Document:

exv10w3

Exhibit 10.3

Page 1 of 8

2009 Performance Share Award

PERFORMANCE SHARE AGREEMENT

UNDER THE

PINNACLE WEST CAPITAL CORPORATION

2007 LONG-TERM INCENTIVE PLAN

     THIS AWARD AGREEMENT is made and entered into as of                                         2009 (the “Date of
Grant”), by and between Pinnacle West Capital Corporation (the “Company”), and
                                        (“Employee”).

BACKGROUND

	A.	 	The Board of Directors of the Company has adopted, and the Company’s shareholders have
approved, the Pinnacle West Capital Corporation 2007 Long-Term Incentive Plan (the “Plan”),
pursuant to which Performance Share Awards may be granted to employees of the Company and its
Subsidiaries and certain other individuals.
	 
	B.	 	The Company desires to grant to Employee a Performance Share Award under the terms of the
Plan. 
	 
	C.	 	Pursuant to the Plan, the Company and Employee agree as follows:

AGREEMENT

	 	1.	 	Grant of Award. Pursuant to action of the Committee, which was taken
on the Date of Grant, the Company grants to Employee                                         (___) Performance
Shares and Dividend Equivalents. The Performance Shares granted under this Section 1
are referred to in this Award Agreement as the “Base Grant.”
	 
	 	2.	 	Award Subject to Plan. This Performance Share Award is granted under
and is expressly subject to all of the terms and provisions of the Plan, which terms
are incorporated herein by reference, and this Award Agreement.
	 
	 	3.	 	Performance Period. The Performance Period for this Award begins
January 1, 2009 and ends December 31, 2011.
	 
	 	4.	 	Payment.

	 	(a)	 	Performance Shares Payable In Stock. As soon as
practicable in the fiscal year immediately following the end of the
Performance Period, the Company will determine (i) the Company’s Earnings Per
Share Growth Rate (as defined herein) as compared to the Earnings Per Share
Growth Rates of the companies in the S&P 1500 Super Composite Electric Utility
Index (the “Growth Index”) over the Performance Period and (ii) the Company’s Average Performance with respect to the
Performance Metrics (as defined herein). The Company will then deliver to
Employee one (1) share of the Company’s Stock for each then-outstanding
Performance Share under this Award Agreement, subject to adjustment pursuant
to Section 5 below. The Company anticipates that the Stock payout, if
any, related to the Company’s Earnings Per Share Growth Rate will be made on
or about April 1, 2012. The Company anticipates that the Stock payout, if
any, 

 

 

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	 	 	 	related to the Performance Metrics will be made on or about November 30,
2012. In no event will the Stock payouts described in this Subsection
5(a) be made later than December 31, 2012.
	 
	 	(b)	 	Retirement. In the case of Employee’s Retirement (as
defined herein) during the Performance Period, Employee shall be deemed to
have been employed by the Company through the end of the Performance Period
and Employee will receive the Stock and Dividend Equivalents, if any, to which
Employee is entitled at the time specified in this Section. For purposes of
this Award Agreement, “Retirement” means a termination of employment
which constitutes an “Early Retirement” or a “Normal
Retirement” under the Pinnacle West Capital Corporation Retirement Plan.
	 
	 	(c)	 	Dividend Equivalents. In satisfaction of the
Dividend Equivalent Award made pursuant to Section 1, at the time of
the Company’s delivery of Stock to Employee pursuant to
Subsection 4(a) above, the Company also will deliver to Employee a
cash payment equal to the amount of dividends, if any, declared on the number
of shares of Stock equal to the number of shares of Stock delivered to
Employee from the Date of Grant to the date of the payment, plus interest on
such amount at the rate of 5% percent, compounded quarterly, as determined
pursuant to the Plan.

	 	5.	 	Performance Criteria and Adjustments.

	 	(a)	 	Adjustment of Base Grant for Earnings Per Share Growth
Rate. Fifty percent (50%) of the Base Grant will increase or decrease
based upon the Company’s “Earnings Per Share Growth Rate” as compared to the
Earnings Per Share Growth Rates of the companies in the Growth Index during
the Performance Period, as follows:

	 	 	 
	If the Company’s Earnings Per Share	 	 
	Compound Growth Rate Over The	 	 
	Performance Period As Compared to the	 	The Number of 
	Earnings Per Share Growth Rates of the	 	 Performance Shares
	Companies in the Growth Index is:	 	will be:
	75th Percentile

	 	.75 X Base Grant
	50th Percentile

	 	0.5 X Base Grant
	25th Percentile

	 	0.25 X Base Grant
	Less than 25th Percentile

	 	None

     If intermediate percentiles are achieved, the number of Performance Shares awarded will be prorated
(partial shares will be rounded down to the nearest whole share when applicable). For example, if
the Company’s Earnings Per Share Growth Rate during the Performance Period places the Company’s
performance in the 60th percentile, then the number of Performance Shares would be increased to
0.60 (0.5 X 60/50) multiplied by the Base Grant. In no event will Employee be entitled to receive
a number of Performance Shares pursuant to this Subsection 5(a) greater than .75 times the
Base Grant, even if the Company’s Earnings Per Share Growth Rate during the Performance Period
places the Company’s performance higher than the 75th percentile.

