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EXHIBIT 10.16
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EMPLOYMENT AGREEMENT
TWEETER HOME ENTERTAINMENT GROUP, INC., a Delaware corporation, whose
principal place of business is 00 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
("Employer" or "Tweeter"), and Xxxxxxx Xxxxx, whose address is 00 Xxxxxx Xxx,
Xxxxxxxx, Xxxxxxxxxxxxx 00000 ("Employee"), in consideration of the mutual
promises made herein, hereby agree to enter into this Employment Agreement (this
"Agreement") as follows:
ARTICLE 1.
TERM OF EMPLOYMENT; DUTIES
1.01. TERM OF EMPLOYMENT. Employer hereby employs Employee and Employee
hereby accepts employment with Employer for the period beginning on the June
____, 1998 and ending five (5) years thereafter unless earlier terminated
pursuant to this Agreement. This Agreement shall be renewed automatically for
succeeding three (3) year terms unless either party gives notice to the other at
least 120 days prior to the expiration of any such renewal term of such party's
intention not to renew. As used herein the phrase "employment term" refers to
the entire period of employment of Employee by Employer hereunder, whether for
the periods provided above, or whether terminated earlier as hereinafter
provided or extended by mutual agreement between Employer and Employee.
1.02. GENERAL DUTIES. Employee shall serve as the President and Chief
Operating Officer of Tweeter. In his capacity as the President and Chief
Operating Officer of Tweeter, Employee shall do and perform all services, acts
or things necessary or advisable to manage and conduct the business of Employer,
subject at all times to the policies set by Tweeter's Board of Directors (the
"Tweeter Board").
1.03. NON-COMPETITION AND NON-SOLICITATION. (a) Subject to the other
provisions of this Section 1.03, during the Restricted Period (as defined
below), the Employee shall not (whether as an owner, partner, officer, director,
trustee, agent, employee, consultant, advisor or otherwise), in the Restricted
Territory (as defined below), directly or indirectly, compete with the Employer
or engage or participate in the business conducted by the Employer or enter into
the employ of or provide any services to any person engaged in a business that
is competitive with the business of the Employer. During the Restricted Period,
the Employee also (i) shall not interfere with, disrupt or attempt to disrupt
the relationship, contractual or otherwise, between the Employer and any
customer, supplier, lessor, lessee, employee, consultant or investor of the
Employer, and (ii) shall not solicit or hire any employee or consultant of the
Employer. The "Restricted Period" shall mean the Employee's employment term, and
(A) any period thereafter in which the Employer is paying Severance Pay to the
Employee, or (B) if Employee is
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terminated for Cause, or if Employee terminates employment (other than by
expiration of this Agreement) without Good Reason, two (2) years following such
termination, regardless of the remaining employment term. The "Restricted
Territory" shall mean the area within fifty (50) miles of any retail store owned
or operated by Employer (I) from time to time during the employment term or (II)
with respect to the period following Employee's employment, at the time of
termination of the Employee's employment.
(b) It is the desire and intent of the parties that the provisions
of this Section 1.03 shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular subsection or portion of this Section
1.03 shall be adjudicated to be invalid or unenforceable, this Section shall be
deemed amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of this
Section in the particular jurisdiction in which such adjudication is made.
(c) In the event of any breach of the provisions of this Section
1.03 by the Employee, any and all rights of the Employee following termination
of employment to receive any payments of Severance Pay pursuant to Article 3
hereof shall automatically terminate, but the foregoing shall not be construed
so as to require repayment by the Employee of any such Severance Pay that has
been paid to the Employee.
1.04. INJUNCTIVE RELIEF. The Employee acknowledges and agrees that a
breach or threatened breach of the provisions of Section 1.03 of this Agreement
would result in irreparable economic harm to the Employer and that a remedy at
law for any such breach would be inadequate, and therefore, if there is a breach
or threatened breach of the provisions of Sections 1.03 of this Agreement, the
Employer shall be entitled to an injunction restraining the Employee from such
breach.
ARTICLE 2.
COMPENSATION OF EMPLOYEE
2.01. ANNUAL SALARY. As compensation for the services to be performed
hereunder, Employee shall receive a salary) (i) at the rate of three hundred
thousand dollars ($300,000.00) per annum through September 30, 1998, payable at
the rate of twenty-five thousand dollars ($25,000.00) per month, (ii) at the
rate of three hundred twenty-five thousand dollars ($325,000.00) per annum from
October 1, 1998 through September 30, 1999, payable at the rate of twenty-seven
thousand eighty-three dollars and thirty-three cents ($27,083.33) per month, and
(iii) thereafter, at the rate of at least three hundred twenty-five thousand
dollars ($325,000.00) per annum, plus such increases, if any, as may be
determined by the Tweeter Board. Employee's salary shall be payable in
accordance with Employer's payroll payment policies during his employment term.
