Exhibit 10.32
 
EMPLOYMENT AGREEMENT
First Amendment
 
FIRST AMENDMENT, dated as of June 4, 2008 (“First Amendment”) to the EMPLOYMENT
AGREEMENT, dated as of January 7, 2008, between Advance Auto Parts, Inc.
(“Advance” or the “Company”), a Delaware corporation, and Darren R. Jackson (the
“Executive”) (the “Agreement”).
 
The Company and the Executive agree as follows:
 
1.           Amendment of Section 4(a) of the Agreement.  Effective upon
execution of this First Amendment by the Company and the Executive, Section 4(a)
of the Agreement shall be amended to provide, in the event of the Executive’s
death, for the immediate vesting of all shares of Restricted Stock granted to
the Executive after the Commencement Date of the Agreement and the immediate
exercisability of all Stock Options and Stock Appreciation Rights granted to the
Executive after the Commencement Date of the Agreement, and said Section 4(a) is
hereby deleted in its entirety and the following is inserted in lieu thereof:
 
4.           Termination of Employment.
 
(a) Death.  In the event of the death of the Executive during the Employment
Term, Executive’s employment shall be automatically terminated as of the date of
death and a lump sum amount, equivalent to the Executive’s annual Base Salary
and Target Bonus then in effect, shall be paid, within 60 days after the date of
the Executive’s death, to the Executive’s designated beneficiary, or to the
Executive’s estate or other legal representative if no beneficiary was
designated at the time of Executive’s death.  In the event of the death of the
Executive during the Employment Term, the shares of Restricted Stock granted
pursuant to Section 3(c)(i) of this Agreement shall vest immediately and the
Stock Appreciation Rights granted pursuant to Section 3(c)(ii) of this Agreement
shall become exercisable upon the date of the Executive’s death for all of the
SARs if not then exercisable in full.  In the event of the death of the
Executive during the Employment Term, any shares of Restricted Stock granted to
the Executive after the Commencement Date of this Agreement shall vest
immediately and all Stock Options or Stock Appreciation Rights granted to
Executive after the Commencement Date of this Agreement shall become exercisable
upon the date of the Executive’s death for all such Stock Options and Stock
Appreciation Rights if not then exercisable in full.  The foregoing benefit will
be provided in addition to any death, disability or other benefits provided
under the Company’s benefit plans and programs in which the Executive was
participating at the time of his death.  Except in accordance with the terms of
the Company’s benefit programs and other plans and programs then in effect
(including the 2004 LTIP or any successor plan thereto, as it relates to the
equity grants referenced in Section 3(c)
 

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hereof), after the date of Executive’s death, Executive shall not be entitled to
any other compensation or benefits from the Company or hereunder.
 
 
2.           Amendment of Section 4(b) of the Agreement.  Effective upon
execution of this First Amendment by the Company and the Executive, Section 4(b)
of the Agreement shall be amended to provide, in the event of Executive’s
Disability, for the payment of the Executive’s Target Bonus amount, as that term
is defined in the Agreement, for the immediate vesting of all shares of
Restricted Stock granted to the Executive after the Commencement Date of the
Agreement, and for the immediate exercisability of all Stock Options and SARs
granted to the Executive after the Commencement Date of the Agreement, and said
Section 4(b) is hereby deleted in its entirety and the following is inserted in
lieu thereof:
 
