley, Assistant Vice President
[SIGNATURE PAGE TO FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT BETWEEN
SUNTRUST BANK, AS ADMINISTRATIVE AGENT,
AND DISCOUNT AUTO PARTS, INC.]
THE HUNTINGTON NATIONAL BANK
By: /s/ William G. Little
William G. Little, Vice President
<PAGE>
EXHIBIT 10.21
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS AGREEMENT is between DISCOUNT AUTO PARTS, INC., a Florida
corporation (the "Company"), and WILLIAM C. PERKINS, residing at, Tampa, Florida
33647 (the "Executive") and is dated as of the 17th day of January, 2000.
WITNESSETH:
WHEREAS, the Executive is a principal officer of the Company and an
integral part of its management; and
WHEREAS, the Company recognizes that even the possibility of a change of
control and the uncertainty and questions which it may raise may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders during a critical time; and
WHEREAS, the Company considers it in the best interest of the Company and
its shareholders that the Executive be encouraged to remain with the Company in
the event of any actual or threatened change of control of the Company; and
WHEREAS, the Company's Board of Directors (the "Board") has determined that
appropriate steps should be taken now to reinforce and encourage members of the
Company's management;
NOW, THEREFORE, in consideration of the above premises and mutual
agreements herein set forth and the services performed and to be performed by
the Executive for the Company, the parties agree as follows:
1. Operation of Agreement.
This Agreement shall constitute a valid and binding contract between the
parties immediately upon its execution. Nevertheless, the Executive and the
Company shall have no obligations hereunder until, and this Agreement shall be
effective without any action by any party only upon the first date on which a
Change of Control (as defined in Section 2) has occurred; provided, however,
that at the option of the Company this Agreement may be terminated on the first
anniversary of written notice of termination given to the Executive by the Board
prior to the Agreement's Effective Date (as defined in Section 2). 2.
Definitions.
APPLICABLE FACTOR. For purposes of this Agreement, "Applicable Factor"
shall equal the Applicable Number of Months divided by 12.
APPLICABLE NUMBER OF MONTHS. For purposes of this Agreement, "Applicable
Number of Months" shall equal the number of months in the Employment Period, as
specified under Section 3.
CAUSE. For purposes of this Agreement, "Cause" shall mean termination
resulting from (i) acts of dishonesty by the Executive constituting a felony and
resulting or intended to result directly or indirectly in gain or personal
enrichment to the Executive at the expense of the Company, (ii) a final
determination by a court or other trier of fact (without any further rights to
appeal) to the effect that the Executive engaged in employment discrimination,
sexual harassment and/or similar employment relationship activities in violation
of any applicable law and resulting in material damage to or liability of the
Company (an "Employment Law Violation") or (iii) willful and continued failure
by Executive to substantially perform his duties with the Company (other than
any such failure resulting from Disability (as defined herein)) after a demand
in writing for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed his duties, and such
failure to perform the Executive's duties results in demonstrably material
injury to the Company.
CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall occur if (i) the Company shall not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (ii) the Company sells,
leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company), (iii) the Company is to be dissolved and liquidated,
(iv) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the 1934 Act, (other than Peter Fontaine, Fontaine Industries
Limited Partnership, Fontaine Enterprises Limited Partnership or any of their
respective affiliates and other than (A) any employee plan established by the
Company, (B) the Company, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation owned, directly
or indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company) acquires or gains beneficial
ownership or control (including, without limitation, power to vote) of more than
25% of the combined voting power of the Company's then outstanding voting
securities, or (v) as a result of or in connection with any cash tender or
exchange offer, merger or other business combination, sales of assets or a
contested election for the board of directors, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Company before such Transaction shall cease to constitute a majority of the
Board.
EFFECTIVE DATE. For purposes of this Agreement, " Effective Date" shall
mean the first date on which a Change of Control has occurred.
<PAGE>
DISABILITY. For purposes of this Agreement, "Disability" shall mean that
the Executive is unable to perform the essential functions of the job for which
the Executive is being employed hereunder, with or without reasonable
accommodation, by reason of his illness, accident or other cause, including
mental disability, for a period of six consecutive calendar months, or an
aggregate of nine months during any continuous twelve-month period.
GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean:
(i) A determination by the Executive made in good faith that his primary
management functions, duties or responsibilities have been diminished in any
material respect and the situation is not remedied within 30 days after receipt
by the Company of written notice from the Executive of such determination;
(ii) Any requirement that the Executive relocate his principal office
outside of Polk County, Florida;
(iii) Any modification to the rights to indemnification or director and
officer liability insurance under which the Executive is covered immediately
prior to the Effective Date which substantially reduces the benefits available
to the Executive under such indemnification or insurance; or
(iv) A breach by the Company of any provision of this Agreement not
embraced within the foregoing clause (i), (ii) or (iii) which is not remedied
within 30 days after receipt by the Company of written notice from the
Executive.
3. Employment Period.
a. Unless terminated pursuant to Section 6, the Company hereby agrees to
continue the Executive in its employ for the period commencing on the Effective
Date and ending on the date which is the Applicable Number of Months following
such date (the "Employment Period"). Unless terminated pursuant to Section 6,
the Executive agrees to remain in the employ of the Company until such time as
the Executive gives the Company at least 30 days written notice of the
Executive's intent to voluntarily terminate employment.
b. For purposes of this Agreement, the Applicable Number of Months will be
equal to thirty-six (36) months.
4. Position and Duties.
a. During the Employment Period, the Executive shall continue to serve as a
principal officer of the Company with office, title and primary management
functions, duties, and responsibilities substantially similar to those held and
performed during the 90-day period immediately preceding the Effective Date
provided that any change in such functions, duties and responsibilities which
results solely from the Company no longer being a reporting company under the
Federal securities laws or the Company being a subsidiary of another company
shall not be considered a change in functions, duties or responsibilities for
any purpose under this Agreement.
b. During the Employment Period, the Executive shall devote the Executive's
full time and efforts during normal business hours to the business and affairs
of the Company except for reasonable vacations and except for illness or
incapacity, but nothing in this Agreement shall preclude the Executive from (i)
devoting reasonable periods required for serving as a director or member of a
committee of any organization involving no conflict of interest with the
interests of the Company, (ii) engaging in charitable and community activities
and professional organizations and (iii) managing personal investments, so long
as such activities do not materially interfere with the regular performance of
his duties and responsibilities under this Agreement.
c. Executive shall have as his principal office and shall perform his
duties hereunder primarily at the Company's headquarters at 4900 Frontage Road
South, Lakeland, Florida 33815 or at such other location as the Board shall
direct within Polk County, Florida.
5. Compensation.
a. Base Salary. During the Employment Period, the Executive shall receive a
base salary ("Base Salary") equal to the average of the Executive's monthly
salary during the three full months immediately preceding the Effective Date
multiplied by twelve. The Base Salary shall not be reduced after the Effective
Date. The Base Salary will be paid in equal semi-monthly installments.
<PAGE>
b. Other Non-Salary Benefits. During the Employment Period, the Executive
shall be entitled to participate in all bonus, incentive, savings and retirement
plans, policies and programs applicable generally to other peer executives of
the Company and its affiliated companies, but in no event shall such plans,
policies and programs provide the Executive with incentive opportunities,
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than those provided by the Company and its
affiliated companies for the Executive under such plans, policies and programs
as in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies. During the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, policies and
programs provided by the Company and its affiliated companies (including to the
extent they exist and without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than such plans, practices,
policies and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies. During the
Employment Period, the Executive shall be entitled to perquisites, including,
without limitation, an office, secretarial and clerical staff, and to fringe
benefits, including, without limitation, the payment of allowances for, and
reimbursement of, automobile expenses, and cellular telephone charges, in each
case at least equal to those attached to his office immediately prior to the
Effective Date.
c. Vacation. The Executive shall be entitled to receive such paid vacation
time each year during the term of this Agreement as is consistent with the then
current vacation policy or practice of the Company for Executive's position.
Such vacation shall be taken at a time convenient to the Company. Any vacation
time to which the Executive is entitled in accordance with the foregoing that is
not taken by the Executive in any year during the Employment Period shall not be
cumulative, and the Executive shall not receive any cash or noncash benefit in
lieu of vacation time not taken by the Executive except that Executive shall be
entitled to receive cash in lieu of any unused vacation time applicable for the
year in which any termination of employment occurs.
d. Expenses. Upon submission of proper vouchers, the Company will pay or
reimburse the Executive for reasonable transportation, hotel, travel and related
expenses incurred by the Executive on business trips away from the Executive's
principal office, and for other business and entertainment expenses reasonably
incurred by the Executive in connection with the business of the Company and its
subsidiaries during the Employment Period, all subject to such limitations as
may from time to time be prescribed by the Board.
e. Indemnity. The Executive shall be entitled to and shall be provided the
benefits of indemnification and director and officer liability insurance on the
same basis as in effect immediately preceding the Effective Date, or if more
favorable to the Executive, as in effect at any time thereafter with respect to
other officers of similar position and responsibility. Indemnification under
this Section shall be in addition to any other indemnification rights of the
Executive whether by separate contract, under the Company's articles of
incorporation or bylaws, or otherwise.
6. Termination.
a. Death or Disability. Executive's employment shall terminate
automatically upon the Executive's death. The Company may terminate Executive's
employment upon Executive's Disability, effective as of the applicable date of
his Disability, by giving to the Executive written notice of termination of the
Executive's employment.
<PAGE>
b. Cause. The Company may terminate the Executive's employment for "Cause"
upon written notice as required herein. Executive's employment shall in no event
be considered to have been terminated by the Company for Cause if such
termination was not as a result of an Employment Law Violation but took place as
the result of (i) bad judgment or negligence, or (ii) any act or omission
without intent of gaining therefrom directly or indirectly a profit to which the
Executive was not legally entitled, or (iii) any act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (iv) any act or omission in respect of which a determination is made
that the Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the by-laws of the
Company or the laws of the State of Florida or the directors and officers
liability insurance of the Company, in each case as in effect at the time of
such act or omission. The Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board, the Executive was guilty of conduct
contained in the definition of Cause and specifying the particulars thereof in
detail.
c. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. Executive's employment shall in no event
be considered to have been terminated by Executive for Good Reason if such
termination by the Executive took place as a result of changes in the
Executive's functions, duties and responsibilities resulting solely from the
Company no longer being a reporting company under the Federal securities laws or
the Company being a subsidiary of another company.
d. Voluntary Termination. The Executive's employment may be terminated by
the Executive at any time; provided that the extent of the rights to continued
compensation shall differ depending upon whether the voluntary termination
occurs before the first anniversary of the Effective Date or on or after the
first anniversary of the Effective Date.
e. Other Termination. At any time, the Company may terminate the employment
of the Executive for reason other than Cause, death or Disability (a "Without
Cause Termination").
f. Notice of Termination. Any termination of the Executive's employment by
the Company for Cause or due to Disability or by the Executive for Good Reason
or otherwise shall be communicated by Notice of Termination to the other party.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, if applicable, and (iii) if the termination date is
other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 15 days after the giving of such notice).
g. Date of Termination. If the Executive's employment is terminated for any
reason, whether pursuant to the terms of this Agreement or otherwise, then the
date of death (in the case of termination occasioned by the death of the
Executive) or otherwise the date set forth in the Notice of Termination as the
termination date of the Executive's employment shall be deemed the "Date of
Termination."
<PAGE>
7. Compensation Upon Termination, During Disability or Following Death.
a. During Disability. During any period that the Executive is unable to
perform his duties hereunder during the Employment Period as a result of
incapacity due to physical or mental illness or injury, the Company shall
continue to pay to the Executive his full Base Salary and other benefits as in
effect immediately prior to such physical or mental illness or injury (including
without limitation annual bonus payments in amounts no less than were paid to
the Executive with respect to the most recent full fiscal year of the Company
preceding the Effective Date or if more favorable to the Executive, in amounts
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies) through the Date of Termination and
then thereafter continuing through any then remaining portion of the Employment
Period.
b. Death. If during the Employment Period the Executive's employment is
terminated by reason of death, the Company shall (w) pay to the Executive or his
estate a lump sum payment (made within 10 days after the Date of Termination)
equal to the Executive's Base Salary divided by twelve multiplied by the number
of full or partial months remaining in the Employment Period, (x) pay to the
Executive or his estate an additional lump sum payment (made within 10 days
after the Date of Termination) equal to (A) the highest amount of the annual
incentive compensation, including annual bonus, received or deferred, by the
Executive for the most recent three (3) full fiscal years immediately prior to
the fiscal year in which the Date of Termination occurs, divided by (B) twelve,
multiplied by (C) the number of full or partial months remaining in the
Employment Period, (y) provide to the Executive's surviving dependents the
medical insurance benefits contemplated by Section 5.b. at the expense of the
Company for one year from the Date of Termination or through the end of the
Employment Period whichever is longer and (z) make available to the Executive's
surviving dependents the medical benefits, which are at least equal to and at a
cost which is comparable to, those benefits required to be provided and the
costs required to be offered under "COBRA" for a period of eighteen months after
the expiration of the Company's obligations under clause (y) above and for any
additional period and to the extent required under "COBRA."
c. Cause; Voluntary Termination Prior to One Year. If the Executive's
employment shall be terminated either (i) for Cause by the Company or (ii)
voluntarily by the Executive prior to the first anniversary of the Effective
Date other than for Good Reason, the Company shall pay the Executive's full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given and shall have no further obligations to the Executive
under this Agreement.
<PAGE>
d. Good Reason; Voluntary Termination on or After One Year; Without Cause.
If, during the Employment Period, (i) the Company shall terminate the
Executive's employment other than for Cause, death or Disability (i.e. a Without
Cause Termination), (ii) the employment of the Executive shall be terminated by
the Executive for Good Reason or (iii) the Executive shall terminate his
employment on or after the first anniversary date of the Effective Date for any
reason or no reason, the Company shall (x) pay to the Executive as severance pay
hereunder and in lieu of any other amounts due hereunder a lump sum payment
(made within 10 days after the Date of Termination) equal to (A) the Applicable
Factor times the Executive's then current Base Salary and the Applicable Factor
times the highest amount of the annual incentive compensation, including annual
bonus, received or deferred by the Executive for the three (3) fiscal years
immediately prior to the fiscal year in which the Date of Termination occurs,
(y) provide to the Executive the medical insurance benefits contemplated by
Section 5.b. at the expense of the Company for one year from the Date of
Termination or through the end of the Employment Period whichever is longer and
(z) make available to the Executive the medical benefits, which are at least
equal to and at a cost which is comparable to, those benefits required to be
provided and the costs required to be offered under "COBRA" for a period of
eighteen months after the expiration of the Company's obligations under clause
(y) above and for any additional period and to the extent required under
"COBRA."
e. Release. Payment of any compensation to the Executive under this Section
7 following termination of employment shall be conditioned upon the prior
receipt by the Company of a release executed by the Executive in substantially
the form attached to this Agreement as Exhibit A.
8. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or of any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
9. Executive Obligations.
a. For the Employment Period the Executive will not do or say anything that
reasonably may be expected to have the effect of diminishing or impairing the
goodwill and good reputation of the Company and its officers, directors and
products nor will the Executive intentionally disparage or injure the reputation
of the Company by making any material negative statements about the Company's
methods of doing business, the effectiveness of its business policies and the
quality of its products or personnel.
<PAGE>
b. The Executive hereby agrees that during the Executive's employment by
the Company and for the Applicable Number of Months following termination of the
Executive's employment during the Employment Period either (i) by the Company
other than for Cause, death or Disability or (ii) by the Executive for Good
Reason or after the first anniversary date of the Effective Date for any reason
or no reason, the Executive shall not act in any manner or capacity, directly or
indirectly, in any individual or representative capacity, whether as principal,
agent, partner, officer, director, employee, joint venturer, member of any
business entity, consultant, advisor or investor (except that the Executive
shall have the right hereunder to own up to 2% of one or more public companies
having a class of equity securities registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) or otherwise,
in or for any business entity or enterprise which competes with the Company in
any geographic area served by the Company at the time of the Executive's
termination and engages as its primary line of business in the sale of
automotive parts or accessories to retail customers or to commercial auto repair
outlets (the "Business");
c. The Executive hereby agrees that during the Executive's employment by
the Company and following the termination of the Executive's employment, the
Executive shall not without the prior written consent of the Company, divulge,
disclose or make accessible to any other person, firm, partnership or company or
other entity any Confidential Information which shall not include information
known generally or available to the public or of information not considered
confidential by persons engaged in the business conducted by the Company or from
disclosure required by law or court order pertaining to the Business except (x)
while employed by the Company in the Business and for the benefit of the Company
or (y) when required to do so by a court of competent jurisdiction, by any
governmental agency, or by any administrative body or legislative body
(including a committee thereof) with purported or apparent jurisdiction to order
the Executive to divulge, disclose or make accessible such information.
d. The Executive hereby agrees that during the Executive's employment by
the Company and for the Applicable Number of Months following the termination of
the Executive's employment, the Executive shall not without the prior written
consent of the Company solicit or hire away any person who is then an employee
of the Company and was an employee of the Company at any time after the
Effective Date and prior to termination of the Executive's employment.
e. The Executive also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer authorized to
act in the matter by the Board, any drawing, blueprint, business strategies,
budgets, projections, nonpublic financial information, manuals, policies or
other document of the Company, its subsidiaries, affiliates and divisions.
f. If the scope of any restriction contained in Section 9.b., c. or d.
hereof is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and the Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceedings brought to enforce such
restrictions.
g. The Executive acknowledges and agrees that the Company's remedy at law
for any breach of the Executive's obligations under this Section 9 (other than
Section 9.b.) may be inadequate, and agrees and consents that temporary and/or
permanent injunctive relief may be granted in any proceeding which may be
brought to enforce any provision hereof (other than Section 9.b.), without the
necessity of proof of actual damage. In the event of any breach of the
provisions of Section 9.b. hereof, as liquidated damages and in lieu of any
other damages, payments to or actions by the Company, the Executive shall pay to
the Company an amount equal to the product of (i) any lump sum payment made to
Executive under this Agreement divided by twenty-four multiplied by (ii)
twenty-four minus the number of months (including as a whole month any portion
thereof) since the Executive's Date of Termination.
10. Review by Counsel. The Executive has had sufficient time and the
opportunity, whether or not exercised, to have this Agreement reviewed by
counsel of the Executive's choosing and to be advised as to the Executive's
rights and obligations hereunder.
11. Successors.
a. This Agreement shall not be assignable by either party without the
consent of the other party.
b. This Agreement shall be binding upon and inure to the benefit of the
Company, its successors or assigns, by operation of law or otherwise, including
without limitation any corporation or other entity or person which shall succeed
(whether directly or indirectly, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company, and the Company will require any parent company or successor, by
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform, or (in the case of a parent company) to guarantee
the performance of, this Agreement. Except as otherwise provided herein this
Agreement shall be binding upon and inure to the benefit of the Executive and
his legal representatives, heirs, and assigns, provided, however, that in the
event of the Executive's death prior to payment or distribution of all amounts,
distributions, and benefits due him hereunder, each such unpaid amount and
distribution shall be paid in accordance with this Agreement to the person or
persons designated by the Executive to the Company to receive such payment or
distribution and in the event the Executive has made no applicable designation,
to the persons or persons designated by the Executive as the residuary
beneficiaries of his estate if he dies testate or to his heirs at law under the
intestate succession laws of his state of domicile if he dies intestate.
12. Miscellaneous.
a. This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
b. Executive shall not be required to mitigate the amount of any payment or
benefit provided for herein by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for herein be reduced by any
compensation earned by Executive as a result of employment by another employer
after the Date of Termination, or otherwise.
c. All notices and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly
given when received if personally delivered; when transmitted and the
appropriate facsimile confirmation is received if transmitted by facsimile or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and five days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
To the Executive:
William C. Perkins
Tampa, Florida 33647
To the Company:
Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33815
Attention: President
Telecopy: (863) 284-2063
or to such other address as either party may have specified in writing to the
other using the procedures specified above in this Section 12.c.
d. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
e. The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
f. This Agreement contains the entire understanding of the Company and the
Executive with respect to the subject matter hereof.
g. The Executive shall not have any right to pledge, hypothecate,
anticipate, or in any way create a lien upon any amounts provided under this
Agreement, and no payments or benefits due hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts or by operation
of law. So long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the subject
matter hereof.
h. In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
i. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together constitute one
and the same instrument.
j. Notwithstanding the pendency of any dispute or controversy concerning
termination of employment or the effects thereof, the Company will continue to
pay Executive semi-monthly the full compensation in effect immediately before
any Notice of Termination giving rise to the dispute was given (including, but
not limited to, Base Salary and bonus or incentive pay) and continue Executive
as a participant in all compensation, benefit and insurance plans in which the
Executive was then participating, until the dispute is finally resolved. Amounts
paid under this paragraph are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement except as otherwise determined in any legal proceedings brought
with respect to enforcement of this Agreement.
k. The Executive and the Company acknowledge that this Agreement, although
binding on the parties hereto, shall have not become effective, and is not
intended to alter in any way the current relationship of the Executive and the
Company, prior to the Effective Date. This Agreement shall terminate and there
shall be no further rights or liabilities hereunder upon a termination of the
Executive's employment prior to the Effective Date.
l. The Executive and the Company acknowledge that no funds shall be set
aside or deposited in trust in advance by the Company for paying benefits under
this Agreement and thus no benefits under this Agreement shall be considered
funded for any purposes.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
WITNESSES:
DISCOUNT AUTO PARTS, INC.
/s/ Kristi Mullis
By: /s/ Peter J. Fontaine
Peter J. Fontaine, Chief Executive Officer
"Company"
/s/ Marta M. Jones /s/ William C. Perkins
William C. Perkins
"Executive"
<PAGE>
EXHIBIT A
Form of Release
WHEREAS, _______________________________ (the "Executive") is an
employee of Discount Auto Parts, Inc., (the "Company") and is a party to the
Change of Control Employment Agreement dated __________________ (the
"Agreement");
WHEREAS, the Executive's employment has been terminated in accordance
with Section ___ of the Agreement; and
WHEREAS, the Executive is required to sign this Release in order to
receive the payment of any compensation under Section __ of the Agreement
following termination of employment.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Executive agrees as follows:
1. This Release is effective on the date hereof and will continue in effect
as provided herein.
2. In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payment and benefits to which the Executive
would be entitled to but for the Agreement, the Executive, for the Executive and
the Executive's dependents, successors, assigns, heirs, executors and
administrators (and the Executive and their legal representatives of every
kind), hereby releases, dismisses, remises and forever discharges the Company,
its predecessors, parents, subsidiaries, divisions, related or affiliated
companies, officers, directors, stockholders, members, employees, heirs,
successors, assigns, representatives, agents and counsel (collectively the
"Released Party") from any and all arbitrations, claims, including claims for
attorney's fees, demands, damages, suits, proceedings, actions and/or causes of
action of any kind and every description, whether known or unknown, which the
Executive now has or may have had for, upon, or by reason of any cause
whatsoever ("claims"), against the Released Party, including but not limited to:
(a) any and all claims arising out of or relating to Executive's
employment by or service with the Company and the Executive's
termination from the Company.
(b) any and all claims of discrimination, including but not
limited to claims of discrimination on the basis of sex, race,
age, national origin, marital status, religion or handicap,
including, specifically, but without limiting the generality
of the foregoing, any claims under the Age Discrimination in
Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act; and
<PAGE>
(c) any and all claims of wrongful or unjust discharge or breach
of any contract or promise, express or implied.
3. The Executive understands and acknowledges that the Company does not
admit any violation of law, liability or invasion of any of the Executive rights
and that any such violation, liability or invasion is expressly denied. The
consideration provided for this Release is made for the purpose of settling and
extinguishing all claims and rights (and every other similar or dissimilar
matter) that the Executive ever had or now may have against the Company to the
extent provided in this Release. The Executive further agrees and acknowledges
that no representations, promises or inducements have been made that the Company
other than as appear in the Agreement.
4. The Executive further agrees and acknowledges that:
(a) The Release provided for herein releases claims to and
including the date of this Release;
(b) The Executive has been advised by the Company to consult with
legal counsel prior to executing this Release, has had an
opportunity to consult with and to be advised by legal counsel
of the Executive's choice, fully understands the terms of this
Release, and enters into this Release freely, voluntarily and
intending to be found.
The Executive agrees that the Executive will never file a lawsuit or other
complaint asserting any claim that is released in this Release.
IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.
Dated: _____________________________________Executive
<PAGE>
EXHIBIT 10.22
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS AGREEMENT is between DISCOUNT AUTO PARTS, INC., a Florida
corporation (the "Company"), and C. MICHAEL MOORE, residing at, Clearwater,
Florida 34622 (the "Executive") and is dated as of the 17th day of January,
2000.
WITNESSETH:
WHEREAS, the Executive is a principal officer of the Company and an
integral part of its management; and
WHEREAS, the Company recognizes that even the possibility of a change of
control and the uncertainty and questions which it may raise may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders during a critical time; and
WHEREAS, the Company considers it in the best interest of the Company and
its shareholders that the Executive be encouraged to remain with the Company in
the event of any actual or threatened change of control of the Company; and
WHEREAS, the Company's Board of Directors (the "Board") has determined that
appropriate steps should be taken now to reinforce and encourage members of the
Company's management;
NOW, THEREFORE, in consideration of the above premises and mutual
agreements herein set forth and the services performed and to be performed by
the Executive for the Company, the parties agree as follows:
1. Operation of Agreement.
This Agreement shall constitute a valid and binding contract between the
parties immediately upon its execution. Nevertheless, the Executive and the
Company shall have no obligations hereunder until, and this Agreement shall be
effective without any action by any party only upon the first date on which a
Change of Control (as defined in Section 2) has occurred; provided, however,
that at the option of the Company this Agreement may be terminated on the first
anniversary of written notice of termination given to the Executive by the Board
prior to the Agreement's Effective Date (as defined in Section 2).
<PAGE>
2. Definitions.
APPLICABLE FACTOR. For purposes of this Agreement, "Applicable Factor"
shall equal the Applicable Number of Months divided by 12.
APPLICABLE NUMBER OF MONTHS. For purposes of this Agreement, "Applicable
Number of Months" shall equal the number of months in the Employment Period, as
specified under Section 3.
CAUSE. For purposes of this Agreement, "Cause" shall mean termination
resulting from (i) acts of dishonesty by the Executive constituting a felony and
resulting or intended to result directly or indirectly in gain or personal
enrichment to the Executive at the expense of the Company, (ii) a final
determination by a court or other trier of fact (without any further rights to
appeal) to the effect that the Executive engaged in employment discrimination,
sexual harassment and/or similar employment relationship activities in violation
of any applicable law and resulting in material damage to or liability of the
Company (an "Employment Law Violation") or (iii) willful and continued failure
by Executive to substantially perform his duties with the Company (other than
any such failure resulting from Disability (as defined herein)) after a demand
in writing for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed his duties, and such
failure to perform the Executive's duties results in demonstrably material
injury to the Company.
CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall occur if (i) the Company shall not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (ii) the Company sells,
leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company), (iii) the Company is to be dissolved and liquidated,
(iv) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the 1934 Act, (other than Peter Fontaine, Fontaine Industries
Limited Partnership, Fontaine Enterprises Limited Partnership or any of their
respective affiliates and other than (A) any employee plan established by the
Company, (B) the Company, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation owned, directly
or indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company) acquires or gains beneficial
ownership or control (including, without limitation, power to vote) of more than
25% of the combined voting power of the Company's then outstanding voting
securities, or (v) as a result of or in connection with any cash tender or
exchange offer, merger or other business combination, sales of assets or a
contested election for the board of directors, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Company before such Transaction shall cease to constitute a majority of the
Board.
EFFECTIVE DATE. For purposes of this Agreement, " Effective Date" shall
mean the first date on which a Change of Control has occurred.
<PAGE>
DISABILITY. For purposes of this Agreement, "Disability" shall mean that
the Executive is unable to perform the essential functions of the job for which
the Executive is being employed hereunder, with or without reasonable
accommodation, by reason of his illness, accident or other cause, including
mental disability, for a period of six consecutive calendar months, or an
aggregate of nine months during any continuous twelve-month period.
GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean:
(i) A determination by the Executive made in good faith that his primary
management functions, duties or responsibilities have been diminished in any
material respect and the situation is not remedied within 30 days after receipt
by the Company of written notice from the Executive of such determination;
(ii) Any requirement that the Executive relocate his principal office
outside of Polk County, Florida;
(iii) Any modification to the rights to indemnification or director and
officer liability insurance under which the Executive is covered immediately
prior to the Effective Date which substantially reduces the benefits available
to the Executive under such indemnification or insurance; or
(iv) A breach by the Company of any provision of this Agreement not
embraced within the foregoing clause (i), (ii) or (iii) which is not remedied
within 30 days after receipt by the Company of written notice from the
Executive.
3. Employment Period.
a. Unless terminated pursuant to Section 6, the Company hereby agrees to
continue the Executive in its employ for the period commencing on the Effective
Date and ending on the date which is the Applicable Number of Months following
such date (the "Employment Period"). Unless terminated pursuant to Section 6,
the Executive agrees to remain in the employ of the Company until such time as
the Executive gives the Company at least 30 days written notice of the
Executive's intent to voluntarily terminate employment.
b. For purposes of this Agreement, the Applicable Number of Months will be
equal to twenty-four (24) months.
4. Position and Duties.
<PAGE>
a. During the Employment Period, the Executive shall continue to serve as a
principal officer of the Company with office, title and primary management
functions, duties, and responsibilities substantially similar to those held and
performed during the 90-day period immediately preceding the Effective Date
provided that any change in such functions, duties and responsibilities which
results solely from the Company no longer being a reporting company under the
Federal securities laws or the Company being a subsidiary of another company
shall not be considered a change in functions, duties or responsibilities for
any purpose under this Agreement.
b. During the Employment Period, the Executive shall devote the Executive's
full time and efforts during normal business hours to the business and affairs
of the Company except for reasonable vacations and except for illness or
incapacity, but nothing in this Agreement shall preclude the Executive from (i)
devoting reasonable periods required for serving as a director or member of a
committee of any organization involving no conflict of interest with the
interests of the Company, (ii) engaging in charitable and community activities
and professional organizations and (iii) managing personal investments, so long
as such activities do not materially interfere with the regular performance of
his duties and responsibilities under this Agreement.
c. Executive shall have as his principal office and shall perform his
duties hereunder primarily at the Company's headquarters at 4900 Frontage Road
South, Lakeland, Florida 33815 or at such other location as the Board shall
direct within Polk County, Florida.
5. Compensation.
a. Base Salary. During the Employment Period, the Executive shall receive a
base salary ("Base Salary") equal to the average of the Executive's monthly
salary during the three full months immediately preceding the Effective Date
multiplied by twelve. The Base Salary shall not be reduced after the Effective
Date. The Base Salary will be paid in equal semi-monthly installments.
<PAGE>
b. Other Non-Salary Benefits. During the Employment Period, the Executive
shall be entitled to participate in all bonus, incentive, savings and retirement
plans, policies and programs applicable generally to other peer executives of
the Company and its affiliated companies, but in no event shall such plans,
policies and programs provide the Executive with incentive opportunities,
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than those provided by the Company and its
affiliated companies for the Executive under such plans, policies and programs
as in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies. During the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, policies and
programs provided by the Company and its affiliated companies (including to the
extent they exist and without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than such plans, practices,
policies and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies. During the
Employment Period, the Executive shall be entitled to perquisites, including,
without limitation, an office, secretarial and clerical staff, and to fringe
benefits, including, without limitation, the payment of allowances for, and
reimbursement of, automobile expenses, and cellular telephone charges, in each
case at least equal to those attached to his office immediately prior to the
Effective Date.
c. Vacation. The Executive shall be entitled to receive such paid vacation
time each year during the term of this Agreement as is consistent with the then
current vacation policy or practice of the Company for Executive's position.
Such vacation shall be taken at a time convenient to the Company. Any vacation
time to which the Executive is entitled in accordance with the foregoing that is
not taken by the Executive in any year during the Employment Period shall not be
cumulative, and the Executive shall not receive any cash or noncash benefit in
lieu of vacation time not taken by the Executive except that Executive shall be
entitled to receive cash in lieu of any unused vacation time applicable for the
year in which any termination of employment occurs.
d. Expenses. Upon submission of proper vouchers, the Company will pay or
reimburse the Executive for reasonable transportation, hotel, travel and related
expenses incurred by the Executive on business trips away from the Executive's
principal office, and for other business and entertainment expenses reasonably
incurred by the Executive in connection with the business of the Company and its
subsidiaries during the Employment Period, all subject to such limitations as
may from time to time be prescribed by the Board.
e. Indemnity. The Executive shall be entitled to and shall be provided the
benefits of indemnification and director and officer liability insurance on the
same basis as in effect immediately preceding the Effective Date, or if more
favorable to the Executive, as in effect at any time thereafter with respect to
other officers of similar position and responsibility. Indemnification under
this Section shall be in addition to any other indemnification rights of the
Executive whether by separate contract, under the Company's articles of
incorporation or bylaws, or otherwise.
6. Termination.
a. Death or Disability. Executive's employment shall terminate
automatically upon the Executive's death. The Company may terminate Executive's
employment upon Executive's Disability, effective as of the applicable date of
his Disability, by giving to the Executive written notice of termination of the
Executive's employment.
<PAGE>
b. Cause. The Company may terminate the Executive's employment for "Cause"
upon written notice as required herein. Executive's employment shall in no event
be considered to have been terminated by the Company for Cause if such
termination was not as a result of an Employment Law Violation but took place as
the result of (i) bad judgment or negligence, or (ii) any act or omission
without intent of gaining therefrom directly or indirectly a profit to which the
Executive was not legally entitled, or (iii) any act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (iv) any act or omission in respect of which a determination is made
that the Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the by-laws of the
Company or the laws of the State of Florida or the directors and officers
liability insurance of the Company, in each case as in effect at the time of
such act or omission. The Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board, the Executive was guilty of conduct
contained in the definition of Cause and specifying the particulars thereof in
detail.
c. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. Executive's employment shall in no event
be considered to have been terminated by Executive for Good Reason if such
termination by the Executive took place as a result of changes in the
Executive's functions, duties and responsibilities resulting solely from the
Company no longer being a reporting company under the Federal securities laws or
the Company being a subsidiary of another company.
d. Voluntary Termination. The Executive's employment may be terminated by
the Executive at any time; provided that the extent of the rights to continued
compensation shall differ depending upon whether the voluntary termination
occurs before the first anniversary of the Effective Date or on or after the
first anniversary of the Effective Date.
e. Other Termination. At any time, the Company may terminate the employment
of the Executive for reason other than Cause, death or Disability (a "Without
Cause Termination").
f. Notice of Termination. Any termination of the Executive's employment by
the Company for Cause or due to Disability or by the Executive for Good Reason
or otherwise shall be communicated by Notice of Termination to the other party.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, if applicable, and (iii) if the termination date is
other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 15 days after the giving of such notice).
g. Date of Termination. If the Executive's employment is terminated for any
reason, whether pursuant to the terms of this Agreement or otherwise, then the
date of death (in the case of termination occasioned by the death of the
Executive) or otherwise the date set forth in the Notice of Termination as the
termination date of the Executive's employment shall be deemed the "Date of
Termination."
<PAGE>
7. Compensation Upon Termination, During Disability or Following Death.
a. During Disability. During any period that the Executive is unable to
perform his duties hereunder during the Employment Period as a result of
incapacity due to physical or mental illness or injury, the Company shall
continue to pay to the Executive his full Base Salary and other benefits as in
effect immediately prior to such physical or mental illness or injury (including
without limitation annual bonus payments in amounts no less than were paid to
the Executive with respect to the most recent full fiscal year of the Company
preceding the Effective Date or if more favorable to the Executive, in amounts
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies) through the Date of Termination and
then thereafter continuing through any then remaining portion of the Employment
Period.
b. Death. If during the Employment Period the Executive's employment is
terminated by reason of death, the Company shall (w) pay to the Executive or his
estate a lump sum payment (made within 10 days after the Date of Termination)
equal to the Executive's Base Salary divided by twelve multiplied by the number
of full or partial months remaining in the Employment Period, (x) pay to the
Executive or his estate an additional lump sum payment (made within 10 days
after the Date of Termination) equal to (A) the highest amount of the annual
incentive compensation, including annual bonus, received or deferred, by the
Executive for the most recent three (3) full fiscal years immediately prior to
the fiscal year in which the Date of Termination occurs, divided by (B) twelve,
multiplied by (C) the number of full or partial months remaining in the
Employment Period, (y) provide to the Executive's surviving dependents the
medical insurance benefits contemplated by Section 5.b. at the expense of the
Company for one year from the Date of Termination or through the end of the
Employment Period whichever is longer and (z) make available to the Executive's
surviving dependents the medical benefits, which are at least equal to and at a
cost which is comparable to, those benefits required to be provided and the
costs required to be offered under "COBRA" for a period of eighteen months after
the expiration of the Company's obligations under clause (y) above and for any
additional period and to the extent required under "COBRA."
c. Cause; Voluntary Termination Prior to One Year. If the Executive's
employment shall be terminated either (i) for Cause by the Company or (ii)
voluntarily by the Executive prior to the first anniversary of the Effective
Date other than for Good Reason, the Company shall pay the Executive's full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given and shall have no further obligations to the Executive
under this Agreement.
<PAGE>
d. Good Reason; Voluntary Termination on or After One Year; Without Cause.
If, during the Employment Period, (i) the Company shall terminate the
Executive's employment other than for Cause, death or Disability (i.e. a Without
Cause Termination), (ii) the employment of the Executive shall be terminated by
the Executive for Good Reason or (iii) the Executive shall terminate his
employment on or after the first anniversary date of the Effective Date for any
reason or no reason, the Company shall (x) pay to the Executive as severance pay
hereunder and in lieu of any other amounts due hereunder a lump sum payment
(made within 10 days after the Date of Termination) equal to (A) the Applicable
Factor times the Executive's then current Base Salary and the Applicable Factor
times the highest amount of the annual incentive compensation, including annual
bonus, received or deferred by the Executive for the three (3) fiscal years
immediately prior to the fiscal year in which the Date of Termination occurs,
(y) provide to the Executive the medical insurance benefits contemplated by
Section 5.b. at the expense of the Company for one year from the Date of
Termination or through the end of the Employment Period whichever is longer and
(z) make available to the Executive the medical benefits, which are at least
equal to and at a cost which is comparable to, those benefits required to be
provided and the costs required to be offered under "COBRA" for a period of
eighteen months after the expiration of the Company's obligations under clause
(y) above and for any additional period and to the extent required under
"COBRA."
e. Release. Payment of any compensation to the Executive under this Section
7 following termination of employment shall be conditioned upon the prior
receipt by the Company of a release executed by the Executive in substantially
the form attached to this Agreement as Exhibit A.
8. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or of any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
9. Executive Obligations.
a. For the Employment Period the Executive will not do or say anything that
reasonably may be expected to have the effect of diminishing or impairing the
goodwill and good reputation of the Company and its officers, directors and
products nor will the Executive intentionally disparage or injure the reputation
of the Company by making any material negative statements about the Company's
methods of doing business, the effectiveness of its business policies and the
quality of its products or personnel.
<PAGE>
b. The Executive hereby agrees that during the Executive's employment by
the Company and for the Applicable Number of Months following termination of the
Executive's employment during the Employment Period either (i) by the Company
other than for Cause, death or Disability or (ii) by the Executive for Good
Reason or after the first anniversary date of the Effective Date for any reason
or no reason, the Executive shall not act in any manner or capacity, directly or
indirectly, in any individual or representative capacity, whether as principal,
agent, partner, officer, director, employee, joint venturer, member of any
business entity, consultant, advisor or investor (except that the Executive
shall have the right hereunder to own up to 2% of one or more public companies
having a class of equity securities registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) or otherwise,
in or for any business entity or enterprise which competes with the Company in
any geographic area served by the Company at the time of the Executive's
termination and engages as its primary line of business in the sale of
automotive parts or accessories to retail customers or to commercial auto repair
outlets (the "Business");
c. The Executive hereby agrees that during the Executive's employment by
the Company and following the termination of the Executive's employment, the
Executive shall not without the prior written consent of the Company, divulge,
disclose or make accessible to any other person, firm, partnership or company or
other entity any Confidential Information which shall not include information
known generally or available to the public or of information not considered
confidential by persons engaged in the business conducted by the Company or from
disclosure required by law or court order pertaining to the Business except (x)
while employed by the Company in the Business and for the benefit of the Company
or (y) when required to do so by a court of competent jurisdiction, by any
governmental agency, or by any administrative body or legislative body
(including a committee thereof) with purported or apparent jurisdiction to order
the Executive to divulge, disclose or make accessible such information.
d. The Executive hereby agrees that during the Executive's employment by
the Company and for the Applicable Number of Months following the termination of
the Executive's employment, the Executive shall not without the prior written
consent of the Company solicit or hire away any person who is then an employee
of the Company and was an employee of the Company at any time after the
Effective Date and prior to termination of the Executive's employment.
e. The Executive also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer authorized to
act in the matter by the Board, any drawing, blueprint, business strategies,
budgets, projections, nonpublic financial information, manuals, policies or
other document of the Company, its subsidiaries, affiliates and divisions.
f. If the scope of any restriction contained in Section 9.b., c. or d.
hereof is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and the Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceedings brought to enforce such
restrictions.
<PAGE>
g. The Executive acknowledges and agrees that the Company's remedy at law
for any breach of the Executive's obligations under this Section 9 (other than
Section 9.b.) may be inadequate, and agrees and consents that temporary and/or
permanent injunctive relief may be granted in any proceeding which may be
brought to enforce any provision hereof (other than Section 9.b.), without the
necessity of proof of actual damage. In the event of any breach of the
provisions of Section 9.b. hereof, as liquidated damages and in lieu of any
other damages, payments to or actions by the Company, the Executive shall pay to
the Company an amount equal to the product of (i) any lump sum payment made to
Executive under this Agreement divided by twenty-four multiplied by (ii)
twenty-four minus the number of months (including as a whole month any portion
thereof) since the Executive's Date of Termination.
10. Review by Counsel. The Executive has had sufficient time and the
opportunity, whether or not exercised, to have this Agreement reviewed by
counsel of the Executive's choosing and to be advised as to the Executive's
rights and obligations hereunder.
