Exhibit 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made by and between THE
PEP BOYS - MANNY, MOE & XXXX, a Pennsylvania corporation (the
"Corporation"), and _______________ (the "Executive"), dated as
of the __ day of June, 1998, and supersedes in its entirety the
Employment Agreement between the Corporation and the Executive
dated as of _________ __, ____.
The Corporation, on behalf of itself and its
shareholders, wishes to continue to attract and retain well-
qualified executive and key personnel who are an integral part of
the management of the Corporation, such as Executive, and to
better assure itself of continuity of management and better
assure Executive of continued employment, or compensation in lieu
thereof, in the event of any "Change of Control" (as defined in
Section 2 of this Agreement) of the Corporation;
IT IS, THEREFORE, AGREED:
1. Operation of Agreement.
(a) The "Effective Date" shall be the date during the "Change of
Control Period" (as defined in Section 1(b) hereof) on which a
Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if the Executive's employment with the
Corporation is terminated prior to the date on which a Change of
Control occurs, and the Executive can reasonably demonstrate that
such termination (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control
or (ii) otherwise arose in connection with a Change of Control,
then for all purposes of this Agreement the "Effective Date"
shall mean the date immediately prior to the date of such
termination.
(b) The "Change of Control Period" is the period commencing on
the date hereof and ending on the earlier to occur of (i) the
second anniversary of such date or (ii) the first day of the
month coinciding with or next following the Executive's
termination of employment on account of retirement on or after
Executive's normal retirement date ("Normal Retirement Date")
under The Pep Boys - Manny, Moe & Xxxx Pension Plan as amended to
date ("Pension Plan") and The Pep Boys - Manny, Moe and Xxxx
Executive Supplemental Pension Plan as amended to date or any
successor retirement plan (the "Retirement Plan"); provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof is hereinafter referred to as
the "Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate on the earlier of (x)
two years from such Renewal Date or (y) the first day of the
month coinciding with or next following the Executive's Normal
Retirement Date, unless at least sixty (60) days prior to the
Renewal Date the Corporation shall give notice that the Change of
Control Period shall not be so extended.
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2. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to have taken place if:
(a) individuals who, on the date hereof, constitute the Board of
Directors (the "Board") of the Corporation (the "Incumbent
Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a
director subsequent to the date hereof, whose election or
nomination for election was approved by a vote of at least two-
thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for
director, without written objection to such nomination) shall be
an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Corporation
as a result of an actual or threatened election contest with
respect to directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of
any person other than the Board shall be deemed to be an
Incumbent Director;
(b) any "Person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power
of the Corporation's then outstanding securities eligible to vote
for the election of the Board (the "Voting Securities");
provided, however, that the event described in this Section 2(b)
shall not be deemed to be a Change in Control by virtue of any of
the following acquisitions: (i) by the Corporation or any
subsidiary of the Corporation in which the Corporation owns more
than 50% of the combined voting power of such entity (a
"Subsidiary"), (ii) by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any
Subsidiary, (iii) by any underwriter temporarily holding the
Corporation's Voting Securities pursuant to an offering of such
Voting Securities, (iv) pursuant to a Non-Qualifying Transaction
(as defined in Section 2(c) hereof), or (v) pursuant to any
acquisition by Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of
persons including Executive);
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(c) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving
the Corporation or any of its Subsidiaries that requires the
approval of the Corporation's stockholders, whether for such
transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such
Business Combination: (i) more than 50% of the total voting
power of (A) the corporation resulting from such Business
Combination (the "Surviving Corporation"), or (B) if applicable,
the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by the Corporation's Voting
Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares
into which the Corporation's Voting Securities were converted
pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportion
as the voting power of the Corporation's Voting Securities among
the holders thereof immediately prior to the Business
Combination, (ii) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible
to elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) and (iii) at least
a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for
such Business Combination (any Business Combination which
satisfies all of the criteria specified in (i), (ii) and (iii)
above shall be deemed to be a "Non-Qualifying Transaction");
(d) a sale of all or substantially all of the Corporation's
assets;
(e) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation; or
(f) such other events as the Board may designate.
