SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended JULY 31, 1999, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ________.
Commission file number 0-15194
SOUND ADVICE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-1520531
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1901 TIGERTAIL BOULEVARD, DANIA BEACH, FLORIDA 33004
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(954) 922-4434
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICAL DATE.
COMMON STOCK, PAR VALUE $.01 PER SHARE - 3,748,894 SHARES OUTSTANDING AS OF
AUGUST 27, 1999.
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheets (Unaudited)
July 31, 1999 and January 31, 1999 3
Condensed Consolidated Statements of Operations (Unaudited)
for the Three and Six Months Ended July 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended July 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 8-12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
Page 2
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
July 31, 1999 and January 31, 1999
<TABLE>
<CAPTION>
JULY 31, 1999 JANUARY 31, 1999
------------- ----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,217,228 $ 1,384,051
Receivables:
Vendors 3,779,870 5,376,641
Trade 892,404 868,378
Employees 468,830 339,451
------------ ------------
5,141,104 6,584,470
Less allowance for doubtful accounts (502,400) (440,900)
------------ ------------
4,638,704 6,143,570
Inventories 29,283,079 30,987,826
Prepaid and other current assets 501,931 472,122
------------ ------------
Total current assets 35,640,942 38,987,569
Property and equipment, net 14,693,297 16,006,704
Deferred tax assets, net 585,500 -
Other assets 108,764 115,040
Goodwill, net 175,283 107,729
------------ ------------
$ 51,203,786 $ 55,217,042
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Borrowings under revolving credit facility $ 12,323,956 $ 13,775,936
Accounts payable 9,005,231 12,310,092
Accrued liabilities 7,463,791 7,671,639
Current maturities of long-term debt - 467,483
------------ ------------
Total current liabilities 28,792,978 34,225,150
Capital lease obligation 793,025 797,180
Other liabilities and deferred credits 4,048,811 4,136,776
------------ ------------
33,634,814 39,159,106
------------ ------------
Shareholders' Equity:
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,738,894 shares at July 31, 1999
and 3,733,894 at January 31, 1999 37,389 37,339
Additional paid-in capital 11,076,555 11,067,455
Retained earnings 6,455,028 4,953,142
------------ ------------
Total shareholders' equity 17,568,972 16,057,936
Commitments and contingencies
------------ ------------
$ 51,203,786 $ 55,217,042
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
For the Three and Six Months Ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
Three Months Ended July 31, Six Months Ended July 31,
----------------------------------- ----------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 41,340,323 $ 33,518,258 $ 80,367,686 $ 67,166,607
Cost of goods sold 27,374,980 22,121,464 52,815,150 43,924,775
-------------- -------------- -------------- --------------
Gross profit 13,965,344 11,396,794 27,552,536 23,241,832
Selling, general and administrative
expenses 12,737,834 11,241,959 25,364,571 22,480,389
-------------- -------------- -------------- --------------
Income from operations 1,227,509 154,835 2,187,965 761,443
Other income (expense):
Interest expense (356,886) (378,696) (706,428) (756,826)
Other, net 10,934 18,469 20,349 35,915
-------------- -------------- -------------- --------------
Income (loss) before income taxes 881,557 (205,392) 1,501,886 40,532
Income taxes - 26,000 - 155,000
-------------- -------------- -------------- --------------
Net income (loss) $ 881,557 $ (231,392) $ 1,501,886 $ (114,468)
============== ============== ============== ==============
Common and common equivalent per
share amounts:
Basic net income (loss) per share $ 0.24 $ (0.06) $ 0.40 $ (0.03)
============== ============== ============== ==============
Diluted net income (loss) per share $ 0.21 $ (0.06) $ 0.36 $ (0.03)
============== ============== ============== ==============
Weighted average number of shares
outstanding - basic 3,735,048 3,728,894 3,734,477 3,728,894
============== ============== ============== ==============
Weighted average number of shares
outstanding - diluted 4,168,251 3,728,894 4,120,600 3,728,894
============== ============== ============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 1,501,886 $ (114,468)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,745,276 1,639,218
Gain on disposition of assets (15,474) -
Deferred income taxes (585,500) -
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 1,504,866 458,306
Inventories 1,776,266 6,420,936
Prepaid and other current assets (29,809) 18,969
Income taxes receivable - 55,000
Other assets (2,724) 8,379
Increase (decrease) in:
Accounts payable (3,304,861) (7,411,005)
Accrued liabilities (207,848) (2,103,260)
Other liabilities & deferred credits (87,965) (302,848)
------------ ------------
Net cash provided by (used in) operating activities 2,294,113 (1,330,773)
------------ ------------
Cash Flows From Investing Activities:
Capital expenditures (1,066,217) (1,311,076)
Proceeds from disposition of assets 821,687 -
Acquisition of store facility (301,938) -
------------ ------------
Net cash provided by (used in) investing activities (546,468) (1,311,076)
------------ ------------
Cash Flows From Financing Activities:
Borrowings on revolving credit facility 73,291,662 75,827,290
Repayments on revolving credit facility (74,743,642) (73,979,795)
Net repayments of long-term debt (467,483) (88,237)
Reductions in capital lease obligation (4,155) (4,155)
Proceeds from exercise of stock options 9,150 -
------------ ------------
Net cash (used in) provided by financing activities (1,914,468) 1,755,103
------------ ------------
Decrease in cash (166,823) (886,746)
Cash, beginning of period 1,384,051 1,421,392
------------ ------------
Cash, end of period $ 1,217,228 $ 534,646
============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 621,079 $ 677,903
============ ============
Income taxes paid, net of refunds $ 780,000 $ 735,801
============ ============
Supplemental disclosure of store acquisition:
Total purchase price $ 301,938
Less:
Fixed asset valuation (148,640)
Inventory valuation (71,519)
------------
Amount included in goodwill $ 81,779
============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in conformity with instructions to Form 10-Q and, therefore,
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. Certain items
included in these statements are based on management estimates. In the opinion
of management, the accompanying financial statements contain all adjustments,
consisting of normal, recurring accruals, necessary to present fairly the
financial position of the Company at July 31, 1999 and January 31, 1999 and the
statements of operations for the three and six month periods ended July 31, 1999
and 1998 and statements of cash flows for the six month periods ended July 31,
1999 and 1998. The results of operations for the three and six months ended July
31, 1999 are not necessarily indicative of the operating results expected for
the fiscal year ending January 31, 2000. These financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
contained in the Company's annual report on Form 10-K for the period ended
January 31, 1999.
2.) EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available
to common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding during the period increased to include the number
of additional common shares that would have been outstanding if the diluted
potential common shares had been issued. The diluted effect of outstanding
options is reflected in diluted earnings per share by application of the
treasury stock method.
3.) STORE ACQUISITION
In June, the Company acquired a Bang & Olufsen concept store located in
Naples, Florida for an aggregate purchase price of $302,000. Included in the
purchase price was inventory of $71,500 and fixed assets of $149,000.
4.) SALE OF PROPERTY
In July, the Company sold its former Fort Lauderdale store location for
a gross selling price of $850,000. The property was encumbered by a mortgage and
upon payment of the outstanding mortgage balance and transaction costs, the
company received net proceeds of $380,500.
Page 6
<PAGE>
5.) SEASONALITY
Historically, the Company's net sales are greater during the holiday
season than during other periods of the year. Net sales by fiscal quarters and
their related percentages for the trailing four quarters ended July 31, 1999 and
1998 are as follows:
TRAILING FOUR QUARTERS ENDED JULY 31,
(Dollars in Thousands)
QUARTERLY SALES
1999 1998
---- ----
AMOUNT % AMOUNT %
------ - ------ -
Second Quarter $41,340 24.6% $33,518 22.0%
(May - July)
First Quarter 39,027 23.3 33,648 22.1
(February - April)
Fourth Quarter 53,002 31.6 48,808 32.1
(November - January)
Third Quarter 34,423 20.5 36,282 23.8
(August - October)
-------- ----- -------- -----
SALES FOR TRAILING TWELVE $167,792 100% $152,256 100%
MONTHS ENDED JULY 31, ======== ===== ======== =====
1999 AND 1998, RESPECTIVELY
6.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
JULY 31, 1999 JANUARY 31, 1999
------------- ----------------
Land $ - 0 - $ 521,465
Building 685,000 1,119,605
Furniture and equipment 10,356,344 9,664,424
Leasehold improvements 19,316,245 19,100,481
Display fixtures 7,458,687 7,183,697
Vehicles 1,003,552 1,097,490
----------- -----------
Total 38,819,828 38,687,162
Less accumulated depreciation (24,126,531) (22,680,458)
----------- ----------
Property and equipment, net $ 14,693,297 $ 16,006,704
=========== ==========
7.) STOCK OPTIONS
During the quarter ended July 31, 1999, incentive stock options for
2,500 shares of common stock were exercised at $1.77 per share and non-qualified
stock options for 2,500 shares were exercised at $1.89 per share.