11. Successors.
a. This Agreement shall not be assignable by either party without the
consent of the other party.
b. This Agreement shall be binding upon and inure to the benefit of the
Company, its successors or assigns, by operation of law or otherwise, including
without limitation any corporation or other entity or person which shall succeed
(whether directly or indirectly, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company, and the Company will require any parent company or successor, by
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform, or (in the case of a parent company) to guarantee
the performance of, this Agreement. Except as otherwise provided herein this
Agreement shall be binding upon and inure to the benefit of the Executive and
his legal representatives, heirs, and assigns, provided, however, that in the
event of the Executive's death prior to payment or distribution of all amounts,
distributions, and benefits due him hereunder, each such unpaid amount and
distribution shall be paid in accordance with this Agreement to the person or
persons designated by the Executive to the Company to receive such payment or
distribution and in the event the Executive has made no applicable designation,
to the persons or persons designated by the Executive as the residuary
beneficiaries of his estate if he dies testate or to his heirs at law under the
intestate succession laws of his state of domicile if he dies intestate.
12. Miscellaneous.
a. This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
b. Executive shall not be required to mitigate the amount of any payment or
benefit provided for herein by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for herein be reduced by any
compensation earned by Executive as a result of employment by another employer
after the Date of Termination, or otherwise.
<PAGE>
c. All notices and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly
given when received if personally delivered; when transmitted and the
appropriate facsimile confirmation is received if transmitted by facsimile or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and five days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
To the Executive:
C. Michael Moore
Clearwater, Florida 34622
To the Company:
Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33815
Attention: President
Telecopy: (863) 284-2063
or to such other address as either party may have specified in writing to the
other using the procedures specified above in this Section 12.c.
d. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
e. The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
f. This Agreement contains the entire understanding of the Company and the
Executive with respect to the subject matter hereof.
g. The Executive shall not have any right to pledge, hypothecate,
anticipate, or in any way create a lien upon any amounts provided under this
Agreement, and no payments or benefits due hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts or by operation
of law. So long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the subject
matter hereof.
<PAGE>
h. In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
i. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together constitute one
and the same instrument.
j. Notwithstanding the pendency of any dispute or controversy concerning
termination of employment or the effects thereof, the Company will continue to
pay Executive semi-monthly the full compensation in effect immediately before
any Notice of Termination giving rise to the dispute was given (including, but
not limited to, Base Salary and bonus or incentive pay) and continue Executive
as a participant in all compensation, benefit and insurance plans in which the
Executive was then participating, until the dispute is finally resolved. Amounts
paid under this paragraph are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement except as otherwise determined in any legal proceedings brought
with respect to enforcement of this Agreement.
k. The Executive and the Company acknowledge that this Agreement, although
binding on the parties hereto, shall have not become effective, and is not
intended to alter in any way the current relationship of the Executive and the
Company, prior to the Effective Date. This Agreement shall terminate and there
shall be no further rights or liabilities hereunder upon a termination of the
Executive's employment prior to the Effective Date.
l. The Executive and the Company acknowledge that no funds shall be set
aside or deposited in trust in advance by the Company for paying benefits under
this Agreement and thus no benefits under this Agreement shall be considered
funded for any purposes.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
WITNESSES:
DISCOUNT AUTO PARTS, INC.
/s/ Kristi Mullis
By: /s/ Peter J. Fontaine
Peter J. Fontaine, Chief Executive Officer
"Company"
/s/ Marta M. Jones /s/ C. Michael Moore
C. Michael Moore
"Executive"
<PAGE>
EXHIBIT A
Form of Release
WHEREAS, _______________________________ (the "Executive") is an
employee of Discount Auto Parts, Inc., (the "Company") and is a party to the
Change of Control Employment Agreement dated __________________ (the
"Agreement");
WHEREAS, the Executive's employment has been terminated in accordance
with Section ___ of the Agreement; and
WHEREAS, the Executive is required to sign this Release in order to
receive the payment of any compensation under Section __ of the Agreement
following termination of employment.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Executive agrees as follows:
1. This Release is effective on the date hereof and will continue in effect
as provided herein.
2. In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payment and benefits to which the Executive
would be entitled to but for the Agreement, the Executive, for the Executive and
the Executive's dependents, successors, assigns, heirs, executors and
administrators (and the Executive and their legal representatives of every
kind), hereby releases, dismisses, remises and forever discharges the Company,
its predecessors, parents, subsidiaries, divisions, related or affiliated
companies, officers, directors, stockholders, members, employees, heirs,
successors, assigns, representatives, agents and counsel (collectively the
"Released Party") from any and all arbitrations, claims, including claims for
attorney's fees, demands, damages, suits, proceedings, actions and/or causes of
action of any kind and every description, whether known or unknown, which the
Executive now has or may have had for, upon, or by reason of any cause
whatsoever ("claims"), against the Released Party, including but not limited to:
(a) any and all claims arising out of or relating to Executive's
employment by or service with the Company and the Executive's
termination from the Company.
(b) any and all claims of discrimination, including but not
limited to claims of discrimination on the basis of sex, race,
age, national origin, marital status, religion or handicap,
including, specifically, but without limiting the generality
of the foregoing, any claims under the Age Discrimination in
Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act; and
<PAGE>
(c) any and all claims of wrongful or unjust discharge or breach
of any contract or promise, express or implied.
3. The Executive understands and acknowledges that the Company does not
admit any violation of law, liability or invasion of any of the
Executive rights and that any such violation, liability or invasion is
expressly denied. The consideration provided for this Release is made
for the purpose of settling and extinguishing all claims and rights
(and every other similar or dissimilar matter) that the Executive ever
had or now may have against the Company to the extent provided in this
Release. The Executive further agrees and acknowledges that no
representations, promises or inducements have been made that the
Company other than as appear in the Agreement.
4. The Executive further agrees and acknowledges that:
(a) The Release provided for herein releases claims to and including the
date of this Release;
(b) The Executive has been advised by the Company to consult with legal
counsel prior to executing this Release, has had an opportunity to consult with
and to be advised by legal counsel of the Executive's choice, fully understands
the terms of this Release, and enters into this Release freely, voluntarily and
intending to be found.
The Executive agrees that the Executive will never file a lawsuit or other
complaint asserting any claim that is released in this Release.
IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.
Dated: Executive
<PAGE>
EXHIBIT 10.23
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS AGREEMENT is between DISCOUNT AUTO PARTS, INC., a Florida corporation
(the "Company"), and , residing at , , (the "Executive") and is dated as of the
15th day of March , 2000.
WITNESSETH:
WHEREAS, the Executive is a principal officer of the Company and an
integral part of its management; and
WHEREAS, the Company recognizes that even the possibility of a change of
control and the uncertainty and questions which it may raise may result in the
departure or distraction of management personnel to the detriment of the Company
and its shareholders during a critical time; and
WHEREAS, the Company considers it in the best interest of the Company and
its shareholders that the Executive be encouraged to remain with the Company in
the event of any actual or threatened change of control of the Company; and
WHEREAS, the Company's Board of Directors (the "Board") has determined that
appropriate steps should be taken now to reinforce and encourage members of the
Company's management;
NOW, THEREFORE, in consideration of the above premises and mutual
agreements herein set forth and the services performed and to be performed by
the Executive for the Company, the parties agree as follows:
1. Operation of Agreement.
This Agreement shall constitute a valid and binding contract between the
parties immediately upon its execution. Nevertheless, the Executive and the
Company shall have no obligations hereunder until, and this Agreement shall be
effective without any action by any party only upon the first date on which a
Change of Control (as defined in Section 2) has occurred; provided, however,
that at the option of the Company this Agreement may be terminated on the first
anniversary of written notice of termination given to the Executive by the Board
prior to the Agreement's Effective Date (as defined in Section 2).
2. Definitions.
APPLICABLE FACTOR. For purposes of this Agreement, "Applicable Factor"
shall equal:
(a) the Applicable Number of Months, but if termination of the Executive's
employment occurs more than 12 months after the occurrence of a Change of
Control, then such number of months will be reduced (but not below zero) by the
number of whole months from the first anniversary of the Change of Control
through the date of the termination of the Executive's employment;
divided by
(b) 12.
APPLICABLE NUMBER OF MONTHS. For purposes of this Agreement, "Applicable
Number of Months" shall be as determined in accordance with Section 3.
CAUSE. For purposes of this Agreement, "Cause" shall mean termination
resulting from (i) acts of dishonesty by the Executive constituting a felony and
resulting or intended to result directly or indirectly in gain or personal
enrichment to the Executive at the expense of the Company, (ii) a final
determination by a court or other trier of fact (without any further rights to
appeal) to the effect that the Executive engaged in employment discrimination,
sexual harassment and/or similar employment relationship activities in violation
of any applicable law and resulting in material damage to or liability of the
Company (an "Employment Law Violation") or (iii) willful and continued failure
by Executive to substantially perform his duties with the Company (other than
any such failure resulting from Disability (as defined herein)) after a demand
in writing for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed his duties, and such
failure to perform the Executive's duties results in demonstrably material
injury to the Company.
CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control"
shall occur if (i) the Company shall not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (ii) the Company sells,
leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company), (iii) the Company is to be dissolved and liquidated,
(iv) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the 1934 Act, (other than Peter Fontaine, Fontaine Industries
Limited Partnership, Fontaine Enterprises Limited Partnership or any of their
respective affiliates and other than (A) any employee plan established by the
Company, (B) the Company, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation owned, directly
or indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company) acquires or gains beneficial
ownership or control (including, without limitation, power to vote) of more than
25% of the combined voting power of the Company's then outstanding voting
securities, or (v) as a result of or in connection with any cash tender or
exchange offer, merger or other business combination, sales of assets or a
contested election for the board of directors, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Company before such Transaction shall cease to constitute a majority of the
Board.
EFFECTIVE DATE. For purposes of this Agreement, " Effective Date" shall
mean the first date on which a Change of Control has occurred.
DISABILITY. For purposes of this Agreement, "Disability" shall mean that
the Executive is unable to perform the essential functions of the job for which
the Executive is being employed hereunder, with or without reasonable
accommodation, by reason of his illness, accident or other cause, including
mental disability, for a period of six consecutive calendar months, or an
aggregate of nine months during any continuous twelve-month period.
GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean:
(i) A determination by the Executive made in good faith that his primary
management functions, duties or responsibilities have been diminished in any
material respect and the situation is not remedied within 30 days after receipt
by the Company of written notice from the Executive of such determination;
(ii) Any requirement that the Executive relocate his principal office
outside of Polk County, Florida;
(iii) Any modification to the rights to indemnification or director and
officer liability insurance under which the Executive is covered immediately
prior to the Effective Date which substantially reduces the benefits available
to the Executive under such indemnification or insurance; or
(iv) A breach by the Company of any provision of this Agreement not
embraced within the foregoing clause (i), (ii) or (iii) which is not remedied
within 30 days after receipt by the Company of written notice from the
Executive.
3. Employment Period.
a. Unless terminated pursuant to Section 6, the Company hereby agrees to
continue the Executive in its employ for the period commencing on the Effective
Date and ending on the date which is a number of months following such date
equal to the sum of (i) 12 months and (ii) the Applicable Number of Months (the
"Employment Period"). Unless terminated pursuant to Section 6, the Executive
agrees to remain in the employ of the Company until such time as the Executive
gives the Company at least 30 days written notice of the Executive's intent to
voluntarily terminate employment.
b. For purposes of this Agreement, the Applicable Number of Months will be
determined as of the Effective Date and shall be equal to the sum of the
Executive's Tenure Credit as of the Effective Date and the Executive's Position
Credit as of the Effective Date. The Tenure Credit shall be computed in
accordance with the following table:
- ------------------------------------------ -------------------------------------
If the Executive's Years of Service Then, the Tenure Credit
to the Company is: shall be:
- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
Less than 6 years None
- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
At least 6 years and less than 11 years 3 months
- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
At least 11 years and less than 16 years 6 months
- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
At least 16 years 12 months
- ------------------------------------------ -------------------------------------
The Position Credit shall be computed in accordance with the following table:
- ------------------------------------------ -------------------------------------
If the Executive's Position Then, the Position Credit
with the Company is: shall be:
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Division Manager 6 months
or Department Director
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Vice President 12 months
---------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Senior or Executive Vice President 18 months
- ----------------------------------------- --------------------------------------
4. Position and Duties.
a. During the Employment Period, the Executive shall continue to serve as a
principal officer of the Company with office, title and primary management
functions, duties, and responsibilities substantially similar to those held and
performed during the 90-day period immediately preceding the Effective Date
provided that any change in such functions, duties and responsibilities which
results solely from the Company no longer being a reporting company under the
Federal securities laws or the Company being a subsidiary of another company
shall not be considered a change in functions, duties or responsibilities for
any purpose under this Agreement.
b. During the Employment Period, the Executive shall devote the Executive's
full time and efforts during normal business hours to the business and affairs
of the Company except for reasonable vacations and except for illness or
incapacity, but nothing in this Agreement shall preclude the Executive from (i)
devoting reasonable periods required for serving as a director or member of a
committee of any organization involving no conflict of interest with the
interests of the Company, (ii) engaging in charitable and community activities
and professional organizations and (iii) managing personal investments, so long
as such activities do not materially interfere with the regular performance of
his duties and responsibilities under this Agreement.
c. Executive shall have as his principal office and shall perform his
duties hereunder primarily at the Company's headquarters at 4900 Frontage Road
South, Lakeland, Florida 33815 or at such other location as the Board shall
direct within Polk County, Florida.
5. Compensation.
a. Base Salary. During the Employment Period, the Executive shall receive a
base salary ("Base Salary") equal to the average of the Executive's monthly
salary during the three full months immediately preceding the Effective Date
multiplied by twelve. The Base Salary shall not be reduced after the Effective
Date. The Base Salary will be paid in equal semi-monthly installments.
b. Other Non-Salary Benefits. During the Employment Period, the Executive
shall be entitled to participate in all bonus, incentive, savings and retirement
plans, policies and programs applicable generally to other peer executives of
the Company and its affiliated companies, but in no event shall such plans,
policies and programs provide the Executive with incentive opportunities,
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than those provided by the Company and its
affiliated companies for the Executive under such plans, policies and programs
as in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies. During the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, policies and
programs provided by the Company and its affiliated companies (including to the
extent they exist and without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than such plans, practices,
policies and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies. During the
Employment Period, the Executive shall be entitled to perquisites, including,
without limitation, an office, secretarial and clerical staff, and to fringe
benefits, including, without limitation, the payment of allowances for, and
reimbursement of, automobile expenses, and cellular telephone charges, in each
case at least equal to those attached to his office immediately prior to the
Effective Date.
c. Vacation. The Executive shall be entitled to receive such paid vacation
time each year during the term of this Agreement as is consistent with the then
current vacation policy or practice of the Company for Executive's position.
