EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETE AGREEMENT
THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its
various subsidiaries (collectively "AutoZone"), and Steve Odland, an individual
("Employee"), dated as of October 23, 2003 (the "Effective Date") and is an
amendment and restatement of the Employment and Non-Compete Agreement between
Employee and AutoZone dated January 29, 2001 (as amended and restated the
"Agreement"). For good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Employment. AutoZone agrees to employ Employee and Employee agrees to
remain in the employment of AutoZone, or a subsidiary or affiliate,
until the expiration of the Term or until earlier termination as
provided under this Agreement. If Employee's employment shall continue
after December 31, 2007, Employee's employment shall be at will and,
subject to the obligations of AutoZone, Inc. under Paragraph 9(b) or
11(b) (as the case may be), may be terminated by AutoZone with or
without Cause or by Employee with or without Good Reason at any time
thereafter.
2. Term. This Agreement shall be effective as of the Effective Date and
shall continue until December 31, 2007 unless sooner terminated
pursuant to Paragraph 9, 10 or 11. The period of employment under this
Paragraph 2 is referred to as the "Term."
3. Salary. Employee shall receive a salary from AutoZone as follows:
During the Term, Employee shall receive minimum annual compensation of
$1,000,000, subject to increases as determined by the Compensation
Committee of the Board of Directors ("Base Salary"). The Base Salary
amount shall be paid on a pro-rated basis for all partial years based
on a 364-day year. AutoZone reserves the right to increase the Base
Salary above the amounts stated above in its sole discretion. All
salary shall be paid at the same time and in the same manner that
AutoZone's other senior executives are paid.
4. Annual Bonuses. During the Term, Employee shall be entitled to receive
an annual bonus (the "Annual Bonus") in an amount equal to 100% of his
Base Salary if the Target is met, subject to and determined in
accordance with AutoZone's Executive Incentive Compensation Plan (the
"Bonus Plan") and the policies and procedures established by
AutoZone's Compensation Committee of the Board of Directors which
shall be based upon the financial and operational goals and objectives
for the Employee and AutoZone established by the Compensation
Committee for each of AutoZone's fiscal years ("Target") in accordance
with the Bonus Plan. The Target is established at the sole discretion
of the Compensation Committee and Board of Directors and is subject to
review and revision at any time upon notification to the Employee. All
bonuses shall be paid at the same time and in the same manner that
AutoZone's other senior executives are paid.
5. Duties. Employee shall serve as Chairman of AutoZone's Board of
Directors and Chief Executive Officer of AutoZone, Inc., performing
such duties as AutoZone, Inc.'s Board of Directors may direct from
time to time and as are normally associated with such a position.
AutoZone may, in its sole discretion, alter, expand or curtail the
services to be performed by Employee or position held by Employee from
time to time, without adjustment in compensation. Employee shall
devote his full time and attention to AutoZone's business. During the
term of this Agreement, Employee shall not engage in any other
business activity that conflicts with his duties with AutoZone,
regardless of whether it is pursued for gain or profit. Employee may,
however, invest his assets in or serve on the Board of Directors of
other companies so long as they do not require Employee's services in
the day to day operation of their affairs and do not violate
AutoZone's conflict of interest policy.
6. Other Compensation and Benefits. Other compensation and benefits to be
received by Employee from AutoZone shall at least be the ordinary
benefits received by AutoZone's other executive officers, which may be
changed by AutoZone in its sole discretion from time to time. Employee
shall be considered for possible annual or other grants of stock
options and other equity compensation as determined by the
Compensation Committee of the Board of Directors in its discretion
based on Employee's performance, consistent with the treatment of
other senior executives of AutoZone. Any grants of stock options or
other equity compensation
made to Employee after the Effective Date shall provide by their terms
that they (i) shall vest in full and become immediately exercisable
upon the termination of Employee's employment with AutoZone pursuant
to Paragraphs 9(a), 9(b) or 11, as the case may be, and (ii) shall
expire at the earlier of their full normal term or the following dates
after the date of Employee's termination of employment with AutoZone
for the following reasons: (x) immediately upon termination if by
AutoZone for Cause, (y) one year after termination if by reason of
Employee's death, (z) 90 days after termination if by AutoZone without
Cause or by Employee for any reason or no reason, including a
termination of employment by reason of Employee's disability, and that
if Employee's employment terminates on or after Employee's normal
retirement date under AutoZone's Pension Plan, such options shall
expire at the end of their full normal term.