 

 

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	 	(b)	 	Adjustment of Base Grant for Performance Metrics.
Fifty percent (50%) of the Base Grant will increase or decrease based upon the
Company’s “Average Performance” with respect to the “Performance Metrics,” as
follows:

	 	 	 
	 	 	The Number of
	 	 	Performance Shares will
	If the Company’s Average Performance is:	 	be:
	 
	75th Percentile

	 	.75 X Base Grant
	50th Percentile

	 	0.5 X Base Grant
	25th Percentile

	 	0.25 X Base Grant
	Less than 25th Percentile

	 	None

     If intermediate percentiles are achieved, the number of Performance
Shares awarded pursuant to this Subsection 5(b) will be prorated
(partial shares will be rounded down to the nearest whole share when
applicable). For example, if the Company’s Average Performance during the
Performance Period places the Company’s performance in the 60th percentile,
then the number of Performance Shares would be increased to .60 (0.5 X
60/50) multiplied by the Base Grant. In no event will Employee be entitled
to receive a number of Performance Shares pursuant to this Subsection
(b) greater than .75 times the Base Grant, even if the Company’s Average
Performance during the Performance Period places the Company’s performance
higher than the 75th percentile.

	 	6.	 	Definitions.

	 	(a)	 	Earnings Per Share Growth Rate. “Earnings Per
Share Growth Rate” for the Performance Period is the compounded
annual-growth rate (“CAGR”) of a company’s earnings per share from
continuing operations, on a fully diluted basis, during the Performance Period;
provided, however, that for purposes of calculating the Company’s Earnings Per
Share Growth Rate, SunCor Development Company’s earnings or losses will be
disregarded for each fiscal year during the Performance Period. Only those
companies that were included in the Growth Index in each of the years of the
Performance Period will be considered. The Earnings Per Share Growth Rates of
the companies in the Growth Index will be determined using an independent third
party data system. If the Growth Index is discontinued, the Committee shall
select the most comparable index then in use for the sector comparison. In
addition, if the sector comparison is no longer representative of the Company’s
industry or business, the Committee shall replace the Growth Index with the
most representative index then in use. Once the CAGR of the Company and all
relevant companies in the Growth Index have been determined, the member
companies will be ranked from greatest to least CAGR. Percentiles will be
calculated based on a company’s relative ranking. For example, company 1 out
of 26 companies is given a percentile of 96.2% (1.0 — 1/26). Percentiles will
be carried out to one (1) decimal place. If the Company is not in the Growth
Index, then its percentile will be interpolated between the companies listed in
the relative ranking. These calculations will be verified by the Company’s
internal auditors.

	 	(b)	 	Performance Metrics. The “Performance Metrics”
for the Performance Period are (i) the JD Power Residential Survey for
investor-owned utilities in the Western Region; (ii) the System Average
Interruption Frequency Index (Major

 

 

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	 	 	 	Events Excluded) (“SAIFI”); (iii) Arizona Public Service Company’s
customer to employee improvement ratio; (iv) the OSHA rate (All Incident
Injury Rate); (v) nuclear capacity factor; and (vi) coal capacity factor.

	 	(1)	 	With respect to the Performance Metric
described in clause (i) of this Subsection 6(b), the JD
Power Residential Survey will provide data on an annual basis
reflecting the Company’s percentile ranking, relative to other
participating companies.
	 
	 	(2)	 	With respect to the Performance Metric
described in clause (ii) of this Subsection 6(b), the
Edison Electric Institute (“EEI”) will provide on an annual
basis the quartile rankings (or percentile rankings, if available)
associated with the SAIFI result of the participating companies; the
Company will determine its SAIFI result for the year in question and
determine its quartile ranking (or percentile ranking, if percentile
rankings are available) based on the information provided by EEI.
	 
	 	(3)	 	With respect to the Performance Metric
described in clause (iii) of this Subsection 6(b), SNL,
an independent third party data system, will provide data on an annual
basis regarding the customer and employee counts; the Company will use
its customer and employee counts for the year in question and determine
its percentile ranking based on the information provided by SNL. Only
those companies whose customers and employees were included in the data
provided by SNL in each of the years of the Performance Period will be
considered.
	 
	 	(4)	 	With respect to the Performance Metric
described in clause (iv) of this Subsection 6(b), EEI
will provide data on an annual basis regarding the OSHA rate of the
participating companies; the Company will calculate its OSHA rate for
the year in question and determine its percentile ranking based on the
information provided by EEI.
	 
	 	(5)	 	With respect to the Performance Metric
described in clause (v) of this Subsection 6(b), SNL
will provide data on an annual basis regarding the nuclear capacity
factors of the participating nuclear plants; the Company will calculate
its nuclear capacity factor for the year in question and determine its
percentile ranking based on the information provided by SNL. Only those
plants that were included in the data provided by SNL in each of the
years of the Performance Period will be considered.
	 
	 	(6)	 	With respect to the Performance Metric
described in clause (vi) of this Subsection 6(b), SNL
will provide data on an annual basis regarding the coal capacity
factors of the participating coal plants; the Company will calculate
its coal capacity factor for the year in question and determine its
percentile ranking based on the information provided by SNL. Only those
plants that were included in the data provided by SNL in each of the
years of the Performance Period will be considered.
	 
	 	(7)	 	The Company’s percentile ranking during the
Performance Period for each Performance Metric will be the average of
the Company’s percentile ranking for each Performance Metric during
each of the three years of the

 

 

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	 	 	 	Performance Period (each, an “Average Performance Metric”);
provided, however, that if a Performance Metric for 2011 is not
calculable by December 15, 2012, the Performance Metric shall consist
of the three most recent years for which such Performance Metric is
calculable. The Company’s “Average Performance,” for purposes
of determining any Base Grant adjustments pursuant to Subsection
5(b) above will be the average of the Average Performance Metrics.
If only quartile, rather than percentile, rankings are available for
a particular Performance Metric, the Average Performance Metric for
any such Performance Metric shall be expressed as a percentile. For
example, if the Performance Metric was in the top quartile for two
Performance Periods and in the lowest quartile in the other
Performance Period, the average of these quartiles would be 3 (the
average of 4, 4, and 1) and the Average Performance Metric would be
the 75th percentile (3 /4). The calculations in this
Subsection 6(b)(7) will be verified by the Company’s internal
auditors.
	 
	 	(8)	 	If either EEI or SNL discontinues providing the
data specified above, the Committee shall select a data source that, in
the Committee’s judgment, will provide data most comparable to the data
provided by EEI or SNL, as the case may be. If the JD Power
Residential Survey for investor-owned utilities in the Western Region
(or a successor JD Power survey) is not available during each of the
years of the Performance Period, the Performance Metric associated with
the JD Power Residential Survey (Subsection 6(b)(1)) will be
disregarded and not included in the Company’s Average Performance for
purposes of determining any Base Grant adjustments pursuant to
Subsection 5(b).

	 	7.	 	Termination of Award. This Award Agreement will terminate and be of no
further force or effect on the date that Employee is no longer actively employed by the
Company or any of its Subsidiaries, whether due to voluntary or involuntary
termination, death, retirement, disability, or otherwise, except as specifically set
forth in Section 4. Employee will, however, be entitled to receive any Stock
and Dividend Equivalents payable under Section 4 of this Award Agreement if
Employee’s employment terminates after the end of the Performance Period but before
Employee’s receipt of such Stock and Dividend Equivalents.

	 	8.	 	Section 409A Compliance.

	 	(a)	 	Purpose of this Provision. Section 409A of the Code
imposes a number of requirements on “non-qualified deferred compensation” plans
and arrangements. Based on regulations issued by the Internal Revenue Service,
the Company has concluded that this Performance Share Award is subject to
Section 409A. As a result, unless the Plan and this Award Agreement are
administered to comply with the new rules, Employee will be required to pay an
additional 20% tax (in addition to regular income taxes) on the compensation
provided by this Award Agreement. In addition, under Section 409A additional
interest will be payable.
	 
	 	(b)	 	Compliance with Section 409A. The Company intends to
comply with Section 409A by assuring that all amounts to which Employee becomes
entitled hereunder are payable at a specified time or pursuant to a fixed
schedule within the meaning of Treas. Reg. § 1.409A-3(a)(4). As a result, any
payment or

 

 

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	 	 	 	transfer to Employee shall be made at the time specified in Section 4. The
provisions of this Subsection 8(b) apply to all amounts due pursuant to this
Award Agreement.
	 
	 	(c)	 	Miscellaneous Payment Provisions. If a payment is not
made due to a dispute in payments, payments can be delayed in accordance with
Treas. Reg. § 1.409A-3(g).
	 
	 	(d)	 	Ban on Acceleration or Deferral. Under no
circumstances may the time or schedule of any payment made or benefit provided
pursuant to this Award Agreement be accelerated or subject to a further
deferral except as otherwise permitted or required pursuant to regulations and
other guidance issued pursuant to Section 409A of the Code.
	 
	 	(e)	 	No Elections. Employee does not have any right to make
any election regarding the time or form of any payment due under this Award
Agreement.
	 
	 	(f)	 	Compliant Operation and Interpretation. The Plan and
this Award Agreement shall be administered in compliance with Section 409A and
each provision of the Award Agreement and the Plan shall be interpreted, to the
extent possible, to comply with Section 409A.

	 	9.	 	Tax Withholding. Any and all payments made pursuant to this Award
Agreement shall be subject to applicable tax withholding requirements and employment
taxes. Employee must pay, or make arrangements acceptable to the Company for the
payment of any and all required federal, state, and local income and payroll tax
withholding. Employee may satisfy any such tax withholding obligation by paying the
amount in cash or by check. In the alternative, Employee may elect to have the Company
withhold shares of Stock having a Fair Market Value on the date of withholding
sufficient to cover the minimum statutory withholding obligation. Within 45 days after
the Date of Grant, Employee must elect, by providing written notice to the Company, to
satisfy any tax withholding obligation by paying the amount in cash or by check or by
having the Company withhold shares of Stock having a Fair Market Value on the date of
withholding sufficient to cover the minimum statutory withholding obligation. In the
absence of a timely election by Employee, Employee’s minimum statutory withholding
obligation will be satisfied through the Company’s withholding shares of Stock as set
forth above.
	 
	 	10.	 	Continued Employment. Nothing in the Plan or this Award Agreement
shall be interpreted to interfere with or limit in any way the right of the Company to
terminate Employee’s employment or services at any time. In addition, nothing in the
Plan or this Award Agreement shall be interpreted to confer upon Employee the right to
continue in the employ or service of the Company.
	 
	 	11.	 	Voting Rights. Employee is not entitled to voting rights with respect
to shares of Stock by virtue of this Award. Upon issuance of Stock in settlement of
Employee’s Performance Share Awards, Employee will have voting rights with respect to
such shares of Stock.
	 
	 	12.	 	Non-Transferability. Neither this Award nor any rights under this
Award Agreement may be assigned, transferred, or in any manner encumbered except by
will or the laws of

 

 

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	 	 	 	descent and distribution, and any attempted assignment, transfer,
mortgage, pledge or encumbrance except as herein authorized, will be void and of no
effect.
	 
	 	13.	 	Definitions: Copy of Plan and Plan Prospectus. To the extent not
specifically defined in this Award Agreement, all capitalized terms used in this Award
Agreement will have the same meanings ascribed to them in the Plan. Employee will
receive a copy of the Plan and the related Plan Prospectus. In the event of any
conflict between the terms and conditions of this Award Agreement and the Plan, the
provisions of the Plan shall control.
	 
	 	14.	 	Amendment. Except as otherwise provided in the Plan, this Award
Agreement may be amended only by a written agreement executed by the Company and
Employee.
	 