Such vacation shall be taken at a time convenient to the Company. Any vacation
time to which the Executive is entitled in accordance with the foregoing that is
not taken by the Executive in any year during the Employment Period shall not be
cumulative, and the Executive shall not receive any cash or noncash benefit in
lieu of vacation time not taken by the Executive except that Executive shall be
entitled to receive cash in lieu of any unused vacation time applicable for the
year in which any termination of employment occurs.
d. Expenses. Upon submission of proper vouchers, the Company will pay or
reimburse the Executive for reasonable transportation, hotel, travel and related
expenses incurred by the Executive on business trips away from the Executive's
principal office, and for other business and entertainment expenses reasonably
incurred by the Executive in connection with the business of the Company and its
subsidiaries during the Employment Period, all subject to such limitations as
may from time to time be prescribed by the Board.
e. Indemnity. The Executive shall be entitled to and shall be provided the
benefits of indemnification and director and officer liability insurance on the
same basis as in effect immediately preceding the Effective Date, or if more
favorable to the Executive, as in effect at any time thereafter with respect to
other officers of similar position and responsibility. Indemnification under
this Section shall be in addition to any other indemnification rights of the
Executive whether by separate contract, under the Company's articles of
incorporation or bylaws, or otherwise.
6. Termination.
a. Death or Disability. Executive's employment shall terminate
automatically upon the Executive's death. The Company may terminate Executive's
employment upon Executive's Disability, effective as of the applicable date of
his Disability, by giving to the Executive written notice of termination of the
Executive's employment.
b. Cause. The Company may terminate the Executive's employment for "Cause"
upon written notice as required herein. Executive's employment shall in no event
be considered to have been terminated by the Company for Cause if such
termination was not as a result of an Employment Law Violation but took place as
the result of (i) bad judgment or negligence, or (ii) any act or omission
without intent of gaining therefrom directly or indirectly a profit to which the
Executive was not legally entitled, or (iii) any act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (iv) any act or omission in respect of which a determination is made
that the Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the by-laws of the
Company or the laws of the State of Florida or the directors and officers
liability insurance of the Company, in each case as in effect at the time of
such act or omission. The Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board, the Executive was guilty of conduct
contained in the definition of Cause and specifying the particulars thereof in
detail.
c. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. Executive's employment shall in no event
be considered to have been terminated by Executive for Good Reason if such
termination by the Executive took place as a result of changes in the
Executive's functions, duties and responsibilities resulting solely from the
Company no longer being a reporting company under the Federal securities laws or
the Company being a subsidiary of another company.
d. Voluntary Termination. The Executive's employment may be terminated by
the Executive at any time; provided that the extent of the rights to continued
compensation shall differ depending upon whether the voluntary termination
occurs before the first anniversary of the Effective Date or on or after the
first anniversary of the Effective Date.
e. Other Termination. At any time, the Company may terminate the employment
of the Executive for reason other than Cause, death or Disability (a "Without
Cause Termination").
f. Notice of Termination. Any termination of the Executive's employment by
the Company for Cause or due to Disability or by the Executive for Good Reason
or otherwise shall be communicated by Notice of Termination to the other party.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, if applicable, and (iii) if the termination date is
other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 15 days after the giving of such notice).
g. Date of Termination. If the Executive's employment is terminated for any
reason, whether pursuant to the terms of this Agreement or otherwise, then the
date of death (in the case of termination occasioned by the death of the
Executive) or otherwise the date set forth in the Notice of Termination as the
termination date of the Executive's employment shall be deemed the "Date of
Termination."
7. Compensation Upon Termination, During Disability or Following Death.
a. During Disability. During any period that the Executive is unable to
perform his duties hereunder during the Employment Period as a result of
incapacity due to physical or mental illness or injury, the Company shall
continue to pay to the Executive his full Base Salary and other benefits as in
effect immediately prior to such physical or mental illness or injury (including
without limitation annual bonus payments in amounts no less than were paid to
the Executive with respect to the most recent full fiscal year of the Company
preceding the Effective Date or if more favorable to the Executive, in amounts
provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies) through the Date of Termination and
then thereafter for a period equal to the lesser of (i) any then remaining
portion of the Employment Period, or (ii) the number of months equal to the sum
of the Executive's Tenure Credit as of the Effective Date and the Executive's
Position Credit as of the Effective Date.
b. Death. If during the Employment Period the Executive's employment is
terminated by reason of death, the Company shall: (w) pay to the Executive or
his estate a lump sum payment (made within 10 days after the Date of
Termination) equal to (A) the Executive's Base Salary divided by (B) twelve,
multiplied by (C) the lesser of (i) the number of full or partial months
remaining in the Employment Period or (ii) the number of months equal to the sum
of the Executive's Tenure Credit as of the Effective Date and the Executive's
Position Credit as of the Effective Date; (x) pay to the Executive or his estate
an additional lump sum payment (made within 10 days after the Date of
Termination) equal to (A) the highest amount of the annual incentive
compensation, including annual bonus, received or deferred, by the Executive for
the most recent three (3) full fiscal years immediately prior to the fiscal year
in which the Date of Termination occurs, divided by (B) twelve, multiplied by
(C) the lesser of (i) the number of full or partial months remaining in the
Employment Period or (ii) the number of months equal to the sum of the
Executive's Tenure Credit as of the Effective Date and the Executive's Position
Credit as of the Effective Date; (y) provide to the Executive's surviving
dependents the medical insurance benefits contemplated by Section 5.b. at the
expense of the Company for one year from the Date of Termination or through the
end of the Employment Period whichever is longer and (z) make available to the
Executive's surviving dependents the medical benefits, which are at least equal
to and at a cost which is comparable to, those benefits required to be provided
and the costs required to be offered under "COBRA" for a period of eighteen
months after the expiration of the Company's obligations under clause (y) above
and for any additional period and to the extent required under "COBRA."
c. Cause; Voluntary Termination Prior to One Year. If the Executive's
employment shall be terminated either (i) for Cause by the Company or (ii)
voluntarily by the Executive prior to the first anniversary of the Effective
Date other than for Good Reason, the Company shall pay the Executive's full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given and shall have no further obligations to the Executive
under this Agreement.
d. Good Reason; Voluntary Termination on or After One Year; Without Cause.
If, during the Employment Period, (i) the Company shall terminate the
Executive's employment other than for Cause, death or Disability (i.e., a
Without Cause Termination), (ii) the employment of the Executive shall be
terminated by the Executive for Good Reason or (iii) the Executive shall
terminate his employment on or after the first anniversary date of the Effective
Date for any reason or no reason, the Company shall (x) pay to the Executive as
severance pay hereunder and in lieu of any other amounts due hereunder a lump
sum payment (made within 10 days after the Date of Termination) equal to (A) the
Applicable Factor times the Executive's then current Base Salary and the
Applicable Factor times the highest amount of the annual incentive compensation,
including annual bonus, received or deferred by the Executive for the three (3)
fiscal years immediately prior to the fiscal year in which the Date of
Termination occurs, (y) provide to the Executive the medical insurance benefits
contemplated by Section 5.b. at the expense of the Company for one year from the
Date of Termination or through the end of the Employment Period whichever is
longer and (z) make available to the Executive the medical benefits, which are
at least equal to and at a cost which is comparable to, those benefits required
to be provided and the costs required to be offered under "COBRA" for a period
of eighteen months after the expiration of the Company's obligations under
clause (y) above and for any additional period and to the extent required under
"COBRA."
e. Release. Payment of any compensation to the Executive under this Section
7 following termination of employment shall be conditioned upon the prior
receipt by the Company of a release executed by the Executive in substantially
the form attached to this Agreement as Exhibit A.
8. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
other agreements with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or of any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
9. Executive Obligations.
a. For the Employment Period the Executive will not do or say anything that
reasonably may be expected to have the effect of diminishing or impairing the
goodwill and good reputation of the Company and its officers, directors and
products nor will the Executive intentionally disparage or injure the reputation
of the Company by making any material negative statements about the Company's
methods of doing business, the effectiveness of its business policies and the
quality of its products or personnel.
b. The Executive hereby agrees that during the Executive's employment by
the Company and for the Applicable Number of Months following termination of the
Executive's employment during the Employment Period either (i) by the Company
other than for Cause, death or Disability or (ii) by the Executive for Good
Reason or after the first anniversary date of the Effective Date for any reason
or no reason, the Executive shall not act in any manner or capacity, directly or
indirectly, in any individual or representative capacity, whether as principal,
agent, partner, officer, director, employee, joint venturer, member of any
business entity, consultant, advisor or investor (except that the Executive
shall have the right hereunder to own up to 2% of one or more public companies
having a class of equity securities registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) or otherwise,
in or for any business entity or enterprise which competes with the Company in
any geographic area served by the Company at the time of the Executive's
termination and engages as its primary line of business in the sale of
automotive parts or accessories to retail customers or to commercial auto repair
outlets (the "Business");
c. The Executive hereby agrees that during the Executive's employment by
the Company and following the termination of the Executive's employment, the
Executive shall not without the prior written consent of the Company, divulge,
disclose or make accessible to any other person, firm, partnership or company or
other entity any Confidential Information which shall not include information
known generally or available to the public or of information not considered
confidential by persons engaged in the business conducted by the Company or from
disclosure required by law or court order pertaining to the Business except (x)
while employed by the Company in the Business and for the benefit of the Company
or (y) when required to do so by a court of competent jurisdiction, by any
governmental agency, or by any administrative body or legislative body
(including a committee thereof) with purported or apparent jurisdiction to order
the Executive to divulge, disclose or make accessible such information.
d. The Executive hereby agrees that during the Executive's employment by
the Company and for the Applicable Number of Months following the termination of
the Executive's employment, the Executive shall not without the prior written
consent of the Company solicit or hire away any person who is then an employee
of the Company and was an employee of the Company at any time after the
Effective Date and prior to termination of the Executive's employment.
e. The Executive also agrees that upon leaving the Company's employ he will
not take with him, without the prior written consent of an officer authorized to
act in the matter by the Board, any drawing, blueprint, business strategies,
budgets, projections, nonpublic financial information, manuals, policies or
other document of the Company, its subsidiaries, affiliates and divisions.
f. If the scope of any restriction contained in Section 9.b., c. or d.
hereof is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and the Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceedings brought to enforce such
restrictions.
g. The Executive acknowledges and agrees that the Company's remedy at law
for any breach of the Executive's obligations under this Section 9 (other than
Section 9.b.) may be inadequate, and agrees and consents that temporary and/or
permanent injunctive relief may be granted in any proceeding which may be
brought to enforce any provision hereof (other than Section 9.b.), without the
necessity of proof of actual damage. In the event of any breach of the
provisions of Section 9.b. hereof, as liquidated damages and in lieu of any
other damages, payments to or actions by the Company, the Executive shall pay to
the Company an amount equal to the product of (i) any lump sum payment made to
Executive under this Agreement divided by twenty-four multiplied by (ii)
twenty-four minus the number of months (including as a whole month any portion
thereof) since the Executive's Date of Termination.
10. Review by Counsel. The Executive has had sufficient time and the
opportunity, whether or not exercised, to have this Agreement reviewed by
counsel of the Executive's choosing and to be advised as to the Executive's
rights and obligations hereunder.
11. Successors.
a. This Agreement shall not be assignable by either party without the
consent of the other party.
b. This Agreement shall be binding upon and inure to the benefit of the
Company, its successors or assigns, by operation of law or otherwise, including
without limitation any corporation or other entity or person which shall succeed
(whether directly or indirectly, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company, and the Company will require any parent company or successor, by
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform, or (in the case of a parent company) to guarantee
the performance of, this Agreement. Except as otherwise provided herein this
Agreement shall be binding upon and inure to the benefit of the Executive and
his legal representatives, heirs, and assigns, provided, however, that in the
event of the Executive's death prior to payment or distribution of all amounts,
distributions, and benefits due him hereunder, each such unpaid amount and
distribution shall be paid in accordance with this Agreement to the person or
persons designated by the Executive to the Company to receive such payment or
distribution and in the event the Executive has made no applicable designation,
to the persons or persons designated by the Executive as the residuary
beneficiaries of his estate if he dies testate or to his heirs at law under the
intestate succession laws of his state of domicile if he dies intestate.
12. Miscellaneous.
a. This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
b. Executive shall not be required to mitigate the amount of any payment or
benefit provided for herein by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for herein be reduced by any
compensation earned by Executive as a result of employment by another employer
after the Date of Termination, or otherwise.
c. All notices and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly
given when received if personally delivered; when transmitted and the
appropriate facsimile confirmation is received if transmitted by facsimile or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and five days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
To the Executive:
=====================
---------------------
To the Company:
Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33815
Attention: President
Telecopy: (863) 284-2063
or to such other address as either party may have specified in writing to the
other using the procedures specified above in this Section 12.c.
d. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
e. The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
f. This Agreement contains the entire understanding of the Company and the
Executive with respect to the subject matter hereof.
g. The Executive shall not have any right to pledge, hypothecate,
anticipate, or in any way create a lien upon any amounts provided under this
Agreement, and no payments or benefits due hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts or by operation
of law. So long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the subject
matter hereof.
h. In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
i. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together constitute one
and the same instrument.
j. Notwithstanding the pendency of any dispute or controversy concerning
termination of employment or the effects thereof, the Company will continue to
pay Executive semi-monthly the full compensation in effect immediately before
any Notice of Termination giving rise to the dispute was given (including, but
not limited to, Base Salary and bonus or incentive pay) and continue Executive
as a participant in all compensation, benefit and insurance plans in which the
Executive was then participating, until the dispute is finally resolved. Amounts
paid under this paragraph are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement except as otherwise determined in any legal proceedings brought
with respect to enforcement of this Agreement.
k. The Executive and the Company acknowledge that this Agreement, although
binding on the parties hereto, shall have not become effective, and is not
intended to alter in any way the current relationship of the Executive and the
Company, prior to the Effective Date. This Agreement shall terminate and there
shall be no further rights or liabilities hereunder upon a termination of the
Executive's employment prior to the Effective Date.
l. The Executive and the Company acknowledge that no funds shall be set
aside or deposited in trust in advance by the Company for paying benefits under
this Agreement and thus no benefits under this Agreement shall be considered
funded for any purposes.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
WITNESSES:
DISCOUNT AUTO PARTS, INC.