2.02. BENEFITS. Employee shall be eligible to receive such benefits, and
to participate in such bonus or incentive plans, are as generally made available
to other senior executives of Employer or as may be specifically provided to
Employee as
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determined by Employer or its Compensation Committee from time to time. In
addition, Employer shall provide Employee with a monthly automobile allowance of
up to thousand dollars ($1,000.00) paid to Employee in addition to his salary
and other benefits on the first of each month. All expenses relating to the
operation and maintenance of the automobile, including, but not limited to
insurance expense, oil and gas, and repair shall be paid by Tweeter.
Additionally, Employer shall procure and maintain an automobile liability
insurance policy for Employee's automobile with coverage including Employee and
Employee's spouse and those of his children who qualify as Employee's dependents
under section 152 of the Internal Revenue Code of 1986, as amended, in such
minimum amounts as are reasonable and prudent. Further, it is contemplated that
Employer and Employee will, within a reasonable time following the date of this
Agreement, agree upon and implement a split-dollar insurance or other deferred
compensation benefit for Employee.
2.03. INDEMNIFICATION OF LOSSES OF EMPLOYEE; INSURANCE. Employer shall
indemnify and defend Employee for all losses sustained by Employee in direct
consequence of the discharge of his duties on Employer's behalf, including the
payment of all reasonable legal fees and costs. Employer shall obtain
appropriate Directors and Officers liability insurance, including Employee as a
named insured in an amount comparable to industry standards for public companies
of a size similar to Employer.
ARTICLE 3.
TERMINATION OF EMPLOYMENT
3.01. TERMINATION EVENTS.
(a) TERMINATION UPON DEATH OR DISABILITY. Employee's death shall
terminate his employment by Employer. In addition, if Employee becomes
physically or mentally incapacitated or is injured so that he is unable to
perform the services required of him under this Agreement and such inability to
perform continues for a period in excess of one hundred twenty (120) days during
any twelve month period (whether such disability is continuous or discontinuous
during such twelve month period), Employer may terminate his employment under
this Agreement at any time thereafter, PROVIDED, however, that such disability
is continuing at the time of such termination notice.
(b) TERMINATION FOR "CAUSE" OR WITH OR WITHOUT "GOOD REASON".
(i) Cause. Employer may terminate Employee's employment at
any time for Cause upon at least thirty (30) days written notice to Employee.
The term "Cause" shall mean (1) gross negligence or willful misconduct in
connection with the performance of the executive's material duties under this
Agreement, (2) a breach by Employee of any of his material duties assigned to
him by the Tweeter Board (other than by reason of physical or mental illness)
and Employee's failure to cure such breach within thirty (30) days of written
notice thereof, (3) conduct by Employee against the material best interests of
Tweeter or a material act of common law fraud by Employee against
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Tweeter or its affiliates or employees, or (4) conviction of or pleading nolo
contendere to a felony.
(ii) Termination With Good Reason. Subject to the provisos
contained in this subparagraph, Employee may terminate his employment under this
Agreement with Good Reason upon at least thirty (30) days written notice to the
Tweeter Board. Employee shall have "Good Reason" upon, and the term "Good
Reason" shall mean, the occurrence of any of the following: (i) liquidation of
Tweeter, cessation by Tweeter of its current core business, or sale of Tweeter
or substantially all of its assets, (ii) attempt by Tweeter to relocate Employee
outside the greater Boston area without Employee's consent, (iii) breach by
Tweeter of any of its material obligations under this Agreement and failure by
Tweeter to cure such breach within thirty (30) days of notice thereof, (iv)
without Employee's consent, a reduction in his title from President and Chief
Operating Officer or of his duties or responsibilities as President and Chief
Operating Officer; or (v) a Change in Control of Tweeter, as defined below;
PROVIDED, however, that the occurrences set forth in the foregoing clause (i)
shall not be deemed to have occurred by reason of a corporate reorganization or
other transaction in which Tweeter merges into another entity if the
stockholders of Tweeter immediately prior to such occurrence or transaction
continue to own, immediately after such occurrence or transaction, a majority in
voting and economic interest of the successor entity.
As used herein, a "Change in Control" shall mean, and shall be
deemed to occur if, the "Incumbent Directors" (as hereinafter defined) cease for
any reason, including without limitation as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of the
Tweeter Board, PROVIDED, however, that any person becoming a Director of the
Company subsequent to such date whose election was approved by a vote of at
least two-thirds of the Incumbent Directors or whose nomination for election was
approved by a nominating committee comprised of Incumbent Directors shall be
deemed an Incumbent Director. The "Incumbent Directors" shall mean persons who,
as of closing of the Company's initial public offering of its common stock on or
about the date of this Agreement, constitute the Tweeter Board and those persons
deemed Incumbent Directors pursuant to the preceding sentence.