	 	15.	 	Choice of Law. This Award Agreement will be governed by the laws of
the State of Arizona, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this Award Agreement to another
jurisdiction.

       An authorized representative of the Company has signed this Award Agreement as of the Date of
Grant.

	 	 	 	 	 	 	 
	 

	 	PINNACLE
	 	WEST CAPITAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

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Pinnacle West Capital Corporation

PERFORMANCE SHARE AWARD

ELECTION FORM

INFORMATION ABOUT YOU

	 	 	 	 	 	 	 
	Last

	 	First
	 	Middle Initial
	 	Employee ID#
	 

TAX WITHHOLDING ELECTION

 

I hereby elect to satisfy any tax withholding obligation associated with my receipt of Stock pursuant to
my Performance Share Agreement in the following form (place an “X” in the “Cash” column or in the
“Stock” column):

 

	 	 	 
	Cash
	 	Stock
	 	 	 
	(I will write a check 

for my taxes that are due)
	 	(The Company should withhold shares of my

stock to cover my taxes)
	o
	 	o

 

	 	 	 	 	 	 	 
	 

PARTICIPANT NAME (PLEASE PRINT)

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

PARTICIPANT SIGNATURE

	 	 
	 	 

DATE
	 	 

IMPORTANT NOTE: Please complete and return this Election Form to                    at Mail Stationexv10w1

	 	 	 	 	 
	

AutoZone Parts, Inc.

123 S. Front Street

Memphis, TN 38103

Telephone (901) 495-6500

Fax (901) 495-8300

	 	(US) VENDOR

AGREEMENT

Vendor No. 07245

Category Manager:
	 	AutoZone Parts, Inc.
	 

	 	[*]	 	 

AUTOZONE RESERVES THE RIGHT TO REMIT TO THE PARTY TO WHOM THE PURCHASE ORDER IS ISSUED.

Payment Information:

Address to mail payment:

	 	 	 	 	 
	Vendor Name 

Factor (If Applicable)

	 	MotorCar Parts of America, Inc.
 

	 	 
	POS

	 	 

No
 

	 	  
	Address

	 	2929 California Street
 

	 	 
	City

	 	Torrance
 

	 	 
	State, Zip

	 	CA, 90503
 

	 	 
	Country/Region

	 	USA
 

	 	 
	Credit Dept Phone

	 	(310) 212-7910
 

	 	 
	Toll Free Number

	 	(800) 890-9988
 

	 	 
	Fax Number

	 	(310) 212-0729
 

	 	 

Vendor also doing  business as: (Attach a list
to this Agreement if space provided is insufficient)

Note: All payments of monies must be made payable to and mailed to:

AutoZone Parts, Inc.

Accounting Dept. 9010

P.O. Box 2198

Memphis, TN 38101

Purchase Order Information:

Address to send purchase orders:

ý Check if same as payment address

	 	 	 	 	 
	Vendor Name

	 	MotorCar Parts of America, Inc.
 

	 	 
	Address

	 	2929 California Street
 

	 	 
	City

	 	Torrance
 

	 	 
	State, Zip

	 	CA, 90503
 

	 	 
	Country/Region

	 	USA
 

	 	 
	Attention

	 	Accounts Receivable
 

	 	 

Street address for use by delivery services other than
the U.S. mail, if not already shown in the P.O. Order
address above.

	 	 	 	 	 
	2929 California Street	 	 
	 	 	 
	Torrance, CA 90503	 	 
	 	 	 
	Country/Region

	 	USA
 

	 	 
	Dept:
	 	 	 	 
	Expedite Orders

	 	 

(310) 212-7910
 

	 	  
	Phone:
	 	 	 	 
	Toll Free Number: 

Fax Number:

	 	 

(800) 890-9988
 

(310) 212-6315
 

	 	   
	Orders will be Via:

	 	 EDI  FAX	 	 
	 

	 	 	 	 

Vendor Financial Information

Vendor agrees to furnish, when returning this completed agreement, a complete
set of current financial statements. Publicly held companies should include the Annual
Report to Shareholders and 10K Report. If financial statements are not available, a Dun
& Bradstreet should be furnished. Further, Vendor agrees to respond to
operational/financial questionnaires from time to time as requested by AutoZone.

Product Liability Insurance

	 
	

	Copy of Certificate of Insurance must be attached to this
Vendor Agreement. Certificate of Insurance must Include:

1. Comprehensive General Liability coverage Including Product
Liability/Completed
Operations Hazard with minimum limits of $5,000.000 per
occurrence.

2. Broad form vendor’s endorsement naming AutoZone
Parts, Inc. and its
subsidiaries and affiliates, as an additional
Insured.

3. Mandatory 30-day notice of cancellation to...

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	AutoZone Parts, Inc.
	 	 
	 

	 	 	 	 
	Travelers Indemnity of Illinois

	 	Risk Management Department
	 	 
	 

	 	 	 	 
	(Insuring Company)

	 	P.O. Box 2198, Dept 8030	 	 
	 

	 	Memphis, TN 38101	 	 

	 
	Address For Product Liability Claims

MotorCar Parts of America, Inc.

2929 California Street

Torrance, California 90503
USA

Attn: Edie Patton
Phone: (800) 890-9988

MotorCar Parts of America, Inc.

			
	 	 	 
	FMRev. 9/03
	 	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

1

 

AutoZone Parts, Inc.

Advertising/Promotions/Allowances

 None  Performance  Expenditure
 Other

	 	 	 
	Qualified Promotions:

	 	Indicate how Funds are Earned:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

[*]

Order of Allowances

If you require the allowance calculations to be in a particular sequence, indicate the sequence
below (1 for 1st, 2 for 2nd, etc.).

	 	 	 	 	 	 	 
	Sequence	 	Name of Allowance	 	Sequence	 	Name of Allowance
	 

	 	None
	 	 	 	None
	 

	 	None
	 	 	 	None
	 

	 	None
	 	 	 	None
	 

	 	None
	 	 	 	None

Use of
VendorNet is subject to the terms and conditions contained on the VendorNet Systems.
Vendor agrees to pay AutoZone the fee(s) for access to
AutoZone’s VendorNet System, as set
forth above. If no fees are paid by Vendor for VendorNet System access, then Vendor will not
be provided access to AutoZone’s VendorNet System.

BILLBACK
ALLOWANCES ARE CALCULATED ON A CALENDAR YEAR BASIS AND PAYMENT IS DUE 30 DAYS AFTER
PERFORMANCE OR VENDOR RECEIPT OF AUTOZONE BILLBACK.

IF BILLBACKS ARE NOT PAID AFTER 90 DAYS FROM DATE REQUESTED, AN
ADDITIONAL LATE PAYMENT CHARGE OF
1.5 PERCENT PER MONTH WILL BE ADDED.

[*]

MotorCar Parts of America, Inc.

			
	 	 	 
	FMRev. 9/03
	 	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

2

 

AutoZone Parts, Inc.

During
the term of this Agreement, Vendor, at Its expense and through its authorized employees or
its Independent certified public accountants, shall have the right
upon reasonable notice of no less
than ten (10) business days, during normal business days and hours to examine AutoZone’s records
pertaining to AutoZone’s promotional allowance
based activities to the extent the same are funded
by these allowances paid under this Agreement. All such Information disclosed during any such audit
is the Confidential Information of AutoZone and shall be protected and governed by the terms and
conditions of the Confidentiality Agreement between AutoZone and Vendor.

Fuel Surcharge

Fuel Surcharge based on the weekly index published by Department of Energy applies to all
Logistics/Collect Vendors. Fuel surcharges will be imposed when the national average diesel fuel
price from the Department of Energy (“DOE”) National Diesel Fuel Price Index is greater than or
equal to [*]

MotorCar Parts of America, Inc.

			
	 	 	 
	FMRev. 9/03
	 	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

3

 

AutoZone Parts, Inc.

Shipping Instructions

If Collect, Vendor agrees to use routing which is approved by AutoZone’s Logistics Department.
The Vendor is liable for the excess transportation cost if the designated routing is not
followed. If a Vendor should question the routing selected, the Vendor must call AutoZone’s
Logistics Department before releasing the committed shipment. Call (901)495-6839.

[*]

Shipping Terms

[*]

All Merchandise to be Shipped F.O.B. Destination

O Prepaid (Indicate any requirements to the right)

l Collect

Prepayment Requirements

	 	 	 	 	 
	Pounds

	 	Dollars
	 	Truck
	Units

	 	Cases
	 	Cube
	Pallets
	 	 	 	 

All
collect quotes are subject to renegotiation, as deemed necessary by increases in
transportation related costs. AutoZone will not accept back orders on
regular stock orders.
Regular stock orders shall be handled on a ship or cancel basis.

	 	 	 
	Drop Shipment Terms:
	 	 
	 

	 	 
	Other:
	 	 
	 

	 	 
	Permanent Return Authorization #

	 	                                        To be used to return merchandise shipped in error freight collect.

Payment Terms

[*]

MotorCar Parts of America, Inc.

	 
	FMRev. 9/03	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

4

 

AutoZone Parts, Inc.

VDP Terms and Conditions

[*]

MotorCar Parts of America, Inc.

	 
	FMRev. 9/03	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

5

 

AutoZone Parts, Inc.

Regular Returns/Recalls/Cores

Return
Privileges      RGA Required

Annual Stock Adjustment [*] of Prior fiscal year’s net purchases.

** Returns will be credited at “Current” Invoice price.

	 	 	 	 	 
	Regular Returns and Recalls

	 	 	 	To Obtain Return Goods Authorization
	RGA Required

	 	Phone:
	 	(800) 890-9988
	Ship back freight prepaid

	 	Address:
	 	2929 California Street
	 

	 	City, State Zip
	 	Torrance, California 90503- USA
	 

	 	Attn:
	 	Lourdes Reinoso
	 

	 	Fax:
	 	(310) 347-4397

	 	 	 	 	 
	NOTE:
Vendor pickup and Collect freight are F.O.B. AutoZone Dock.
	 	 	 	 
	Cores are “banked” In excess of 0.00% of purchases.
	 	 	 	 
	If core banking is handled differently than above, explain:
	 	 	 	 
	Core packaging instructions:

	 	 

	 	 
	 

	 	 	 	 
	Other core limitations or instructions.
	 	 	 	 
	 

	 	 	 	 

	 	 	 
	Address to Ship Returns:

	 	Vendor requirements for routing or classification:
	MotorCar Parts of America, Inc.
	 	 
	2306 Avenue Costa Este
	 	 
	San Diego, California 92154
	 	 
	USA
	 	 
	Attn:
Pedro Hernandez
	 	 
	Phone:
619-489-2300
	 	 

UPC Information

Vendor must be a member of the UPC Council and a list and sample of current UPC codes must be
sent to the Product Manager’s attention prior to purchase of any
products from the vendor.

AutoZone requires both format and manufacturer’s number to match item UPC numbers. Indicate your
UPC Manufacturer’s number(s) below.

	 	 	 	 	 	 	 	 	 
	029175	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	Alternators & Starters	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	Product Line
	 	Product Line
	 	Product Line
	 	Product Line
	 	Product Line

1. Vendor
shall comply with all UCC Standards concerning UPC Symbols and Shipping Container Bar
Coding (ITF).

2. UPC
Symbol Quality: [*]

3. All
full pallets, containing the same SKU, shall have a shipping label with Shipping Container
Bar Codes (ITF).

[*]

VENDOR AGREES TO FURNISH THE FOLLOWING DATA TO AUTOZONE FOR EACH PRODUCT SUPPLIED TO AUTOZONE :

	•	 	Up-to-date AAIA compliant catalog data, databases, graphics, images and product attributes, features and benefits
	 
	•	 	copies of paper catalogs in pdf format
	 
	•	 	cross-reference data
	 
	•	 	product specifications where applicable, and
	 
	•	 	product bulletins and technical service bulletins

[*]

Vendor
shall be solely responsible for notifying AutoZone in writing of
those jurisdictions, including each and every United States state and territory, Canadian province and Mexico state
and each and every subdivision thereof (hereinafter “jurisdictions”), where Vendor’s product(s)
supplied to AutoZone are prohibited or restricted from sale. On an ongoing basis, Vendor
further agrees to be solely responsible for providing AutoZone with all applicable regulatory
requirements as to each product supplied by Vendor to AutoZone for all jurisdictions. Vendor
will promptly update this Information as applicable.

Obsolescence

Parts which are scheduled to be dropped by the Vendor will be indicated in the Vendor catalog
or price sheet [*] month(s) in advance.

[*]

MotorCar Parts of America, Inc.

FMRev.
9/03

Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

6

 

AutoZone Parts, Inc.

EAS Compliance

[*]

Warranties and Representations to AutoZone

By acceptance of an order under this Agreement,
Vendor warrants and represents that (a) as
applicable, products meet or exceed Original Equipment Specifications: (b) the goods will
comply with all specifications contained in the order and will be of comparable quality as all samples
delivered to AutoZone: (c) the goods are not adulterated, misbranded, falsely labeled or
advertised, or falsely invoiced within the meaning of any local, state or federal laws and
amendments thereof now in force: (d) the goods have been labeled, advertised and invoiced in
accordance with the requirements of any and all governmental laws and the respective rules and
regulations thereunder: (e) the goods are properly labeled as to content as required by
applicable Federal Trade Commission Trade Practice Rules, the Fair Labor Standards Act, and similar
laws, rules and regulations: (f) the goods ordered shall be delivered in good and undamaged
condition and shall, when delivered, be merchantable and fit and safe for the purposes for which
the same are intended to be used, including without limitation,
consumer use: (g) the goods do not infringe upon or violate any patent, copyright, trademark, trade name or, without limitation, any
other rights belonging to others: (h) all weights, measures, sizes, legends or descriptions
printed, stamped, attached or otherwise indicated with regard to the goods are true and correct,
and conform and comply with all laws, rules, regulations, ordinances, codes and/or standards
relating to said goods of federal, state and local governments: (i) the goods are not in violation
of any other laws, ordinances, statutes, rules or regulations of the United Sates or any state or
local government or any subdivision or agency thereof; and (j) by shipping and invoicing goods
sold to AutoZone, Vendor warrants and represents that all goods purchased hereunder were produced
in compliance with all applicable requirements of sections 6, 7, and 12 of the Fair Labor Standards
Act, as amended, and of regulations and orders of the U.S. Department of Labor issued under section
14 thereof. In addition to the other warranties and representations contained in this paragraph,
the warranties of the Uniform Commercial Code are specifically incorporated herein. Nothing
contained in this Agreement shall be deemed a waiver of warranties implied by law as may be applied
to AutoZone. Labeling of shipments of products to be distributed in Mexico must comply with
AutoZone’s Mexico Vendor Compliance (Guidelines), as the same may be amended from time to time. Vendor agrees to pay the assessments, liquidated damages and other amounts set forth in
the Guidelines. A copy of the current Guidelines is available to Vendor through VendorNet or upon
request to its AutoZone Category Manager.

Warranty to Customer

[*]

Allowances And Credits

[*]

MotorCar Parts of America, Inc.

FMRev. 9/03 

Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

7

 

AutoZone Parts, Inc.

Terms And Conditions

1. Agreement: This Agreement sets
forth the entire agreement between Vendor and Autozone with
respect to the sale and purchase of goods and
supersedes all prior agreements, oral or written. Acceptance of a purchase order may be made only
by shipment of the goods In accordance with that
order and ACCEPTANCE IS EXPRESSLY LIMITED TO ALL OF THE TERMS AND CONDITIONS OF THE ORDER,
INCLUDING ALL
ATTACHMENTS AND SUPPLEMENTAL INSTRUCTIONS DELIVERED THEREWITH, AND TO CURRENT SHIPPING, BILLING AND
ROUTING
INSTRUCTIONS OF AUTOZONE. SHIPMENTS MADE CONTRARY TO AUTOZONE’S ROUTING INSTRUCTIONS WILL BE
CONSIDERED F.O.B.
DESTINATION. Vendor’s Invoice, confirmation memorandum or other writing may not vary the terms of the
Agreement. Vendor’s failure to comply
with each and every term or order shall constitute an event of default and shall be grounds for the
exercise by AutoZone of any of the remedies
provided for in this Agreement.

2. Remedies
on Breach or Default: Failure to comply with each and every term of this Agreement and
each guarantee or warranty herein shall be
grounds for the exercise by Autozone of any one or more of the following remedies: a) cancellation
of all or any part of an order without notice,
including without limitations the balance of any order received on installment; and b) rejection
of all or any part of any shipment by AutoZone, which
may return the goods or hold them at Vendor’s risk and expense. AutoZone’s right to reject and
return or hold goods at Vendor’s expense and risk
shall extend to goods which are returned by AutoZone’s customers for any
reason entitling
AutoZone to reject. AutoZone may, at its option, require
Vendor to grant a full refund or credit to AutoZone of the price actually paid by AutoZone
for such
item in lieu of replacement with respect to any item
which AutoZone is entitled to reject hereunder. Autozone shall be
under no duty to inspect the
goods before resale thereof and notice of rejection shall
be deemed given within a reasonable time if given within a reasonable time after notice of defects
or deficiencies has been given to AutoZone by its
customers. In respect of any goods rightfully rejected by AutoZone, there shall be charged to
Vendor all expenses incurred by AutoZone in (i) unpacking, examining, repacking and storing such goods (it being agreed that in the absence of
proof of a higher expense that AutoZone shall claim an
allowance for each rejection at the rate of 10% of the price for each rejection made by AutoZone)
and (ii) landing and reshipping such goods. When
AutoZone has exercised any of the above remedies, Vendor shall not have the right to make
a conforming delivery within the contract time. In addition
to AutoZone’s remedies provided above, the buyer’s remedies of the Uniform Commercial Code are
specifically incorporated in this Agreement.

3. DELIVERY TIME: THE TIME SPECIFIED ON ORDERS FOR RECEIPT OF GOODS IS OF THE ESSENCE OF THIS
AGREEMENT AND IF
SHIPMENT IS NOT EFFECTED WITHIN THE TIME SPECIFIED. AUTOZONE RESERVES THE RIGHT, AT ITS OPTION
AND WITHOUT
LIMITATIONS, TO CANCEL THE ORDER OR REJECT ANY GOODS DELIVERED AFTER THE TIME SPECIFIED
 and to hold vendor liable for
damages sustained by AutoZone as a result of Vendor’s failure. Notwithstanding AutoZone’s right
to cancel and/or reject goods. Vendor agrees to inform AutoZone immediately of any failure to ship
any part of an order or the exact goods called for on an order on the shipment date specified.
Acceptance of any goods shipped after the specified shipment date shall not be construed as a
waiver of any of AutoZone’s rights resulting from the late shipment.

4. Cancellation:
AutoZone may cancel all or any part of an order at any time prior to shipment. In
addition, in the event any place of business or other
premises of AutoZone shall be affected by lockouts, strikes, riots, war, fire,
civil insurrection,
flood, earthquake or any other casualty or cause beyond
AutoZone’s control, which might reasonably tend to impede or delay the reception, handling,
inspecting, processing or marketing of the goods covered
by an order by AutoZone, its agents or employees, AutoZone may, at its option, cancel all or any
part of the undelivered order by giving written notice
to Vendor which notice shall be effective upon mailing.

5. Set-off. All claims for money
due to vendor and/or to become due from AutoZone shall be
subject to deduction by AutoZone for any set-off or
counterclaim arising out of any order or other agreement with Vendor.

6. Withholding:
AutoZone shall have the right to withhold from payment to Vendor, an amount up to
ten percent (10%) of the then present value of
AutoZone’s inventory of products purchased from Vendor,
against which Vendor credits owed to
AutoZone may be taken. In the event of participation
in Supplier Confirmed Receivable program, an additional withholding may be imposed to cover any
future outstanding credits due AutoZone.

7. Assignment
of Accounts: The Vendor shall provide AutoZone written notice of an assignment,
factoring or other transfer of its rights to receive
payments arising under this Agreement 30 days prior to such assignment, factoring or other transfer
taking legal effect. Such written notice shall
include the name and address of the assignee/transferee, date assignment is to begin and terms of
the assignment, and shall be considered delivered
upon receipt of such written notice by the AutoZone Warehouse
Accounting Manager. Vendor shall be
allowed to have only one assignment, factoring,
or other transfer legally effective at any one point in time. No
multiple assignments, factorings
or other transfers by the Vendor shall be permitted.
Vendor shall indemnify AutoZone against and hold AutoZone harmless from any and all lawsuits,
claims, actions, damages (including reasonable
attorney fees, obligations, liabilities end liens) arising or imposed in connection with the
assignment, factoring, or other transfer of any account or right
arising thereunder where the Vendor has not complied with the assignment notification requirements
of this section. Vendor also releases and waives
any right, claim or action against AutoZone for amounts due and owing under this Agreement where
Vendor did not comply with the notice
requirements of this section. Such notice shall be mailed directly to:

AutoZone Parts, Inc.

Warehouse Accounting Manager

Accounting Dept. 9010

P.O. Box 2198

Memphis. TN 38101

8. Performance
Assignment: Vendor shall not assign the obligation to perform any order or any
part thereof, and AutoZone shall not be obligated to accept a tender of performance by any
assignee, unless AutoZone shall have previously expressly consented in writing to such an
assignment.

9. Vendor
agrees that any credit balance will be paid in cash to AutoZone upon written request.

10. Publicity:
Vendor shall not refer to AutoZone or any company affiliated with AutoZone in
publication form in connection with goods of services
rendered by Vendor without prior written approval of AutoZone.

11. Validity:
No finding that a part of an order or this Agreement is invalid or unenforceable
shall affect the validity of any other part thereof.

12. [*]

13. Safety
& Health: As applicable, Vendor shall furnish AutoZone with Material Safety Data Sheets,
including warnings and safety and health
information concerning the products and/or the containers for such products sold hereunder. Vendor
and AutoZone agree to comply with all applicable
OSHA and EPA requirements concerning hazardous materials.

14. This
Agreement shall be governed by the laws of the State of Tennessee without regard to its
conflicts of laws principles. Jurisdiction and venue
for any lawsuits related to this Agreement shall only be proper in Shelby County, Tennessee.

15. Vendor
hereby grants AutoZone a perpetual license to use its part numbers and parts descriptions
for AutoZone’s business purposes, including,
but not limited to, AutoZone’s electronic catalogues and databases.