Notwithstanding the foregoing, a Change in Control of
the Corporation shall not be deemed to occur solely because any
person acquires beneficial ownership of more than 20% of the
Corporation's Voting Securities as a result of the acquisition of
the Corporation's Voting Securities by the Corporation which
reduces the number of the Corporation's Voting Securities
outstanding; provided, that if after such acquisition by the
Corporation such person becomes the beneficial owner of
additional Corporation Voting Securities that increases the
percentage of outstanding Corporation Voting Securities
beneficially owned by such person by more than one percent (1%)
of the Corporation's outstanding Voting Securities, a Change in
Control of the Corporation shall then occur.
3. Employment Period. The Corporation hereby agrees to
continue the Executive in its employ, for the period commencing
on the Effective Date and ending on the earlier to occur of (i)
the date two (2) years after such date or (ii) the first day of
the month coinciding with or next following the Executive's
Normal Retirement Date (the "Employment Period").
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4. Position and Duties.
(a) As of the date hereof, the Executive is employed as
_________________________________ and as such the Executive is
responsible for oversight and management of
_________________________________. During the Employment Period,
(i) the Executive's position (including status, offices, titles
and reporting requirements), authority, duties and
responsibilities shall be at least comparable in all material
respects with the most significant of those held, exercised and
assigned at any time during the ninety (90) day period
immediately preceding the Effective Date and (ii) the Executive's
services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or at an
office or location less than twenty (20) miles from such
location.
(b) Excluding periods of vacation, sick leave and disability to
which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the
business and affairs of the Corporation and, to the extent
necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such
responsibilities. The Executive may (i) serve on corporate,
civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions
and (iii) manage personal investments, so long as such activities
do not significantly interfere with the performance of the
Executive's responsibilities. 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.
5. 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 the annual rate
of base salary paid to the Executive by the Corporation, and any
affiliated companies, during the ninety-day period immediately
preceding the month in which the Effective Date occurs ("Base
Salary") payable over the calendar year at the regular pay
periods of the Corporation. During the Employment Period, Base
Salary shall be reviewed by the Board (or the Compensation
Committee thereof) at least annually and shall be increased, but
not decreased, at any time and from time to time as shall be
consistent with increases in Base Salary awarded by the
Corporation in the ordinary course of business to other key
executives. Any increase in Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this
Agreement. Executive's Base Salary shall not be reduced after
any such increase. As used in this Agreement, the term
"affiliated companies" includes any company controlling,
controlled by or under common control with the Corporation.
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(b) Executive Incentive Bonus Plan. During the Employment
Period, the Executive shall receive an annual bonus (a "Bonus")
at least equal to the greater of (i) the average annual dollar
bonus amount that was earned by the Executive under the
Corporation's Annual Incentive Bonus Plan, amended and restated
as of March 31, 1998 (or any predecessor or successor plan,
policy or arrangement thereto) (the "Bonus Plan") for the three
completed fiscal years of the Corporation (each a "Fiscal Year")
immediately prior to the Effective Date, or (ii) Executive's
Target (as defined in the Bonus Plan) bonus amount under the
Bonus Plan for the Fiscal Year which includes the Effective Date
or, if no target has been set with respect to Executive for such
Fiscal Year, the Target bonus amount for the immediately
preceding Fiscal Year (in either case, based on 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 applicable to other key executives, and to receive use
of an automobile of comparable value to automobiles provided to
other key executives (or to receive the same automobile allowance
as is provided to other key executives). In no event shall such
plans and programs, in the aggregate, provide the Executive with
compensation, benefits and reward opportunities less favorable
than the most favorable of those provided by the Corporation and
its affiliated companies for the Executive under such plans and
programs as in effect at any time during the ninety-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter with respect to
other key executives.
(d) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under each welfare benefit plan of the Corporation,
including, without limitation, all medical, supplemental medical,
prescription, dental, disability, salary continuance, life,
accidental death and travel accident insurance plan and programs
of the Corporation and its affiliated companies, in each case not
less favorable than those in effect at any time during the ninety-
day period immediately preceding the Effective Date which would
be most favorable to the Executive or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(e) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in the performance of his
duties hereunder.
(f) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and
other assistance, at least equal to those provided to the
Executive at any time during the ninety-day period immediately
preceding the Effective Date, or, if more favorable to the
Executive, as provided at any time thereafter with respect to
other key executives.
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(g) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most
favorable policies of the Corporation as in effect at any time
during the ninety-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect at any
time thereafter with respect to other key executives.
6. Termination. This Agreement shall terminate under the
following circumstances:
(a) Expiration of the Employment Period. This Agreement shall
terminate automatically upon the expiration of the Employment
Period.
