EXHIBIT 10.19
XXXXX CFO PARTNERS, LLP
INTERIM EXECUTIVE SERVICES AGREEMENT
June 24, 2005
Xxxxxx XxXxxxx, CEO
Tweeter Home Entertainment Group
00 Xxxxxx Xxx
Xxxxxx, XX 00000
Dear Xxx:
Xxxxx CFO Partners, LLP ("Xxxxx") understands that Tweeter Home Entertainment
Group ("the Company") desires to engage a partner of Xxxxx to serve as interim
chief financial officer. This Interim Executive Services Agreement sets forth
the conditions under which such services will be provided.
Services; Fees
Commencing on July 6, 2005, Xxxxx will make available to the Company Xxxx
Xxxxxxxxxx (the "Xxxxx Partner"), who will serve as chief financial officer of
the Company for a term of three months, or such longer term as mutually agreed
to by the Company and the Xxxxx Partner. The Xxxxx Partner will become an
employee and, if applicable, a duly elected or appointed officer of the Company,
and subject to the supervision and direction of the CEO of the Company, the
board of directors of the Company, or both. Xxxxx will have no control or
supervision over the Xxxxx Partner.
The Company will pay the Xxxxx Partner directly a salary of $23,920.00 per
month, with payments to be made in the normal course of the Company's
exempt-employee payroll. In addition, the Company will pay directly to Xxxxx a
fee of $5,980.00 per month as compensation for resources provided. The Company
will pay Xxxxx the monthly fees one month in advance, with the first payment due
on July 6, 2005. The second payment and every payment thereafter will be paid in
advance before each month-end related to the following month.
Within the first six weeks of the Xxxxx Partner's engagement by the Company, the
Company and the Xxxxx Partner will agree on targets and deliverables to be used
as the basis for incentive compensation. If the agreed-upon targets and
deliverables are achieved, at the end of the engagement the Xxxxx Partner will
receive incentive compensation equal to 25% of salary paid during the
engagement, or such lesser amount as the Xxxxx Partner and the Company may agree
to. In addition, Xxxxx shall receive a fee equal to 25% of the incentive
compensation paid to the Xxxxx Partner, payable within ten days of the end of
the engagement.
The Company will have no obligation to provide the Xxxxx Partner any health or
major medical benefits. In lieu of the Xxxxx Partner participating in the
Company-sponsored employee medical insurance benefit plan, the Xxxxx Partner
will remain on his or her current medical plan. The Company will reimburse the
Xxxxx Partner for amounts paid by the Xxxxx Partner for medical
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insurance for himself and his family upon presentation of reasonable
documentation of premiums paid by the Xxxxx Partner, provided that such
reimbursement will not exceed the amount paid by the Company for comparable
benefits provided to other senior managers. In accordance with the U.S. federal
tax law, such amount will not be considered reportable W-2 income, but instead
non-taxable benefits expense reimbursement.
As an employee, the Xxxxx Partner will be eligible for any Company employee
retirement and/or 401(k) plan and for vacation and holidays consistent with the
Company's policy as it applies to senior management, and the Xxxxx Partner will
be exempt from any delay periods otherwise required for eligibility.
The Company will reimburse the Xxxxx Partner directly for out-of-pocket expenses
incurred by the Xxxxx Partner in providing services hereunder to the same extent
that the Company is responsible for such expenses of senior managers of the
Company.
The Company agrees to pay Xxxxx and to maintain a security deposit of $10,000.00
for the Company's future payment obligations to both Xxxxx and the Xxxxx Partner
under this agreement (the "Deposit"). The security deposit must be received by
Xxxxx before the Xxxxx Partner's employment commences. If the Company breaches
this agreement and fails to cure such breach as provided in this agreement,
Xxxxx will be entitled to apply the Deposit to its damages resulting from such
breach. Upon termination or expiration of this agreement, Xxxxx will return to
the Company the balance of the Deposit remaining after application of any
amounts to unfulfilled payment obligations of the Company to Xxxxx or the Xxxxx
Partner as provided for in this agreement.