7. Supplemental Pension Plan Service Credit. For all purposes under
AutoZone's Executive Deferred Compensation Plan (a copy of which is on
file with the Securities and Exchange Commission, the "supplemental
pension"), Employee shall continue to be eligible for participation
therein and, in addition to his years of service with AutoZone prior
to the freeze of the plan, has been credited with four years of
defined benefit pension accruals and vesting service for Employee's
time in service with Employee's former employer, including, without
limitation, a benefit accrual equal to such amounts as Employee would
have accrued under the AutoZone tax-qualified pension plan if such
plan does not credit Employee with such prior employer service
thereunder.
8. Taxes. Employee understands that all salary, bonuses and other
benefits will be subject to reduction for amounts required to be
withheld by law as taxes and otherwise.
9. Termination by AutoZone or by Employee for Good Reason
(a) Without Cause or for Good Reason before January 1, 2008. At
any time before January 1, 2008, AutoZone may terminate this
Agreement without Cause, and Employee may terminate this
Agreement for Good Reason, upon notice by the terminating
party to the other party. In such event, Employee shall
thereupon resign from AutoZone's Board of Directors and shall
cease to be Chief Executive Officer of AutoZone, Inc. In such
event, Employee shall continue to be paid his then current
Base Salary until December 31, 2007 but for a period of not
more than three (3) years (the "Continuation Period"). During
the Continuation Period, Employee shall not receive any bonus
payments, except as expressly provided herein. During the
Continuation Period, Employee shall continue to be an
employee of AutoZone or a subsidiary of AutoZone available to
perform such services as may be requested by the Chief
Executive Officer of AutoZone, pursuant to a mutually
satisfactory agreement to be entered into by AutoZone and
Employee at that time which shall specify Employee's duties
as a common law employee of AutoZone.
(i) During the Continuation Period, Employee's stock options
shall continue to vest and may be exercised in the manner set
forth in the respective stock option agreements until the end
of the Continuation Period, at which time Employee's
employment with AutoZone shall be terminated and further
stock option exercise and vesting shall be governed by the
terms of the respective stock option agreements. During the
Continuation Period, Employee shall receive such other
benefits as other executives of AutoZone, including, but not
limited to, health and life insurance, on the same terms and
conditions. AutoZone shall pay Employee any earned and unpaid
bonus from any prior year and a full bonus for the fiscal
year in which this Agreement is terminated pursuant to this
Paragraph 9(a) calculated based on the period of time elapsed
during such fiscal year until this Agreement is terminated
and the formula established by the Compensation Committee for
officers for that fiscal year. Said bonus shall be paid when
other officer bonuses are paid for that fiscal year.
(ii) At the end of the Continuation Period, Employee's employment
with AutoZone shall terminate and Employee shall receive as
soon as practicable after such termination a lump-sum cash
payment in immediately available funds in an amount equal to
(a) 2.99 times his then current annual Base Salary minus (b)
the total amount of the Base Salary
paid to Employee during the Continuation Period. In addition,
during the period beginning on the date of termination of
Employee's employment and ending on the earlier of (A) the
third anniversary of the date on which the Continuation
Period begins or (B) the first day on which Employee becomes
eligible to participate in a group health plan of a
subsequent employer which provides benefits comparable to
AutoZone's health plan, Employee shall receive health
insurance coverage under AutoZone's health insurance plan on
the same terms and conditions as other senior executive
employees of AutoZone; provided, however, that if Employee is
ineligible under the terms of AutoZone's health plan to
continue to be so covered, AutoZone shall provide Employee
with substantially equivalent coverage through other sources
or will provide Employee with a lump-sum payment in such
amount that, after all taxes on that amount, shall be equal
to the cost to Employee of providing himself such coverage.
(iii) AutoZone shall have no other obligations other than those
stated herein upon the termination of this Agreement and
Employee hereby releases AutoZone from any and all
obligations and claims except those as are specifically set
forth herein.