8.) PROVISION FOR INCOME TAXES
The Company recorded a deferred tax asset of approximately $585,500 as
a result of a change in the valuation reserve for deferred taxes. The income tax
provision for the six months ended July 31, 1998, includes an amount for taxes
payable on pretax operating income and an increase in the valuation reserve for
deferred tax assets.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's net sales for the quarter ended July 31, 1999 increased
$7,822,000 or 23.3% to $41,340,000 compared to $33,518,000 in the corresponding
period in the prior fiscal year. The increase in sales resulted from an increase
in same store sales along with the addition of two stores and two Bang & Olufsen
concept stores in the 1999 quarter as compared to the 1998 quarter. Sales
increased in each of the core categories of audio, video, and mobile products.
The largest percentage sales increases were in audio speakers and audio music
systems in the audio category and in direct view television and DVD players in
the video category. Increases in these categories were partially offset by
reduced sales of cellular phones which are being de-emphasized in the Company's
product mix. Comparable store net sales increased 19.6% in the quarter ended
July 31, 1999 over the corresponding quarter in the prior year. The comparable
store sales were adjusted to exclude the new stores opened in November 1998 and
December 1998. The Company's operations, in common with other retailers in
general, are subject to seasonal influences. Historically, the Company has
realized greater sales and profits during the holiday selling season.
Net sales for the six months ended July 31, 1999 increased by
$13,201,000 or 19.7% to $80,368,000 over the corresponding period in the prior
fiscal year. As stated above, the increase in net sales for the six month period
results from growth in same store sales and the addition of two stores and two
concept stores compared to the prior year. Overall sales increased in the core
categories of audio, video, and mobile products. For the six months the largest
percentage sales increases were in audio speakers, audio/video receivers and
audio acessories in the audio category and direct view televisions, DVD players
and projection televisions in the video category. Increases in these categories
were partially offset by reduced sales of cellular phones as discussed above.
Comparable store net sales as adjusted for the new stores increased 13.4% in the
six months ended July 31, 1999 compared to the corresponding six month period in
the prior fiscal year.
Gross profit increased by $2,569,000 or 22.5% in the quarter ended July
31, 1999 compared to the corresponding quarter in the prior fiscal year. The
gross profit percentage was 33.8% in the quarter ended July 31, 1999 as compared
to 34% in the quarter ended July 31, 1998. The increase in gross profit is
directly related to the increase in overall sales and the slight reduction in
gross profit percentage is directly related to the Company's current sales mix.
Gross profit increased by $4,311,000 or 18.5% in the six months ended
July 31, 1999 compared to the corresponding period in the prior year. The gross
profit percentage was 34.2% in the six months ended July 31, 1999 as compared to
34.6% in the six months ended July 31, 1998. As stated above, the increase in
gross profit and slight reduction in gross profit percentage is directly related
to the increase in the Company's total sales and the Company's current sales
mix.
Page 8
<PAGE>
Selling, general and administrative expenses ("SG&A") increased by
$1,496,000 or 13.3% in the quarter ended July 31, 1999 over the corresponding
period in the prior year. SG&A increased by $2,884,000 or 12.8% in the six
months ended July 31, 1999 over the corresponding period in the prior year. The
increase in both periods is primarily a result of sales commissions on increased
gross profit and costs associated with the new stores. SG&A as a percentage of
net sales decreased to 30.8% in the quarter and 31.6% in the six months ended
July 31, 1999 from 33.5% in both the comparable quarter and six months of the
previous fiscal year. The percentage decrease is directly related to the
increase in overall sales.
Interest expense decreased by $22,000 and $50,000, respectively, for
the quarter and six months ended July 31, 1999 from the corresponding periods in
the prior fiscal year. The decreases were primarily attributable to a lower
effective interest rate under the Company's revolving credit facility as
compared to the comparable period in the prior fiscal year.
The Company recorded a deferred tax asset of $340,500 for the quarter
and $585,500 for the six months ended July 31, 1999 as a result of a change in
the valuation reserve for deferred taxes. The income tax provision in the 1998
quarter and six month periods includes an amount for taxes payable on pretax
operating income and an increase in the valuation reserve for deferred tax
assets.
Net income for the quarter ended July 31, 1999 was $882,000 or $.24 per
share basic and $.21 per share diluted compared to net loss of $231,000 or $.06
per share basic and diluted for the same quarter in the previous fiscal year.
Net income for the six months ended July 31, 1999 was $1,502,000 or $.40 per
share basic and $.36 per share diluted compared to net loss of $114,000 or $.03
per share basic and diluted in the same period of the prior fiscal year. The
improvement in the quarter and six months ended July 31, 1999 over the
comparable periods in the prior fiscal year is primarily a result of increased
gross profit resulting from increased same store sales and the adition of new
stores. The increase in gross profit was partially offset by sales commissions
and expenses associated with new stores.
FINANCIAL CONDITION
Net cash provided by operating activities was approximately $2,294,000
for the six months ended July 31, 1999 primarily due to the profitable
operations of the Company during this period. The Company had working capital of
approximately $6,848,000 at July 31, 1999, as compared to $4,762,000 in working
capital at January 31, 1999 for an overall increase of $2,086,000. The decrease
in current assets of $3,347,000 during the six month period was primarily
related to the $1,705,000 decrease in inventory and a decrease in receivables of
$1,505,000. The net decrease in current assets was offset by an overall decrease
of $5,432,000 in current liabilities. The net decrease in current liabilities
resulted primarily from a decrease in accounts payable of $3,305,000 and a
decrease in borrowings under the revolving credit facility of $1,452,000.
Page 9
<PAGE>
During the quarter ending July 31, 1999, the Company acquired its third
Bang & Olufsen concept store in Naples, Florida for an aggregate purchase price
of $302,000. Included in the purchase price were inventory and fixed assets
totaling $72,000 and $149,000, respectively. In addition, the Company sold its
former Fort Lauderdale store location for a gross sales price of $850,000 and,
after repayment of the existing mortgage transaction costs, received net cash
proceeds of approximately $381,000.
The Company currently believes that funds from the Company's operations
combined with borrowings available under its revolving credit facility and
vendor credit programs will be sufficient to satisfy its currently projected
operating cash requirements during the 2000 fiscal year. However, to fully
complete the store expansion program currently planned in the 2001 fiscal year,
the Company may need to seek additional financing sources including debt and/or
equity securities. In that regard, the Company is exploring additional financing
sources in connection with the expansion program. The Company has signed a lease
for the relocation of one of its stores in Tampa, Florida and has assumed a
lease in connection with the aquisition of the Bang & Olufsen concept store in
Naples, Florida.
YEAR 2000 ISSUE
The year 2000 issue is primarily the result of computer programs being
written using two digits rather than four to define the applicable year. Such
programs may be unable to interpret dates beyond the year 1999, which could
cause a system failure or other computer errors, including possible
miscalculations, and a disruption in the operation of such systems. This is
commonly referred to as the year 2000 issue.
The Company has been executing a plan to identify and address any
possible business issues related to the impact of the year 2000 problem on both
its information technology ("IT") and non-IT systems (e.g., embedded
technology). This plan addresses the year 2000 issue in multiple phases,
including (i) determining an initial inventory of the Company's systems,
equipment, vendors, customers and third party administrators that may be
vulnerable to system failures or processing errors as a result of year 2000
issues, (ii) assessment and prioritization of inventoried items to determine
risks associated with their failure to be year 2000 compliant, (iii) testing of
systems and equipment to determine year 2000 compliance, (iv) remediation and
implementation of systems and equipment, and (v) contingency planning to assess
reasonably likely worst case scenarios. The initial inventory and assessment of
the Company's systems has been completed. Action plans are being developed to
address systems and equipment that are currently non-compliant. Implementation
of the required changes is expected to be complete by October 1999.