4.           Termination of Employment.
 
(b)  Disability.  In the event of the Executive’s Disability as hereinafter
defined, the employment of the Executive may be terminated by the Company,
effective upon the Disability Termination Date (as defined below).  In such
event, the Company shall pay the Executive an amount equivalent to thirty
percent (30%) of the Executive’s Base Salary for a one year period, which amount
shall be paid in one lump sum within forty-five days following the Executive’s
“separation from service,” as that term is defined in Section 409A of the Code
and regulations promulgated thereunder, from the Company (his “Separation From
Service”), provided that the Executive or an individual duly authorized to
execute legal documents on the Executive’s behalf executes and does not revoke
within any applicable revocation period the release described in Section
4(j)(ii)(B).  The Company shall also pay to the Executive a lump sum amount
equivalent to the Executive’s Target Bonus Amount then in effect, which amount
shall be paid in one lump sum within forty-five days following the Executive’s
Separation from Service, provided that the Executive or an individual duly
authorized to execute legal documents on the Executive’s behalf executes and
does not revoke within any applicable revocation period the release described in
Section 4(j)(ii)(B).  In the event of the Executive’s Disability during the
Employment Term, the shares of Restricted Stock granted pursuant to Section
3(c)(i) of this Agreement shall vest immediately upon the date of the
Executive’s Separation from Service and the Stock Appreciation Rights granted
pursuant to Section 3(c)(ii) of this Agreement shall become exercisable upon the
date of the Executive’s Separation from Service for all of the SARs if not then
exercisable in full.  In the event of the Executive’s Disability during the
Employment Term, any shares of Restricted Stock granted to the Executive after
the Commencement Date of this Agreement shall vest immediately upon the date of
the Executive’s Separation from Service and all Stock Options or Stock
Appreciation Rights granted to the Executive
 

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after the Commencement Date of this Agreement shall become exercisable upon the
date of the Executive’s Separation from Service for all such Stock Options and
Stock Appreciation Rights if not then exercisable in full.  The foregoing
benefit will be provided in addition to any disability or other benefits
provided under the Company’s benefit plans in which the Executive
participates.  The purpose and intent of the preceding two sentences is to
ensure that the Executive receives a combination of insurance benefits and
Company payments following the Disability Termination Date equal to 100% of his
then-applicable Base Salary for such one-year period.  Otherwise, after the
Disability Termination Date, except in accordance with the Company’s benefit
programs and other plans then in effect, Executive shall not be entitled to any
compensation or benefits from the Company or hereunder.
 
“Disability,” for purposes of this Agreement, shall mean the Executive’s
incapacity due to physical or mental illness causing the Executive’s complete
and full-time absence from the Executive’s duties, as defined in Paragraph 2,
for either a consecutive period of more than six months or at least 180 days
within any 270-day period.  Any determination of the Executive’s Disability made
in good faith by the Company shall be conclusive and binding on the Executive,
unless within 10 days after written notice to Executive of such determination,
the Executive elects by written notice to the Company to challenge such
determination, in which case the determination of Disability shall be made by
arbitration pursuant to Paragraph 10 below.  Except as provided in this
Subsection 4(b), the Company shall not be required to provide the Executive any
compensation or benefits after the determination by the Company unless the
arbitration results in a determination that the Executive is not disabled, in
which case the Company shall pay to the Executive within 10 days after such
arbitration decision all compensation due through the date of such arbitration
decision.  The Company shall not be deemed to have breached its obligations
related to such compensation and benefits under this Agreement if it makes such
payment within 10 days after such arbitration decision.  The “Disability
Termination Date” shall be the date on which the Company makes such
determination of the Executive’s Disability unless the arbitration, if any,
results in a determination that the Executive is not disabled.  The Executive
shall have a legally binding right to the disability salary continuation benefit
as of the Disability Termination Date.
 

3.           Amendment of Section 4(f) of the Agreement.  Effective upon
execution of this First Amendment by the Company and the Executive, Section 4(b)
of the Agreement shall be amended by adding a new section 4(f)(v)(F), which
shall read its entirety as follows:
 

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(F)  All Gross-Up Payments, including any additional Gross-Up Payments under
Section 4(f)(v)(C) and (E), shall be made to the Executive by the end of the
calendar year next following the year in which the Executive remits the related
taxes to the relevant Taxing Authorities.  Payment pursuant to Section
4(f)(v)(E) of amounts indemnifying the Executive against any loss in connection
with, and all costs and expenses which may be incurred as a result of
contesting, a claim made against the Executive by a Taxing Authority, shall be
made to the Executive by the end of the calendar year following the year in
which the taxes which are the subject of the claim are remitted to the relevant
Taxing Authority, or where, as a result of the claim, no taxes are remitted, by
the end of the calendar year following the year in which there is a final
nonappealable settlement or other resolution of the claim.

