Exhibit No. 99.1 Employment Agreement between The Pep Boys-Manny, Moe & Xxxx
and Xxxxxx Xxxxxx, Xx. dated July 23, 2004.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made by and between THE PEP BOYS-MANNY, MOE &
XXXX, a Pennsylvania corporation (the "Corporation"), and Xxxxxx Xxxxxx Xx.
(the "Executive"), on this 23rd day of July 2004 (the "Effective Date").
W I T N E S S E T H :
WHEREAS, the Executive is currently employed by the Corporation pursuant to an
Employment Agreement, dated February 28, 2003 (the "Former Agreement");
WHEREAS, the Corporation desires to continue to retain the services of the
Executive by entering into this Employment Agreement on the terms and
conditions as set forth herein (the "Agreement"), which Agreement shall
supercede the Former Agreement; and
WHEREAS, this Agreement shall be in addition to and shall not supercede the
Agreement between the Corporation and the Executive, dated as of
March 28, 2000 (the "Change of Control Agreement"), which Change of Control
Agreement shall continue in effect under the terms and conditions set forth
therein;
NOW, THEREFORE, in consideration of the representations, warranties and mutual
covenants set forth herein, the Corporation and the Executive agree as follows:
1. Position and Duties.
(a) The Executive shall serve as a President of the Corporation
and shall perform such duties and services incident to such
position and such other reasonably related duties as may be
assigned to him from time to time. From the Effective Date
through July 31, 2004, the Executive shall also continue to
serve as the Chief Financial Officer of the Corporation and
shall continue to perform such duties and services incident
to such position, including, but not limited to, compliance
with the rules and regulations of the Securities and
Exchange Commission with respect to the Corporation's
financial statements for the quarterly period ending
July 31, 2004. For a reasonable period following
July 31, 2004, the Executive shall assist in the transition
of the duties and services incident to the position of the
Corporation's chief financial officer to the Executive's
successor in such position. Commencing August 1, 2004, the
Executive shall assume responsibility for the oversight of
the Corporation's Store Operations. During the Executive's
employment with the Corporation, the Executive shall report
directly to the Chief Executive Officer ("CEO") of the
Corporation. The majority of the Executive's services
shall be performed at the Corporation's main headquarters
in Philadelphia Pennsylvania or at an office or location no
more than twenty (20) miles from Philadelphia.
(b) Excluding periods of vacation, sick leave and disability to
which the Executive is entitled, the Executive agrees to
devote his full time, attention and energy to the business
of the Corporation and to use his reasonable best efforts
to perform faithfully and efficiently such
responsibilities. The Executive shall not, without the
prior written consent of the Corporation, actively engage
in any other business or business activity during the
Employment Period (as defined below). The Executive may,
however, (i) serve on corporate, civic or charitable boards
or committees, (ii) participate in appropriate professional
organizations, (iii) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(iv) manage personal investments, so long as such
activities do not significantly interfere with the
performance of the Executive's responsibilities hereunder.
It is expressly understood and agreed that to the extent
that any such activities have been conducted by the
Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to
the Corporation.
2. Employment Period. The term of this Agreement shall commence on the
Effective Date and continue until terminated by either party in
accordance with Section 4 hereof (the "Employment Period").
3. Compensation.
(a) Base Salary. During the Employment Period, as
consideration for services rendered, the Corporation shall
pay to the Executive a base salary at an annual rate at
least equal to Five Hundred Thirty Five Thousand Dollars
($535,000) ("Base Salary") payable over each calendar year
at the regular pay periods of the Corporation. During the
Employment Period, Base Salary shall be reviewed by the
Board of Directors of the Corporation (the "Board")(or the
Compensation Committee thereof) at least annually and may
be increased, but not decreased, at any time and from time
to time as shall be determined by the Board (or the
Compensation Committee) in its sole discretion.
(b) Annual Bonus. During the Employment Period, the Executive
shall be eligible to earn an annual bonus (an "Annual
Bonus") under the terms and conditions of the Corporation's
Executive Incentive Bonus Plan (the "Bonus Plan") based on
the Executive's target percentage of Base Salary
established pursuant to the Bonus Plan.
(c) Employee Benefit Plans. In addition to the Base Salary and
Bonus payable as hereinabove provided, the Executive shall
be entitled to participate during the Employment Period in
all incentive programs, savings, pension and retirement
plans and programs generally available to other senior
executives of the Corporation from time to time other than
those embodied in separately negotiated agreements.
(d) Welfare Benefit Plans. During the Employment Period, the
Executive and the Executive's family shall be eligible for
participation (to the same degree as other senior
executives of the Corporation) in each welfare benefit plan
of the Corporation, including, without limitation, all
medical, prescription, dental, disability, salary
continuance, life, accidental death and travel accident
insurance plan and programs of the Corporation and its
affiliated companies.
(e) Reimbursement of Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement, in accordance with the general expense
reimbursement policy of the Corporation for all reasonable
expenses incurred by the Executive in the performance of
his duties hereunder.
(f) Vacation. During the Employment Period, the Executive
shall be entitled to four weeks per calendar year of paid
vacation.
4. Termination. This Agreement and the Executive's employment shall
terminate under the following circumstances:
(a) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death. During the
Employment Period, if, as a result of physical or mental
incapacity or infirmity, the Executive shall be unable to
perform his duties under this Agreement for (i) a
continuous period of 90 days or more, or (ii) periods
aggregating 120 days or more during any period of 12
consecutive months (each a "Disability Period"), and at
the end of the Disability Period there is no reasonable
probability that Executive can promptly resume his duties
hereunder, the Executive shall be deemed disabled (the
"Disability") and the Corporation, by notice to the
Executive, shall have the right to terminate this Agreement
and the Executive's employment for Disability at, as of or
after the end of the Disability Period. The existence of
the Disability shall be determined by a reputable, licensed
physician selected by Corporation in good faith, whose
determination shall be final and binding on the parties.
The Executive shall cooperate in all reasonable respects to
enable an examination to be made by such physician.
Notwithstanding the foregoing, the Corporation may
conclusively determine the Executive to have suffered a
Disability and terminate the Employment Period on account
of such Disability at any time after the Executive has
commenced receiving benefits under the Corporation's Long
Term Disability Salary Continuation Plan.
(b) With or Without Cause. The Corporation may terminate this
Agreement and the Executive's employment with or without
"Cause." For purposes of this Agreement, "Cause" means
(i) the continued failure of the Executive to perform
substantially his duties with the Corporation (other than
any such failure resulting from the Executive's incapacity
due to physical or mental illness or any such failure
subsequent to the Executive being delivered a Notice of
Termination without Cause by the Corporation or delivering
a Notice of Termination for Good Reason to the
Corporation); (ii) any act by the Executive of illegality,
dishonesty or fraud in connection with the Executive's
employment; (iii) the willful engaging by the Executive in
gross misconduct which is demonstrably and materially
injurious to the Corporation or its affiliates; (iv) the
Executive's conviction of or pleading guilty or no contest
to a felony; or (v) a violation of Section 6 or 7 herein.
For purpose of this paragraph (b), no act or failure to act
by the Executive shall be considered "willful" unless done
or omitted to be done by the Executive in bad faith and
without reasonable belief that the Executive's action or
omission was in the best interests of the Corporation or
its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the
Corporation, or upon the instructions of the CEO or another
officer of the Corporation senior to the Executive shall be
conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of
the Corporation. Cause shall not exist unless and until
the Corporation has delivered to the Executive, along with
the Notice of Termination for Cause, a copy of a resolution
duly adopted by three-quarters (3/4) of the entire Board
(excluding the Executive if the Executive is a Board
member) at a meeting of the Board called and held for such
purpose, finding that in the good faith opinion of the
Board an event set forth in clauses (i) - (v) above has
occurred and specifying the particulars thereof in detail.
The Board must notify the Executive of any event
constituting Cause within ninety (90) days following the
Board's knowledge of its existence or such event shall not
constitute Cause under this Agreement.
(c) With or Without Good Reason. This Agreement and the
Executive's employment may be terminated by the Executive
with or without Good Reason. For purposes of this
Agreement, "Good Reason" means:
(i) a material and adverse change in the Executive's title
as a President of the Corporation, other than an
insubstantial and inadvertent action which is remedied
by the Corporation promptly after receipt of notice
thereof given by the Executive;
(ii) the Executive no longer reporting to the CEO;
(iii) any substantial failure by the Corporation to comply
with any of the provisions of Section 3 of this
Agreement; or
(iv) the Corporation requiring the Executive to be based at
any office or location other than that described in
Section 1(a) hereof, except for travel required in the
performance of the Executive's responsibilities
hereunder; provided, however, that a termination by the
Executive for Good Reason shall be effective only if,
within 30 days following the delivery of a Notice of
Termination for Good Reason by the Executive to the
Corporation, the Corporation has failed to cure the
circumstances giving rise to Good Reason to the
reasonable satisfaction of the Executive.