Page 10
<PAGE>
Incremental costs, which include costs associated with internal
resources to modify existing systems in order to achieve year 2000 compliance
are charged to expense as incurred. The Company does not expect the cost of
making the required system changes to exceed $150,000. The anticipated cost of
the project and the dates on which the Company believes it will complete the
year 2000 modifications and assessments are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources. There can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area and the ability to locate and correct all
relevant systems.
With respect to the Company's suppliers and vendors, the Company is in
the process of contacting suppliers and vendors to assess the potential impact
on operations if such third parties are not successful in ensuring that their
systems and operations are year 2000 complaint in a timely manner. The Company's
year 2000 issues and any potential business interruptions, costs, damages or
loses related thereto, are also dependent upon the year 2000 compliance of other
third parties. To date, the Company is unable to determine whether it will be
materially affected by the failure of any of its suppliers, vendors, or other
third parties to be year 2000 compliant. The Company believes that its
compliance efforts have and will reduce the impact on the Company of such
failures. Failures of any third parties with which the Company interacts to
achieve year 2000 compliance could have a material adverse effect on the
Company's business, financial condition and results of operations.
Risk assessment, readiness evaluation, action plans and contingency plans
related to the Company's suppliers, vendors and other third parties are expected
to be completed by October 1999. The Company's risk management program includes
emergency backup and recovery procedures to be followed in the event of failure
of a business critical system. These procedures will be expanded to include
specific procedures for the potential year 2000 issue. Contingency plans to
protect the Company from year 2000 related interruptions are also being
developed and are expected to be completed by October 1999. These plans will
include development of backup procedures, identification of alternate suppliers,
possible increases in inventory levels and other appropriate measures.
There can be no assurance, however, that the Company's systems are
"Year 2000" compliant or that the systems of other companies on which the
Company's systems and operations rely, or companies with whom the Company
conducts business, will be timely converted to address the "Year 2000 Issue," or
that a failure to convert by another company, or a conversion that is
incompatible with the Company's systems, would not have a material adverse
effect on the Company's business, operations, results and financial position.
For this reason, the Company continues to work towards ensuring that all systems
associated with the processes of the Company are Year 2000 compliant by the end
of 1999.
Page 11
<PAGE>
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements (within the meaning
of Section 21E. of the Securities Exchange Act of 1934, as amended) representing
the Company's current expectations, beliefs, estimates or intentions concerning
the Company's future performance and operating results, its products, services,
markets and industry, and/or future events relating to or effecting the Company
and its business and operations. When used in this Form 10-Q, the words
"believes," "estimates," "plans," "expects," "intends," "anticipates," "Year
2000" and similar expressions as they relate to the Company or its management
are intended to identify forward-looking statements. The actual results or
achievements of the Company could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties related to
and including, without limitation, the effectiveness of the Company's business
and marketing strategies, the product mix sold by the Company, customer demand,
availability of existing and new merchandise from, and the establishment and
maintenance of, relationships with suppliers, price competition for products and
services sold by the Company, management of expenses, gross profit margins, the
opening of additional stores, availability and terms of financing to refinance
or repay existing financings or to fund capital and expansion needs, the
continued and anticipated growth of the retail home entertainment and consumer
electronics industry, a change in interest rates, exchange rate fluctuations,
the seasonality of the Company's business and the other risks and factors
detailed in this Form 10-Q and in the Company's other filings with the
Securities and Exchange Commission. These risks and uncertainties are beyond the
ability of the Company to control. In many cases, the Company cannot predict the
risks and uncertainties that could cause actual results to differ materially
from those indicated by the forward-looking statements.
Page 12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report:
EXHIBIT NO. DESCRIPTION
----------- --------------------------------------------
10.1 Tenth Amendment to Employment Agreement,
dated as of February 1, 1999 between
Sound Advice, Inc. and Peter Beshouri
(filed herewith).
10.2 Tenth Amendment to Employment Agreement,
dated as of February 1, 1999 between
Sound Advice, Inc. and Michael Blumberg
(filed herewith).
10.3 Employment Agreement dated as of January 31,
1999 between Sound Advice, Inc. and Kenneth
L. Danielson (filed herewith).
10.4 Employment Agreement dated as of January
31, 1999 between Sound Advice, Inc. and
Christopher P. O'Neil (filed herewith).
27. Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company.
Page 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUND ADVICE, INC.
-----------------------------------
(Registrant)
Date SEPTEMBER 13, 1999 /s/ Peter Beshouri
------------------- -----------------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date SEPTEMBER 13, 1999 /s/ Kenneth L. Danielson
------------------- ------------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 14
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED
JULY 31, 1999
COMMISSION FILE NUMBER
0-15194
-----------------------------------------------------
SOUND ADVICE, INC.
-----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
10.1 Tenth Amendment to Employment Agreement, dated as of
February 1, 1999 between Sound Advice, Inc. and Peter
Beshouri (filed herewith).
10.2 Tenth Amendment to Employment Agreement, dated as of
February 1, 1999 between Sound Advice, Inc. and Michael
Blumberg (filed herewith).
10.3 Employment Agreement dated as of January 31, 1999 between
Sound Advice, Inc. and Kenneth L. Danielson (filed herewith).
10.4 Employment Agreement dated as of January 31, 1999 between
Sound Advice, Inc. and Christopher P. O'Neil (filed herewith).
27. Financial Data Schedule (filed herewith).
TENTH AMENDMENT TO EMPLOYMENT AGREEMENT
TENTH AMENDMENT, dated as of the 1st day of February, 1999, to the
Employment Agreement, dated as of June 30, 1986, by and between SOUND ADVICE,
INC., a Florida corporation (the "Employer"), and PETER BESHOURI (the
"Employee"), as previously amended by that First Amendment to Employment
Agreement, dated as of May 15, 1989, that Second Amendment to Employment
Agreement, dated as of October 27, 1989, that Third Amendment to Employment
Agreement, dated as of July 1, 1992, that Fourth Amendment to Employment
Agreement, dated as of July 1, 1993, that Fifth Amendment to Employment
Agreement, dated as of July 1, 1994, that Sixth Amendment to Employment
Agreement, dated as of July 1, 1995, that Seventh Amendment to Employment
Agreement, dated as of July 1, 1996, that Eighth Amendment to Employment
Agreement, dated as of March 24, 1997 and that Ninth Amendment to Employment
Agreement, dated as of March 18, 1998 (collectively, the "Agreement").
W I T N E S S E T H:
WHEREAS, the Employee and the Employer mutually desire and each of them
is willing, in accordance with the terms and conditions specifically set forth
below, to amend the Agreement, it being understood by the Employee and the
Employer that all terms and conditions of the Agreement not otherwise modified
by this Tenth Amendment thereto shall remain effective and continue operating in
full force throughout the entire term of the Agreement, as amended.
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
<PAGE>
1. TERM. Section 2 of the Agreement is hereby amended to provide that
the term of the Agreement is hereby extended for another three years or until
January 31, 2002.
2. BASE COMPENSATION. Section 4(a) of the Agreement is hereby amended
to provide that the Base Compensation of the Employee shall be Four Hundred
Thousand Dollars ($400,000) per year, which amount may be increased or otherwise
modified per such Section 4(a).
3. BONUS. In lieu of any bonus arrangement set forth in Section 4(b) of
the Agreement, the Employee shall be entitled to participate in the Employer's
annual incentive bonus plan and long term incentive stock option program adopted
in December 1994 by the Employer's Board of Directors and the Stock Option
Committee thereof, respectively.
4. TERMINATION OF EMPLOYMENT. Effective as of the date first written
above, Section 7(a) of the Agreement shall be amended by adding thereto the
following subsection 7(a)(v):
"in the sole discretion of the Employer for any reason other than Cause."
5. TERMINATION OF EMPLOYMENT. Effective as of the date first written
above, the final paragraph of Section 7(a) is hereby amended by deleting
therefrom the word "and" immediately preceding clause (c) thereof and adding to
the end thereof the following:
"and (d) Section 7(a)(v) immediately upon notice given by the
Company to the Employee."