 
4.           Amendment of Section 18(f) of the Agreement.  Effective upon
execution of this First Amendment by the Company and the Executive, Section 4(b)
of the Agreement shall be amended by revising section 18(f) to clarify that the
covenants not to compete applies only to businesses or divisions of
multi-division business that derives more than 15% of its revenues from the
Restricted Activities and which shall now read in its entirety as follows:

(f)           Covenants Not to Compete.
 
(i) Non-Competition.  Executive covenants and agrees that during the period from
the date hereof until, two (2) years immediately following the termination, for
any reason, of Executive’s employment with the Company (the “Non-Compete
Period”),  Executive will not, directly or indirectly:
 
(A) own or hold, directly or beneficially, as a shareholder (other than as a
shareholder with less than 5% of the outstanding common stock of a publicly
traded corporation), option holder, warrant holder, partner, member or other
equity or security owner or holder of any company or business that derives more
than 15% of its revenue from the Restricted Activities (as defined below) within
the Restricted Area (as defined below), or any company or business controlling,
controlled by or under common control with any company or business directly
engaged in such Restricted Activities within the Restricted Area (any of the
foregoing, a “Restricted Company”) or
 
(B) engage or participate as an employee, director, officer, manager, executive,
partner, independent contractor, consultant or technical or business advisor (or
any foreign equivalents of the foregoing) with any Restricted Company in the
Restricted Activities within the Restricted Area.
 

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(ii) Restricted Activities/Restricted Area.  For purposes of this Agreement, the
term “Restricted Activities” means the retail, wholesale or commercial sale of
aftermarket auto parts and accessories.  The term “Restricted Area” means the
United States of America, including its territories and possessions.
 
(iii) Association with Restricted Company.  In the event that the Executive
intends to associate (whether as an employee, consultant, independent
contractor, officer, manager, advisor, partner, executive or director) with any
Restricted Company during the Non-Compete Period, the Executive must provide
information in writing to the Company relating to the activities proposed to be
engaged in by the Executive for such Restricted Company.  All such current
associations are set forth on Exhibit B to this Agreement.  In the event that
the Company consents in writing to the Executive’s engagement in such activity,
the engaging in such activity by the Executive shall be conclusively deemed not
to be a violation of this Subsection 18(f).  Such consent is not intended and
shall not be deemed to be a waiver or nullification of the covenant of
non-competition of the Executive or other similarly bound executives.
 
(iv) Permitted Employment with Multi-Division Company.  Nothing in this
Subsection 18(f) shall preclude the Executive from accepting employment with a
multi-division company so long as (A) the Executive’s employment is not within a
division of the new employer that engages in and derives more than 15% of its
revenues from the Restricted Activities within the Restricted Area, (B) during
the course of such employment, the Executive does not communicate related to
Restricted Activities with any division of Executive’s new employer that is
engaged in and derives more than 15% of its revenues from the Restricted
Activities within the Restricted Area and (C) the Executive does not engage in
the Restricted Activities within the Restricted Area.
 

5.           Addition of New Section 21 to the Agreement.  Effective upon
execution of this First Amendment by the Company and the Executive, the
Agreement shall be amended by adding a new section 21, which shall read its
entirety as follows:

 
21.           Accelerated Vesting of Equity Awards Upon Change In Control.  In
the event of a Change in Control as defined hereinabove, the restrictions and
deferral limitations applicable to any Restricted Stock or any Other Stock Unit
Awards granted to the Executive shall lapse and such Restricted Stock or Other
Stock Unit Awards shall become fully vested and transferable to the full extent
of the original grant as of the date such Change In Control is determined to
have occurred; and any Stock Options or SARs granted to the Executive that are
outstanding as of the date of such Change In Control shall become fully
exercisable and vested
 

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to the extent of the original grant as of the date such Change In Control is
determined to have occurred.
 

 
6.           Full Force and Effect.   Except for those terms and provisions
amended herein, all other terms and conditions in the Agreement shall remain
unchanged and in full force and effect.
 

 
[SIGNATURE PAGE FOLLOWS]
 

 
 

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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of
the date first written above.
 
 

Advance Auto Parts, Inc.              By:    (SEAL)             Print Name:     
          Title:                  Address:           

 
 

Executive              Print Name:  Darren Jackson              Signature:     
            Address: