Exhibit 10.16
Circuit City Stores, Inc.
Employment Agreement for [FirstName MI
LastName]
This EMPLOYMENT AGREEMENT is made,
entered into, and is effective as of the 4th day of December, 2003
(the “Effective Date”), by and between Circuit City
Stores, Inc. (the “Company”) and [FirstName MI
LastName] (the “Executive”).
WHEREAS, the Company desires to
employ the Executive as [Job Title] of Circuit City Stores,
Inc.;
WHEREAS, the Company recognizes the
Executive’s intimate knowledge and experience in the business
of the Company, and desires to secure the employment of the
Executive in the role of [Job Title] of the Company;
WHEREAS, the Executive will develop
and/or come in contact with the Company’s proprietary and
confidential information which is not readily available to the
public, and which is of great importance to the Company and is
treated by the Company as secret and confidential information;
and
WHEREAS, the Company desires to
modify certain terms of Executive’s employment
agreement.
NOW, THEREFORE, in consideration of
the Executive’s continued employment and of the mutual
covenants and agreements of the parties set forth in this
Agreement, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as
follows:
Article 1. Term of
Employment
The Company hereby agrees to employ
the Executive and the Executive hereby accepts employment as [Job
Title] of the Company, in accordance with the terms and conditions
set forth herein, for an initial period of one (1) year,
commencing as of the Effective Date of this Agreement as indicated
above (the “Initial Term”); subject, however, to
earlier termination as expressly provided herein.
The Initial Term shall automatically
be renewed for additional periods of one (1) year each at the
end of the Initial Term, and then again after each successive year
thereafter (collectively, the “Renewal Periods,” which,
together with the Initial Term, constitute the “Term”
of this Agreement). However, either party may terminate this
Agreement at the end of the Initial Term, or at the end of any
Renewal Period, by giving the other party written notice of intent
not to renew, delivered at least forty-five (45) days prior to
the end of the Initial Term or any Renewal Period. For purposes of
this Agreement, an “Employment Year” shall mean any
twelve (12) month period during the Term of this Agreement
beginning on the Effective Date or on any anniversary
thereof.
Article 2. Position and
Responsibilities
During the Term of this Agreement,
the Executive agrees to serve as [Job Title] of the Company. In
his/her capacity as [Job Title] of the Company, the Executive shall
report directly to the Executive’s immediate manager and
shall have the duties and responsibilities of [Job Title] of the
Company and such other duties and responsibilities not inconsistent
with the performance of his/her duties as [Job Title] of the
Company.
Article 3. Standard of
Care
During the term of this Agreement,
the Executive agrees to devote substantially his/her full-time
attention and energies to the Company’s business. The
Executive covenants, warrants, and represents that he/she
shall:
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(a)
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Devote his/her
full and best efforts and talents full time to the performance of
his/her employment obligations and duties for the
Company;
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(b)
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Exercise the
highest degree of loyalty and the highest standards of conduct in
the performance of his/her duties;
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(c)
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Comply with all
rules, regulations, and policies established or issued by the
Company; and
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(d)
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Refrain from
taking advantage, for himself/herself or others, of any corporate
opportunities of the Company.
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Article 4. Other
Employment.
The Executive shall not, during the
term hereof, be interested directly or indirectly, in any manner,
as partner, officer, director, investor, stockholder, advisor,
employee, or in any other capacity, in any other business similar
to Company’s business for the Executive’s personal
advantage or benefit or that of others. Any other employment or
position which might reasonably be deemed contrary to the best
interests of the Company is prohibited. During the term of
employment hereunder, the Executive agrees to obtain the
Company’s written consent prior to entering into any other
occupation, even if dissimilar to that of the Company. Such consent
may be granted or withheld, in the Company’s absolute
discretion. Nothing herein contained shall be deemed to prevent or
limit the right of the Executive to invest in the capital stock or
other securities of any corporation whose stock or securities are
regularly traded on any public exchange, nor shall anything herein
contained be deemed to prevent the Executive from investing in real
estate for his/her own benefit (so long as such investment
(a) is not related to or in support of any entity engaged in a
business similar to that of the Company or (b) does not
detract from the Executive’s performance of his/her duties
and obligations hereunder).