Hiring Xxxxx Partner Outside of Agreement
During the twelve (12)-month period following termination or expiration of this
agreement, other than in connection with another Xxxxx agreement, the Company
will not employ the Xxxxx Partner, or engage the Xxxxx Partner as an independent
contractor, to render services of substantially the same nature as those to be
performed by the Xxxxx Partner as contemplated by this agreement. The parties
recognize and agree that a breach by the Company of this provision would result
in the loss to Xxxxx of the Xxxxx Partner's valuable expertise and revenue
potential and that such injury will be impossible or very difficult to
ascertain. Therefore, in the event this provision is breached, Xxxxx will be
entitled to receive as liquidated damages an amount equal to twenty-five percent
(25%) of the Xxxxx Partner's Annualized Compensation (as defined below), which
amount the parties agree is reasonably proportionate to the probable loss to
Xxxxx and is not intended as a penalty. If, however, a court or arbitrator, as
applicable, determines that liquidated damages are not appropriate for such
breach, Xxxxx will have the right to seek actual damages. The amount will be due
and payable to Xxxxx upon written demand to the Company. For this purpose,
"Annualized Compensation" will mean monthly Salary equivalent to what the Xxxxx
Partner would receive on a full-time basis multiplied by twelve (12), plus the
maximum amount of any bonus for which the Xxxxx Partner was eligible with
respect to the then current bonus year.
Term & Termination
This agreement will terminate upon the effective date of termination or
expiration of the Xxxxx Partner's employment with the Company or upon the
Employee ceasing to be a partner of Xxxxx.
Notwithstanding the preceding, following such time as the Xxxxx Partner has
commenced rendering services hereunder, either party may terminate this
agreement at any time effective immediately upon written notice to the other
party of such termination.
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Insurance
The Company will provide Xxxxx or the Xxxxx Partner with written evidence that
the Company maintains directors' and officers' insurance in an amount reasonably
acceptable to the Xxxxx Partner at no additional cost to the Xxxxx Partner, and
the Company will maintain such insurance at all times while this agreement
remains in effect.
Furthermore, the Company will maintain such insurance coverage with respect to
occurrences arising during the term of this agreement for at least three years
following the termination or expiration of this agreement or will purchase a
directors' and officers' extended reporting period, or "tail," policy to cover
the Xxxxx Partner.
Disclaimers, Limitations of Liability & Indemnity
The Company acknowledges to Xxxxx that, as of the date of this Agreement it is,
and has been for some time, unprofitable. Xxxxx offers no assurances that the
resources to be provided under this Agreement will correct the financial
difficulties of the Company. Further, the Company will not require the Xxxxx
Partner to attest to the accuracy of the books and records of the Company until
the Xxxxx Partner has served under this Agreement for six weeks.
Xxxxx assumes no responsibility or liability under this agreement other than to
render the services called for hereunder and will not be responsible for any
action taken by the Company in following or declining to follow any of Xxxxx'x
advice or recommendations. Xxxxx represents to the Company that Xxxxx has
conducted its standard screening and investigation procedures with respect to
the Xxxxx Partner becoming a partner in Xxxxx, and the results of the same were
satisfactory to Xxxxx. Xxxxx disclaims all other warranties, either express or
implied. Without limiting the foregoing, Xxxxx makes no representation or
warranty as to the accuracy or reliability of reports, projections, forecasts,
or any other information derived from use of Xxxxx'x resources, and Xxxxx will
not be liable for any claims of reliance on such reports, projections,
forecasts, or information. Xxxxx will not be liable for any non-compliance of
reports, projections, forecasts, or information or services with federal, state,
or local laws or regulations. Such reports, projections, forecasts, or
information or services are for the sole benefit of the Company and not any
unnamed third parties.
The Company agrees to indemnify Xxxxx and the Xxxxx Partner to the full extent
permitted by law for any losses, costs, damages, and expenses (including
reasonable attorneys' fees), as they are incurred, in connection with any cause
of action, suit, or other proceeding arising in connection with Xxxxx'x
resources or the Xxxxx Partner's services to the Company
In the event that any partner of Xxxxx (including without limitation the Xxxxx
Partner to the extent not otherwise entitled in his or her capacity as an
officer of the Company) is subpoenaed or otherwise required to appear as a
witness or Xxxxx or such partner is required to provide evidence, in either case
in connection with any action, suit, or other proceeding initiated by a third
party or by the Company against a third party, then the Company shall reimburse
Xxxxx for the costs and expenses (including reasonable attorneys' fees) actually
incurred by Xxxxx or such partner and provide Xxxxx with compensation at Xxxxx'x
customary rate for the time incurred.