(b) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death. The Corporation may
terminate this Agreement, after having established the
Executive's Disability (pursuant to the definition of
"Disability" set forth below), by giving to the Executive written
notice of its intention to terminate the Executive's employment.
In such a case, the Executive's employment with the Corporation
shall terminate effective on the 180th day after receipt of such
notice (the "Disability Effective Date"), provided that, within
180 days after such receipt, the Executive shall not have
returned to full performance of the Executive's duties. For
purposes of this Agreement, "Disability" means personal injury,
illness or other cause which, after the expiration of not less
than 180 days after its commencement, renders the Executive
unable to perform his duties with substantially the same level of
quality as immediately prior to such incident and such disability
is determined to be total and permanent by a physician selected
by the Corporation or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement
as to acceptability not to be withheld unreasonably).
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(c) With or Without Cause. The Corporation may terminate the
Executive's employment with or without "Cause." For purposes of
this Agreement, "Cause" means (i) the willful and continued
failure of Executive to perform substantially his duties with the
Corporation (other than any such failure resulting from
Executive's incapacity due to physical or mental illness or any
such failure subsequent to Executive being delivered a Notice of
Termination without Cause by the Corporation or delivering a
Notice of Termination for Good Reason to the Corporation) after a
written demand for substantial performance is delivered to
Executive by the Board which specifically identifies the manner
in which the Board believes that Executive has not substantially
performed Executive's duties and the Executive has failed to cure
such failure to the reasonable satisfaction of the Board; (ii)
the willful engaging by Executive in gross negligence or willful
misconduct which is demonstrably and materially injurious to the
Corporation or its affiliates; or (iii) Executive's conviction of
or pleading guilty or no contest to a felony. For purpose of
this Section 6(c), no act or failure to act by Executive shall be
considered "willful" unless done or omitted to be done by
Executive in bad faith and without reasonable belief that
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, based upon the advice of counsel for the Corporation or
upon the instructions of the Corporation's chief executive
officer or another senior officer of the Corporation shall be
conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the
Corporation. Cause shall not exist unless and until the
Corporation has delivered to Executive, along with the Notice of
Termination for Cause, a copy of a resolution duly adopted by
three-quarters (3/4) of all members of the Board (excluding
Executive if Executive is a Board member) at a meeting of the
Board called and held for such purpose (after reasonable notice
to Executive and an opportunity for Executive, together with
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board an event set forth in clauses (i) -
(iii) above has occurred and specifying the particulars thereof
in detail. The Board must notify 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.
(d) With or Without Good Reason. The Executive's employment may
be terminated by the Executive with or without Good Reason. For
purposes of this Agreement, "Good Reason" means:
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(i) (A) any change in the duties or responsibilities (including
reporting responsibilities) of Executive that is inconsistent in
any material and adverse respect with Executive's position(s),
duties, responsibilities or status with the Corporation
immediately prior to the Effective Date (including any material
and adverse diminution of such duties or responsibilities);
provided, however, that Good Reason shall not be deemed to occur
upon a change in duties or responsibilities (other than reporting
responsibilities) that is solely and directly a result of the
Corporation no longer being a publicly traded entity and does not
involve any other event set forth in this Section 6(d) or (B) a
material and adverse change in Executive's titles or offices
(including, if applicable, membership on the Board) with the
Corporation as in effect immediately prior to the Effective Date;
(ii) any failure by the Corporation to comply with any of the
provisions of Section 5 hereof;
(iii) the Corporation requiring the Executive to be based
at any office or location other than that described in Section
4(a)(ii) hereof, except for travel required in the performance of
the Executive's responsibilities which shall be no more extensive
than the customary travel requirements of Executive prior to the
Effective Date;
(iv) any purported termination by the Corporation of the
Executive's employment other than as permitted by this Agreement,
it being understood that any such purported termination shall not
be effective for any purpose of this Agreement; or
(v) any failure by the Corporation to comply with and satisfy
Section 12(c) hereof by causing any successor to the Corporation
to expressly assume and agree to perform this Agreement with
Executive, to the full extent set forth in said Section 12(c);
provided, however, that a termination by Executive for Good
Reason shall be effective only if, within 30 days following the
delivery of a Notice of Termination for Good Reason by Executive
to the Corporation, the Corporation has failed to cure the
circumstances giving rise to Good Reason to the reasonable
satisfaction of the Executive. For purposes of this Section
6(d), a good faith determination made by the Executive that a
"Good Reason" for termination has occurred, and has not been
adequately cured, shall be conclusive and binding.