(d) Notice of Termination. Any termination by the Corporation
with or without Cause or by the Executive with or without
Good Reason shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section
9(d) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the termination date is
other than the date of receipt of such notice specifies the
proposed termination date.
(e) Certain Modifications. Notwithstanding anything to the
contrary contained in this Section 4 or in any other
Section of this Agreement, Good Reason shall not be deemed
to occur, and the Corporation shall not be deemed in
violation of any provision of this Agreement, upon any
change in duties or responsibilities of the Executive that
is a result of a modification of the organizational
structure of the Corporation.
5. Obligations of the Corporation Upon Termination.
(a) Death. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall
terminate and the Corporation shall pay the Executive's
estate his Base Salary through the date of termination at
the rate in effect at the time of death and any other
benefits (including death benefits) to which the Executive
is entitled to hereunder as of the date of the Executive's
death and shall have no further obligations to the
Executive under this Agreement, except as may be applicable
under Section 5(d) hereof.
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this
Agreement shall terminate and the Corporation shall pay the
Executive his Base Salary through the date of termination
at the rate in effect at the time of Disability and any
other benefits (including Disability benefits) to which the
Executive is entitled to hereunder at the date of the
termination and shall have no further obligations to the
Executive under this Agreement, except as may be applicable
under Section 5(d) hereof.
(c) Other than Death or Disability. If the Executive's
employment shall be terminated by either party for any
reason other than the Executive's Death or Disability, the
Corporation shall pay the Executive his Base Salary through
the date of termination at the rate in effect at the time
Notice of Termination is given and shall have no further
obligations to the Executive under this Agreement, except
as may be applicable under Section 5(d) hereof.
(d) Severance Compensation.
(i) If the Executive's employment shall be terminated
prior to August 1, 2007, (A) by reason of the
Executive's Death or Disability, (B) by the Corporation
without Cause or (C) by the Executive for Good Reason,
the Corporation shall pay the Executive, within ten
(10) days of the applicable termination date, a lump
sum of One Million Six Hundred Thousand Dollars
($1,600,000).
(ii) If the Executive's employment shall be terminated
during the period commencing on August 1, 2007 and
ending on February 4, 2012 (inclusive) for any reason,
other than by the Corporation with Cause as specified
in Section 4(b)(ii)-(v) hereof, the Corporation shall
pay the Executive, within ten (10) days of the
applicable termination date, a lump sum of One Million
Six Hundred Thousand Dollars ($1,600,000).
(iii) In addition, upon a termination of the Executive's
employment (A) by the Corporation without Cause or (B)
by the Executive for Good Reason, and not withstanding
any other provisions of this Agreement or any other
agreement, (1) all non-vested stock-based awards then
held by the Executive which had been granted as of the
Effective Date shall immediately become fully vested
and non-forfeitable and (2) all vested stock-based
awards (including those that vested pursuant to clause
(1) above) shall be exercisable at any time up to the
sooner of their expiration or the last day of the month
which is within the period ending twenty-four calendar
months after the date of termination of employment.
All payments and benefits to be provided under this
Section 5 (d) shall be subject to the Executive's (x)
compliance with the restrictions of Sections 6 and 7(a)
herein and (y) execution of a general release and
waiver of claims against the Corporation in the form to
be determined by the Corporation at the time of
termination. Anything herein to the contrary
notwithstanding, if the Executive becomes entitled to
payments pursuant to Section 5(d) hereof, the Executive
agrees to waive payments under any severance plan or
program of the Corporation.
6. Confidential Information. The Executive shall forever hold in
a fiduciary capacity for the benefit of the Corporation all secret
or confidential information, knowledge or data relating to the
Corporation or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Corporation or any of its
affiliated companies and which shall not be public knowledge. The
Executive shall not, without the prior written consent of the
Corporation, communicate or divulge any such information, knowledge
or data to anyone other than the Corporation and those designated by
it.
