Exhibit 10.38.1
FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
     This First Amendment (“Amendment”) to the Employment Agreement (the
“Employment Agreement”) dated as of March 31, 2008, by and between CSK Auto,
Inc., an Arizona corporation (the “Company”), a wholly owned subsidiary of CSK
Auto Corporation, a Delaware corporation (“Parent”), and Lawrence N. Mondry (the
“Executive”), dated as of June 8, 2007.
     WHEREAS, the Executive and the Company have entered into the Employment
Agreement; and
     WHEREAS, the Company and Executive wish to amend the Employment Agreement
as provided for herein;
     WHEREAS, pursuant to Section 15.2 of the Employment Agreement, the parties
affected thereby may amend the Employment Agreement by a written instrument;
     NOW, THEREFORE, BE IT RESOLVED that the Employment Agreement is amended as
follows, effective as of the date hereof:
     1. Section 5.2 is hereby amended in its entirety to read as follows:
     “As soon as practicable following the first regular meeting of the Board
after the Company’s filing with the SEC of its audited financial statements for
the Company’s 2007 fiscal year, or concurrent with the granting of awards to
eligible grantees pursuant to Parent’s equity grant policy (as amended from time
to time by the Board), Parent will grant the Executive an additional stock
option to acquire such number of shares of Parent’s common stock as is
determined pursuant to the next sentence, with an exercise price equal to the
fair market value of Parent’s common stock on the date of grant (the “2008
Option”), or, in the sole discretion of the Board, an equivalent award in the
form of restricted stock or restricted stock units. The number of shares subject
to the 2008 Option shall be equal to the quotient obtained by dividing 130% of
the Executive’s then Base Salary by the deemed per share value of the shares of
Parent’s common stock issuable under the 2008 Option on the grant date
determined using the same methodology as used by Parent for financial reporting
purposes under SFAS No. 123(R). The 2008 Option (or equivalent restricted stock
or restricted stock unit award) shall be subject to the terms and conditions set
forth in the Company’s stock incentive plans and standard form of award
agreement for executive-level employees in use at the time of such grant, which
terms and conditions may not be the same as the terms and conditions of the
Initial Option.”
     2. Section 8.1 is hereby amended in its entirety to read as follows:
     “During the period between the Commencement Date and June 30, 2008 (the
“Relocation Period”), the Company agrees to reimburse the Executive for
reasonable travel and temporary living expenses (including without limitation
housing and other transportation expenses) incurred by the Executive in
connection with his temporary living arrangements in Phoenix, Arizona and his
travel between his home in Dallas, Texas and the Company’s corporate
headquarters in Phoenix, Arizona, subject to a

 

--------------------------------------------------------------------------------

 

reasonable limit on such expenses to be mutually agreed upon by the Board and
the Executive. To the extent any payments under this Section 8.1 are taxable to
the Executive, the Company shall pay to the Executive an additional cash payment
in an amount such that the Executive will be in the same position as he would
have been had no taxes been imposed upon or incurred as a result of any payments
under this Section 8.1. Notwithstanding anything herein to the contrary, if on
or prior to June 30, 2008 the Company enters into an agreement that, if
consummated, would result in a Change of Control (as defined below), then the
Relocation Period will be automatically extended until the earlier of (A) the
date that is eight months after the consummation of the Change of Control
transaction and (B) the date that is thirty days following the date of the
Executive’s termination of employment for any reason. For the avoidance of
doubt, to the extent the Relocation Period is extended pursuant to the preceding
sentence, from and after the consummation of the Change of Control transaction
referred to therein, the Company (and any successor thereto) shall continue to
reimburse the Executive for travel and temporary living expenses pursuant to
this Section 8.1 on terms no less favorable than those agreed to by the Board
and the Executive prior to the consummation of the Change of Control, which
terms shall include, but shall not be limited to, the terms set forth in
Appendix A hereto and, to the extent not inconsistent with the Section 8.1 or
Appendix A, the CSK Auto, Inc. Relocation Policy and the Company’s travel
policy, each as in effect and applicable to the Executive prior to the Change of
Control.”
     3. Section 8.2 is hereby amended in its entirety to read as follows:
     “During the Relocation Period (including any extension thereof pursuant to
Section 8.1), the Company shall provide the Executive with an automobile
allowance of $2,000 per month. Any automobile allowance after the end of the
Relocation Period would be subject to review and approval by the Board.”
     4. Section 10.3(b)(v) is hereby amended in its entirety to read as follows:
     “the Company breaches Section 8 (or Appendix A) of this Agreement and/or
requires (A) the Executive to relocate to Phoenix, Arizona prior to the
expiration of the Relocation Period (including any extension thereof pursuant to
Section 8.1); or (B) that the Executive’s employment be based at a location
outside a 50 mile radius from the Company’s current corporate headquarters in
Phoenix, Arizona;”
     5. Section 10.3(c) is hereby amended in its entirety to read as follows:
     “If the Executive’s employment is terminated by the Company without Cause
(other than by reason of death or Disability) or if the Executive resigns for
Good Reason, in each case, other than during the period commencing upon the
consummation of a Change of Control and ending on the first anniversary thereof,
the Executive shall be entitled to receive: (i) the Accrued Rights within 7
business days following the date of such termination; (ii) subject to (A) the
Executive’s continued compliance with the provisions of Section 12 hereof and
(B) the Executive’s execution and non-revocation of a mutual release with the
Company in the form of Exhibit A attached hereto: a cash payment equal to two
times the Executive’s Base Salary as in effect upon the date the

