Exhibit 10.3
Employment Agreement, dated as of June 1, 2003, between the Company and Xxxxx
Yanawitz.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made by and between THE PEP BOYS-MANNY, MOE &
XXXX, a Pennsylvania corporation (the "Corporation"), and Xxxxx Xxxxxxxx
(the "Executive"), on this ____ day of June 2003 (the "Effective Date").
W I T N E S S E T H :
WHEREAS, the Corporation desires to retain the employment services of the
Executive and the Executive desires to accept such employment by entering into
this Employment Agreement on the terms and conditions as set forth herein
(the "Agreement");
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 the Senior Vice President - Business
Development of the Corporation (the "SVP - Strategy & Business Development")
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.
During Executive's employment with the Corporation, the Executive shall report
directly to the Chief Executive Officer ("CEO") of the Corporation. The
majority of 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.
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.
2. Employment Period; Commencement of Employment. The term of this
Agreement shall commence on the Effective Date and end on the third anniversary
of the Effective Date (the "Initial Employment Period"). Thereafter, the term
of this Agreement shall automatically renew for an indeterminate number of one-
year periods unless, at least two months prior to the expiration of the Initial
Employment Period or any succeeding one-year term, either party gives written
notice to the other of its election not to extend such term of the Agreement
(the Initial Employment Period and any succeeding one-year renewal is
hereinafter referred to as the "Employment Period"). The Executive shall
commence employment services as soon as reasonably practicable following the
Effective Date but no later than June 16, 2003 (the "Employment Commencement
Date").
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 $300,000 ("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) Signing Bonus. In consideration for the Executive entering into this
Agreement and agreeing to serve as the SVP - Strategy & Business Development,
the Corporation shall pay to the Executive a signing bonus equal to $50,000
(the "Signing Bonus") within five business days following the Employment
Commencement Date. The Signing Bonus shall be conditioned on the Executive's
continued employment with the Corporation for twelve (12) months following the
Employment Commencement Date. To the extent that the Executive voluntarily
terminates employment with the Corporation or the Corporation terminates the
Executive's employment for Cause (as defined herein) during the initial twelve-
month Employment Period, the Signing Bonus shall be forfeited and the Executive
agrees to repay the Signing Bonus to the Corporation within five business days
following such termination. A termination of employment on account of the
death or Disability (as defined herein) of the Executive or initiated by the
Corporation (other than for Cause) or by the Executive for Good Reason shall
not require such repayment.
(c) 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"). For each full fiscal year during the Employment Period, the Executive
shall be entitled to earn a bonus based upon performance objectives established
by the Compensation Committee of the Board. The target bonus level for each
full fiscal year during the Employment Period shall be 45% of Base Salary. The
Annual Bonus for the first fiscal year during the Employment Period (the "First
Fiscal Year") shall be prorated for the time that this Agreement is in effect
during the First Fiscal Year and shall be paid to the Executive after the end
of the First Fiscal Year at the time that fiscal year 2004 bonuses are paid to
other senior executives under the. If the target performance goals for the
First Fiscal Year are not attained such that the Executive would not earn at
least 45% of Base Salary (prorated as above), the Corporation shall pay to
Executive a guaranteed bonus for the First Fiscal Year equal to $100,000,
prorated for the time that this Agreement is in effect during the First
Fiscal Year (the "Guaranteed Bonus"). The Guaranteed Bonus and any Annual
Bonus payable hereunder are hereinafter referred to as a "Bonus".
(d) 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.
(e) 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.
(f) 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.
(g) Vacation. During the Employment Period, the Executive shall be
entitled to four weeks per calendar year of paid vacation.
(h) Stock Option. On the Effective Date, the Corporation shall grant to
the Executive a stock option to purchase 125,000 shares of the Corporation's
common stock (the "Inducement Option"). The Inducement Option shall have an
exercise price equal to the fair market value of one share of the
Corporation's common stock on the Effective Date and shall be subject to the
following vesting schedule: 20% fully vested on the Effective Date, 20% to
vest on each of the first, second, third and fourth anniversaries of the
Effective Date. Except as otherwise set forth herein, vesting shall be
contingent on continued employment with the Corporation. The Inducement
Option shall have such other terms and conditions as set forth in a stock
option agreement to be entered into by the Corporation and the Executive.