- -----------------------------------
By:_______________________________
___________________________________ Title:____________________________
"Company"
- ----------------------------------- ------------------------------------
- -----------------------------------
"Executive"
<PAGE>
EXHIBIT A
Form of Release
WHEREAS, _______ (the "Executive") is an employee of Discount Auto Parts,
Inc., (the "Company") and is a party to the Change of Control Employment
Agreement dated March 15, 2000 (the "Agreement");
WHEREAS, the Executive's employment has been terminated in accordance with
Section ___ of the Agreement; and
WHEREAS, the Executive is required to sign this Release in order to receive
the payment of any compensation under Section __ of the Agreement following
termination of employment.
NOW, THEREFORE, in consideration of the promises and agreements contained
herein and other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, and intending to be legally bound, the Executive
agrees as follows:
1. This Release is effective on the date hereof and will continue in effect
as provided herein.
2. In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payment and benefits to which the Executive
would be entitled to but for the Agreement, the Executive, for the Executive and
the Executive's dependents, successors, assigns, heirs, executors and
administrators (and the Executive and their legal representatives of every
kind), hereby releases, dismisses, remises and forever discharges the Company,
its predecessors, parents, subsidiaries, divisions, related or affiliated
companies, officers, directors, stockholders, members, employees, heirs,
successors, assigns, representatives, agents and counsel (collectively the
"Released Party") from any and all arbitrations, claims, including claims for
attorney's fees, demands, damages, suits, proceedings, actions and/or causes of
action of any kind and every description, whether known or unknown, which the
Executive now has or may have had for, upon, or by reason of any cause
whatsoever ("claims"), against the Released Party, including but not limited to:
(a) any and all claims arising out of or relating to Executive's employment
by or service with the Company and the Executive's termination from the Company.
(b) any and all claims of discrimination, including but not limited to
claims of discrimination on the basis of sex, race, age, national origin,
marital status, religion or handicap, including, specifically, but without
limiting the generality of the foregoing, any claims under the Age
Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act; and
(c) any and all claims of wrongful or unjust discharge or breach of any
contract or promise, express or implied.
3. The Executive understands and acknowledges that the Company does not
admit any violation of law, liability or invasion of any of the Executive rights
and that any such violation, liability or invasion is expressly denied. The
consideration provided for this Release is made for the purpose of settling and
extinguishing all claims and rights (and every other similar or dissimilar
matter) that the Executive ever had or now may have against the Company to the
extent provided in this Release. The Executive further agrees and acknowledges
that no representations, promises or inducements have been made that the Company
other than as appear in the Agreement.
4. The Executive further agrees and acknowledges that:
(a) The Release provided for herein releases claims to and including the
date of this Release;
(b) The Executive has been advised by the Company to consult with legal
counsel prior to executing this Release, has had an opportunity to consult with
and to be advised by legal counsel of the Executive's choice, fully understands
the terms of this Release, and enters into this Release freely, voluntarily and
intending to be found.
The Executive agrees that the Executive will never file a lawsuit or other
complaint asserting any claim that is released in this Release.
IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.
Dated:
Executive
<PAGE>
EXHIBIT 10.24
DISCOUNT AUTO PARTS, INC.
SEVERANCE PROTECTION AND CHANGE OF CONTROL BENEFITS PROGRAM
1. Purpose
The purpose of this Discount Auto Parts, Inc. Severance Protection and
Change of Control Benefits Program (the Program") is to provide certain team
members with severance payments in the event of certain terminations of
employment upon a "Change of Control", as hereinafter defined, and incentives
for team members to continue in employment following a Change of Control. The
Program is not intended to meet the qualification requirements of Section 401 of
the Code or to be an "employee pension benefit plan" as defined in ERISA. The
Program is not intended to affect eligibility for or payment of any other
compensation or benefits in accordance with the terms of any applicable plans or
programs of the Company.
2. Definitions
When used herein with initial capital letters, each of the following terms
shall have the corresponding meaning set forth below unless a different meaning
is plainly required by the context in which the term is used:
"Affiliate" shall mean an "affiliate" as defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
"Annual Compensation" for any Participant shall mean the Participant's
annualized base rate of salary plus all short-term incentive compensation at the
target level for the Participant specified under compensation programs
established by the Company for team members generally holding the employment
position held by the Participant, received by the Participant in all capacities
with the Company, as would be reported for federal income tax purposes on Form
W-2, together with any and all salary reduction authorized amounts under any of
the Company's benefit plans or programs, for the most recent full calendar year
immediately preceding the calendar year in which occurs Participant's Triggering
Termination Date or preceding the Change of Control, if higher. "Annual
Compensation" shall not include the value of any stock options, stock
appreciation rights, restricted stock, or restricted stock units granted to
Participant by the Company.
"Applicable Factor" for a particular Participant shall mean be equal to:
(a) the Applicable Benefit Months for such Participant, but if the
Triggering Termination occurs more than 12 months after the occurrence of a
Change of Control, then such number of months will be reduced by the number of
whole months from the first anniversary of the Change of Control through the
date of the Triggering Termination
divided by
(b) 12.
For example, if the Applicable Benefit Months for a particular Participant
is 6 months and at the time of the Triggering Termination only 3 months has
passed since the date of the Change of Control, then the Applicable Factor would
be 0.50 (6 / 12), but if the Applicable Benefit Months for a particular
Participant is 18 months and at the time of the Triggering Termination 15 months
has passed since the date of the Change of Control, the Applicable Factor would
be 1.25 ([18 - 3] / 12).
"Applicable Benefit Months" for a particular Participant shall mean that
number of months equal to the sum of the Participant's Tenure Credit and the
Participant's Position Credit.
The "Tenure Credit" for a particular Participant shall be determined as of
the date of the Change of Control and shall be computed in accordance with the
following table:
- ----------------------------------------- --------------------------------------
If the Participant's Years of Service Then, the Tenure Credit
to the Company is: shall be:
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Less than 6 years None
- ---------------------------------------- ---------------------------------------
- ---------------------------------------- ---------------------------------------
At least 6 years and less than 11 years 3 months
- --------------------------------------- ----------------------------------------
- --------------------------------------- ----------------------------------------
At least 11 years and less than 16 years 6 months
- --------------------------------------- ----------------------------------------
- --------------------------------------- ----------------------------------------
At least 16 years 12 months
- --------------------------------------- ----------------------------------------
The "Position Credit" for a particular Participant shall be determined as
of the date of the Change of Control and shall be computed in accordance with
the following table:
- --------------------------------------- ----------------------------------------
If the Participant's Position Then, the Position Credit
with the Company is: shall be:
- --------------------------------------- ----------------------------------------
- --------------------------------------- ----------------------------------------
Office Supervisor 3 months
- --------------------------------------- ----------------------------------------
- --------------------------------------- ----------------------------------------
Key Manager 3 months
- --------------------------------------- ----------------------------------------
- --------------------------------------- ----------------------------------------
Distribution Center Supervisor 3 months
or above
- --------------------------------------- ----------------------------------------
-------------------------------------- ----------------------------------------
Division Manager 6 months
- --------------------------------------- ----------------------------------------
- --------------------------------------- ----------------------------------------
Department Director/Office Manager 6 months
- --------------------------------------- ----------------------------------------
"Board" shall mean the Board of Directors of Discount Auto Parts, Inc.
"Cause" with respect to the Termination of Employment of a Participant
shall mean termination resulting from (i) acts of dishonesty by the Participant
constituting a felony and resulting or intended to result directly or indirectly
in gain or personal enrichment to the Participant at the expense of the Company,
(ii) a final determination by a court or other trier of fact (without any
further rights to appeal) to the effect that the Participant engaged in
employment discrimination, sexual harassment and/or similar employment
relationship activities in violation of any applicable law and resulting in
material damage to or liability of the Company (an "Employment Law Violation")
or (iii) willful and continued failure by the Participant to substantially
perform his or her duties with the Company (other than any such failure
resulting from Disability (as defined herein)).
"Change of Control." For the purpose of this Program, a "Change of Control"
shall occur if (i) the Company shall not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (ii) the Company sells,
leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company), (iii) the Company is to be dissolved and liquidated,
(iv) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the 1934 Act, (other than Peter Fontaine, Fontaine Industries
Limited Partnership, Fontaine Enterprises Limited Partnership, or any of their
respective affiliates and other than (A) any employee plan established by the
Company, (B) the Company, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation owned, directly
or indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company) acquires or gains beneficial
ownership or control (including, without limitation, power to vote) of more than
25% of the combined voting power of the Company's then outstanding voting
securities, or (v) as a result of or in connection with any cash tender or
exchange offer, merger or other business combination, sales of assets or a
contested election for the board of directors, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Company before such Transaction shall cease to constitute a majority of the
Board.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation and Benefits Committee of the
Board, or any subsequent committee of the Board that has primary responsibility
for compensation policies. In the absence of such a committee, "Committee" shall
mean the Board or any committee of the Board designated by the Board to perform
the functions of the Committee under the Program.
"Company" includes, individually and/or collectively as the context
requires, Discount Auto Parts, Inc., and all other entities that have approved
and adopted this Program pursuant to Article VII, whether or not an individual
such entity directly compensates the Participant or the Participant appears on
the payroll of such entity.
"Effectiveness Term" shall mean a period of time from the occurrence of a
Change in Control and continuing thereafter for that number of months equal to
the sum of (a) 12 months and (b) the Participant's Applicable Benefit Months.
"Disability" shall mean that the Participant is unable to perform the
essential functions of the job for which the Participant is being employed by
the Company, with or without reasonable accommodation, by reason of his or her
illness, accident or other cause, including mental disability, for a period of
six consecutive calendar months, or an aggregate of nine months during any
continuous twelve-month period.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Good Reason" For purposes of this Agreement, "Good Reason" shall mean:
(i) A determination by the Participant made in good faith that there has
been a significant reduction by the Company of the authority, duties or
responsibilities of the Participant and such reduction in duties and/or
responsibilities is not remedied within 30 days after receipt by the Company of
written notice from the Participant of such determination;
(ii) Any material reduction of the Participant's compensation or benefits
other than a reduction applicable to all employees generally and such reduction
in compensation and/or benefits is not remedied within 30 days after receipt by
the Company of written notice from the Participant that such a reduction has
occurred;
(iii) The assignment to the Participant of duties which are materially
inconsistent with the duties of the Participant's position with the Company and
such assignment of duties is not revoked within 30 days after receipt by the
Company of written notice from the Participant that such an assignment of duties
has occurred;
(iv) The transfer of the Participant, without the Participant's written
consent, to a location that is more than 50 miles from the Participant's
principal place of employment immediately preceding the then applicable Change
of Control.
"Participant" at any time shall mean each team member then employed by the
Company who (a) holds a position with the Company which qualifies as a
Qualifying Position, and (b) is not a party to a then effective separate written
agreement with the Company which has been adopted by the Board and expressly
provides cash compensation benefits following a change of control of Discount
Auto Parts, Inc. (unless such agreement expressly provides for participation in
this Program).
"Qualifying Position" shall mean a position with the Company either (a) at
the level of Office Supervisor or above (or comparable positions as they may
exist or be designated in the future), (b) at the level of Key Manager or above
(or comparable positions as they may exist or be designated in the future), or
(c) at the level of Distribution Center Supervisor or above (or comparable
positions as they may exist or be designated in the future). At the time of
adoption of this Program, team members at the level of Office Supervisor and
above include, for example, Department Heads and Department Directors, and team
members at the level of Key Manager and above include, for example, Division
Managers. The Committee shall be entitled to make all decisions regarding which
team members fall within this definition of Qualifying Position, and all such
decisions shall be final and conclusive.
"Termination of Employment" of a Participant shall mean the termination of
the Participant's actual employment relationship with the Company.
"Triggering Termination" with respect to any Participant shall mean (a) a
Termination of Employment as a result of the death of the Participant during the
Effectiveness Term, (b) a Termination of Employment by the Company during the
Effectiveness Term as a result of the Disability of the Participant, (c) a
Termination of Employment by the Company during the Effectiveness Term for
reason other than death of the Participant, Disability of the Participant or
Cause, (d) a Termination of Employment by the Participant for Good Reason during
the Effectiveness Term.
"Triggering Termination Date" with respect to any Participant shall mean
the date of a Triggering Termination as to such Participant.
3. Benefits
(a) Benefits Following a Triggering Termination. So long as a Participant
executes a written release substantially in the form of Annex 2 hereto, upon the
occurrence of such a Triggering Termination, (i) the Company will pay to the
Participant, in a single cash payment within 30 days after the later of the
Triggering Termination Date and the date the Participant executes such release,
an amount equal to the product of the Applicable Factor and the Participant's
Annual Compensation.
(b) Vesting. A Participant shall be vested and shall have a nonforfeitable
right with respect to the benefits to be provided hereunder from and after the
Triggering Termination Date. The respective rights and obligations of the
Company and the Participant under this Program shall survive any termination of
Participant's employment to the extent necessary to the intended preservation of
such rights and obligations.
(c) Non-Exclusivity of Rights. Nothing in this Program shall prevent or
limit any Participant's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the Company
and for which such Participant may qualify; provided, however, that if such
Participant becomes entitled to and receives all of the payments provided for in
this Program, the Participant hereby waives his or her right to receive payments
under any severance plan or similar program applicable to employees of the
Company generally.
4. Funding
Benefits payable under this Program shall be unfunded and the Company shall
administer this Program in a manner that will ensure that benefits are unfunded
and that Participants will not be considered to have received a taxable economic
benefit prior to the time at which benefits are actually payable hereunder.
Accordingly, the Company shall not be required to segregate or earmark any of
its assets for the benefit of Participants or their spouses or other
beneficiaries, and each such person shall have only a contractual right against
the Company for benefits hereunder. The rights and interests of a Participant
under this Program shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge or encumbrance by a Participant
or any person claiming under or through a Participant, nor shall they be subject
to the debts, contracts, liabilities or torts of a Participant or anyone else
prior to payment.
