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EXHIBIT 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), made and entered into
effective the close of business on the 15th day of August, 2000, by and between
The Good Guys, Inc., a Delaware corporation ("COMPANY"), and Xxxxxxx X Xxxxxx
("EXECUTIVE").
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, Company hereby agrees to employ Executive and Executive hereby
accepts such employment upon the terms and conditions hereinafter set forth:
STATEMENT OF AGREEMENT
1. Duties of Executive.
(a) President. Executive agrees that during the term of this Agreement,
he will devote his best efforts and all of his business time and attention
to the business of the Company and will faithfully and diligently carry out
the duties of President. Executive's duties shall include those normally
performed by a chief operating officer, except initially for duties in the
finance, merchandising and advertising areas of the business. In such
capacity, Executive shall report directly to the Chief Executive Officer.
(b) Board of Directors. On or before September 1, 2000, Company shall
cause Executive to be appointed to Company's Board of Directors.
2. Compensation.
(a) Base Salary. Company shall pay Executive a base salary at the
annual rate of not less than Four Hundred Thousand Dollars ($400,000.00) as
determined by Company's Board of Directors ("ANNUAL BASE SALARY"). The base
salary shall be reviewed annually and adjusted upwards as appropriate based
on performance and any increase in responsibilities.
(b) Annual Cash Incentive Bonus. In addition to his base salary,
Executive shall be eligible to receive from Company, commencing with the
fiscal year that begins on October 1, 2000, an annual incentive bonus
("ANNUAL INCENTIVE BONUS"), payable in cash within ninety (90) days
following the end of such fiscal year, in an amount of up to 100% of
Executive's Annual Base Salary as reasonably determined by the Board of
Directors based upon factors including, but not limited to, Executive's
achievement of established professional goals as well as the financial
performance of the Company for that particular fiscal year. In the event
the Cash Incentive Bonus program is not established on or before the
November 9, 2000 board meeting, and before the annual anniversary date in
each year
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thereafter, Executive shall be entitled to a minimum annual bonus equal to
50% of Executive's Annual Base Salary for such year. Executive acknowledges
that the Company is considering changing its fiscal year, and that if such
change occurs then such bonus dates shall be adjusted appropriately in
order to maintain economic parity for Executive. Each Annual Incentive
Bonus distribution, if any, will be conditioned upon Executive being fully
employed by Company on the date of distribution, except in the third year
of the Agreement when the bonus shall vest on the termination date of this
Agreement (provided Executive is then employed by Company and it has
otherwise been earned) and be payable to Executive on or before December
31, 2002.
(c) Options. Effective upon Executive's commencement date of
employment, Executive shall be granted a non-qualified stock option to
purchase one million (1,000,000) shares of the Company's common stock,
exercisable over a period of three (3) years, vesting at the rate of
thirty-three and one third percent (33 1/3 %) per year (on 8/15/2001,
8/15/2002 and 8/15/2003) and having an exercise price equal to the fair
market value of the Company's common stock as of August 15, 2000 (based on
the closing price of such stock on the Nasdaq National Market on that
date). In the event of a reorganization, statutory or other merger or
consolidation in which the stockholders of the Company immediately before
the transaction do not own 50% or more of the stock of the Company
immediately after the transaction or a sale or transfer of all or
substantially all of the Company's properties and assets (a "change of
control") all such options shall fully vest and may be exercised and the
underlying shares sold, subject to compliance with applicable securities
laws, without reference to any company mandated holding period.. All such
options shall immediately terminate in the event of any breach of the
provisions of Section 6 hereof. Further, Company agrees to use its best
efforts to register all unregistered shares owned by Executive as a result
of exercise of such options no later than six months after the exercise of
any such option. In the event the shares are not so registered, Executive
shall have the first option each month to sell the maximum number of shares
permitted under Rule 144 should the Company then have in effect a policy
restricting such sales.