16. All
notices shall be deemed received three days after it is sent by certified mail, return
receipt requested, or when actually received by
hand-delivery or overnight courier. All notices shall be sent to
Vendor at aforementioned
address as provided by Vendor on this Agreement or to
AutoZone at the below address:

AutoZone
Parts, Inc.

123 South Front Street, Dept 9009

Memphis, TN 38103
Attn: Executive VP, Merchandising

with a copy to the General Counsel at the same address,
department 8074.

17. Country
of Origin: All packaging and products must be compliant with all applicable federal,
state and other laws and requirements as stipulated by
the Federal Trade Commission (“FTC”)
and other regulatory bodies. Pursuant to the Tariff
Act of 1930 as amended (19 USCA 1304(2007)), U.S.
Customs requires every item imported into the United States to be conspicuously and clearly marked
to indicate its country of origin to the “ultimate
purchaser”. Country of origin affects product admissibility, duty rate, anti-dumping and
entitlement to special duty or trade preference programs.

Vendor must ensure that all of its
 packaging and product has correct country of origin information
which is properly matched and marked in compliance with all
applicable requirements and laws,
Vendor represents and warrants that all packaging and labeling of products supplied under this
Agreement are correct and comply with all laws and regulations. Vendor is responsible for and will
reimburse AutoZone for any costs, expenses and other damages incurred
by AutoZone (i) if product is
improperly packaged or labeled or (ii) relating to any other Country of Origin issues.

MotorCar
Parts of America, Inc.

			
	 	 	 
	FMRev. 9/03
	 	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

8

 

AutoZone Parts, Inc.

[*]

Notice Regarding Price Increases

AutoZone shall be given at least 90 days written notice prior to any price increase.

Indemnification

[*]

Statement of Conduct

AutoZone
will strive to deal with Vendor in an open, honest manner at all times; AutoZone expects
Vendor to do likewise. AutoZone does not allow gifts or other considerations to be provided to any
AutoZone employees except where these are immaterial. Solicitation of a gift of any kind or value,
or the acceptance of gifts in the form of cash or gift certificates in any amount is expressly
forbidden, AutoZone generally discourages its employees from participating in sponsor contests,
trips, recreational outings, etc., which accrue to the benefit of the employee. However, AutoZone
recognizes that those can sometimes provide mutually beneficial business relationships, and such
employees are expressly required to obtain permission from their direct superiors prior to
participating.

MotorCar Parts of America, Inc.

FMRev.
9/03

Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

9

 

AutoZone Parts, Inc.

By the
execution of this Agreement, Vendor agrees to the representations stated above, and on the
preceding pages. Vendor further agrees that AutoZone may rely on these representations in placing
any purchase orders pursuant to information contained in this agreement.

Any changes to this Agreement must be in writing and executed by both parties.

The undersigned in represents and warrants to AutoZone that he/she is fully authorized to execute this
agreement.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Contact 1	 	 	 	 
	Vendor:	 	MotorCar Parts of America, Inc.	 	Name	 	John Foster

	 

	 	 	 	 	 	 	 	Title
	 	VP Marketing

	By:

	 	/s/ Selwyn Joffe 	 	Date:
	 	4/22/09	 	Address:
	 	2929 California Street

	 

	 	 
(Signature of Principal of the Company)
	 	 	 	 	 	 	 	Torrance,

	 

	 	 	 	 	 	 	 	 	 	CA.,

	Print

	 	 	 	Title 	 	CEO	 	 
	 	90503	 
	Name:

	 	Selwyn Joffe 
	 	 	 	 	 	 	 	USA

	 

	 	 	 	 	 	 	 	Phone
	 	(800) 890-9988	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	AutoZone Parts, Inc.	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Contact 2	 	 	 	 
	By:

	 	/s/ [*] 	 	Date: 	 	4/27/09 	 	Name
	 	Tom Sticker

	 

	 	 

(Signature of Product Manager)
	 	 	 	 	 	Title
	 	VP Sales

	 

	 	 	 	 	 	 	 	Address:
	 	2929 California Street

	Print

	 	 	 	 	 	 	 	 	 	Torrance,
	Name:

	 	[*]  
	 	 	 	 	 	 	 	CA.,

	 

	 	 	 	 	 	 	 	 	 	90503	 
	By:

	 	/s/ [*] 	 	Date:
	 	4/27/09 	 	 	 	USA

	 

	 	 

(Signature of Company Officer)
	 	 	 	 	 	Phone:
	 	(800) 890-9988	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Print

	 	 	 	 	 	 	 	Contact 3	 	 

	Name:
	 	[*] 
	 	 	 	 	 	Name 	 	Selwyn Joffe
	 

	 	 	 	 	 	 	 	Title
	 	CEO

	 

	 	 	 	 	 	 	 	Address:
	 	2929 California Street

	By:

	 	/s/ [*] 	 	Date:
	 	4/27/09	 	 	 	Torrance,

	 

	 	 

(Signature of Company Officer)
	 	 	 	 	 	 	 	CA.,

	 

	 	 	 	 	 	 	 	 	 	90503	 
	Print

	 	 	 	 	 	 	 	 	 	USA

	Name:
	 	[*] 
	 	 	 	 	 	Phone:
	 	(800) 890-9988	 
	 

	 	SVP Merchandising 	 	 	 	 	 	 
	 	 	 
	 

	 	 	 	 	 	 	 	 	 	MotorCar Parts of America, Inc.

	 
	FMRev. 9/03	Date: 03/31/2009

 

			
	[*] =	 	CONFIDENTIAL TREATMENT REQUESTED. THE OMITTED
MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

10

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