(iv) Any provision of this Agreement to the contrary
notwithstanding, "Good Reason" shall mean any one of the
following events, unless Employee consents in writing:
(1) (I) the material failure of AutoZone to comply with
the provisions of Paragraphs 3 through 7 of this
Agreement, (II) any material adverse change in the
status, responsibilities, perquisites of Employee
(except, in the case of perquisites, for
across-the-board changes applicable to all other
senior executives), including any actual material
adverse change in status which results from an
assignment of this Agreement by AutoZone pursuant to
Paragraph 18 below, (III) approval by AutoZone's
Board of Directors of a transaction (other than a
Change of Control) pursuant to which Employee would
cease to be the Chief Executive Officer of AutoZone,
Inc. or the publicly-held successor to AutoZone,
Inc., provided that Employee has provided written
notice of termination to the Board of Directors
within 60 days following such approval and provided
that such termination shall not be effective until
the consummation of such approved transaction, (IV)
any failure to nominate or elect Employee as
Chairman of the Board of Directors of AutoZone,
Inc.(or the publicly-held successor to AutoZone,
Inc.), (V) causing or requiring Employee to report
to anyone other than the Board of Directors, (VI)
assignment of duties which are materially and
adversely inconsistent with his positions and duties
described in this Agreement or (VII) any other
material breach of the Agreement by AutoZone;
provided, that no such act or omission shall constitute
Good Reason unless Employee gives AutoZone 30 days prior
written notice (except as provided in clause (III) of
this subparagraph (1)) of such act or omission and
AutoZone fails to cure such act or omission within the
30-day period;
(2) The failure of AutoZone to assign this Agreement to
a successor to AutoZone or failure of a successor to
AutoZone to explicitly assume and agree to be bound
by the Agreement; or
(3) The requiring of Employee to be principally based at
any office or location more than 60 miles from the
current corporate offices of AutoZone in Memphis,
Tennessee.
(b) Without Cause or For Good Reason after December 31, 2007. At
any time after December 31, 2007, AutoZone may terminate
Employee's employment without Cause, and Employee may
terminate Employee's employment for Good Reason (and, for
purposes of this Paragraph 9(b), in any determination of
"Good Reason" the provisions of Paragraphs 3 through 7 and
Paragraph 18 of this Agreement shall be deemed to survive any
expiration of this Agreement under Paragraph 2), upon notice
by the terminating party to the other party. In such event,
Employee shall thereupon resign from AutoZone's Board of
Directors and shall cease to be Chief Executive Officer of
AutoZone, Inc. In the event of a termination pursuant to this
Paragraph 9(b),
i. Employee shall receive as soon as practicable after
the date of the termination of employment (the
"Termination Date") a lump-sum cash amount in
immediately available funds equal to 2.99 times his
then current annual Base Salary. In addition,
AutoZone shall pay Employee his full Annual Bonus
for the fiscal year which includes the Termination
Date pursuant to this Paragraph 9(b), based on the
Targets attained by AutoZone and Employee for such
fiscal year. Said bonus shall be paid when other
officer bonuses are paid for that fiscal year or
cycle. Except as set forth in the preceding
sentence, Employee shall not be entitled to receive
any bonus payments after the termination of his
employment hereunder;
ii. During the period from the Termination Date and
ending on the earlier of (A) the third anniversary
of the Termination Date or (B) the first day on
which Employee becomes eligible to participate in a
group health plan of a subsequent employer which
provides benefits comparable to AutoZone's health
plan, Employee shall receive health insurance
coverage under AutoZone's health insurance plan on
the same terms and conditions as other senior
executive employees of AutoZone; provided, however,
that if Employee is ineligible under the terms of
AutoZone's health plan to continue to be so covered,
AutoZone shall provide Employee with substantially
equivalent coverage through other sources or will
provide Employee with a lump-sum payment in such
amount that, after all taxes on that amount, shall
be equal to the cost to Employee of providing
himself such coverage;
iii. Any grants of stock options or other equity
compensation made to Employee after the Effective
Date shall vest in full and become immediately
exercisable as of the Termination Date and shall
expire at the earlier of the last day of each such
grant's full normal term or 90 days after the
Termination Date.
iv. AutoZone shall have no other obligations other than
those stated herein after the Termination Date and
Employee hereby releases AutoZone from any and all
obligations and claims except those as are
specifically set forth herein.
(c) With Cause. AutoZone shall have the right to terminate this
Agreement and Employee's employment with AutoZone for Cause
at any time by a determination of a majority of the members
of the Board of Directors in good faith. Upon such
termination for Cause, Employee shall have no right to
receive any compensation, salary, or bonus and shall
immediately cease to receive any benefits (other than those
as may be required pursuant to the AutoZone Pension Plan or
by law) and any stock options shall be governed by the
respective stock option agreements in effect between the
Employee and AutoZone at that time. "Cause" shall mean (i)
the willful engagement by the Employee in conduct which is
demonstrably and materially injurious to AutoZone, monetarily
or otherwise, and (ii) if reasonably capable of being cured,
is not cured by the Employee within thirty (30) days after
the Board of Directors provides him with a detailed notice of
the conduct that is considered to be grounds for a
determination of Cause. For this purpose, no act or failure
to act by the Employee shall be considered "willful" unless
done, or omitted to be done, by the Employee not in good
faith and without reasonable belief that his action or
omission was in the best interest of AutoZone.