2

--------------------------------------------------------------------------------

 

Executive’s employment was terminated (without giving effect to any reduction in
Base Salary that constituted Good Reason for such termination), payable in equal
monthly installments over a two-year period commencing with the month following
the date of such termination; and (iii) for a period of one year subsequent to
his termination, the Company shall provide the Executive (and his eligible
dependents, to the extent applicable and comparable to coverage afforded prior
to termination of employment) with continued coverage under the Company’s
medical, dental, vision and Exec-U-Care benefit plans, in each case, in
accordance with the terms thereof and with the same level of coverage (and
related cost to the Executive) as if the Executive had remained employed during
such period; at the time when the foregoing health coverage ends, at the
Executive’s election and at the Executive’s own expense, the Executive (and his
eligible dependents) shall be entitled to COBRA coverage for the full COBRA
period (18 months); provided that, in no event shall the Executive be entitled
to participation in any other employee benefit plans or arrangements or
perquisites provided by the Company from and after the date the Executive’s
employment is terminated, except as set forth herein. In addition, the Executive
shall be permitted to retain for personal use following such termination of
employment the cell phone and/or PDA and laptop computer provided to the
Executive by the Company.”
     6. Section 10.4(b) is hereby amended in its entirety to read as follows:
     “If the Executive’s employment is terminated by the Company without Cause
(other than by reason of death or Disability) or if the Executive resigns for
any reason (including Good Reason), in each case, during the period commencing
upon the consummation of a Change of Control and ending on the first anniversary
thereof, the Executive shall be entitled to receive: (i) the Accrued Rights
within 7 business days following the date of such termination; (ii) subject to
(A) the Executive’s continued compliance with the provisions of Section 12
hereof and (B) the Executive’s execution and non-revocation of a mutual release
with the Company in the form of Exhibit A attached hereto, a lump sum cash
payment equal to two times the sum of the Executive’s Base Salary and Target
Bonus, in each case as in effect upon the date the Executive’s employment was
terminated (without giving effect to any reduction in Base Salary or Target
Bonus that constituted Good Reason for such termination), payable upon the
Effective Date as defined in Section 7 of such release; and (iii) for a period
of one year subsequent to his termination, the Company shall provide the
Executive (and his eligible dependents, to the extent applicable and comparable
to coverage afforded prior to termination of employment) with continued coverage
under the Company’s medical, dental, vision and Exec-U-Care benefit plans, in
each case, in accordance with the terms thereof and with the same level of
coverage (and related cost to the Executive) as if the Executive had remained
employed during such period; at the time when the foregoing health coverage
ends, at the Executive’s election and at the Executive’s own expense, the
Executive (and his eligible dependents) shall be entitled to COBRA coverage for
the full COBRA period (18 months); provided that, in no event shall the
Executive be entitled to participation in any other employee benefit plans or
arrangements or perquisites provided by the Company from and after the date the
Executive’s employment is terminated, except as set forth herein. In addition,
the Executive shall be permitted to retain for personal use following such
termination of employment the cell phone and/or PDA and