(iii) Termination Without Good Reason. Employee may terminate
his obligations under this Agreement without Good Reason by giving Employer at
least three (3) months notice in advance.
3.02 OBLIGATIONS OF EMPLOYER FOLLOWING TERMINATION.
(a) TERMINATION BY DEATH. In the event of termination of
employment by reason of Employee's death, Employee, or his estate or other
successors in interest, shall be entitled to receive any salary, pro rated
bonuses, and benefits earned by or accrued to Employee and unpaid at the date of
his death, but shall not receive any further salary or other compensation
hereunder.
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(b) TERMINATION BY REASON OF DISABILITY. In the event of
termination of employment upon disability pursuant to Section 3.01(a) above,
Employer agrees to pay Employee his annual salary for one year payable in the
same manner as provided for the payment of salary herein irrespective of any
disability insurance or other benefits available to Employee.
(c) TERMINATION FOR "CAUSE". In the event of termination of
employment during the employment term for Cause, Employee shall be entitled to
receive his salary then in effect and benefits due or to become due to him up to
the date of termination of employment, and, in the case of benefits, as may be
mandated by law following termination of employment, but Employee shall not be
entitled to any other or further salary or other compensation, bonuses (whether
or not pro rated) or other benefits.
(d) TERMINATION BY EMPLOYER WITHOUT CAUSE OR BY EMPLOYEE WITH GOOD
REASON. Upon termination of Employee's employment by Employee for Good Reason,
or by Employer for any reason other than for Cause, death or disability,
Employee shall be entitled to receive, subject to the provisions of Section 1.03
above, "Severance Pay" as follows:
(i) If such termination occurs during the first, second or
third year of this Agreement, Employee's annual salary then in effect
payable for three (3) years following termination of employment.
(ii) If such termination occurs during the fourth year of
this Agreement, Employee's annual salary then in effect payable for two
(2) years following termination of employment.
(iii) If such termination occurs during the fifth or any
subsequent years of this Agreement, Employee's annual salary then in
effect payable for one (1) year following termination of employment.
No Severance Pay shall be payable to Employee if his employment
terminates due to expiration of this Agreement without renewal, PROVIDED,
however, that upon any such expiration Employer may elect, at its option, to pay
Employee Severance Pay for up to two (2) years following such expiration, in
which event Employee shall be bound by the provisions of Section 1.03 above
during the period in which such Severance Pay is paid. Severance Pay shall be
payable as salary continuation, payable over time in the same manner as
Employee's salary.
Additionally, upon any termination as described in this Section
3.02(d): (i) all stock options of Employee under any incentive or stock option
plan of Employer or any Employer affiliate shall continue to vest during the
period in which Severance Pay is being paid, subject, however, to the specific
terms of any option or other agreement or plan relating thereto and (ii) Tweeter
shall pay Employee, within ninety (90) days of such a termination, in cash, an
amount equal to the unvested accrued benefits, if any (other
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than with respect to stock options or restricted stock), which Employee may have
under any retirement, short- or long-term incentive, or stock-option plan of
Tweeter or any Tweeter affiliate.
(e) TERMINATION BY EMPLOYEE WITHOUT GOOD REASON. In the event of a
termination of employment by Employee without Good Reason, Employee shall be
entitled to receive any salary or bonuses earned by or accrued to Employee and
unpaid at the date of his death, but shall not receive any further salary or
other compensation hereunder, and without limiting the foregoing, in such event,
(i) Employee shall receive no Severance Pay, (ii) vesting of all stock options
and restricted stock shall cease upon termination of employment, and (iii)
Employee shall receive no payments in respect of unvested accrued benefits under
any long or short-term incentive plan or retirement plan. The foregoing clauses
(i) through (iii) shall also apply if Employee's employment terminates due to
expiration of this Agreement, or of a renewal term of this Agreement, without
further renewal.
ARTICLE 4.
GENERAL PROVISIONS
4.01. NOTICES. Any notices to be given hereunder by either party to the
other shall be in writing and may be transmitted by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested to
such other party at the address first set forth above.
4.02 ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever.
4.03. LAW GOVERNING AGREEMENT. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Massachusetts, without regard to conflicts of laws principles.
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4.04. ASSIGNMENT. This Agreement may be assigned by Employer but not by
Employee.
Executed on _____________________, 1998, at Canton, Massachusetts.
EMPLOYER:
TWEETER HOME ENTERTAINMENT GROUP, INC.
By:
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Name:
Title:
EMPLOYEE:
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Xxxxxxx Xxxxx
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