6. TERMINATION OF EMPLOYMENT. Effective as of the date first written
above, Section 7(b) of the Agreement is hereby deleted in its entirety and shall
be restated as follows:
"(b) In the event of a termination of the Employee's
employment hereunder, the Employee shall be entitled to the following:
2
<PAGE>
(i) in the event of a termination pursuant to Section
7(a)(i), the Employee shall be entitled to receive (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) for a period of one year from the Effective
Date his Base Compensation and thereafter shall not be entitled to any
further compensation, remuneration or perquisites hereunder;
(ii) in the event of a termination pursuant to
Section 7(a)(ii), the Employee shall be entitled to receive (A) any
Base Compensation and Bonus owed to him hereunder to the Effective Date
of such termination and (B) for a period of one year from the Effective
Date (1) his Base Compensation reduced by the sum of all periodic
payments the Employee receives by virtue of his disability (x) pursuant
to any disability policy paid for by the Employer pursuant to Sections
5(a)(iii) or 5(b) hereof and (y) in the form of Florida State
Disability Benefits and/or Social Security Benefits and (2) all of the
perquisites set forth in Sections 5(a)(i), 5(a)(ii), 5(a)(iii) and 5(b)
hereof and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iii) in the event of a termination pursuant to
Section 7(a)(iii), the Employee shall be entitled to receive any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iv) In the event of a termination pursuant to
Section 7(a)(iv) hereof, if the Employee remains and continues as an
employee of the Employer until the Effective Date of the Change in
Control unless the Employee is terminated by the Employer prior to the
Effective Date of the Change in Control other than for Cause, the
Employee shall be entitled to receive, in one lump sum payment payable
in full on the Effective Date of the Change in Control (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) three years Base Compensation plus three times
the amount of the Bonus received by the Employee for the last full
fiscal year prior to the Effective Date of the Change in Control; and
(v) in the event of a termination pursuant to Section
7(a)(v) hereof, the Employee shall be entitled to receive in one lump
sum payment payable in full on the Effective Date (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) three years Base Compensation plus three times
the amount of the Bonus received by the Employee for the last full
fiscal year prior to the Effective Date and thereafter shall not be
entitled to any further compensation, remuneration or perquisites
hereunder."
For purposes of Section 7(c)(iv) the following
terms will have the meanings set forth below:
(P) A "Change in Control" shall be deemed to have
occurred upon any of the following events: (i) the acquisition in one
or more transactions by any "person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of "beneficial ownership" (within
3
<PAGE>
the meaning of Rule 13d-2 promulgated under the 1934 Act) of fifteen
percent (15%) or more of the combined voting power of the Employer's
then outstanding voting securities (the "Voting Securities"), provided,
however, that for purposes hereof the Voting Securities acquired (by
sale, merger, consolidation or in any other manner) from the Employer
by any person shall be excluded from the determination of such person's
beneficial ownership of Voting Securities (but such Voting Securities
shall be included in the calculation of the total number of Voting
Securities then outstanding); or (ii) the individuals who, as of the
date hereof, are members of the Board of Directors of the Employer (the
"Incumbent Board") cease for any reason to constitute more than
one-half of the Board; provided, however, that, if the election, or
nomination for election by the Employer's shareholders, of any new
director was approved by a vote of more than one-half of the Incumbent
Board, such new director shall, for purposes hereof, be considered as a
member of the Incumbent Board; or (iii) approval by the shareholders of
the Employer of (A) a merger or consolidation involving the Employer if
the shareholders of the Employer immediately before such merger or
consolidation do not own, directly or indirectly immediately following
such merger or consolidation, more than one-half of the combined voting
power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion
as their ownership of the Voting Securities immediately before such
merger or consolidation (unless, however, the event described in
subparagraph (ii) above does not occur in connection therewith) or (B)
a complete liquidation or dissolution of the Employer or an agreement
for the sale or other disposition of all or substantially all of the
assets of the Employer; provided, however, that, notwithstanding the
foregoing, (x) a change in control shall not be deemed to occur solely
because fifteen percent (15%) or more of the then outstanding Voting
Securities is acquired by (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by the
Employer or any of its subsidiaries, (2) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly
by the shareholders of the Employer in the same proportion as their
ownership of stock in the Employer immediately prior to such
acquisition or (3) the Employee and/or Michael Blumberg or any person
directly or indirectly controlled, under common control with or
controlled by either or both of them, and (y) a change in control shall
not be deemed to occur solely because any person (the "Subject Person")
acquired beneficial ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Employer which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
beneficially owned by the Subject Person, provided that if a change in
control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Employer and,
after such share acquisition by the Employer, the Subject Person
becomes the beneficial owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
beneficially owned by the Subject Person, then a change in control
shall occur.
(Q) The "Effective Date of the Change in Control"
shall be the later to occur of the closing date or the effective date
(as the case may be) of the transaction or event resulting in the
Change in Control; provided, however, that, notwithstanding the
4
<PAGE>
foregoing, the Effective Date of the Change in Control solely for the
event set forth in item (i) of subsection (P) of this Section 7(c)(iv)
shall be the date fifteen (15) business days after the occurrence of
such event.
7. EFFECT. Except as otherwise modified by this Tenth Amendment, all
terms, conditions and provisions of the Agreement shall remain effective and
continue operating in full force throughout the entire term of the Agreement, as
amended.
8. CAPTIONS. Paragraph titles or captions contained in this Tenth
Amendment are inserted only as a matter of convenience and for reference and in
no way define, limit, extend or describe the scope of this Tenth Amendment or
the intent of any provision hereof.
5
<PAGE>
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the
Employer has caused this Amendment to be executed by its duly authorized officer
effective as of the day and year first above written.
SOUND ADVICE, INC.
By:__________________
MICHAEL BLUMBERG,
Senior Vice President
EMPLOYEE:
___________________
PETER BESHOURI
6
TENTH AMENDMENT TO EMPLOYMENT AGREEMENT
TENTH AMENDMENT, dated as of the 1st day of February, 1999, to the
Employment Agreement, dated as of June 30, 1986, by and between SOUND ADVICE,
INC., a Florida corporation (the "Employer"), and MICHAEL BLUMBERG (the
"Employee"), as previously amended by that First Amendment to Employment
Agreement, dated as of May 15, 1989, that Second Amendment to Employment
Agreement, dated as of October 27, 1989, that Third Amendment to Employment
Agreement, dated as of July 1, 1992, that Fourth Amendment to Employment
Agreement, dated as of July 1, 1993, that Fifth Amendment to Employment
Agreement, dated as of July 1, 1994, that Sixth Amendment to Employment
Agreement, dated as of July 1, 1995, that Seventh Amendment to Employment
Agreement, dated as of July 1, 1996, that Eighth Amendment to Employment
Agreement, dated as of March 24, 1997 and that Ninth Amendment to Employment
Agreement, dated as of March 18, 1998 (collectively, the "Agreement").
W I T N E S S E T H:
WHEREAS, the Employee and the Employer mutually desire and each of them
is willing, in accordance with the terms and conditions specifically set forth
below, to amend the Agreement, it being understood by the Employee and the
Employer that all terms and conditions of the Agreement not otherwise modified
by this Tenth Amendment thereto shall remain effective and continue operating in
full force throughout the entire term of the Agreement, as amended.
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
<PAGE>
1. TERM. Section 2 of the Agreement is hereby amended to
provide that the term of the Agreement is hereby extended for another three
years or until January 31, 2002.
2. BASE COMPENSATION. Section 4(a) of the Agreement is hereby amended
to provide that the Base Compensation of the Employee shall be Three Hundred
Twenty Thousand Dollars ($320,000) per year, which amount may be increased or
otherwise modified per such Section 4(a).
3. BONUS. In lieu of any bonus arrangement set forth in Section 4(b) of
the Agreement, the Employee shall be entitled to participate in the Employer's
annual incentive bonus plan and long term incentive stock option program adopted
in December 1994 by the Employer's Board of Directors and the Stock Option
Committee thereof, respectively.
4. TERMINATION OF EMPLOYMENT. Effective as of the date first written
above, Section 7(a) of the Agreement shall be amended by adding thereto the
following subsection 7(a)(v):
"in the sole discretion of the Employer for any reason other
than Cause."
5. TERMINATION OF EMPLOYMENT. Effective as of the date first written
above, the final paragraph of Section 7(a) is hereby amended by deleting
therefrom the word "and" immediately preceding clause (c) thereof and adding to
the end thereof the following:
"and (d) Section 7(a)(v) immediately upon notice given by the
Company to the Employee."
6. TERMINATION OF EMPLOYMENT. Effective as of the date first written
above, Section 7(b) of the Agreement is hereby deleted in its entirety and shall
be restated as follows:
"(b) In the event of a termination of the Employee's
employment hereunder, the Employee shall be entitled to the following:
2
<PAGE>
(i) in the event of a termination pursuant to Section
7(a)(i), the Employee shall be entitled to receive (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) for a period of one year from the Effective
Date his Base Compensation and thereafter shall not be entitled to any
further compensation, remuneration or perquisites hereunder;
(ii) in the event of a termination pursuant to
Section 7(a)(ii), the Employee shall be entitled to receive (A) any
Base Compensation and Bonus owed to him hereunder to the Effective Date
of such termination and (B) for a period of one year from the Effective
Date (1) his Base Compensation reduced by the sum of all periodic
payments the Employee receives by virtue of his disability (x) pursuant
to any disability policy paid for by the Employer pursuant to Sections
5(a)(iii) or 5(b) hereof and (y) in the form of Florida State
Disability Benefits and/or Social Security Benefits and (2) all of the
perquisites set forth in Sections 5(a)(i), 5(a)(ii), 5(a)(iii) and 5(b)
hereof and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iii) in the event of a termination pursuant to
Section 7(a)(iii), the Employee shall be entitled to receive any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iv) In the event of a termination pursuant to
Section 7(a)(iv) hereof, if the Employee remains and continues as an
employee of the Employer until the Effective Date of the Change in
Control unless the Employee is terminated by the Employer prior to the
Effective Date of the Change in Control other than for Cause, the
Employee shall be entitled to receive, in one lump sum payment payable
in full on the Effective Date of the Change in Control (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) three years Base Compensation plus three times
the amount of the Bonus received by the Employee for the last full
fiscal year prior to the Effective Date of the Change in Control; and
(v) in the event of a termination pursuant to Section
7(a)(v) hereof, the Employee shall be entitled to receive in one lump
sum payment payable in full on the Effective Date (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) three years Base Compensation plus three times
the amount of the Bonus received by the Employee for the last full
fiscal year prior to the Effective Date and thereafter shall not be
entitled to any further compensation, remuneration or perquisites
hereunder."
For purposes of Section 7(c)(iv) the following
terms will have the meanings set forth below:
(P) A "Change in Control" shall be deemed to have
occurred upon any of the following events: (i) the acquisition in one
or more transactions by any "person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of "beneficial ownership" (within
3
<PAGE>
the meaning of Rule 13d-2 promulgated under the 1934 Act) of fifteen
percent (15%) or more of the combined voting power of the Employer's
then outstanding voting securities (the "Voting Securities"), provided,
however, that for purposes hereof the Voting Securities acquired (by
sale, merger, consolidation or in any other manner) from the Employer
by any person shall be excluded from the determination of such person's
beneficial ownership of Voting Securities (but such Voting Securities
shall be included in the calculation of the total number of Voting
Securities then outstanding); or (ii) the individuals who, as of the
date hereof, are members of the Board of Directors of the Employer (the
"Incumbent Board") cease for any reason to constitute more than
one-half of the Board; provided, however, that, if the election, or
nomination for election by the Employer's shareholders, of any new
director was approved by a vote of more than one-half of the Incumbent
Board, such new director shall, for purposes hereof, be considered as a
member of the Incumbent Board; or (iii) approval by the shareholders of
the Employer of (A) a merger or consolidation involving the Employer if
the shareholders of the Employer immediately before such merger or
consolidation do not own, directly or indirectly immediately following
such merger or consolidation, more than one-half of the combined voting
power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion
as their ownership of the Voting Securities immediately before such
merger or consolidation (unless, however, the event described in
subparagraph (ii) above does not occur in connection therewith) or (B)
a complete liquidation or dissolution of the Employer or an agreement
for the sale or other disposition of all or substantially all of the
assets of the Employer; provided, however, that, notwithstanding the
foregoing, (x) a change in control shall not be deemed to occur solely
because fifteen percent (15%) or more of the then outstanding Voting
Securities is acquired by (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by the
Employer or any of its subsidiaries, (2) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly
by the shareholders of the Employer in the same proportion as their
ownership of stock in the Employer immediately prior to such
acquisition or (3) the Employee and/or Peter Beshouri or any person
directly or indirectly controlled, under common control with or
controlled by either or both of them, and (y) a change in control shall
not be deemed to occur solely because any person (the "Subject Person")
acquired beneficial ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Employer which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
beneficially owned by the Subject Person, provided that if a change in
control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Employer and,
after such share acquisition by the Employer, the Subject Person
becomes the beneficial owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
beneficially owned by the Subject Person, then a change in control
shall occur.
(Q) The "Effective Date of the Change in Control"
shall be the later to occur of the closing date or the effective date
(as the case may be) of the transaction or event resulting in the
Change in Control; provided, however, that, notwithstanding the
4
<PAGE>
foregoing, the Effective Date of the Change in Control solely for the
event set forth in item (i) of subsection (P) of this Section 7(c)(iv)
shall be the date fifteen (15) business days after the occurrence of
such event.
7. EFFECT. Except as otherwise modified by this Tenth Amendment, all
terms, conditions and provisions of the Agreement shall remain effective and
continue operating in full force throughout the entire term of the Agreement, as
amended.
8. CAPTIONS. Paragraph titles or captions contained in this Tenth
Amendment are inserted only as a matter of convenience and for reference and in
no way define, limit, extend or describe the scope of this Tenth Amendment or
the intent of any provision hereof.
5
<PAGE>
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the
Employer has caused this Amendment to be executed by its duly authorized officer
effective as of the day and year first above written.
SOUND ADVICE, INC.
By:__________________
PETER BESHOURI
President
EMPLOYEE:
________________
MICHAEL BLUMBERG
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made and entered into as of the 31st day of
January, 1999 by and between SOUND ADVICE, INC., a Florida corporation (the
"Employer"), and KENNETH L. DANIELSON (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee serves in an executive and management capacity
with the Employer and makes significant and material contributions to the
growth, development and expansion of the business of the Employer; and
WHEREAS, the Employee has acquired and developed experience and
knowledge concerning the business and operations of the Employer, which
experience and knowledge the Employer desires to have available to it; and
WHEREAS, the Employee is willing, on the terms and conditions set forth
below, to enter into an employment agreement with, and to render services to and
for the benefit of the Employer,
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee
and the Employee hereby accepts employment by the Employer upon and subject to
all of the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions providing for earlier termination as
hereinafter set forth, the term of this Agreement shall be for a period of three
(3) years commencing on January 31, 1999 and ending on January 31, 2002.
<PAGE>
3. DUTIES. The Employee shall serve in the capacity of Chief Financial
Officer of the Employer and shall, during the term of this Agreement, devote so
much of his time as is necessary for the proper management of the affairs of the
Employer and the performance of his duties and responsibilities as an employee
of the Employer. The Employee shall, during the term of this Agreement, perform
such services, duties and responsibilities for and on behalf of the Employer as
the Board of Directors of the Employer shall from time to time determine and
direct consistent with the capacities in which he is being employed hereunder.
4. ANNUAL COMPENSATION. For and in consideration of the services to be
rendered and duties and responsibilities to be performed by the Employee
pursuant to this Agreement, the Employer shall pay to the Employee during the
term of this Agreement the following:
(a) an annual base salary (the "Base Compensation") of One
Hundred Eighty Four Thousand Dollars ($184,000.00) per year or such greater
amount during the second and third years of the term of this Agreement as shall
be determined from time to time by the President of the Company; and
(b) the Employee shall be entitled to participate in the
Employer's annual incentive bonus plan and long term incentive stock option
program adopted in December 1994 by the Employer's Board of Directors and the
Stock Option Committee thereof, respectively.
5. PERQUISITES. The Employee shall be eligible (subject to the terms
and conditions of particular plans and programs) to participate in any other
medical, health, accident, disability and/or life insurance programs, pension
plans, profit-sharing plans and other benefit programs and plans as are made
generally available from time to time by the Employer to all of its employees;
provided, however, that it is understood that the Employer does not by reason of
this
2
<PAGE>
Agreement obligate itself to make any such other programs, plans or
benefits available to its employees.