5. Participant Obligations.
The following obligations shall be applicable to any Participant who
receives and retains benefits under this Program and the retaining of such
benefits shall constitute the Participant's agreement to abide by such
obligations:
(a) For a period beginning on the Triggering Termination Date and
continuing for a number of months thereafter equal to the Applicable Benefits
Months for such Participant (but if the Triggering Termination occurs more than
12 months after the occurrence of a Change of Control, then such number of
months will be reduced by the number of whole months from the first anniversary
of the Change of Control through the date of the Triggering Termination) (the
"Obligations Period"), the Participant will not do or say anything that
reasonably may be expected to have the effect of diminishing or impairing the
goodwill and good reputation of the Company and its officers, directors and
products nor will the Participant intentionally disparage or injure the
reputation of the Company by making any material negative statements about the
Company's methods of doing business, the effectiveness of its business policies
and the quality of its products or personnel;
(b) During the Obligations Period, the Participant shall not without the
prior written consent of the Company, divulge, disclose or make accessible to
any other person, firm, partnership or company or other entity any confidential
information of Discount Auto Parts, Inc. which shall not include information
known generally or available to the public or of information not considered
confidential by persons engaged in the business conducted by the Company or from
disclosure required by law or court order pertaining to the sale of automotive
parts or accessories to retail customers or to commercial auto repair outlets
(the "Business") except (x) while employed by the Company in the Business and
for the benefit of the Company or (y) when required to do so by a court of
competent jurisdiction, by any governmental agency, or by any administrative
body or legislative body (including a committee thereof) with purported or
apparent jurisdiction to order the Participant to divulge, disclose or make
accessible such information;
(c) Upon leaving the Company's employ, the Participant will not take with
him or her, without the prior written consent of an officer authorized to act in
the matter by the Board, any drawing, blueprint, business strategies, budgets,
projections, nonpublic financial information, manuals, policies or other
document of the Company, its subsidiaries, affiliates and divisions.
Prior to the payment of any benefits to a Participant hereunder, the
Company may require that such Participant execute and deliver to the Company a
written instrument, in a form reasonably acceptable to the Company, under which
such Participant acknowledges his or her agreement to abide by the foregoing
obligations.
6. Administration
The Program shall be operated under the direction of the Committee and
administered by the Company. The calculation of all benefits payable under the
Program shall be performed by the Company, subject to the review of the
Committee
7. Claims Procedure
All claims for benefits under this Program shall be determined under the
claims procedure in effect under the Company's 401(k) Plan on the date that such
claims are submitted, except that the Company shall make initial determinations
with respect to claims hereunder and the Committee shall decide appeals of such
determinations. In the event that any dispute under the provisions of this
Program is not resolved to the satisfaction of the affected Participant, other
than a dispute in which the primary relief sought is an equitable remedy such as
an injunction, the parties shall be required to have the dispute, controversy or
claim settled by arbitration in the City of Lakeland, Florida in accordance with
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and the affected Participant,
respectively, and the third of whom shall be selected by the other two
arbitrators. Any award entered by the arbitrators shall be final, binding and
nonappealable and judgment may be entered thereon by either party in accordance
with applicable law in any court of competent jurisdiction. This arbitration
provision shall be specifically enforceable. The arbitrators shall have no
authority to modify any provision of this Program or to award a remedy for a
dispute involving this Program other than a benefit specifically provided under
or by virtue of the Program. If a Participant prevails on any material issue
which is the subject of any such arbitration or lawsuit, the Company shall be
responsible for all of the fees of the American Arbitration Association and the
arbitrators and any expenses relating to the conduct of the arbitration
(including the Company's and the Participant's reasonable attorneys' fees and
expenses). Otherwise, to the extent permitted by law, each party shall be
responsible for its own expenses relating to the conduct of the arbitration
(including reasonable attorneys' fees and expenses) and shall share the fees of
the American Arbitration Association.
8. Miscellaneous
(a) Amendment or Termination. Prior to the occurrence of a Change of
Control, the Board at any time may amend this Program so long as such amendment
does not materially eliminate or reduce the payments or benefits owing to
Participants under the Program. In addition, prior to the occurrence of a Change
of Control, the Board at any time may discontinue this Program or may amend this
Program in such manner as the payments or benefits owing to Participants are
materially eliminated or reduced, but in each such case only by action taken at
least two (2) years prior to the effective date of such discontinuation or
amendment. Upon and following a Change of Control, this Program may not be
amended or terminated in any way that would eliminate or reduce the payments and
benefits owing to Participants under the Program.
(b) Headings. Headings are included in the Program for convenience only and
are not substantive provisions of the Program.
(c) Applicable Law. The interpretation of the provisions and the
administration of the Program shall be governed by the laws of the State of
Florida without giving effect to any conflict of laws provisions, and to the
extent applicable, the United States of America.
(d) Mitigation. No Participant shall be required to mitigate the amount of
any payment or benefit provided for in this Program by seeking other employment
or otherwise and there shall be no offset against amounts due any Participant
under this Program on account of any remuneration attributable to any subsequent
employment that may be obtained.
(e) Notices. All notices and other communications required or permitted
under this Program or necessary or convenient in connection herewith shall be in
writing and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail to the last known address of the Company or the
Participant, as the case may be, reflected upon Company records. Notices to the
Company shall be addressed to:
Discount Auto Parts, Inc.
4900 Frontage Road South
Lakeland, Florida 33815
Attention: Chief Financial Officer
(f) Binding Effect; Successors and Assigns. All of the terms and provisions
of this Program shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, executors, administrators, legal
representatives, successors and assigns of the parties hereto, except that the
duties and responsibilities of the Participants under this Program are of a
personal nature and shall not be assignable or delegatable in whole or in part
by the Participants. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Participants, expressly to assume and
agree to perform this Plan in the same manner and to the extent the Company
would be required to perform if no such succession had taken place.
(g) Severability. If any provision of this Program or application thereof
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Program which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
(h) Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Program is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given under this Program or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power under this
Program or existing at law or in equity shall be construed as a waiver thereof,
and any such right, remedy or power may be exercised by such party from time to
time and as often as may be deemed expedient or necessary by such party in its
sole discretion.
(i) Beneficiaries/References. Each Participant shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this Program
following his or her death by giving the Company written notice thereof. In the
event of a Participant's death or a judicial determination of a Participant's
incompetence, reference in this Program to "Participant" shall be deemed, where
appropriate, to refer to such Participant's beneficiary, estate or other legal
representative.
(j) Withholding. The Company may withhold from any payments under this
Program all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Each
Participant shall bear all expense of, and be solely responsible for, all
federal, state and local taxes due with respect to any payment received under
this Program. <PAGE>
EXHIBIT 10.25
AGREEMENT AND GENERAL RELEASE
THIS AGREEMENT AND GENERAL RELEASE is executed as of the 1st day of March,
2000, by and between STEVEN C. BAIR ("Employee") and DISCOUNT AUTO PARTS, INC.
as employer of record ("Company").
W I T N E S S E T H :
WHEREAS, Employee's employment with Company has been terminated as of March
1, 2000; and
WHEREAS, the Employee has been in employment of the Company for an extended
period, during which time Employee has been provided access to the Company's
trade secrets and other confidential, proprietary business information; and
WHEREAS, the Company is engaged in a very competitive business in which it
must restrict the disclosure of its trade secrets and other confidential and
proprietary business information in order to be successful; and
WHEREAS, Company and Employee wish to provide for certain payments to be
made to Employee in exchange for a General Release and other terms and
conditions as set forth below;
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
FIRST: Recitals. The recitals stated herein above are incorporated herein
and made an integral part of this Agreement and General Release as an inducement
to each party to enter into this Agreement and General Release.
SECOND: Prior Obligations. The parties agree that the sums of money
provided for in Paragraph THIRD to be paid by Company to Employee, with the
exception of the Supplemental Executive Profit Sharing Plan monies, are amounts
that are not currently owed to Employee as a result of any prior obligation of
Company.
THIRD: Consideration. In consideration for the agreements and obligations
of Employee herein set forth (including without limitation the agreement to make
himself available to perform certain consulting services) and the other terms
and conditions hereof, Company agrees to pay to Employee (1) One Hundred Eighty
Thousand Dollars and 00/100 ($180,000.00) in equal monthly installments over
twelve (12) months, with such payments to continue during such period so long as
Employee is not in breach of any of the terms or conditions of this Agreement
and (2) the fiscal 2000 third quarter bonus that the Employee would have earned
had he been employed on the last day of such third quarter, payable at the same
time as other executives receive their third quarter bonuses, so long as
Employee is at such time not then in breach of any of the terms or conditions of
this Agreement, it being understood that such bonus would be the final bonus
paid to Employee. Required deductions shall be made from all payments.
Company also agrees to pay in further consideration for the terms hereof
that percentage of the Employee's health insurance premiums for family coverage
under COBRA which is equal to the percentage of total premiums for family
coverage that was being paid by the Company immediately prior to the execution
of this Agreement, such payment to continue for a period of twelve (12) months,
the value of which is currently $150 per month. Should Employee find other
employment during this period and should that employer cover Employee for health
insurance, then the payment of this premium by Employer will end.
Within thirty (30) days following the execution of this Agreement, the
Company also will pay to Employee in further consideration for the terms hereof
the agreed upon current balance of the Employee under the Company's Supplemental
Executive Profit Sharing Plan, as amended, which current balance is agreed to be
Fifty Six Thousand, Eight Hundred Seventy Eight and 00/100 Dollars ($56,878.00).
FOURTH: Reimbursement of Expenses. Employee has advised Company that he has
appropriate substantiation and can prepare appropriate expense reports for
expenditures incurred in connection with his employment by Company. If, on or
before March 1, 2000 and in accordance with Company's requirements and policies
for expense substantiation and expense reports, Employee submits expense reports
substantiating such expenditures, Company shall reimburse Employee for such
expenditures on or before April 1, 2000.
FIFTH: Personal Property. Company acknowledges that certain property
belonging to Employee may remain physically located at the Company's offices,
including without limitation, certain office furniture, personal effects and
wall hangings. Company's agrees to permit Employee, during normal business hours
and upon reasonable notice to a senior officer of Company, to remove or arrange
for the removal of such personal effects.
SIXTH: Stock Options. Employee shall receive a nonqualified stock option to
purchase 22,500 shares of the Company's common stock, which will be evidenced by
a separate stock option agreement. The right to purchase such stock shall be
nontransferable, shall be fully vested on the date received and shall have a
term of five (5) years from the date hereof. The option price shall be $12.00
per share. Although these options will not be granted under any of the Company's
existing stock option plans and the shares issued pursuant to the exercise
thereof will not be the subject of any registration statement filed with the
SEC, the other terms pursuant to which the stock option is granted shall be
substantially similar to the terms of grant contained in the Company's Amended
and Restated 1995 Stock Option Plan.
SEVENTH: Exclusive Obligations. Employee agrees that other than the
obligations created by Paragraphs THIRD and FOURTH, he is not owed any further
amounts by Company in salary, wages, expenses, vacation, reimbursement,
severance or otherwise.
EIGHTH: Resignation. Employee agrees that he is, simultaneously with the
execution of this Agreement and General Release, resigning from all positions
with the Company, including without limitation as an employee and an officer and
agrees to execute such further documents as may be reasonably necessary to
evidence such resignations.
NINTH: Return of Company Property; Retention of Certain Property. Employee
shall be entitled to retain, and the Company shall transfer to Employee
ownership of, that certain cellular telephone that he is currently using in
carrying out his duties for the Company (Nokia Model 2160, Serial number
____________) and that certain laptop computer that has recently been used by
him in carrying out his duties for the Company (_____ Model ___, Serial number
____________), it being understood that prior to the transfer of the laptop
computer to Employee and prior to the Employee being entitled to take possession
of the laptop computer, Company will remove all programs, files and information
from the computer's hard drive. Employee may not take possession of the laptop
computer until Company notifies Employee that such programs, files and
information have been so removed.
Except as provided for in this Paragraph NINTH, Employee agrees to
immediately return all Company property in his possession, including, but not
limited to, Company credit cards, keys, pager, customer lists, reports
(including sales reports by store listings), catalogs, price lists, computer
files and records, and copies thereof.
TENTH: Representations by Employee. Employee represents and warrants that
he has not filed any charges or complaints of any nature or kind whatsoever
against Company, and its subsidiaries, affiliates or related companies and/or
their respective present and former officers, directors, shareholders, partners,
employees, supervisors, agents, representatives, attorneys, servants and
successors or any person in any way related to Company, and each of them
("Released Parties") with any state or federal court or any governmental agency
based on events occurring prior to the date of execution of this Agreement and
General Release and there are no facts known to Employee that might reasonably
serve as a basis now or in the future for any such charges, claims or complaints
by anyone.
ELEVENTH: Release by Employee. Employee does hereby, for himself and for
his successors, heirs, executors, administrators and assigns, release, acquit
and forever discharge the Released Parties of and from any and all claims,
actions, causes of action, rights, contract claims, claims for attorneys' fees,
demands, debts, damages or accountings of whatever nature, whether known or
unknown, fixed or contingent, liquidated or unliquidated from the beginning of
time to the date hereof including but not limited to any claims for
discrimination, harassment, torts, damage to character, damage to reputation,
defamation, interference with contract, intentional infliction of emotional
distress, pain and suffering, retaliation, breach of contract, claims for
commissions, wages, bonuses, incentive pay, benefits or claims under any state,
federal or local law, constitution or ordinance or at common law including,
without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights
Act of 1991, the Equal Pay Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act, or the Florida Civil Rights Act, it being the
intention of the parties to make this release as broad and as general as the law
permits. Employee further covenants not to sue or cause or allow any suit to be
filed, against the Company or any one or more of the Released Parties for any
matters released herein. Employee understands that rights or claims under the
Age Discrimination in Employment Act that may arise after the date this
Agreement and General Release is executed are not waived.
TWELFTH: Employee Acknowledgment of Business Interests to Be Protected.