The Company agrees that, with respect to any claims the Company may assert
against Xxxxx in connection with this agreement or the relationship arising
hereunder, Xxxxx'x total liability will not exceed two (2) months of Fees.
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As a condition for recovery of any liability, the Company must assert any claim
against Xxxxx within three (3) months after discovery or sixty (60) days after
the termination or expiration of this agreement, whichever is earlier.
Xxxxx will not be liable in any event for incidental, consequential, punitive,
or special damages, including without limitation, any interruption of business
or loss of business, profit, or goodwill.
Arbitration
If the parties are unable to resolve any dispute arising out of or in connection
with this agreement, either party may refer the dispute to arbitration by a
single arbitrator selected by the parties according to the rules of the American
Arbitration Association ("AAA"), and the decision of the arbitrator will be
final and binding on both parties. Such arbitration will be conducted by the
Atlanta, Georgia, office of the AAA. In the event that the parties fail to agree
on the selection of the arbitrator within thirty (30) days after either party's
request for arbitration under this paragraph, the arbitrator will be chosen by
AAA. The arbitrator may in his discretion order documentary discovery but shall
not allow depositions without a showing of compelling need. The arbitrator will
render his decision within ninety (90) days after the call for arbitration. The
arbitrator will have no authority to award punitive damages. Judgment on the
award of the arbitrator may be entered in and enforced by any court of competent
jurisdiction. The arbitrator will have no authority to award damages in excess
or in contravention of this agreement and may not amend or disregard any
provision of this agreement, including this paragraph. Notwithstanding the
foregoing, either party may seek appropriate injunctive relief from a court of
competent jurisdiction, and either party may seek injunctive relief in any court
of competent jurisdiction.
Miscellaneous
Xxxxx will be entitled to receive all reasonable costs and expenses incidental
to the collection of overdue amounts under this Resources Agreement, including
but not limited to attorneys' fees actually incurred.
Neither the Company nor Xxxxx will be deemed to have waived any rights or
remedies accruing under this agreement unless such waiver is in writing and
signed by the party electing to waive the right or remedy. This agreement binds
and benefits the respective successors of Xxxxx and the Company.
Neither party will be liable for any delay or failure to perform under this
agreement (other than with respect to payment obligations) to the extent such
delay or failure is a result of an act of God, war, earthquake, civil
disobedience, court order, labor dispute, or other cause beyond such party's
reasonable control.
The provisions in this agreement concerning payment of compensation and
reimbursement of costs and expenses, limitation of liability, directors' and
officers' insurance, indemnity, and arbitration will survive any termination or
expiration of this Resources Agreement.
This agreement will be governed by and construed in all respects in accordance
with the laws of the State of Georgia, without giving effect to
conflicts-of-laws principles.
The terms of this agreement are severable and may not be amended except in
writing signed by the party to be bound. If any portion of this agreement is
found to be unenforceable, the rest of the agreement will be enforceable except
to the extent that the severed provision deprives either party of a substantial
benefit of its bargain.
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Nothing in this agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns and the Xxxxx Partner.
Each person signing below is authorized to sign on behalf of the party
indicated, and in each case such signature is the only one necessary.
Bank Lockbox Mailing Address for Deposit and Fees:
Xxxxx CFO Partners, LLP
X.X. Xxx 000000
Xxxxxxx, XX 00000-0000
Electronic Payment Instructions for Deposit and Fees:
Bank Name: Bank of America
Branch: Atlanta
Routing Number: For ACH Payments: 061 000 052
For Wires: 026 009 593
Account Name: Xxxxx CFO Partners, LLP
Account Number: 003 279 247 763
Please reference Tweeter Home Entertainment Group in the body of the wire.
Please sign below and return a signed copy of this letter to indicate the
Company's agreement with its terms and conditions.
We look forward to serving you.
Sincerely yours,
XXXXX CFO PARTNERS, LLP Acknowledged and agreed by:
_________________________________________ TWEETER HOME ENTERTAINMENT GROUP
Signature
Xxxxxx XxXxxxxx
______________________________
Area Managing Partner for XXXXX CFO Signature
PARTNERS, LLP
______________________________
(Print name)
______________________________
(Title)
______________________________
(Date)
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