6. VACATION. The Employee shall be entitled to at least four (4) weeks
of paid vacation during each year of the term hereof. The scheduling of the
Employee's vacation(s) shall be consistent with the availability of his time and
shall be subject to (i) the Employer's vacation policy and (ii) the prior
approval of the Employer.
7. TERMINATION OF EMPLOYMENT.
(a) Notwithstanding any provisions of this Agreement to the
contrary including, without limitation, Section 2 hereof, the Employee's
employment hereunder and this Agreement shall be terminated in the following
circumstances (any of such circumstances hereinafter referred to as a
"Terminating Event"):
(i) upon the death of the Employee;
(ii) in the sole discretion of the Board of
Directors of the Employer, after the Employee is Disabled (as hereinafter
defined) upon the Employer giving the Employee written notice of such
termination;
(iii) in the sole discretion of the Board of
Directors of the Employer, for Cause (as hereinafter defined) upon the Employer
giving the Employee written notice specifying the grounds for such termination;
(iv) in the sole discretion of the Employee,
after a Change in Control (as hereinafter defined) upon the Employee giving the
Employer written notice of such termination within thirty (30) days of the date
that the Employee becomes aware of such Change in Control; or
3
<PAGE>
(v) in the sole discretion of the Employer for any
reason other than Cause.
Such termination shall be effective (the "Effective Date") as to the Terminating
Event set forth in (a) Section 7(a)(i) on the date of the death of the Employee,
(b) Sections 7(a)(ii) and 7(a)(iii) immediately upon receipt by the Employee of
the written notice required by each of such Sections, (c) Section 7(a)(iv)
thirty (30) days after receipt by the Employer of the written notice required by
such Section and (d) Section 7(a)(v) immediately upon notice given by the
Company to the Employee.
(b) In the event of a termination of the Employee's employment
hereunder, the Employee shall be entitled to the following:
(i) in the event of a termination pursuant to Section
7(a)(i), the Employee shall be entitled to receive (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) for a period of one year from the Effective
Date his Base Compensation and thereafter shall not be entitled to any
further compensation, remuneration or perquisites hereunder;
(ii) in the event of a termination pursuant to
Section 7(a)(ii), the Employee shall be entitled to receive (A) any
Base Compensation and Bonus owed to him hereunder to the Effective Date
of such termination and (B) for a period of one year from the Effective
Date (1) his Base Compensation reduced by the sum of all periodic
payments the Employee receives by virtue of his disability (x) pursuant
to any disability policy paid for by the Employer pursuant to Sections
5(a)(iii) or 5(b) hereof and (y) in the form of Florida State
Disability Benefits and/or Social Security Benefits and (2) all of the
perquisites set forth in Sections 5(a)(i), 5(a)(ii), 5(a)(iii) and 5(b)
hereof and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iii) in the event of a termination pursuant to
Section 7(a)(iii), the Employee shall be entitled to receive any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iv) In the event of a termination pursuant to
Section 7(a)(iv) hereof, if the Employee remains and continues as an
employee of the Employer until the Effective Date of the Change in
Control unless the Employee is terminated by the Employer prior to the
Effective Date of the Change in Control other than for Cause, the
Employee shall
4
<PAGE>
be entitled to receive, in one lump sum payment payable in full on the
Effective Date of the Change in Control (A) any Base Compensation and
Bonus owed to him hereunder to the Effective Date of such termination
and (B) two years Base Compensation plus two times the amount of the
Bonus received by the Employee for the last full fiscal year prior to
the Effective Date of the Change in Control; and
(v) in the event of a termination pursuant to Section
7(a)(v) hereof, the Employee shall be entitled to receive in one lump
sum payment payable in full on the Effective Date (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) two years Base Compensation plus two times the
amount of the Bonus received by the Employee for the last full fiscal
year prior to the Effective Date and thereafter shall not be entitled
to any further compensation, remuneration or perquisites hereunder."
For purposes of Section 7(c)(iv) the following
terms will have the meanings set forth below:
(P) A "Change in Control" shall be deemed to have
occurred upon any of the following events: (i) the acquisition in one
or more transactions by any "person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of "beneficial ownership" (within
the meaning of Rule 13d-2 promulgated under the 1934 Act) of fifteen
percent (15%) or more of the combined voting power of the Employer's
then outstanding voting securities (the "Voting Securities"), provided,
however, that for purposes hereof the Voting Securities acquired (by
sale, merger, consolidation or in any other manner) from the Employer
by any person shall be excluded from the determination of such person's
beneficial ownership of Voting Securities (but such Voting Securities
shall be included in the calculation of the total number of Voting
Securities then outstanding); or (ii) the individuals who, as of the
date hereof, are members of the Board of Directors of the Employer (the
"Incumbent Board") cease for any reason to constitute more than
one-half of the Board; provided, however, that, if the election, or
nomination for election by the Employer's shareholders, of any new
director was approved by a vote of more than one-half of the Incumbent
Board, such new director shall, for purposes hereof, be considered as a
member of the Incumbent Board; or (iii) approval by the shareholders of
the Employer of (A) a merger or consolidation involving the Employer if
the shareholders of the Employer immediately before such merger or
consolidation do not own, directly or indirectly immediately following
such merger or consolidation, more than one-half of the combined voting
power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion
as their ownership of the Voting Securities immediately before such
merger or consolidation (unless, however, the event described in
subparagraph (ii) above does not occur in connection therewith) or (B)
a complete liquidation or dissolution of the Employer or an agreement
for the sale or other disposition of all or substantially all of the
assets of the Employer; provided, however, that, notwithstanding the
foregoing, (x) a change in control shall not be deemed to occur solely
because fifteen percent (15%) or more of the then outstanding
5
<PAGE>
Voting Securities is acquired by (1) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained
by the Employer or any of its subsidiaries, (2) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly
by the shareholders of the Employer in the same proportion as their
ownership of stock in the Employer immediately prior to such
acquisition or (3) Michael Blumberg and/or Peter Beshouri or any person
directly or indirectly controlled, under common control with or
controlled by either or both of them, and (y) a change in control shall
not be deemed to occur solely because any person (the "Subject Person")
acquired beneficial ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Employer which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
beneficially owned by the Subject Person, provided that if a change in
control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Employer and,
after such share acquisition by the Employer, the Subject Person
becomes the beneficial owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
beneficially owned by the Subject Person, then a change in control
shall occur.
(Q) The "Effective Date of the Change in Control"
shall be the later to occur of the closing date or the effective date
(as the case may be) of the transaction or event resulting in the
Change in Control; provided, however, that, notwithstanding the
foregoing, the Effective Date of the Change in Control solely for the
event set forth in item (i) of subsection (P) of this Section 7(c)(iv)
shall be the date fifteen (15) business days after the occurrence of
such event.
(c) For purposes of this Section 7, the terms set forth herein
shall have the following meanings:
(i) The term "Disabled" shall mean the permanent inability of the
Employee by reason of physical or mental illness, incapacity or injury to
adequately perform all of the services, duties and responsibilities required of
him in connection with his employment hereunder, which permanent inability shall
be determined by the Board of Directors of the Employer; provided, however,
that, if the Employee disputes the determination of the Board of Directors as to
his being Disabled, the issue shall be
6
<PAGE>
submitted for decision to a medical doctor mutually agreed upon by the Board of
Directors of the Employer and the Employee, except that, if such disability
arises from mental illness or incapacity and a dispute arises, the issue shall
be submitted to a medical doctor selected by the Board of Directors of the
Employer in its sole discretion, and the decision of such medical doctor shall
be binding upon the parties hereto for all purposes hereof; provided, further,
that, if any insurance carrier shall acknowledge the onset of disability
pursuant to a disability insurance policy covering the Employee and maintained
and paid for by the Employer pursuant to Section 5(a)(iii) hereof, the Employee
shall be conclusively presumed to be Disabled for purposes hereof.
(ii) The term "Cause" shall mean and include any of the following with
respect to the Employee: a fraud, gross dishonesty or gross misconduct
perpetrated on the Employer, a criminal conviction for a felony, fraud or theft,
the imposition of any material sanction against the Employee or the Employer
solely by reason of the actions of the Employee by an regulatory or governmental
agency governing the Employer or its business or a material breach or violation
by the Employee of any material term or provision of this Agreement which is not
cured within thirty (30) days of the Employee's receipt of written notice from
the Board of Directors of the Employer detailing such material breach or
violation.