7. Covenant Against Competition.
(a) The Executive shall not, during his employment with the
Corporation and for two years thereafter, directly or
indirectly, induce or attempt to influence any employee of
the Corporation to terminate his employment with the
Corporation or hire or solicit for hire on behalf of
another employer any person then employed or who had been
employed by the Corporation during the immediately
preceding six months. The Executive shall not, during his
employment with the Corporation and for two years
thereafter, unless the Executive's employment is terminated
by the Corporation without Cause or by the Executive with
Good Reason, directly or indirectly, engage in (as a
principal, partner, director, officer, agent, employee,
consultant or otherwise) or be financially interested in
any business operating within the United States of America,
if (i) such business' primary business is the retail and/or
commercial sale of automotive parts, accessories, tires
and/or repair/maintenance services including, without
limitation, the entities (including their franchisees and
affiliates) listed on Schedule 7 hereto, or (ii) the retail
and/or commercial sale of automotive parts, accessories,
tires and/or repair/maintenance services is the primary
focus of such engagement or financial interest. However,
nothing contained in this Section 7 shall prevent the
Executive from holding for investment up to two percent
(2%) of any class or equity securities of a company whose
securities are traded on a national or foreign securities
exchange.
(b) The Executive acknowledges that the restrictions contained
in Section 6 and 7(a), in view of the nature of the
business in which the Corporation is engaged, are
reasonable and necessary in order to protect the legitimate
interests of the Corporation, and that any violation
thereof would result in irreparable injuries to the
Corporation, and the Executive therefore acknowledges that,
in the event of his violation of any of these restrictions,
the Corporation shall be entitled to obtain from any court
of competent jurisdiction preliminary and permanent
injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits
arising from such a violation, which rights shall be
cumulative and in addition to any other rights or remedies
to which the Corporation may be entitled.
(c) If the Executive violates any of the restrictions contained
in the foregoing Section 7(a), the restrictive period shall
be extended from the time of the commencement of any such
violation until such time as such violation shall be cured
by the Executive to the satisfaction of the Corporation.
(d) The invalidity or unenforceability of any provision or
provisions of this Section 7 shall not affect the validity
or enforceability of any other provision or provisions of
this Section 7, which shall remain in full force and
effect. If any provision of this Section 7 is held to be
invalid, void or unenforceable in any jurisdiction, any
court or arbitrator so holding shall substitute a valid,
enforceable provision that preserves, to the maximum lawful
extent, the terms and intent of this Agreement and shall
correspondingly modify the Company's obligations under
Section 5(d). If any of the provisions of, or covenants
contained in, this Section 7 are hereafter construed to be
invalid or unenforceable in any jurisdiction, the same
shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which
shall be given full effect, without regard to the
invalidity or unenforceability in such other jurisdiction.
If any such holding shall affect such provision of this
Section 7, solely as to that jurisdiction, without
rendering that or any other provisions of this Section 7
invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant contained in this Section 7
should be deemed invalid, illegal or unenforceable because
its scope is considered excessive, such covenant will be
modified so that the scope of the covenant is reduced only
to the minimum extent necessary to render the modified
covenant valid, legal and enforceable and a corresponding
reduction in the scope of the Company's obligations under
Section 5(d) shall also be made.
8. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be
assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors.
(c) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Corporation to expressly assume and
agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to
perform it if no such succession had taken place. As used
in this Agreement, "Corporation" shall mean the Corporation
as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Pennsylvania without reference to principles of conflict of
laws. The parties hereto agree that exclusive jurisdiction
of any dispute regarding this Agreement shall be the state
or federal courts located in Philadelphia, Pennsylvania.
EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY PROCEEDING OVER ANY DISPUTE ARISING
UNDER THIS AGREEMENT.
(b) The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
(c) This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(d) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive, to:
the last known address of the Executive maintained in the
Corporation's books and records
If to the Corporation, to:
The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
cc: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(e) The Corporation may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law
or regulation.
(f) This Agreement, together with the Change of Control
Agreement, contains the entire understanding of the
Corporation and the Executive with respect to the subject
matter hereof and supersedes any and all prior agreements
or understandings between the parties regarding such
subject matter, including, but not limited to, the Former
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Corporation has caused this Agreement to be
executed in its name on its behalf, all as of the day and
year first above written.
/s/ Xxxxxx Xxxxxx Xx.
---------------------------------
Xxxxxx Xxxxxx, Xx.
THE PEP BOYS - MANNY, MOE & XXXX
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxxxx
Chief Executive Officer
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Xxxxxxx Xxxxxxx
Chairman, Compensation Committee
of the Board of Directors
Schedule 7
AutoZone, Advance, CSK, NAPA, Monro, Midas, Xxxxxxx, Jiffy Lube, Sears
Automotive, Firestone, Goodyear, NTB, America's Discount Tire, TBC Corp
(Big O Tire), Just Tires, Xxx Xxxxxx, Tire Kingdom, Tire Plus, and
O'Reilly