(d) Special Stock Purchases. As additional consideration for
Executive's execution and delivery of this Agreement, Executive will be
given the opportunity to purchase for cash up to five hundred thousand
(500,000) shares of restricted stock on or before September 1, 2000 at the
fair market value of the Company's common stock as of August 16, 2000
(based on the closing price of such stock on the Nasdaq National Market on
that date) In conjunction therewith, Executive shall also receive fifty per
cent (50%) warrant coverage for any shares purchased under this subsection,
exercisable within three (3) years of the effective date hereof at the
price paid for the purchased shares. Company agrees to use its best efforts
to register all unregistered shares owned by Executive not later than six
months after acquisition of such shares. In the event the shares are not
registered Executive shall have the first option each month to sell the
maximum number of shares permitted under Rule 144 should the Company then
have in effect a policy restricting such sales.
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(e) Favored Nations Xxxxxxxxx.Xx the event that at any time during the
term hereof Company shall extend anti-dilution or preemptive rights to any
other party, then such rights shall automatically be extended to Executive
with respect to shares or options then held by Executive hereunder.
3. Benefits.
(a) Generally. Executive shall be entitled to participate in or receive
benefits under any and all employee benefit plans and arrangements made
available by Company at any time and from time to time during the term of
this Agreement to any of its executive officers and key management
personnel, subject to and on a basis consistent with the terms, conditions
and overall administration of such plans or arrangements.
(b) Relocation Expenses. Company agrees to pay Executive for reasonable
relocation expenses commensurate with the provisions of the Company's
current relocation policy. Notwithstanding the foregoing, the twenty-five
thousand dollar ($25,000) maximum relative to closing costs on the sale of
a home shall not be applicable to Executive, and Executive shall have the
prerogative of selecting his own realtor to assist in the relocation
effort. Company agrees that the amount of all such relocation reimbursement
shall be grossed up by an amount equal to the estimated federal and state
income tax rate multiplied by the incremental taxable income reported which
shall apply to Executive.
(c) Vacations. Executive shall be entitled to paid vacation during each
calendar year, consistent with the policies then applicable to executive
officers and key management personnel, but in no event fewer than four (4)
weeks. Notwithstanding the foregoing, Executive shall be entitled to
additional paid vacation during the period from August 16 through September
1, 2000 in order to facilitate his transition to the duties described
herein.
(d) Reimbursement of Expenses. Company shall reimburse Executive, upon
presentation of receipts or other adequate documentation, for all necessary
and reasonable business expenses incurred by Executive in the course of
rendering services to Company under this Agreement.
4. Nondisclosure. Executive acknowledges that during the course of his
performance of services for the Company, he will acquire technical knowledge
with respect to the Company's business operations, including, by way of
illustration, the Company's investment plans or strategies, trade secrets,
customer lists, customer or consultant contracts and the details thereof,
pricing policies, operational methods, marketing and merchandising plans or
strategies, business acquisition plans, personnel acquisition plans and all
other information pertaining to the business of the Company (or any affiliate)
that is not publicly available (the "CONFIDENTIAL INFORMATION"); provided
however, that the term Confidential Information shall not include (a) any
information which is or becomes publicly available otherwise than through breach
of this Agreement or (b) any information which is or becomes known or available
to Executive on a non-confidential basis and not in contravention of applicable
law from a source which is entitled to disclose such information to Executive.
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Executive agrees that he will not, while employed by the Company, divulge to any
person, directly or indirectly, except to the Company or its officers and agents
or as reasonably required in connection with his duties on behalf of the
Company, or use, except on behalf of the Company, any Confidential Information
acquired by Executive during the term of his employment. Executive further
agrees that he will not, at any time after his employment with the Company has
ended, divulge to any person, directly or indirectly any Confidential
Information nor use the Confidential Information in any way detrimental to the
Company.
5. Nonsolicitation. Except with the Board of Director's prior written
approval, during Executive's employment with Company and for one (1) year after
the termination of expiration thereof, Executive will not directly or
indirectly: (i) solicit, entice, persuade or induce any employee of Company's to
terminate such employee's employment by the Company or to become employed by any
person other than Company; (ii) approach any such employee for any of the
foregoing purposes or, (iii) authorize, solicit or assist in the taking of such
actions by any third party.