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 13(d) hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(x) indicates the specific termination provision in this
Agreement relied upon, (y) 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 (z) if the termination date is other than the date
of receipt of such notice, specifies the proposed termination
date.
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7. Obligations of the Corporation Upon Termination.
(a) Expiration of Employment Period. If the Executive's
employment shall be terminated on account of the expiration of
the Employment Period, the Corporation shall pay the Executive
his Base Salary through the expiration of the Employment Period,
plus any Bonus amounts earned but not paid during such period and
any benefits to which the Executive is entitled under the terms
of any of the Corporation's benefit plans, policies or
arrangements, and the Corporation shall have no further
obligations to the Executive under this Agreement.
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate
without further obligations to the Executive's legal
representatives, other than those death benefits provided by the
Corporation to which Executive is entitled at the date of the
Executive's death, which shall be at least comparable to those in
effect at any time during the ninety-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's designees, as in effect on the
date of the Executive's death with respect to other key
executives and their designees.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability, this Agreement shall
terminate without further obligations to the Executive, other
than those benefits provided by the Corporation to which
Executive is entitled as of the Disability Effective Date, which
benefits shall be at least comparable to those in effect at any
time during the ninety-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the
Executive's designees, as in effect on the date of the
Executive's Disability with respect to other key executives and
their designees.
(d) With Cause or Without Good Reason. If the Executive's
employment shall be terminated (i) by the Corporation with Cause,
or (ii) by Executive without Good Reason, 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,
plus any Bonus amounts earned but not paid through the date of
termination and any benefits to which the Executive is entitled
under the terms of any of the Corporation's benefit plans,
policies or arrangements, and the Corporation shall have no
further obligations to the Executive under this Agreement.
(e) Without Cause or With Good Reason. If, during the
Employment Period, Executive's employment shall be terminated (i)
by the Corporation without Cause, or (ii) by Executive for Good
Reason, the Corporation shall pay to the Executive in a lump sum
in cash within ten (10) days after the date of termination the
aggregate of the following amounts, with respect to which
Executive shall have no duty of mitigation and the Corporation
shall have no right of set-off:
(A) to the extent not theretofore paid, the Executive's
Base Salary through the date of termination at the rate in effect on
the date of termination plus any Bonus amounts which have become
payable and any accrued vacation pay;
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(B) a pro rata portion of Executive's Bonus for the Fiscal
Year in which the date of termination occurs equal to the product of
(1) the greater of (x) the average annual dollar bonus amount
that was earned by the Executive under the Bonus Plan for the
three completed Fiscal Years immediately prior to the date of
termination, or (y) Executive's Target bonus amount under the
Bonus Plan for the Fiscal Year which includes the date of
termination or, if no target has been set with respect to
Executive for such Fiscal Year, the Target bonus amount for the
immediately preceding Fiscal Year (in either case, based on
Executive's target percentage of Base Salary established pursuant
to the Bonus Plan) (the greater of (x) and (y) being referred to
as the "Target Bonus"), multiplied by (2) a fraction, the
numerator of which is the number of days in the Fiscal Year in
which the date of termination occurs through the date of
termination and the denominator of which is three hundred sixty-
five (365);
(C) an amount equal to Executive's Base Salary and Target
Bonus for the remainder of the Employment Period; and
(D) the present lump sum value of benefits which would have
accrued under the Pension Plan and the Retirement Plan had
Executive remained employed through the date of termination and
for the remainder of the Employment Period (and Executive's
entire Supplemental Plan benefit, including such lump sum, shall
be computed by applying early retirement factors and subsidies as
if Executive was the age he would be, and had accrued the years
of service he would have accrued, at the end of such Employment
Period), determined using the factors specified in the Pension
Plan for calculating lump sum distributions, and assuming that
Executive would have continued for such period to earn the Base
Salary at the date of termination and be paid the Target Bonus on
each date during such Employment Period that the Bonus typically
had been paid prior to the date of termination.
In addition, upon a termination of Executive in accordance with
this Section 7(e), the Corporation shall continue to provide
welfare benefits to the Executive and his or her family during
the remainder of the Employment Period at least equal to those
which would have been provided to them in accordance with the
plans, programs and policies described in Section 5(d) hereof if
the Executive's employment had continued through the Employment
Period. To the extent that the provision of such welfare
benefits is not permissible after termination of employment under
the terms of the benefit plans of the Corporation then in effect,
the Corporation shall pay to the Executive in a lump sum in cash
within thirty (30) days after the date of termination an amount
equal to the cost to the Executive of acquiring on a non-group
basis those benefits lost to the Executive and/or the Executive's
family as a result of the Executive's termination.