10. Termination by Employee. Employee may terminate this Agreement and
Employee's employment with AutoZone at anytime upon written notice to
AutoZone. Upon such termination, other than for Good Reason,
Employee's employment shall terminate and Employee shall cease to
receive any further salary, benefits, or bonus, and all stock options
granted shall be governed by the respective stock option agreement(s)
between the Employee and AutoZone.
11. Termination by Employee upon a Change of Control. In the event of a
Change of Control at any time during the Term or thereafter, Employee
may terminate this Agreement and/or his employment with AutoZone upon
a Change of Control of AutoZone after the occurrence of a Change of
Control, as follows.
(a) In the event of Change of Control before January 1,
2008, Employee may terminate this Agreement by
giving written notice to AutoZone within sixty (60)
days after the occurrence of a Change of Control and
the provisions of Paragraph 9(a) of this Agreement
shall then apply.
(b) In the event of Change of Control after December 31,
2007 and while Employee is employed by AutoZone,
Employee may terminate this Agreement and his
employment with AutoZone by giving written notice to
AutoZone within sixty (60) days after the occurrence
of a Change of Control and the provisions of
Paragraph 9(b) of this Agreement shall then apply.
(c) Any of the following events shall constitute a
"Change of Control": (a) the acquisition after the
date hereof, in one or more transactions, of
beneficial ownership (as defined in Rule 13d-3(a)(1)
under the Securities Exchange Act of 1934, as
amended ("Exchange Act")), by any person or entity
or any group of persons or entities who constitute a
group (as defined in Section 13(d)(3) under the
Exchange Act) of any securities such that as a
result of such acquisition such person, entity or
group beneficially owns AutoZone Inc.'s then
outstanding voting securities representing 51% or
more of the total combined voting power entitled to
vote on a regular basis for a majority of the Board
of Directors of AutoZone, Inc. or (b) the sale of
all or substantially all of the assets of AutoZone
(including, without limitation, by way of merger,
consolidation, lease or transfer) in a transaction
where AutoZone or the beneficial owners (as defined
in Rule 13d-3(a)(1) under the Exchange Act) of
capital stock of AutoZone do not receive (i) voting
securities representing a majority of the total
combined voting power entitled to vote on a regular
basis for the board of directors of the acquiring
entity or of an affiliate which controls the
acquiring entity or (ii) securities representing a
majority of the total combined equity interest in
the acquiring entity, if other than a corporation;
provided however, that the foregoing provisions of
this Paragraph 11 shall not apply to any
reorganization, recapitalization or similar
transaction in which all or substantially all of the
individuals and entities who were the beneficial
owners of the outstanding voting securities of
AutoZone immediately prior to such transaction
respectively continue to beneficially own, directly
or indirectly, the outstanding voting securities of
the surviving entity in such transaction in
substantially the same proportions as their
beneficial ownership immediately prior to such
transaction.
12. Effect of Termination. Any termination of Employee's service as an
officer of AutoZone shall be deemed a termination of Employee's
service on all boards and as an officer of all subsidiaries of
AutoZone.
13. Non-Compete. Employee agrees that he will not, for the three (3) year
period commencing on the first day of any Continuation Period, if
there is one, or commencing on the date of Employee's termination of
employment if there is no Continuation Period prior to such
termination of Employment (the "Non-Competition Period"), be engaged
in or concerned with, directly or indirectly, any business related to
or involved in the retail sale of auto parts to "DIY" customers, or
the wholesale or retail sale of auto parts to commercial installers in
any state, province, territory or foreign country in which AutoZone
operates now or shall operate during the term set forth in this
Non-Compete section (herein called "Competitor"), as an employee,
director, consultant, beneficial or record owner, partner, joint
venturer, officer or agent of the Competitor, other than the
acquisition of not more than a 1% equity interest in a publicly-traded
Competitor; provided, solely for purposes of excluding any retail
business with retail stores that sell automotive parts and automotive
accessories as a minor portion of the retail business in each of its
retail stores from the term "Competitor", any such retail business
engaged in the same business or substantially the same business as
that of AutoZone either directly or through an operating division or
subsidiary of such retail business shall not be deemed to be a
"Competitor" if both (a) the average sales per store per annum of the
business or the average sales per store per annum of any
organizational unit, part, subpart, subsidiary or affiliate of such
business from the sale of automotive parts and automotive accessories
(excluding sales at stores which do not sell automotive parts and
automotive accessories ) shall be less than 10%
of the average sales per store per annum of AutoZone for the same year
and (b) the total sales of automotive parts and accessories for any
such retail business (including the sales of automotive parts and
automotive accessories by any organizational unit, part, subpart,
subsidiary or affiliate of such business) shall be, in the aggregate,
less than 10% of such business' total gross sales.
