Execution Copy


 

Exhibit 10.1

AGREEMENT

__________________________





THIS AGREEMENT entered into this day of 19th day of October,
2000, by and between AutoZone, Inc., a Nevada corporation and its various
subsidiaries (collectively, "AutoZone"), and John C. Adams, Jr., an individual
(the "Employee"), effective the Effective Date (as defined below) ("Agreement").
As in the preceding sentence, terms in this Agreement that begin with initial
capital letters have the meaning set forth in this Agreement.

        WHEREAS, the Employee currently
serves as the Chairman of AutoZone's Board of Directors (the "Board"),
and as AutoZone's Chief Executive Officer ("CEO"),

        WHEREAS, the Parties have
previously entered into an Amended and Restated Employment Agreement and
Non-Compete Agreement dated August 31, 1999, and desire that such agreement
become null and void and be replaced by this Agreement.

        WHEREAS, the parties mutually
desire to initiate a succession process under which the Employee may resign
from his position as CEO, but remain in AutoZone's service in accordance
with the terms and conditions of this Agreement, and

        WHEREAS, the parties desire
by this writing to set forth the employment relationship of AutoZone and
the Employee during the period of this Agreement.

        NOW, THEREFORE, it is AGREED
as follows:

        1.    
Employment. On the Effective Date, the Employee shall resign from
his position as AutoZone's CEO, and shall thereafter serve on a full-time
basis as AutoZone's Chairman of the Board ("Chairman") subject to the terms
and conditions of this Agreement. The Employee shall render such administrative
and management services for AutoZone as are customarily performed by persons
performing similar duties for other publicly held companies. The Employee's
other duties shall be such as the Board may from time to time reasonably
direct.

        2.    
Term. This Agreement shall be effective upon the election of the
new CEO ("Effective Date") and shall continue in effect for five years
after the Effective Date. The date that is five years after AutoZone elects
a new Chief Executive Officer shall be the "Expiration Date" for purposes
of this Agreement.

        3.    
Base Salary.Effective as of August 27, 2000, AutoZone agrees to
pay the Employee a salary at the rate of $575,000 per annum (retroactive
to August 27, 2000, after the execution of this Agreement) payable in cash
at the same time and in the same manner as AutoZone pays its other executive
employees ("Base Salary"). The Board shall review the rate of the Employee's
Base Salary not less often than annually, and in its sole discretion may
decide to increase his Base Salary.

        4.    
Annual Cash Bonuses. So long as Employee shall remain Chairman,
the Employee shall participate in all cash bonus and incentive plans in
a manner consistent with other executive officers of AutoZone, and shall
participate in AutoZone's long-term cash bonus plan (if one exists) in
a manner and at levels consistent with other executive officers. If at
any time during the Term Employee ceases to be Chairman, Employee shall
not be eligible, except as may be otherwise provided for in Paragraph 9
of this Agreement, to receive any further bonus payments or other types
of incentive compensation. No other compensation provided for in this Agreement
shall be deemed a substitute for the Employee's right to receive such bonuses.

        5.    
Stock Options; Other Benefits; Loans from AutoZone.

              
(a) Stock Options. The Employee shall be entitled to receive a stock
option grant with respect to the fiscal year ending August 26, 2000, in
accordance with grants (if any) made to other executive officers of AutoZone
for performance in fiscal year 2000 subject to substantially the same terms
and conditions as grants made to other executive officers for the same
period of time, and the Employee shall be treated equitably with other
senior officers. The Employee shall thereafter not be entitled to additional
stock option grants pursuant to this Agreement. No other compensation provided
for in this Agreement shall be deemed a substitute for the Employee's right
to receive the stock option grant referenced herein. Any stock options
that the Employee holds on the Effective Date or thereafter receives as
a new grant shall remain exercisable in accordance with the terms and conditions
of the various stock option agreements entered into by AutoZone and Employee.
In the event of any "Corporate Transaction," as currently defined in the
AutoZone, Inc. Second Amended and Restated Stock Option Plan, as in effect
on the Effective Date, at any time between the Effective Date and the Expiration
Date, any unexercised stock options that the Employee has not exercised
shall be equitably adjusted in a manner similar to adjustments (if any)
that are made with respect to stock options held by other executive
officers of AutoZone under that stock option plan.