In addition, upon a termination of Executive in accordance with
this Section 7(e), all non-vested stock options, and any other
non-vested stock or stock-based awards held by Executive, shall
immediately become fully vested, non-forfeitable and exercisable.
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8. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or
program provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor shall
anything herein limit such rights as the Executive may have under
any stock option or other agreements with the Corporation or any
of its affiliated companies. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any
plan or program of the Corporation or any of its affiliated
companies at or subsequent to the date on which the Executive's
employment is terminated shall be payable in accordance with such
plan or program. Anything herein to the contrary
notwithstanding, if the Executive becomes entitled to payments
pursuant to Section 7(e) hereof, such Executive agrees to waive
payments under any severance plan or program of the Corporation.
9. Confidential Information. The Executive shall 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 (other than by acts by the Executive or his
representatives in violation of this Agreement). After
termination of the Executive's employment with the Corporation,
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. In no event shall an asserted violation of the
provisions of this Section 9 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under
this Agreement.
10. Covenant Against Competition.
(a) If, after the occurrence of a Change in Control, the
Executive's employment by the Corporation is terminated pursuant
to Sections 7(d) or 7(e) hereof, then for the greater of (i) one
year after the date of termination or (ii) the remainder of the
Employment Period, the Executive shall not directly or indirectly
induce or attempt to influence any employee of the Corporation to
terminate his employment with the Corporation and shall not
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,
which is involved in business activities which are substantially
the same as, similar to or in competition with business
activities carried on by the Corporation, or being definitely
planned by the Corporation, at the time of the termination of the
Executive's employment. However, nothing contained in this
Section 10(a) shall prevent the Executive from holding for
investment no more than two percent (2%) of any class or equity
securities of a company whose securities are traded on a national
securities exchange.
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(b) Executive acknowledges that the restrictions contained in
Sections 9 and 10(a) hereof, 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 10(a), the period during which the
restrictions contained in Section 10(a) shall remain in effect
shall be tolled as of the time of commencement of such
violation, and shall not begin to run again until such time as
such violation shall be cured by the Executive to the
satisfaction of the Corporation.
(d) Executive acknowledges and agrees that the covenants and
other provisions set forth in Sections 10(a), 10(b) and 10(c)
hereof are reasonable and valid in geographical and temporal
scope and in all other respects. If any of such covenants or
other provisions are found to be invalid or unenforceable by a
final determination of a court of competent jurisdiction, then
(I) the remaining covenants and other provisions set forth in
Sections 10(a), 10(b) and 10(c) shall be unimpaired, and (ii) the
invalid or unenforceable covenant or provision shall be deemed
replaced by a covenant or provision that is valid or enforceable
and that comes closest to expressing the intention of the
covenant or provision found to be invalid or unenforceable.
11. Certain Additional Payments by the Corporation.
(a) If it is determined (as hereafter provided) that any payment
or distribution by the Corporation to or for the benefit of
Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar
right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any
such interest and penalties, are hereafter collectively referred
to as the "Excise Tax"), then Executive will be entitled to
receive an additional payment or payments (a "Gross-Up Payment")
in an amount such that, after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
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(b) Subject to the provisions of Section 11(f) hereof, all
determinations required to be made under this Section 11,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, will be made by
a nationally recognized firm of certified public accountants (the
"Accounting Firm") selected by Executive in his sole discretion.
Executive will direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the
Corporation and Executive within 30 days after the date of the
Change in Control or the date of Executive's termination of
employment, if applicable, and any other such time or times as
may be requested by the Corporation or Executive. If the
Accounting Firm determines that any Excise Tax is payable by
Executive, the Corporation will pay the required Gross-Up Payment
to Executive within 15 days after receipt of such determination
and calculations. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it will, at the same time as
it makes such determination, furnish Executive with an opinion
that he has substantial authority not to report any Excise Tax on
his federal, state, local income or other tax return. Any
determination by the Accounting Firm as to the amount of the
Gross-Up Payment will be binding upon the Corporation and
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state
or local tax law at the time of any determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not have been made by the Corporation should have been
made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Corporation
exhausts or fails to pursue its remedies pursuant to
Section 11(f) hereof and Executive thereafter is required to make
a payment of any Excise Tax, Executive will direct the Accounting
Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting
calculations to both the Corporation and Executive as promptly as
possible. Any such Underpayment will be promptly paid by the
Corporation to, or for the benefit of, Executive within 15 days
after receipt of such determination and calculations.