The parties acknowledge and agree that the time, scope, geographic
area and other provisions of this Non-Compete section have been
specifically negotiated by sophisticated commercial parties and
specifically hereby agree that such time, scope, geographic area and
other provisions are reasonable under the circumstances and are in
exchange for the obligations undertaken by AutoZone pursuant to this
Agreement.
Further, Employee agrees not to hire, for himself or any other entity,
encourage anyone or entity to hire, or entice away from AutoZone any
employee of AutoZone during the term of this non-compete obligation.
If at any time in a proceeding under or arising out of this Agreement
(or a proceeding brought on behalf of or at the direction of Employee)
a court of competent jurisdiction holds that any portion of this
Non-Compete section is unenforceable for any reason, then Employee
shall forfeit his right to any further salary, bonus, stock option
exercises, or benefits from AutoZone during the Non-Competition
Period.
14. Confidentiality. Unless otherwise required by law, Employee shall hold
in confidence any proprietary or confidential information obtained by
him during his employment with AutoZone, which shall include, but not
be limited to, information regarding AutoZone's present and future
business plans, vendors, systems, operations and personnel.
Confidential information shall not include information: (a) publicly
disclosed by AutoZone, (b) rightfully received by Employee from a
third party without restrictions on disclosure, (c) approved for
release or disclosure by AutoZone, or (d) produced or disclosed
pursuant to applicable laws, regulation or court order. Employee
acknowledges that all such confidential or proprietary information is
and shall remain the sole property of AutoZone and all embodiments of
such information shall remain with AutoZone. Unless otherwise required
by law, each of AutoZone and Employee shall hold in confidence all
matters regarding the termination of employment of Employee and the
conduct of Employee or the Board of Directors resulting in such
termination.
15. Breach by Employee. The parties further agree that if, at any time,
despite the express agreement of the parties hereto, Employee violates
the provisions of this Agreement by violating the Non-Compete or
Confidentiality sections, or by failing to perform his obligations
under this Agreement, Employee shall forfeit any unexercised stock
options, vested or not vested, and AutoZone may cease paying any
further salary or bonus. In the event of breach by Employee of any
provision of this Agreement, Employee acknowledges that such breach
will cause irreparable damage to AutoZone, the exact amount of which
will be difficult or impossible to ascertain, and that remedies at law
for any such breach will be inadequate. Accordingly, AutoZone shall be
entitled, in addition to any other rights or remedies existing in its
favor, to obtain, without the necessity for any bond or other
security, specific, performance and/or injunctive relief in order to
enforce, or prevent breach of any such provision.
16. Death of Employee or Disability. If Employee should die or become
disabled (such that he is no longer capable of performing his duties)
during the term of this Agreement, then all salary and bonuses shall
cease as of the date of his death or disability, all stock options
shall be governed by the terms of the respective stock option
agreements, and Employee shall receive disability or death benefits as
may be provided under AutoZone's then existing policies and procedures
related to disability or death of AutoZone senior executives. If
Employee should die or become disabled (such that he is no longer
capable of performing his duties) during the Continuation Period, then
Employee, or his estate in the event of Employee's death, shall
continue to be paid his then current Base Salary until the expiration
of the Continuation Period and shall be paid any severance benefit
payable to Employee pursuant to Paragraphs 9(a),9(b) or 11, all stock
options shall be governed by the terms of the respective stock option
agreements, and Employee shall receive disability or death benefits as
may be provided under AutoZone's then existing policies and procedures
related to disability or death of AutoZone senior executives.
17. Waiver. Any waiver of any breach of this Agreement by AutoZone shall
not operate or be construed as a waiver of any subsequent breach by
Employee. No waiver shall be valid unless in writing and signed by an
authorized officer of AutoZone.
18. Assignment. Employee acknowledges that his services are unique and
personal. Accordingly, Employee shall not assign his rights or
delegate his duties or obligations under this Agreement. Employee's
rights and obligations under this Agreement shall inure to the benefit
of and be binding upon AutoZone successors and assigns. AutoZone may
assign this Agreement to any wholly-owned subsidiary operating for the
use and benefit of AutoZone.
19. Entire Agreement. This Agreement contains the entire understanding of
the parties related to the matters discussed herein. It may not be
changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification,
extension, or discharge is sought.
20. Jurisdiction. This Agreement shall be governed and construed by the
laws of the State of Tennessee, without regard to its choice of law
rules. The parties agree that the only proper venue for any dispute
under this Agreement shall be in the state or federal courts located
in Shelby County, Tennessee.
21. Survival. Paragraphs 9, 11, 13, 14, 15, 16, 20, 23 and 25 of this
Agreement shall survive any termination of this Agreement or
Employee's employment with AutoZone (including, without limitation
termination pursuant to Paragraph 9, 10 or 11).
22. Notices. All notices hereunder shall be in writing and delivered by
hand, by nationally-recognized delivery service that guarantees
overnight delivery, or by first-class, registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to AutoZone, to: AutoZone, Inc.
123 South Front Street
Memphis, TN 38103
Attention: General Counsel
With copy to: James D.C. Barrall, Esq.
Gary Olson, Esq.
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071
If to Employee, to: Steve Odland
c/o AutoZone, Inc.
123 South Front Street
Memphis, TN 38103
With copy to: Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Suite 2600
Chicago, IL 60601
Attention: Robert J. Stucker
Either party may from time to time designate a new address by notice
given in accordance with this Paragraph. Notice shall be effective
when actually received by the addressee.
23. Tax Gross-Up Payment. If it shall be finally determined that any
payment to Employee pursuant to this Agreement or any other payment or
benefit from AutoZone, any affiliate, or any other person would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any similar tax
payable under any United States federal, state, local or other law,
then Employee shall receive a Tax Gross-Up Payment with respect to all
such excise taxes and similar taxes (collectively, the "Excise Tax").
An initial determination as to whether a Tax Gross-Up Payment is
required pursuant to this Agreement and the amount of such Tax
Gross-Up Payment shall be made at AutoZone's expense by a nationally
recognized accounting firm selected by AutoZone (the "Accounting
Firm"). The determination by the Accounting Firm (the "Determination")
shall be binding, final and conclusive upon AutoZone and the Employee
for purposes of any dispute between the parties hereto. The parties
hereto shall cooperate with each other in connection with
any proceeding or claim involving any taxing authority under this
Paragraph 23 relating to the existence or amount of any liability for
the Excise Tax; provided, however, that AutoZone shall control all
proceedings taken in connection with such proceeding or claim and
shall bear and pay directly all costs, expenses, and tax penalties and
interest incurred in connection with such proceeding or claim. As a
result of uncertainty in the application of Section 4999 of the Code
at the time of the initial Determination by the Accounting Firm, it is
possible that the Tax Gross-Up Payment made will have been an amount
less than AutoZone should have paid pursuant to this Paragraph 23 (the
"Underpayment") or an amount greater than AutoZone should have paid
pursuant to this Paragraph 23 (the "Overpayment"). In the event that
it is finally determined that an Underpayment exists and the Employee
is required to make a payment of any Excise Tax, the Tax Gross-Up
Payment shall be adjusted accordingly and the shortfall shall be
promptly paid by AutoZone to the Employee or for his benefit. In the
event that it is finally determined that an Overpayment exists and
AutoZone paid a Tax Gross-Up Payment to the Employee in excess of the
amount of the Tax Gross-Up Payment to which he is actually entitled
hereunder, such excess shall be promptly reimbursed by the Employee to
AutoZone.
24. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced
by the amount of any compensation or benefits provided to the Employee
in any subsequent employment.
25. Indemnification. Employee shall be indemnified while serving as Chief
Executive Officer or Chairman of the Board of Directors to the same
extent and in the same manner as other members of the Board of
Directors and senior executives of AutoZone.
26. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Counterpart signature pages may be delivered via facsimile.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the respective parties execute this Agreement.
AUTOZONE, INC.
By: /s/ Edward S. Lampert /s/ Steve Odland
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Title: Chairman, Compensation Committee Employee