(i) Relocation and Expenses. The Corporation shall reimburse the Executive
for all reasonable and customary relocation costs and expenses (including
reasonable and customary travel and lodging expenses for the Executive and his
family to look for permanent living accommodations and temporary living
accommodations for the Executive after the Employment Commencement Date but
excluding the broker's commission for selling his current Canadian residence)
accrued through the end of September 2003 in connection with the Executive's
relocation from his current home in Canada to the greater Philadelphia
metropolitan area, including all costs, expenses and fees necessary under U.S.
law to allow the Executive to enter the United States and work for the
Corporation during Employment Period. In the event that this Agreement and
Executive's employment is terminated by the Corporation without Cause within
thirty-six (36) months of the Effective Date or the Company gives to the
Executive written notice of its intent not to extend the Agreement beyond the
Initial Employment Period pursuant to Section 2 herein, the Corporation shall
reimburse the Executive for all reasonable and customary relocation costs and
expenses accrued (within four months of such termination of employment) in
connection with the Executive's relocation from his then current home in the
greater Philadelphia metropolitan area back to Xxxxxxx, Xxxxxxx, Xxxxxx.
4. Termination. This Agreement and 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, 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, Executive shall be deemed disabled (the
"Disability") and the Corporation, by notice to 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. 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 Executive to have suffered a Disability
and terminate the Employment Period on account of such Disability at any time
after 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 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); (ii) any act by Executive of illegality, dishonesty
or fraud in connection with the Executive's employment; (iii) the willful
engaging by Executive in gross misconduct which is demonstrably and materially
injurious to the Corporation or its affiliates; (iv) 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
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 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 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 the entire Board
(excluding Executive if 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 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) any change in the duties or responsibilities of Executive that is
inconsistent in any material and adverse respect with Executive's position,
duties, responsibilities or status as SVP - Strategy & Business Development
(including any material and adverse diminution of such duties or
responsibilities); provided, however, that Good Reason shall not be deemed to
occur upon (A) 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 paragraph (c).
(ii) a material and adverse change in Executive's title or office as
SVP-Strategy & Business Development, other than an insubstantial and
inadvertent action which is remedied by the Corporation promptly after receipt
of notice thereof given by Executive;
(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 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.
(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) Expiration of the Employment Period. This Agreement and the
Executive's employment shall terminate upon the delivery of a notice of
non-extension of the Employment Period by either the Executive or the
Corporation as set forth in Section 2.
(f) 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 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.
(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 Executive is entitled to hereunder at the date of
the termination and shall have no further obligations to the Executive under
this Agreement.
(c) With Cause, Without Good Reason or Non-Extension of Employment Period.
If the Executive's employment shall be terminated (i) by the Corporation with
Cause, (ii) by Executive without Good Reason or (iii) on account of the
delivery by either party of a notice of non-extension of the Employment Period,
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.
(d) 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 or provide the following amounts and benefits, with respect to which
Executive shall have no duty of mitigation:
(A) to the extent not theretofore paid, the Corporation shall pay 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 been earned and
become payable and any vacation pay for accrued but unused vacation through the
date of termination in the calendar year which includes the date of termination
(such amount to be paid in a lump sum within 10 days of such termination);
(B) the Corporation shall continue to pay to the Executive the Base Salary
in equal installments at the regular pay periods of the Corporation from the
termination date through the end of the then applicable Employment Period as if
the Executive had continued to be employed for the remainder of the then
applicable Employment Period (the "Severance Period");
(C) the Corporation shall also pay to the Executive (i) his target bonus
amount under the Bonus Plan (or $100,000 if such termination occurs in the
First Fiscal Year) 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 "Target Bonus") and (ii) his Target Bonus for
each fiscal year that ends during the Severance Period;
(D) the Corporation shall continue to provide welfare benefits to the
Executive and his family during the Severance Period at least equal to those
which would have been provided to them in accordance with the plans, programs
and policies described in Section 3(e) in this Agreement if the Executive's
employment had continued through the Severance Period. To the extent that such
benefits are 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 the Executive's family
as a result of the Executive's termination; and
(E) all non-vested stock options held by the Executive shall immediately
become fully vested and exercisable; All payments and benefits to be provided
to 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, 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 (i) for two years following his termination of employment with the
Corporation for any reason other than by the Corporation without Cause or by
the Executive for Good Reason or (ii) during the Severance Period in the event
the Executive is terminated by the Corporation without Cause or the Executive
terminates his employment for Good Reason, 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 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 7(a) 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) 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.
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 courts located in
Philadelphia, Pennsylvania.
(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:
Xxxxx Xxxxxxxx
00 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X ZS1
(until such time as the Executive has relocated to the United States and
thereafter to such new U.S. address)
If to the Corporation, to:
The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
cc: Chief Legal Officer
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 invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force
and effect. If any provision of this Agreement 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. If any of the
provisions of, or covenants contained in, this Agreement 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. Any such
holding shall affect such provision of this Agreement, solely as to that
jurisdiction, without rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
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.
(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 and the stock option agreement to be entered into in
connection with the grant of the Inducement Option, contains the entire
understanding of the Corporation and the Executive with respect to the
subject matter hereof.
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.
Xxxxx Xxxxxxxx
THE PEP BOYS - MANNY, MOE & XXXX
By:
Xxxxxxxx X. Xxxxxxxxx
Chief Executive Officer