8. WAIVER. The waiver of a breach or violation of any term or provision
of this Agreement by either party shall not operate or be construed or deemed as
a continuing waiver by such party of such breach or violation or as a waiver of
a breach or violation of any other term or provision of this Agreement or as a
waiver of any subsequent breach or violation of the same term or provision of
this Agreement.
9. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice
of termination of this Agreement is given or received, the Employee shall
immediately cease contact with all customers, vendors and lenders of and others
doing business with the Employer
7
<PAGE>
and shall forthwith surrender to the Employer all customer lists, documents and
other property of the Employer then in his possession. Pending the surrender of
all such customer lists, documents and other property to the Employer, the
Employer may hold in abeyance any payments due the Employee pursuant to this
Agreement.
10. ASSIGNMENT. The Employee shall not assign, transfer or convey this
Agreement or in any manner encumber the compensation, remuneration or other
benefits payable and/or provided to him hereunder or delegate any of this duties
or obligations hereunder, except with the prior written consent of the Employer.
Subject to the provisions of Section 7 hereof, the Employer may assign this
Agreement and its rights hereunder in whole, but not in part, to any corporation
or any other entity to or into which it may transfer all or substantially all of
its assets.
11. NOTICES. All notices, demands and other communications which may be
made or are required hereunder shall be in writing and shall be deemed to have
been given when delivered personally or when deposited in the U.S. mail,
certified or registered, with postage prepaid and a return receipt requested,
addressed, if to the Employer, at 1901 Tigertail Blvd., Dania, Florida 33004,
Attention: Michael Blumberg, Vice President, and, if to the Employee, at the
address set forth below the signature of the Employee at the end of this
Agreement, or at such other addresses as may, from time to time, be furnished in
writing in the manner provided in this Section to the Employer by the Employee
or to the Employee by the Employer.
12. BINDING EFFECT. This Agreement shall be binding on the parties
hereto and on their respective heirs, administrators, executors, legal
representatives, successors and permitted assigns.
8
<PAGE>
13. ENFORCEABILITY. This Agreement contains the entire understanding of
the parties and may be altered, amended or modified only by a writing executed
by both of the parties hereto. This Agreement supersedes all prior agreements
and understandings by and between the Employer and the Employee relating to the
Employee's employment. In the event any part or provision of this Agreement
shall be found to be invalid or unenforceable, such invalidity or
unenforceability shall attach to only such part or provision and shall not in
any way affect or render invalid or unenforceable any other part or provision of
this Agreement, and the remaining parts and provisions of this Agreement shall
nevertheless be binding and enforceable with the same effect as though the
invalid or unenforceable part or provision was deleted and not contained herein.
14. APPLICABLE LAW. This Agreement and the rights and liabilities of
the parties hereto shall be interpreted under, and governed and enforced by, the
laws of the State of Florida.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.
16. GENDER. Wherever in this Agreement the masculine gender is used, it
shall be deemed to include the feminine or neuter; and the use of the singular
or plural shall be deemed to include the other.
17. ATTORNEYS' FEES AND COSTS. In the event that either of the parties
to this Agreement institutes suit against the other party to this Agreement to
enforce any of his or its rights hereunder, the prevailing party in such action
shall be entitled to recover from the other party all reasonable costs thereof,
including reasonable attorneys' fees.
9
<PAGE>
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the
Employer has caused this Agreement to be executed by its duly authorized
officers on the day and year first above written.
SOUND ADVICE, INC.
By:____________________
_______________________
KENNETH L. DANIELSON
_______________________
Address
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made and entered into as of the 31st day of
January, 1999 by and between SOUND ADVICE, INC., a Florida corporation (the
"Employer"), and CHRISTOPHER O'NEIL (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee serves in an executive and management capacity
with the Employer and makes significant and material contributions to the
growth, development and expansion of the business of the Employer; and
WHEREAS, the Employee has acquired and developed experience and
knowledge concerning the business and operations of the Employer, which
experience and knowledge the Employer desires to have available to it; and
WHEREAS, the Employee is willing, on the terms and conditions set forth
below, to enter into an employment agreement with, and to render services to and
for the benefit of the Employer,
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee and the
Employee hereby accepts employment by the Employer upon and subject to all of
the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions providing for earlier termination as
hereinafter set forth, the term of this Agreement shall be for a period of three
(3) years commencing on January 31, 1999 and ending on January 31, 2002.
<PAGE>
3. DUTIES. The Employee shall serve in the capacity of Executive Vice
President, Chief Operating Officer and Assistant Secretary of the Employer and
shall, during the term of this Agreement, devote so much of his time as is
necessary for the proper management of the affairs of the Employer and the
performance of his duties and responsibilities as an employee of the Employer.
The Employee shall, during the term of this Agreement, perform such services,
duties and responsibilities for and on behalf of the Employer as the Board of
Directors of the Employer shall from time to time determine and direct
consistent with the capacities in which he is being employed hereunder.
4. ANNUAL COMPENSATION. For and in consideration of the services to be
rendered and duties and responsibilities to be performed by the Employee
pursuant to this Agreement, the Employer shall pay to the Employee during the
term of this Agreement the following:
(a) an annual base salary (the "Base Compensation") of One
Hundred Eighty Four Thousand Dollars ($184,000.00) per year or such greater
amount during the second and third years of the term of this Agreement as shall
be determined from time to time by the President of the Company; and
(b) the Employee shall be entitled to participate in the
Employer's annual incentive bonus plan and long term incentive stock option
program adopted in December 1994 by the Employer's Board of Directors and the
Stock Option Committee thereof, respectively.
5. PERQUISITES. The Employee shall be eligible (subject to the terms
and conditions of particular plans and programs) to participate in any other
medical, health, accident, disability and/or life insurance programs, pension
plans, profit-sharing plans and other benefit programs and plans as are made
generally available from time to time by the Employer to all of its employees;
provided, however, that it is understood that the Employer does not by reason
of this
2
<PAGE>
Agreement obligate itself to make any such other programs, plans or benefits
available to its employees.
6. VACATION. The Employee shall be entitled to at least four (4) weeks
of paid vacation during each year of the term hereof. The scheduling of the
Employee's vacation(s) shall be consistent with the availability of his time and
shall be subject to (i) the Employer's vacation policy and (ii) the prior
approval of the Employer.
7. TERMINATION OF EMPLOYMENT.
(a) Notwithstanding any provisions of this Agreement to the
contrary including, without limitation, Section 2 hereof, the Employee's
employment hereunder and this Agreement shall be terminated in the following
circumstances (any of such circumstances hereinafter referred to as a
"Terminating Event"):
(i) upon the death of the Employee;
(ii) in the sole discretion of the Board of
Directors of the Employer, after the Employee is Disabled (as hereinafter
defined) upon the Employer giving the Employee written notice of such
termination;
(iii) in the sole discretion of the Board of
Directors of the Employer, for Cause (as hereinafter defined) upon the Employer
giving the Employee written notice specifying the grounds for such termination;
(iv) in the sole discretion of the Employee,
after a Change in Control (as hereinafter defined) upon the Employee giving the
Employer written notice of such termination within thirty (30) days of the date
that the Employee becomes aware of such Change in Control; or
3
<PAGE>
(v) in the sole discretion of the Employer for any
reason other than Cause.
Such termination shall be effective (the "Effective Date") as to the Terminating
Event set forth in (a) Section 7(a)(i) on the date of the death of the Employee,
(b) Sections 7(a)(ii) and 7(a)(iii) immediately upon receipt by the Employee of
the written notice required by each of such Sections, (c) Section 7(a)(iv)
thirty (30) days after receipt by the Employer of the written notice required by
such Section and (d) Section 7(a)(v) immediately upon notice given by the
Company to the Employee.