(c) The Corporation and Executive will each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Corporation or Executive, as
the case may be, reasonably requested by the Accounting Firm, and
otherwise cooperate with the Accounting Firm in connection with
the preparation and issuance of the determination contemplated by
Section 11(b) hereof.
(d) The federal, state and local income or other tax returns
filed by Executive will be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect
to the Excise Tax payable by Executive. Executive will make
proper payment of the amount of any Excise Tax, and at the
request of the Corporation, provide to the Corporation true and
correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed
with the applicable taxing authority, and such other documents
reasonably requested by the Corporation, evidencing such payment.
If prior to the filing of Executive's federal income tax return,
or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive will within 15 days pay to
the Corporation the amount of such reduction.
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(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Sections 11(b) and (d) hereof will be borne by
the Corporation. If such fees and expenses are initially
advanced by Executive, the Corporation will reimburse Executive
the full amount of such fees and expenses within 15 days after
receipt from Executive of a statement therefor and reasonable
evidence of his payment thereof.
(f) Executive will notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of a Gross-Up Payment.
Such notification will be given as promptly as practicable but no
later than 30 days after Executive actually receives notice of
such claim and Executive will further apprise the Corporation of
the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by
Executive). Executive will not pay such claim prior to the date
that any payment of amount with respect to such claim is due. If
the Corporation notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim,
Executive will:
(A) provide the Corporation with any written records or
documents in his possession relating to such claim reasonably
requested by the Corporation;
(B) take such action in connection with contesting such
claim as the Corporation will reasonably request in writing from time to
time, including without limitation accepting legal representation
with respect to such claim by an attorney competent in respect of
the subject matter and reasonably selected by the Corporation;
(C) cooperate with the Corporation in good faith in order
effectively to contest such claim; and
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(D) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation will bear and pay
directly all costs and expenses (including interest and
penalties) incurred in connection with such contest and will
indemnify and hold harmless Executive, on an after-tax basis, for
and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without
limiting the foregoing provisions of this Section 11(f), the
Corporation will control all proceedings taken in connection with
the contest of any claim contemplated by this Section 11(f) and,
at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim (provided that
Executive may participate therein at his own cost and expense)
and may, at its option, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Corporation will determine; provided, however,
that if the Corporation directs Executive to pay the tax claimed
and xxx for a refund, the Corporation will advance the amount of
such payment to Executive on an interest-free basis and will
indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such
advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Corporation's control of any such
contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive will be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
(g) If Executive receives any refund with respect to any Excise
Tax previously paid to the Internal Revenue Service by Executive,
and if Executive had received a Gross-Up Payment from the
Corporation with respect to such Excise Tax, Executive will
promptly pay to the Corporation the amount of such refund
(together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by Executive of
an amount advanced by the Corporation pursuant to Section 11(f)
hereof, a determination is made that Executive will not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 days
after such determination, then such advance will be forgiven and
will not be required to be repaid and the amount of such advance
will offset, to the extent thereof, the amount of the Gross-Up
Payment required to be paid pursuant to this Section 11.
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12. 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 other 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.
13. 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 the exclusive jurisdiction of any dispute
regarding this Agreement shall be the state courts located in
Philadelphia, Pennsylvania. The Corporation shall reimburse
Executive for the fees and expenses incurred by him in enforcing
this Agreement, provided that at least one matter in dispute is
decided in favor of Executive.
(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:
If to the Corporation:
The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx,
Chairman of the Board
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.
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(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) 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.
(g) This Agreement contains the entire understanding of the
Corporation and the Executive with respect to the subject matter
hereof.
(h) The Executive and the Corporation acknowledge that the
employment of the Executive by the Corporation, prior to the
Effective Date, is "at will", and may be terminated by either the
Executive or the Corporation at any time. Upon a termination of
the Executive's employment or upon the Executive's ceasing to be
an officer of the Corporation, in each case, prior to the
Effective Date, there shall be no further rights under this
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.
THE PEP BOYS - MANNY, MOE & XXXX
By:
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