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EXHIBIT 10.15
XXXXXX X. XXXXXXXXX
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 Xxxxxx X. Xxxxxxxxx, whose address is 000 Xxxxxx
Xxxxxx, Xxxxxxxxx, 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
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 Chairman and Chief
Executive Officer ("CEO") of Tweeter. In his capacity as the CEO 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 CEO of
Tweeter or of his duties or responsibilities as CEO of Tweeter; 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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Xxxxxx X. Xxxxxxxxx
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