Article 5. Compensation and
Benefits
As remuneration for all services to
be rendered by the Executive during the Employment Period, and as
consideration for complying with the covenants herein, the Company
shall pay and provide to the Executive the following:
5.1. Base Salary.
During the Term of this Agreement,
the Company shall pay the Executive a Base Salary in an amount
which shall be established and approved by the Compensation
Committee of the Board of Directors; provided, however, that such
Base Salary shall be established at a rate of not less than [Annual
Salary Amount] per year. This Base Salary shall be subject to all
appropriate federal and state withholding taxes and payable in
accordance with the normal payroll practices of the Company. The
Base Salary shall be reviewed at least annually following the
Effective Date of this Agreement, while the Term of this Agreement
is in force, to ascertain whether, in the judgment of the
Compensation Committee, such Base Salary should be changed. If
changed, the Base Salary as stated above shall, likewise, be
changed for all purposes of this Agreement.
5.2 Annual Bonus.
In addition to his/her Base Salary,
the Executive shall be entitled to participate in the
Company’s short-term incentive program, as such program may
exist from time to time during the Term of this
Agreement.
Under the Company’s short-term
incentive plan, the Executive has the opportunity to earn an annual
bonus with respect to any fiscal year of the Company (“Annual
Bonus”). The Annual Bonus, if earned with respect to a
particular fiscal year, will generally be in an amount that is not
less than [Annual Bonus % of Base Salary] percent (00%) of the
Executive’s Base Salary for the fiscal year with respect to
which the Annual Bonus is being paid (the “Minimum Bonus
Rate”) and is commensurate with the position of [Job Title]
of the Company.
The award and amount of any Annual
Bonus shall be determined under the Company’s short-term
incentive plan, at the sole discretion of the Company’s
Compensation Committee. If the Minimum Bonus Rate is changed, it
shall, likewise, be changed for all purposes of this
Agreement.
5.3. Long-Term
Incentives. During the
Term of this Agreement, the Executive shall be eligible to
participate in the Company’s long-term incentive plan, to the
extent that the Board of Directors of the Company or the
Compensation Committee, in their discretion, determines is
appropriate. The Board of Directors will make its determination
consistent with the methodology used by the Company for
compensating its comparably situated employees.
5.4. Retirement
Benefits. During the Term
of this Agreement, the Company shall provide to the Executive the
opportunity for participation in all Company pension, insurance,
fringe benefit, and executive compensation plans and programs,
subject to the eligibility and participation requirements of such
plans.
5.5. Employee
Benefits. During the Term
of this Agreement, the Company shall provide the Executive all
benefits, as commensurate with the position of [Job Title] of the
Company, but at a minimum not less than those provided by the
Company to other comparably situated employees subject to the
eligibility requirements and other provisions of such arrangements.
Such benefits may include group term life insurance, comprehensive
health and major medical insurance, dental and life insurance, and
short-term and long-term disability.
5.6. Perquisites.
During the Term of this Agreement,
the Company shall provide to the Executive, at the Company’s
cost, all perquisites, which are commensurate with the position of
[Job Title] of the Company.
5.7. Right to Change
Plans. By reason of
Articles 5.5 and 5.6 herein, the Company shall not be obligated to
institute, maintain, or refrain from changing, amending, or
discontinuing any benefit plan or perquisite, so long as such
changes are similarly applicable to comparably situated
employees.
Article 6.
Expenses
During the Term of this Agreement,
the Company shall pay or reimburse the Executive for all ordinary
and necessary expenses, in a reasonable amount, which the Executive
incurs in performing his/her duties under this Agreement including,
but not limited to, travel, entertainment, professional dues and
subscriptions, and all dues, fees, and expenses associated with
membership in various professional, business, and civic
associations and societies in which the Company finds that the
Executive’s participation is in the best interests of the
Company. The payment of reimbursement of expenses shall be subject
to such rules concerning documentation of expenses and the type or
magnitude of such expenses as the Compensation Committee of the
Board of Directors may establish from time to time.
Article 7. Employment
Termination
7.1. Termination Due to
Retirement or Death. In
the event the Executive’s employment ends by reason of
Retirement (defined as voluntary “Normal Retirement”
under the then established definitions and rules of the
Company’s tax-qualified retirement plan) or the
Executive’s death during the term of this Agreement, the
Executive’s benefits shall be determined in accordance with
the Company’s retirement, survivor’s benefits,
insurance, and/or other applicable programs of the Company then in
effect. In addition, all stock grants, except performance-based
grants in the case of Retirement, will become immediately vested
and may be exercised by the Executive, the Executive’s
personal representatives, distributees, legatees, or estate at any
time before the expiration date of the grant.
