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Exhibit 10.16
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is made and
entered into as of this ___ day of January 2001 by and between Xxxxxxx Xxxxxxx,
an individual (the "Executive"), and National Record Mart, Inc., a Delaware
Company (the "Company").
RECITALS
A. The Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key management personnel.
B. The Company's Board of Directors recognizes that, as is the
case with many publicly held Companies, the possibility of a change in control
exists and that such possibility, and the uncertainty which it may engender
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
C. The Board of Directors has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control.
NOW, THEREFORE, in consideration of the premises and the
respective covenants herein contained, the Company and the Executive hereby
agree as follows:
1. Certain Definitions. The following terms when used in this
Agreement shall have the meaning hereafter set forth:
(a) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended from
time to time.
(b) "Change in Control" shall mean the determination (which
may be made effective as of a particular date specified by the Board of
Directors of the Company) by the Board of Directors of the Company, made by a
majority vote that a change in control has occurred, or is about to occur. Such
a change shall not include, however, a restructuring, reorganization, merger, or
other change in capitalization in which the Persons who own an interest in the
Company on the date hereof (the "Current Owners") (or any individual or entity
which receives from a Current Owner an interest in the Company through will or
the laws of descent and distribution) maintain more than an eighty percent (80%)
interest in the resultant entity. Regardless of the Board's vote or whether or
not the Board votes, a Change in Control will be deemed to have occurred as of
the first day any one (1) or more of the following subparagraphs shall have been
satisfied:
(i) Any Person (other than a Person in control of the
Company as of the date of this Agreement, or other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or a
Company owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
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the Company), becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing more than twenty percent (20%) of the
combined voting power of the Company's then outstanding securities;
(ii) The Company institutes any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fails to file an answer or other pleading
denying the material allegations of any such proceeding filed against it; or
(iii) The stockholders of the Company approve:
(A) a plan of complete liquidation of the Company; or
(B) an agreement for the sale or disposition of all or
substantially all of the Company's assets; or
(C) a merger, consolidation, or reorganization of the
Company with or involving any other Company, other than a merger, consolidation,
or reorganization that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least eighty percent (80%) of the combined voting power of
the voting securities of the Company (or such surviving entity) outstanding
immediately after such merger, consolidation, or reorganization.
However, in no event shall a Change in Control be deemed to have occurred, with
respect to the Executive, if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if the
Executive is an equity participant or has agreed to become an equity participant
in the purchasing company or group (except for (i) passive ownership of less
than five percent (5%) of the voting equity securities of the purchasing
company; or (ii) ownership of equity participation in the purchasing company or
group which is otherwise deemed not to be significant, as determined prior to
the Change in Control by a majority of the nonemployee continuing Directors of
the Board of Directors of the Company).
(c) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934, as in effect on the date
hereof ("Exchange Act") and used in Sections 13(d) and 14(d) thereof, including
a "group" as defined in Section 13(d) thereof.
2. Term of Agreement. The Term of this Agreement shall
commence on the date hereof and end on December 31, 2001, unless further
extended as hereinafter provided. Commencing on January 1, 2002 and each January
1 thereafter, the Term shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company or the
Executive shall have given notice not to extend the Term; provided, however,
that if a Change in Control shall have occurred during the Term, the Term shall
expire no earlier than six (6) months beyond the month in which such Change in
Control occurred.
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3. Executive's Right to Terminate upon Change in Control.
Notwithstanding the term of employment set forth in the Employment Agreement,
dated as of January 1, 1996, between the Executive and the Company, as amended
(as the same may be further amended from time to time, the "Employment
Agreement"), the Executive shall have the right, exercisable by providing Notice
of Termination to the Company, to immediately terminate her employment in the
event of a Change in Control; provided such Notice of Termination shall have
been given not more than ninety (90) days after the date on which such Change in
Control is deemed to have occurred.
4. Severance Payment. In the event that Executive elects to
terminate her employment in accordance with Section 3 hereof, the Company shall
pay the Executive a lump sum severance payment, in cash, equal to the
Executive's annual base salary as in effect immediately prior to the Date of
Termination (the "Severance Payment"). The Severance Payment shall be in lieu of
any further salary payments to the Executive for periods subsequent to the Date
of Termination and in lieu of any severance benefit or separation pay otherwise
payable to the Executive. No Severance Payment shall be payable under this
Agreement unless there shall have been a termination of the Executive's
employment with the Company in accordance with Section 3 hereof and during the
Term. This Agreement shall not be construed as creating an express or implied
contract of employment and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be retained
in the employ of the Company.
5. Notice of Termination. After a Change in Control and during
the Term, any purported termination of her employment by the Executive hereunder
shall be communicated to the Company by written notice ("Notice of Termination")
which shall specify the date on which the Executive's employment shall
terminate, which shall not be less than fifteen (15) days nor more than sixty
(60) days, respectively, from the date such Notice of Termination is given
("Date of Termination").
6. Timing of Severance Payment. The Severance Payment shall be
made not later than the tenth business day following the Date of Termination
7. Successors. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable to
the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, each
such amount, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
8. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
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To the Company:
National Record Mart, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
9. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board of Directors of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
of any lack of compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. This Agreement supersedes any other agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof which
have been made by either party. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed.
10. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Settlement of Disputes; Arbitration. Any dispute or
controversy as to the validity, interpretation, construction, application or
enforcement of, or otherwise arising under or in connection with this Agreement,
shall be submitted at the request of either party hereto for resolution and
settlement through arbitration in Pittsburgh, Pennsylvania in accordance with
the rules then prevailing with the American Arbitration Association. Any award
rendered therein shall be final and binding on each of the parties hereto and
their heirs, executors and administrators and successors and assigns, and
judgment may be entered thereon in any court having jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this
Amendment or caused this Amendment to be duly executed as of the day and year
first written above.
WITNESS: XXXXXXX XXXXXXX
Xxxxx X. Xxxxxxxxx Xxxxxxx Xxxxxxx
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Notice Address:
000 Xxxxx Xxxx
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Xxxxxxxxxx, XX 00000
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ATTEST: NATIONAL RECORD MART, INC.
Xxxxxxx Xxxxxxx By: Xxxxxxx X. Xxxxxxxxxx
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Secretary Name: Xxxxxxx X. Xxxxxxxxxx
Title: CEO, President & Chairman
Xxxxx X. Xxxxxxxxx
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Assistant Secretary
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