            (b)
Participation in Retirement, Medical and Other Plans. During the
Term of this Agreement, the Employee shall be eligible to participate in
employee benefit plans maintained by AutoZone in the same manner as other
employees of AutoZone.

            (c)
Other Employee Benefits; Expenses. So long as Employee remains Chairman,
the Employee shall be eligible to participate in any fringe benefits which
are or may become available to AutoZone's executive officers, including
for example any benefits which are commensurate with the responsibilities
and functions to be performed by the Employee under this Agreement. The
Employee shall be reimbursed for all reasonable out-of-pocket business
expenses which he shall incur in connection with his services under this
Agreement upon substantiation of such expenses in accordance with the policies
of AutoZone.

            (d)
Loans from AutoZone. Any loan that the Employee has received from
AutoZone shall become due and payable in accordance with the terms and
conditions of such loans, although the Employee may at any time repay any
or all loans without penalty.

    6.     Loyalty; Non-competition.

            (a).
Non-Compete. Employee agrees that he will not, for the period commencing
on the date of this Agreement and ending on the Expiration Date 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 of this Agreement,. (herein called "Competitor"), as an
employee, director, consultant, beneficial or record owner, partner, joint
venturer, officer or agent of the Competitor. Competitor shall mean any
entity of any kind which is engaged in any manner in the same business
or substantially the same business as that of AutoZone; or any entity of
any kind which has any organizational unit, part, subpart, subsidiary or
affiliate engaged in the same or substantially the same business as that
of AutoZone. Employee and AutoZone expressly agree that the wholesale distribution
of automotive parts through a network of "jobbers" or through company-owned
or company-controlled outlets such as Genuine Parts - NAPA shall be a "Competitor".
Provided, however, 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. By way of
illustration and not limitation, "Competitor" is consequently intended
to include (i) all public or independently owned automotive parts and automotive
accessory specialty retailing chains such as, for example, Pep-Boys, Advance,
and O'Reilly's; (ii) all chains with divisions or subsidiaries selling
automotive parts and automotive accessories from separate business units
(iii) all wholesalers of automotive parts or automotive accessories such
as Genuine Parts - NAPA; and (iv) all other retail businesses with sales
of automotive parts and/or automotive "accessories exceeding either of
the minimum sales volume limitations set forth in clauses (a) or (b) of
this paragraph. 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. If at any time 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 Term.

            (b)
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.

            (c)
Loyalty. During the term of this Agreement, the Employee will except for
illnesses, reasonable vacation periods, and reasonable leaves of absence,
devote all his full business time, attention, skill, and efforts to the
faithful performance of his duties hereunder; provided, however, from time
to time, the Employee may serve on the boards of directors of, and hold
any other offices or positions in, companies or organizations, which will
not present any conflict of interest with AutoZone or any of its subsidiaries
or affiliates, or unfavorably affect the performance of the Employee's
duties pursuant to this Agreement, or will not violate any applicable statute
or regulation. "Full business time" is hereby defined as that amount of
time usually devoted to like companies by similarly situated employee officers.
During the term of his employment under this Agreement, the Employee shall
not engage in any business or activity contrary to the business affairs
or interests of AutoZone.

            (d)
Nothing contained in this Section shall be deemed to prevent or limit the
Employee's right to invest in the capital stock or other securities of
any business dissimilar from that of AutoZone, and not otherwise in violation
of this Agreement.

    7.     Standards. The
Employee shall perform his duties under this Agreement in accordance with
such reasonable standards as the Board may establish from time to time.
AutoZone will provide the Employee with the working facilities and staff
customary for similar Employees and necessary for him to perform his duties.

    8.     Vacation and Sick Leave.
At such reasonable times as the Board shall in its discretion permit, the
Employee shall be entitled, without loss of pay, to absent himself voluntarily
from the performance of his employment under this Agreement, all such voluntary
absences to count as vacation time, provided that:

            (a)
The Employee shall be entitled to an annual vacation in accordance with
the policies that the Board periodically establishes for executive officers
of AutoZone.