The Effective Date of Termination
due to Retirement or death shall be (a) ninety (90) days
following the date the Executive provides the Company with written
notice that the Executive is ending employment by reason of
Retirement or (b) on the Executive’s date of death, as
the case may be. Upon the Effective Date of Termination, the
Company shall be obligated to pay the Executive or, if applicable,
the Executive’s estate; (a) any Base Salary or Annual
Bonus that was
accrued but not yet paid as of the Effective
Date of Termination; plus (b) a pro rata share of the Annual
Bonus for the Employment Year in which the Effective Date of
Termination occurs (calculated by multiplying (i) the Base
Salary in effect on the Effective Date of Termination by
(ii) the Minimum Bonus Rate in effect on the Effective Date of
Termination and by (iii) a fraction, the numerator of which is
the number of full completed days in the Employment Year through
the Effective Date of Termination, and the denominator of which is
three hundred sixty-five (365)); and (c) all other rights and
benefits that the Executive is vested in, pursuant to other plans
and programs of the Company.
7.2 Termination Due to
Disability. The Company
shall have the right to terminate the Executive’s employment
for disability. For the purposes of this Agreement, disability
shall mean any physical or mental illness or injury that causes the
Executive to be unable to substantially perform the
Executive’s normal duties; provided however that the
Executive shall not be considered disabled until: (i) the
Executive has been so disabled for 180 days during any period of
twelve (12) consecutive months; (ii) the
Executive’s attending physician shall have furnished to the
Company certification that the return of the Executive to his/her
normal duties is impossible or improbable; or (iii) the
Executive is determined to be totally disabled by the disability
insurer then insuring the Executive, if any.
The Effective Date of Termination
due to Disability shall be specified, in a written notice, by the
Executive’s immediate manager, and such written notice shall
be delivered to the Executive, but shall be no less than thirty
(30) calendar days after the delivery of such written notice
to the Executive. Upon the Effective Date of Termination, the
Company shall be obligated to pay the Executive [or, if applicable,
the Executive’s estate]: (a) any salary that was accrued
but not yet paid as of the Effective Date of Termination;
(b) the unpaid Annual Bonus, if any, with respect to the
fiscal year preceding the Effective Date of Termination (such
Annual Bonus, if any, to be determined in the manner it would have
been determined and payable at the time it would have been payable
under Article 5.2 had there been no termination of the Employment
Period); (c) a pro rata share of target Annual Bonus for the
fiscal year in which the Effective Date of Termination occurs (the
calculation of which the Annual Bonus is multiplied by a fraction,
the numerator of which is the number of full completed days in the
bonus plan year through the Effective Date of Termination, and the
denominator of which is three hundred sixty-five (365)); and
(d) all other rights and benefits that the Executive is vested
in, pursuant to other plans and programs of the Company.
It is expressly understood that the
Disability of the Executive for a period of one hundred eighty
(180) calendar days or less in the aggregate during any period
of twelve (12) consecutive months, in the absence of any
reasonable expectation that his/her Disability will exist for more
than such a period of time, shall not constitute a failure by
him/her to perform his/her duties hereunder and shall not be deemed
a breach or default, and the Executive shall receive full
compensation for any such period of Disability or for any other
temporary illness or incapacity during the term of this
Agreement.
If the employment of the Executive
terminates because of disability, all of the Executive’s
outstanding stock grants, excluding restricted stock grants issued
under a performance based
plan, will become immediately vested, effective
as of the date of the Executive’s disability. Then, the
Executive, the Executive’s personal representatives,
distributees, or legatees may exercise the Executive’s grants
at any time before the expiration date of the grant.
7.3. Voluntary Termination by the
Executive. The Executive
may terminate his/her employment and this Agreement at any time by
giving the Company at least forty-five (45) days written
notice. The Company reserves the right to require the Executive not
to work during the notice period but shall pay the Executive
his/her full Base Salary, at the rate then in effect as provided in
Article 5.1 herein, [through the notice period] or [through the
last day of the Executive’s employment] plus all other
benefits to which the Executive has a vested right on the last day
of employment (for purposes of this paragraph, the Executive shall
not be paid any Annual Bonus with respect to the fiscal year in
which voluntary termination under this Article 7.3 occurs). The
Company thereafter shall have no further obligations under this
Agreement.
7.4 Involuntary Termination by
the Company Without Cause. The Company may terminate the Executive’s
employment, at any time, for any reason other than death,
Disability, Retirement, or for Cause (“involuntary
termination without Cause”), by providing the Executive with
at least forty-five (45) days written notice.