Employee acknowledges that as a result of his employment by the Company, he has
received valuable and specialized skills, training and knowledge about the
Company and about its business. Employee further acknowledges that the Company
has developed, at its expense, valuable and substantial relationships with its
customers and prospective customers, and that the Company enjoys the benefit of
goodwill associated with its ongoing business and relationships. Employee
acknowledges that the Company's marketing techniques and strategies, methods
and/or cost of doing business including current store base sales information,
pricing strategies, margin strategies and expectations, vendor lists, customer
lists, administrative procedures, financial information, personnel information,
business plans including real estate and expansion plans, and other similar
business information, are all trade secrets or otherwise constitute valuable,
confidential, proprietary information belonging to the Company.
THIRTEENTH: Non-Disclosure Covenant. During the four (4) year period
immediately following the termination of his employment by and for the Company
Employee will not, directly or indirectly, individually or by or through any
other corporate or business entity, misappropriate or otherwise use any trade
secret or other valuable, confidential, proprietary business information
belonging to the Company and material in any respect to its business or
operations, nor will he disclose or communicate any such information to any
person, firm, corporation, association or other entities. Employee acknowledges
that all of the matters described in the preceding Paragraph TWELFTH above are
the types of information subject to this prohibition against his unauthorized
disclosure or use. Notwithstanding the foregoing, this prohibition shall not
apply to any information that (a) was already known to Employee prior to
disclosure of same to him by the Company or prior to his having been provided
access to same by the Company, as applicable; (b) was or becomes publicly known
through no wrongful act of Employee; (c) was rightfully obtained by Employee
from a third party without similar restriction and without breach hereof; (d)
was independently developed by Employee without the use of any of such
confidential or proprietary information disclosed to Employee by the Company or
to which Employee had access through the Company; (e) was disclosed pursuant to
the requirement or request of a governmental agency, which disclosure cannot be
made in confidence, provided that, in such instance, Employee shall first give
to the Company notice of such requirement or request; or (f) was identified by
the parties in a separate writing signed by the parties specifically
acknowledging information that is not within the prohibitions of this section.
FOURTEENTH: Non-Competition Covenant. During the two (2) year period
immediately following the termination of his employment by and for the Company,
Employee will not, either directly or indirectly, whether personally or as an
associate, employee, partner, manager, agent or otherwise, on behalf of any
other person:
(1) Engage in the business of selling automotive and motor vehicle parts,
accessories and/or maintenance items at retail or to commercial accounts such as
installers, mechanics and garages in competition with the business of the
Company within the states of Florida, Georgia, Alabama, South Carolina,
Mississippi, Louisiana, Texas, Tennessee, Arkansas or North Carolina, or within
the Commonwealth of Puerto Rico;
(2) Accept employment or otherwise provide services to or for the benefit
of any company engaged in competition with the Company, which competing company
has or maintains stores within or engages in sales within any of the proscribed
jurisdictions described above;
(3) Accept employment with any of the following companies: Autozone,
Advance Auto Parts/Western Auto, O'Reilly's Auto Parts, Pep Boys, CSK Auto
Parts, NAPA, or Car Quest Auto Parts;
(4) Solicit, sell to, call upon, or otherwise engage in any contact with
any commercial account customer, or any person who was identified as a
prospective commercial account customer, of the Company for the purpose of
soliciting, selling or providing to such person any goods or services in
competition with the Company nor will he accept any orders from any such
persons;
(5) Hire or engage for employment or services, or solicit to do so, any
employee, leased employee, agent, representative or other person while such
person is providing services to or for the Company or at any time within one (1)
year after the termination of any such person's relationship with the Company;
(5) Recruit, solicit, train or assist any other person to engage in any of
the activities proscribed by any covenant of this Agreement and General Release.
It is agreed by Company and Employee that if any portion of the covenants
set forth in this Paragraph FOURTEENTH are held to be invalid, unreasonable,
arbitrary, or against public policy, then such portion of such covenants shall
be considered divisible as to both time and geographic area. Company and
Employee agree that, if any court of competent jurisdiction determines the
specified time period or the specified geographic area applicable to this
Paragraph FOURTEENTH to be invalid, unreasonable, arbitrary, or against public
policy, then a lesser time period or geographic area which is determined to be
reasonable, non-arbitrary, and not against public policy may be enforced against
the Employee. Company and the Employee agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by Company.
If at any time the Company fails to make any material payment to Employee
that is required to be made under this Agreement or otherwise breaches any of
its material obligations hereunder, and such failure continues without cure
through the date which is ten (10) days after the Company receives written
notice from Employee of such failure, Employee shall be relieved of the
covenants set forth in this Paragraph FOURTEENTH from and after the date of such
failure by the Company; provided however that such failure shall not relieve
Employee of any other obligations hereunder.
FIFTEENTH: Remedies in the Event of Breach. In the event of a breach by the
Employee of any of the covenants of the Employee in this Agreement and General
Release, including without limitation the covenants in Paragraphs TWELFTH,
THIRTEENTH or FOURTEENTH of this Agreement and General Release, the Company,
after providing written notice of such breach to Employee and provided that
Employee has not cured such breach within ten (10) days following the giving of
such notice, shall be entitled to:
(1) Obtain an injunction enjoining any violation or threatened violation of
the covenants herein for the benefit and protection of the Company;
(2) Obtain an injunction compelling the performance by Employee of all
obligations and covenants owed to the Company under this Agreement and General
Release;
(3) Obtain a judgment for all losses, damages, profits or expenses which
are incurred, lost or suffered by the Company, including all reasonable
attorneys' fees and court costs incurred by the Company, in enforcing any right
under this Agreement and General Release;
(4) Extend the non-disclosure, non-competition, non-solicitation and other
prohibition periods for any time during which Employee is in breach of this
Agreement and General Release;
(5) Withhold from Employee and not pay to Employee any sum otherwise
payable by Company to Employee, including without limitation, any such sum
payable under this Agreement and General Release; and
(6) Terminate the stock options granted pursuant to Paragraph SIXTH.
SIXTEENTH: Voluntary and Knowing Action. Employee represents that he has
been advised to consult an attorney before executing this Agreement and General
Release and that he has had sufficient time to review, consider, and become
fully informed of the terms and effect of this Agreement and General Release
before signing it. In particular, Employee represents that he has had a full
twenty (21) days within which to consider this Agreement and General Release
before executing it, or has waived such time period in order to begin and obtain
the payments and benefits hereunder. Employee further acknowledges that he is
voluntarily entering into this Agreement and General Release and has full
capacity to enter into this Agreement and General Release. Employee agrees that
his covenants and promises made in this Agreement and General Release are in
consideration of the agreements and payment obligations of the Company made
pursuant to this Agreement and General Release.
Employee has a full seven (7) days following the execution of this
Agreement and General Release to revoke this Agreement and General Release,
provided such revocation is accompanied by the return of any and all payments
then having been made to Employee hereunder and any and all property then having
been provided to Employee hereunder, and has been and hereby is advised in
writing that this Agreement and General Release shall not become effective or
enforceable until the revocation period has expired.
SEVENTEENTH: Confidentiality. Except to the extent disclosure may be
required by applicable law, Employee agrees that the terms, provisions, and fact
of this Agreement and General Release shall remain completely confidential and
that he has not and will not hereafter disclose any information concerning this
Agreement and General Release to anyone except his attorney, accountant and/or
other professional advisors, who will in turn keep such information completely
confidential, and not disclose it to others. Employee understands that his
promise of confidentiality includes, but is not limited to, any current or
former Employee, customer, supplier or vendor of the Company or any related
entity and the media, or competitor company.
Should Employee violate any of his promises and representations as provided
for in this Agreement and General Release and fail to cure such violation within
ten (10) days after the Company gives Employee written notice of such violation,
the payments provided pursuant to Paragraph THIRD above shall be returned and/or
forfeited to the Company, the property delivered to Employee by the Company
pursuant to Paragraph FIFTH above shall be returned and/or forfeited to the
Company and the stock options provided pursuant to Paragraph SIXTH above shall
be returned and/or forfeited to the Company, but this Agreement and General
Release shall otherwise remain in full force and effect. Additionally a breach
by Employee of any of the provisions of this Agreement and General Release will
entitle Company to any and all rights and remedies against Employee available
under the laws of Florida, including, but not limited to, reimbursement for all
costs, expenses and attorneys fees incurred to enforce this Agreement and
General Release, together with the return of any payments and property
previously made.
EIGHTEETH. Non-Disparagement. Employee shall not hereafter (i) make any
public or private statements criticizing the business or activities of Company,
or (ii) take any action which is intended, or would reasonably be expected, to
harm Company or its reputation or which would reasonably be expected to lead to
unwanted or unfavorable publicity concerning Company. Company shall not
hereafter (i) make any public or private statements criticizing the activities
of Employee in any way or (ii) take any action which is intended, or would
reasonably be expected, to harm Employee or Employee?s reputation or which would
reasonably be expected to lead to unwanted or unfavorable publicity concerning
Employee. If either party wishes to make a public statement concerning the
matters addressed by this Agreement and General Release, such party shall prior
thereto provide a copy of such statement to the other party and such other party
may provide comments thereon; provided however, that nothing herein shall be
deemed to prohibit any party from making any disclosure which its counsel deems
necessary in order to fulfill such party's disclosure obligations imposed by
law.
NINETEENTH: Cooperation; Consulting Services. Employee agrees that he will
cooperate with and assist the Company in connection with consummating the terms
and provisions of this Agreement and General Release and in any investigation
and proceedings, related to or arising out of or in connection with any matter
in which he was involved or of which he had knowledge while providing services
to the Company.
Employee also agrees during the period March 1, 2000, to February 28, 2001,
to make himself available as a consultant to the Company up to a maximum of
twenty (20) hours per month upon reasonable request by the Company to assist his
successor(s) or any other representative designated by the CEO or President of
the Company to complete and/or help resolve any outstanding matters, to assist
in the management transition and to provide the benefit of his experience and
expertise.
TWENTIETH: Outplacement. The Company, at its cost, will provide Employee
with six months of outplacement services from an independent outplacement
service either selected by the Company or, if suggested by the Employee,
approved in advance by the Company in its reasonable discretion. The extent of
outplacement services shall be as is customary for executives similarly
situated, within a level of program reasonably acceptable to the Company.
TWENTY-FIRST: Entire Agreement; Amendment; Etc. This Agreement and General
Release supersedes all prior oral and/or written agreements between the parties,
all of which shall be deemed terminated, null and void and of no further effect
from and after the date hereof. There are no representations, warranties or
commitments, except as specifically set forth herein. This Agreement and General
Release may be amended only by an instrument in writing duly executed by each of
the parties hereto.
All rights, entitlements and benefits of this Agreement and General Release
inure to the Company and to any of its successors or assigns and, without
limitation thereof, the obligations of Paragraphs TWELFTH, THIRTEENTH and
FOURTEENTH are specifically intended to be enforceable by all successors and
assigns.
All covenants herein survive the termination or expiration of this
Agreement and General Release.
TWENTY-SECOND: Independent Covenants; Waiver. Except as otherwise expressly
provided for herein, the restrictive covenants herein are independent of any
other agreement between the parties, and no claim by Employee against the
Company shall be a defense to the enforcement of these covenants. Further, any
waiver of a breach by the Company does not constitute a waiver of any subsequent
breach, nor does any failure to take action by the Company against any other
employee for similar breaches constitute a waiver or estoppel as to Employee.
TWENTY-THIRD: Notices. All notices required or permitted under this
Agreement and General Release shall be in writing and shall be deemed delivered
when delivered in person or three days after deposited in the United States
mail, postage paid, addressed as follows:
Company: DISCOUNT AUTO PARTS, INC. Attn: Vice President of Human Resources
4900 Frontage Road South Lakeland, Florida 33801
Employee: STEVEN C. BAIR Dade City, Florida 33525
Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.
TWENTY-FOURTH: Severability. Should any provision of this Agreement and
General Release be declared or determined by any court to be invalid, illegal or
unenforceable in any respect, the remaining provisions of this Release will not
be affected or impaired in any way.
TWENTY-FIFTH: Governing Law. This Agreement and General Release shall be
construed and interpreted in accordance with the laws of the state of Florida.
TWENTY-SIXTH: Jurisdiction. In the event of any litigation arising out of
the enforcement or interpretation of this Agreement and General Release,
Employee hereby consents to venue in Polk County, Florida. Employee further
stipulates that the Circuit Court in and for the Tenth Judicial Circuit in and
for Polk County, Florida, shall be the exclusive forum for all legal proceedings
involving this Agreement and General Release and he hereby consents to be
subject to and bound by the personal jurisdiction of such court.
TWENTY-SEVENTH: Attorneys Fees. In the event of any litigation arising out
of the enforcement or interpretation of this Agreement and General Release, the
prevailing party shall be entitled to recover the expenses incurred by it in
such litigation, including without limitation reasonable attorneys fees and
costs.
IT IS FURTHER UNDERSTOOD AND AGREED, AND EMPLOYEE EXPRESSLY ACKNOWLEDGES,
THAT THIS AGREEMENT AND GENERAL RELEASE IS INTENDED TO INCLUDE IN ITS EFFECT,
WITHOUT LIMITATION, A RELEASE OF ALL CLAIMS WHICH HAVE ARISEN PRIOR TO THE DATE
OF THIS AGREEMENT AND GENERAL RELEASE INCLUDING THOSE OF WHICH EMPLOYEE DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTION HEREOF, AND THAT
THE TERMS AGREED UPON CONTEMPLATES THE EXTINGUISHMENT OF ANY SUCH CLAIM OR
CLAIMS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
General Release on the date first above written.
By: /s/ Steven C. Bair
------------------------------------------
STEVEN C. BAIR
Date: March 1, 2000
----------------------------------------
DISCOUNT AUTO PARTS, INC.
By: /s/ C. Michael Moore
------------------------------------------
Title: Chief Financial Officer
----------------------------------------
Date: March 1, 2000
----------------------------------------
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<LEGEND>
(Replace this text with the legend)
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<FISCAL-YEAR-END> May-30-2000
<PERIOD-START> Jun-2-1999
<PERIOD-END> Feb-29-2000
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<PP&E> 508,204
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0
0
<COMMON> 167
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<TOTAL-LIABILITY-AND-EQUITY> 687,256
<SALES> 433,642
<TOTAL-REVENUES> 433,642
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<TOTAL-COSTS> 257,985
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<INTEREST-EXPENSE> 12,951
<INCOME-PRETAX> 30,503
<INCOME-TAX> 11,324
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<EPS-DILUTED> 1.15
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