            (b)
The Employee shall not receive any additional compensation from AutoZone
on account of his failure to take a vacation or sick leave, and the Employee
shall not accumulate unused vacation leave from one fiscal year to the
next, except in either case to the extent authorized by the Board.

    9.     Termination as Chairman.
The Employee's services as Chairman of the Board may be terminated under
the following circumstances:

            (a)
Death. The Employee's employment under this Agreement shall terminate upon
his death during the Term of this Agreement, in which event the Employee's
estate shall be entitled (i) to receive a lump sum payment equal to the
total Base Salary that the Employee would have collected if he had lived
until the Agreement's Expiration Date plus a prorated bonus for a partial
year if Employee is Chairman at the time of his death (calculated in accordance
with Paragraph 9(c)), and (ii) to exercise any stock options in accordance
with the terms and conditions of the various stock option agreements between
the Employee and AutoZone.

            (b)
Just Cause. The Board may, by written notice to the Employee, immediately
terminate his employment at any time, for "Cause" which shall mean, in
the good faith determination of the Board, the Employee's willful engagement
in conduct which (i) is demonstrably or materially injurious to AutoZone,
monetarily or otherwise, and (ii) if reasonably capable of being cured,
is not cured by the Employee within 10 days after the Board provides him
with a detailed notice of the conduct that is considered to be grounds
for a determination of Cause. No act, or failure to act, on the Employee's
part shall be considered "willful" unless he has acted, or failed to act,
with an absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of AutoZone. The Employee
shall have no right to earn additional compensation or benefits for any
period after his termination for Cause, but shall receive his compensation,
vested rights and employee benefits up to the date of his termination and
any and all stock options shall be governed by the terms and conditions
of such agreements.

            (c)
Without Just Cause. The Board may terminate the Employee's services
as Chairman for any reason other than Cause, as of any annual stockholders
meeting that follows the Board's delivery of at least 90 days' advance
written notice to the Employee. Notwithstanding the previous sentence,
the Board may terminate the Employee's services as Chairman of the Board
within 90 days after the election of a new CEO by written notice to the
Employee. Upon the termination of Employee's services as Chairman, Employee
shall remain an employee of AutoZone until the Expiration Date available
to perform such services as requested by the Board. In the event of Employee's
services as Chairman being terminated without Cause in accordance with
this paragraph, Employee shall be entitled to receive the following cash
payments and benefits:

(i) The Base Salary, as stated in Section 3 of this Agreement through
the Expiration Date.
(ii) A cash payment,

 

(a) if the Employee's services as Chairman terminates before August
26, 2001, in an amount equal to the average of the Bonus Percentage paid
to the five highest-paid officers of AutoZone (excluding Employee) for
the fiscal year ending on that date, multiplied by the Base Salary paid
to Employee for that full fiscal year, or
 




(b) if Employee's services as Chairman terminate after August 26, 2001,
in an amount calculated by multiplying the average of the Bonus Percentage
paid to the five highest-paid officers of AutoZone (excluding Employee)
for that fiscal year, times the actual Base Salary paid to Employee from
the beginning of the fiscal year until the date his services as Chairman
are terminated.
 

 





This cash payment shall be paid when other officer bonuses are paid for
that fiscal year. "Bonus Percentage" as used in this section shall mean
the percentage of the maximum obtainable bonus paid to an executive officer.
 



(iii) Credit under AutoZone's supplemental retirement plan equal to any
pension years of service accruals that the Employee would have earned under
any qualified or supplemental retirement plans of AutoZone (in existence
on the Effective Date) if his service as Chairman had continued until the
Expiration Date.,
 



(iv) Administrative assistance, at levels comparable to those in effect
on the Effective Date, for the six-month period after his services as Chairman
end.
 



(v) Such other benefits as employees of AutoZone are entitled to receive
except as may be otherwise set forth in this Agreement.
 

 



Any amounts payable to the Employee pursuant to clause (i) of the preceding
subsection shall be paid to him in periodic payments through the Expiration
Date and any payments due under clauses (ii) or (iii) shall be paid to
the Employee when such amounts are customarily paid.