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(a)
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The
Company’s decision not to renew this Agreement at the
Expiration Date of the Initial Term or any Renewal Period shall be
deemed an involuntary termination without cause; provided, however,
that for purposes of this Article 7.4(a), no variation, alteration,
modification, cancellation, change or amendment made to this
Agreement pursuant to Article 12.3 or 12.4 at a time other than the
Expiration Date of the Initial Term or any Renewal Period, shall be
deemed an involuntary termination without Cause.
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(b)
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Upon the
Effective Date of Termination specified by the Company for
termination by the Company without cause, the Company shall pay to
the Executive, in equal monthly installments over the following
twenty-four (24) month period an amount equal to the product
of two (2) times both the Executive’s Base Salary and
the Executive’s target Annual Bonus established for the
fiscal year in which the Executive’s Effective Date of
Termination occurs. The Company shall also pay to the Executive the
amount equal to a pro rata share of the Executive’s target
Annual Bonus for the fiscal year in which the Effective Date of
Termination occurs (the calculation of which the Annual Bonus is
multiplied by a fraction, the numerator of which is the number of
full completed days in the bonus plan year through the Effective
Date of Termination, and the denominator of which is three hundred
sixty-five (365)). In addition, the Company shall continue, at the
same cost to the Executive as existed as of the Effective Date of
Termination, all health and welfare benefit plan participation for
two (2) full years following the Executive’s termination
of employment; provided, however, that the applicable COBRA
“period of coverage” under any plan subject to
Section 4980B of the Internal Revenue Code of 1986, as amended
(the “Code”), or Sections 601 through 609 of the
Employee Retirement Income Security Act of 1974 (ERISA) shall begin
as of the Effective Date of Termination.
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(c)
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The Company
shall also provide the Executive with outplacement services not to
exceed a cost of fifty thousand dollars ($50,000).
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(d)
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Any unvested
stock options or any outstanding restricted stock, excluding
restricted stock grants issued under a performance based plan, that
would become vested (that is, transferable and non-forfeitable) if
the Executive remained an employee through the Initial Term or the
then current Renewal Period of this Agreement will become vested as
of the date of the Executive’s termination of employment. The
Executive must satisfy the tax withholding requirements.
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(e)
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The Executive
will be credited with age and service credit through the end of the
Initial Term or current Renewal Period of this Agreement for
purposes of computing benefits under the Company’s pension,
medical and other benefit plans, and the Company will continue the
Executive’s coverage under the Company’s benefit plans
as if the Executive remained employed through the end of the term
of this Agreement. Notwithstanding the foregoing, if crediting such
age and service credit or continued coverage could adversely affect
the tax qualification or tax treatment of a benefit plan, or
otherwise have adverse legal ramifications to either the plan or
the Company, the Company may pay the Executive a lump sum cash
amount that reasonably approximates the after-tax value to the
Executive of such age and service credit and continued coverage
through the end of the term of this Agreement, in lieu of giving
such credit and continued coverage.
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The Company thereafter shall have no
further obligations under this Agreement.
7.5. Termination For
Cause. Nothing in this
Agreement shall be construed to prevent the Company from
terminating the Executive’s employment under this Agreement,
without notice or liability for doing so, for
“Cause.”
For purposes of this Agreement,
“Cause” means:
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(a)
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The
Executive’s material breach of this Agreement, which breach
is not cured within ten (10) days of receipt by the Executive
of written notice from the Company specifying the
breach;
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(b)
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The
Executive’s gross negligence in the performance of his/her
material duties hereunder, intentional nonperformance or
intentional misperformance of such duties, misconduct or refusal to
abide by or comply with the directives of the Board, his/her
superior officers, or the Company’s policies and procedures,
which actions continue for a period of ten (10) days after
receipt by the Executive of written notice of the need to cure or
cease;
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(c)
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Conviction of a
felony or other crime involving moral turpitude;
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(d)
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The Executive
engaging in illegal conduct, dishonesty or fraud with respect to
the business or affairs of the Company that in the reasonable
judgment of the Company materially and adversely affects the
operations or reputation of the Company;
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(e)
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Failure of the
Executive to disclose to the Executive’s manager a conflict
of interest, of which the Executive knew or, with reasonable
diligence, would have known, in connection with any transaction
entered into on behalf of the Company; or
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(f)
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Failure of the
Executive to agree to a modification of this Agreement, pursuant to
paragraph 12.3 below, when the purpose of the modification is to
comply with applicable federal, state and/or local laws or
regulations, or when such modification is designed to further
define the restrict
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