3

--------------------------------------------------------------------------------

 

laptop computer provided to the Executive by the Company. Notwithstanding any
provision of the Company’s relocation policy to the contrary, in the event of a
termination of employment as described in this Section 10.4(b), the Executive
shall not be required to reimburse the Company for any relocation expenses
properly incurred or expended (whether pursuant to the Appendix A or otherwise),
regardless of whether the Executive’s termination of employment occurred within
one year of the date Executive commenced employment with the Company.”
     7. Section 10.4 is hereby amended to add the following new subsection
(c) after the end of the existing Section 10.4(b):
     “(c) In addition to any other payments or benefits hereunder, if a Change
of Control occurs on or prior to the end of the Company’s 2008 fiscal year and
(i) the Executive remains continuously employed by the Company or the continuing
or surviving corporation resulting from the Change of Control on a full-time
basis through the date that is six months following the consummation of the
Change of Control or (ii) the Executive’s employment with the Company is
terminated (a) by the Company without Cause or (b) by the Executive for Good
Reason, in each case before the date that is six months following the
consummation of the Change of Control, then:
     (i) if the Executive’s employment terminates prior to the end of the
Company’s 2008 fiscal year, the Company shall pay to the Executive, within
10 days following the date of such termination of employment, a gross lump sum
cash amount equal to the Executive’s Target Bonus for the 2008 fiscal year
multiplied by a fraction, (a) the numerator of which is the greater of (1) the
number of full or partial months (rounded up to the whole month) between
February 4, 2008 and the date that is six months following the consummation of
the Change of Control or (2) the number of full or partial months (rounded up to
the whole month) the Executive was employed by the Company and/or the continuing
or surviving corporation during the 2008 fiscal year, and (b) the denominator of
which is 12; provided, that the amount payable pursuant to this
Section 10.4(c)(i) shall in no event exceed 100% of the Executive’s Target Bonus
for the 2008 fiscal year; or
     (ii) if the Executive remains employed by the Company or the continuing or
surviving corporation resulting from the Change of Control through the end of
the Company’s 2008 fiscal year, the Company shall pay to the Executive, within
10 days following the end of the Company’s 2008 fiscal year, a gross lump sum
cash amount equal to the Executive’s Target Bonus for the 2008 fiscal year.”
     8. Section 12.2(a) is hereby amended in its entirety to read as follows:
     “During the Restricted Period (as defined below), the Executive shall not
become engaged in a managerial or executive capacity for, or consultant to, Auto
Zone, Inc., The Pep Boys — Manny, Moe & Jack, O’Reilly Automotive, Inc., Advance
Stores Company, Incorporated, Discount Auto Parts, Inc., any other national auto
parts and accessories

4

--------------------------------------------------------------------------------

 

retailer, any multi-state regional auto parts and accessories retailer that
competes with the Company, or any successor to any of them (each a
“Competitor”). Notwithstanding the foregoing, in the event of a Change of
Control that results in the Company (or its assets or business) being acquired
or merging with a Competitor (or subsidiary thereof), the preceding sentence
shall have no effect with respect to such Competitor.”
     9. Appendix attached to this Amendment is hereby added to the Employment
Agreement as Appendix A thereto.
     10. Except as provided for above, the provisions of the Employment
Agreement shall remain in full force and effect.
(signature page follows)

5

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date first written above.

            CSK AUTO, INC.
      By:   /s/ JAMES D. CONSTANTINE         Name:   James D. Constantine       
Title:   Executive Vice President of
Finance and Chief Financial Officer        CSK AUTO CORPORATION
      By:   /s/ JAMES D. CONSTANTINE         Name:   James D. Constantine       
Title:   Executive Vice President of
Finance and Chief Financial Officer        EXECUTIVE
        /s/ LAWRENCE N. MONDRY         Lawrence N. Mondry         

6

--------------------------------------------------------------------------------

 

         

Appendix A — Approved Relocation Expenses
Effective as of March 31, 2008, the following travel and temporary living
expense reimbursements have been approved by the Compensation Committee of the
Board of Directors of the Company and CSK Auto Corporation:

•   Temporary housing consistent with the Executive’s existing accommodations in
and around the Phoenix, Arizona metropolitan area or comparable housing in the
Executive’s sole discretion.

•   Weekly travel (such reimbursement consistent with past practices) between
Phoenix, Arizona and the Executive’s residence in Dallas, Texas.

•   Reimbursement of the cost to transport the Executive and the Executive’s
family and any and all of the Executive’s personal goods back to Dallas, Texas
following termination of your employment for any reason other than Cause.

7