6. Noncompete. During Executive's period of employment and for one (1) year
after the termination or expiration of Executive's employment, Executive will
not directly or indirectly, anywhere in the United States, engage, participate,
make any financial investment in, or become employed by or render advisory
services to or for any Person or other business enterprise (other than Company)
that is engaged in the consumer electronics business or any other material line
of business in which the Company is engaged after the date hereof ("COMPETITIVE
ACTIVITIES"). The foregoing covenant respecting Competitive Activities will not
be construed to preclude Executive from making any investments in the securities
of any company, whether or not engaged in competition with the Company, to the
extent that such securities are actively traded on a national securities
exchange or in the over-the-counter market in the United States or any foreign
securities exchange and such investment does not exceed one percent (1.0%) of
the issued and outstanding share of such company or give Executive the right or
power to control or participate directly in making the policy decisions of such
company. Notwithstanding the provisions herein, Executive shall not be
prohibited from returning to work for Best Buy, Inc. or its affiliates in the
event of termination of this Agreement.
7. Term. Executive's employment hereunder shall commence on August 16,
2000. The initial term of employment shall be three (3) years unless earlier
terminated by reason of death, disability (which shall mean continuous inability
to substantially perform the responsibilities of the position for a period of
more than six months) or cause. The Company, however, may terminate Executive's
employment at any time during the term for any reason, provided that Executive
shall be entitled to receive one year's severance pay based upon Executive's
then current Annual Base Salary in the event the termination was other than for
cause. The term "cause" shall be construed to mean continued neglect of
Executive's duties, misconduct in connection with the performance of Executive's
duties or dishonesty. In the event of termination by the Company for any reason
other than voluntary resignation by Executive or dismissal for "limited cause",
all unexercised options shall vest and shall be exercisable at any time during
the six month period after termination. For purposes of the above, "limited
cause" shall mean only gross negligence, willful malfeasance, or
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criminal activity. After any such termination, Executive shall have the first
option each month to sell the maximum number of shares permitted under Rule 144
should the Company then have in effect a policy restricting such sales.
8. Company Policies. Executive shall execute the Company's Code of Conduct
and explicitly agree to be bound by its terms. For the convenience of Company,
Executive shall be entitled to use a Company apartment in the San Francisco Bay
area, in compliance with Company's policies related to its use.
9. Severability and Reformation. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision were never a
part hereof, and the remaining provisions shall remain in full force and effect
and shall not be affected by the illegal, invalid, or unenforceable provision or
by its severance.
10. Integrated Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with regard to the subject matter hereof, and there
are no agreements or understandings between the parties other than those set
forth herein or herein provided for.
11. Waiver. No waiver of any right under this Agreement shall be deemed
effective unless the same is set forth in writing and signed by the party giving
such waiver.
12. Headings. The headings used in this Agreement are used for reference
purposes only and do not constitute substantive matter to be considered in
construing the terms of this Agreement.
13. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by certified mail (return receipt
requested) or sent by overnight delivery service or facsimile transmission (with
electronic confirmation of successful transmission) to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice:
(a) If to Company: The Good Guys, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
(b) If to Executive: Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxxx XXX #000
Xxxxx, XX 00000
Notice so given shall, in the case of mail, be deemed to be given and
received on the fourth calendar day after posting, in the case overnight
delivery service, on the date of actual
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delivery and, in the case of facsimile transmission, telex or personal delivery,
on the date of actual transmission or, as the case may be, personal delivery.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
DELAWARE.
15. Assignment. This Agreement is personal to Executive and may not be
assigned in any way by Executive without the prior written consent of Company.
This Agreement shall not be assignable or delegable by Company.
16. Counterparts. This Agreement may be executed in counterparts, each of
which will take effect as an original and all of which shall evidence one and
the same Agreement.
17. Minneapolis Office. Executive shall establish and maintain, a
Minneapolis office and the Company shall pay directly or reimburse Executive for
up to $3,000.00 per month for expenses associated with such office.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT ON THE DATES
STATED BELOW.
THE GOOD GUYS, INC.
Dated: August 15, 2000 By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
EXECUTIVE:
Dated: August 15, 2000 /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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