            (e)
Voluntary Termination by Employee. The Employee may voluntarily
terminate his services as Chairman with AutoZone during the term of this
Agreement at any time after 2 years after the Effective Date, upon at least
90 days' prior written notice to the Board, in which case the Employee
shall remain an employee of the Company available to perform such services
as requested by the Board until the Expiration Date. Employee shall continue
to receive the Base Salary and such other benefits as other employees of
AutoZone are entitled to receive until the Expiration Date except as may
be otherwise set forth in this Agreement. Upon the termination of Employee's
services as Chairman, Employee shall remain an employee of AutoZone available
to perform such services as requested by the Board. If Employee's services
as Chairman terminate pursuant to this paragraph (e), AutoZone shall pay
Employee a prorated bonus for the fiscal year in which his services as
Chairman are terminated calculated in accordance with the formula stated
in section 9(c)(ii)(b) of this Agreement. The bonus shall be paid when
other officer bonuses are paid for that fiscal year.
    10.     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.

    11.    Indemnification. Employee shall
be indemnified while serving as Chairman to the same extent and in the
same manner as other officers of AutoZone.

    12.     Reimbursement for
Enforcement Proceedings. In the event that any dispute arises during
or after the term of this Agreement between the Employee and AutoZone as
to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, the prevailing party shall be reimbursed
from the losing party for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the prevailing party obtains either a written settlement or a final
judgement by a court of competent jurisdiction substantially in his or
its favor. Such reimbursement shall be paid within ten days of the prevailing
party furnishing to the other party written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs
or expenses incurred by the prevailing.

    13.     Federal Income Tax
Withholding. AutoZone shall withhold all federal and state income or
other taxes from any benefit payable under this Agreement as shall be required
pursuant to any law or government regulation or ruling.

    14.     Successors and Assigns.

            (a)
AutoZone. This Agreement shall not be assignable by AutoZone, provided
that this Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of AutoZone which shall acquire, directly
or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of AutoZone, as the case may be.

            (b)
Employee. Since AutoZone is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the
written consent of AutoZone; provided, however, that nothing in this paragraph
shall preclude (i) the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or (ii) the executors, administrators,
or other legal representatives of the Employee or his estate from assigning
any rights hereunder to the person or persons entitled thereunto.

            (c)
Attachment. Except as required by law, no right of the Employee
to receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge,
or hypothecation or to exclusion, attachment, levy or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary,
to effect any such action shall be null, void and of no effect.

            (d)
Continuing Effect. The parties mutually agree and recognize that
any provision of this Agreement that has potential effect beyond the term
of this Agreement shall survive its expiration and remain fully enforceable.

    15.     Amendments.
No amendments or additions to this Agreement shall be binding unless made
in writing and signed by all of the parties, except as herein otherwise
specifically provided.

    16.     Applicable Law.
Except to the extent preempted by Federal law, the laws of the State of
Tennessee shall govern this Agreement in all respects, whether as to its
validity, construction, capacity, performance or otherwise.

    17.    Severability.
The provisions of this Agreement shall be deemed severable and the invalidity
or unenforceability of any provision shall not affect the validity or enforceability
of the other provisions hereof.

    18.     Entire Agreement.
On the Effective Date, this Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto and shall supersede
any prior agreement between the parties and the Amended and Restated Employment
and Non-Compete Agreement dated as of August 31, 1999, and all previous
employment and non-compete agreements between Employee and AutoZone shall
be null and void and of no further effect.


< signature page follows >























IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first hereinabove written.

                                         
                                          
                                
AUTOZONE, INC.

Witnessed by:

    /s/ Donald R. Rawlins                                   
                                          
  
By:     /s/ Robert J. Hunt

    Asst. Secretary                                    
                                          
           
Title:  EVP-CFO

                                          
                                          
                               
By:     /s/ Harry L. Goldsmith

                                         
                                          
                                
Title:  Sr. V.P. & General Counsel

                                         
                                          
                                
EMPLOYEE

Witnessed by:

        /s/ Harry L. Goldsmith                               
                                          
/s/  John C. Adams, Jr.

                                         
                                          
                                
John C. Adams, Jr.