(b) In the event of a termination of the Employee's employment
hereunder, the Employee shall be entitled to the following:
(i) in the event of a termination pursuant to Section
7(a)(i), the Employee shall be entitled to receive (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) for a period of one year from the Effective
Date his Base Compensation and thereafter shall not be entitled to any
further compensation, remuneration or perquisites hereunder;
(ii) in the event of a termination pursuant to
Section 7(a)(ii), the Employee shall be entitled to receive (A) any
Base Compensation and Bonus owed to him hereunder to the Effective Date
of such termination and (B) for a period of one year from the Effective
Date (1) his Base Compensation reduced by the sum of all periodic
payments the Employee receives by virtue of his disability (x) pursuant
to any disability policy paid for by the Employer pursuant to Sections
5(a)(iii) or 5(b) hereof and (y) in the form of Florida State
Disability Benefits and/or Social Security Benefits and (2) all of the
perquisites set forth in Sections 5(a)(i), 5(a)(ii), 5(a)(iii) and 5(b)
hereof and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iii) in the event of a termination pursuant to
Section 7(a)(iii), the Employee shall be entitled to receive any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and thereafter shall not be entitled to any further
compensation, remuneration or perquisites hereunder;
(iv) In the event of a termination pursuant to
Section 7(a)(iv) hereof, if the Employee remains and continues as an
employee of the Employer until the Effective Date of the Change in
Control unless the Employee is terminated by the Employer prior to the
Effective Date of the Change in Control other than for Cause, the
Employee shall
4
<PAGE>
be entitled to receive, in one lump sum payment payable in full on the
Effective Date of the Change in Control (A) any Base Compensation and
Bonus owed to him hereunder to the Effective Date of such termination
and (B) two years Base Compensation plus two times the amount of the
Bonus received by the Employee for the last full fiscal year prior to
the ffective Date of the Change in Control; and
(v) in the event of a termination pursuant to Section
7(a)(v) hereof, the Employee shall be entitled to receive in one lump
sum payment payable in full on the Effective Date (A) any Base
Compensation and Bonus owed to him hereunder to the Effective Date of
such termination and (B) two years Base Compensation plus two times the
amount of the Bonus received by the Employee for the last full fiscal
year prior to the Effective Date and thereafter shall not be entitled
to any further compensation, remuneration or perquisites hereunder."
For purposes of Section 7(c)(iv) the following
terms will have the meanings set forth below:
(P) A "Change in Control" shall be deemed to have
occurred upon any of the following events: (i) the acquisition in one
or more transactions by any "person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of "beneficial ownership" (within
the meaning of Rule 13d-2 promulgated under the 1934 Act) of fifteen
percent (15%) or more of the combined voting power of the Employer's
then outstanding voting securities (the "Voting Securities"), provided,
however, that for purposes hereof the Voting Securities acquired (by
sale, merger, consolidation or in any other manner) from the Employer
by any person shall be excluded from the determination of such person's
beneficial ownership of Voting Securities (but such Voting Securities
shall be included in the calculation of the total number of Voting
Securities then outstanding); or (ii) the individuals who, as of the
date hereof, are members of the Board of Directors of the Employer (the
"Incumbent Board") cease for any reason to constitute more than
one-half of the Board; provided, however, that, if the election, or
nomination for election by the Employer's shareholders, of any new
director was approved by a vote of more than one-half of the Incumbent
Board, such new director shall, for purposes hereof, be considered as a
member of the Incumbent Board; or (iii) approval by the shareholders of
the Employer of (A) a merger or consolidation involving the Employer if
the shareholders of the Employer immediately before such merger or
consolidation do not own, directly or indirectly immediately following
such merger or consolidation, more than one-half of the combined voting
power of the outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion
as their ownership of the Voting Securities immediately before such
merger or consolidation (unless, however, the event described in
subparagraph (ii) above does not occur in connection therewith) or (B)
a complete liquidation or dissolution of the Employer or an agreement
for the sale or other disposition of all or substantially all of the
assets of the Employer; provided, however, that, notwithstanding the
foregoing, (x) a change in control shall not be deemed to occur solely
because fifteen percent (15%) or more of the then outstanding
5
<PAGE>
Voting Securities is acquired by (1) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained
by the Employer or any of its subsidiaries, (2) any corporation which,
immediately prior to such acquisition, is owned directly or indirectly
by the shareholders of the Employer in the same proportion as their
ownership of stock in the Employer immediately prior to such
acquisition or (3) Michael Blumberg and/or Peter Beshouri or any person
directly or indirectly controlled, under common control with or
controlled by either or both of them, and (y) a change in control shall
not be deemed to occur solely because any person (the "Subject Person")
acquired beneficial ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Employer which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
beneficially owned by the Subject Person, provided that if a change in
control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Employer and,
after such share acquisition by the Employer, the Subject Person
becomes the beneficial owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
beneficially owned by the Subject Person, then a change in control
shall occur.
(Q) The "Effective Date of the Change in Control"
shall be the later to occur of the closing date or the effective date
(as the case may be) of the transaction or event resulting in the
Change in Control; provided, however, that, notwithstanding the
foregoing, the Effective Date of the Change in Control solely for the
event set forth in item (i) of subsection (P) of this Section 7(c)(iv)
shall be the date fifteen (15) business days after the occurrence of
such event.
(c) For purposes of this Section 7, the terms set forth herein
shall have the following meanings:
(i) The term "Disabled" shall mean the
permanent inability of the Employee by reason of physical or mental illness,
incapacity or injury to adequately perform all of the services, duties and
responsibilities required of him in connection with his employment hereunder,
which permanent inability shall be determined by the Board of Directors of the
Employer; provided, however, that, if the Employee disputes the determination of
the Board of Directors as to his being Disabled, the issue shall be submitted
for decision to a medical doctor mutually agreed upon by the Board of Directors
of the Employer and the Employee, except that, if such disability arises from
mental illness or incapacity and a dispute arises, the issue shall be
6
<PAGE>
submitted to a medical doctor selected by the Board of Directors of the Employer
in its sole discretion, and the decision of such medical doctor shall be binding
upon the parties hereto for all purposes hereof; provided, further, that, if any
insurance carrier shall acknowledge the onset of disability pursuant to a
disability insurance policy covering the Employee and maintained and paid for by
the Employer pursuant to Section 5(a)(iii) hereof, the Employee shall be
conclusively presumed to be Disabled for purposes hereof.
(ii) The term "Cause" shall mean and include any of
the following with respect to the Employee: a fraud, gross dishonesty or gross
misconduct perpetrated on the Employer, a criminal conviction for a felony,
fraud or theft, the imposition of any material sanction against the Employee or
the Employer solely by reason of the actions of the Employee by an regulatory or
governmental agency governing the Employer or its business or a material breach
or violation by the Employee of any material term or provision of this Agreement
which is not cured within thirty (30) days of the Employee's receipt of written
notice from the Board of Directors of the Employer detailing such material
breach or violation.
8. WAIVER. The waiver of a breach or violation of any term or provision
of this Agreement by either party shall not operate or be construed or deemed as
a continuing waiver by such party of such breach or violation or as a waiver of
a breach or violation of any other term or provision of this Agreement or as a
waiver of any subsequent breach or violation of the same term or provision of
this Agreement.
9. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice
of termination of this Agreement is given or received, the Employee shall
immediately cease contact with all customers, vendors and lenders of and others
doing business with the Employer and shall forthwith surrender to the Employer
all customer lists, documents and other property of
7
<PAGE>
the Employer then in his possession. Pending the surrender of all such customer
lists, documents and other property to the Employer, the Employer may hold in
abeyance any payments due the Employee pursuant to this Agreement.
10. ASSIGNMENT. The Employee shall not assign, transfer or convey this
Agreement or in any manner encumber the compensation, remuneration or other
benefits payable and/or provided to him hereunder or delegate any of this duties
or obligations hereunder, except with the prior written consent of the Employer.
Subject to the provisions of Section 7 hereof, the Employer may assign this
Agreement and its rights hereunder in whole, but not in part, to any corporation
or any other entity to or into which it may transfer all or substantially all of
its assets.
11. NOTICES. All notices, demands and other communications which may be
made or are required hereunder shall be in writing and shall be deemed to have
been given when delivered personally or when deposited in the U.S. mail,
certified or registered, with postage prepaid and a return receipt requested,
addressed, if to the Employer, at 1901 Tigertail Blvd., Dania, Florida 33004,
Attention: Michael Blumberg, Vice President, and, if to the Employee, at the
address set forth below the signature of the Employee at the end of this
Agreement, or at such other addresses as may, from time to time, be furnished in
writing in the manner provided in this Section to the Employer by the Employee
or to the Employee by the Employer.
12. BINDING EFFECT. This Agreement shall be binding on the parties
hereto and on their respective heirs, administrators, executors, legal
representatives, successors and permitted assigns.
13. ENFORCEABILITY. This Agreement contains the entire understanding of
the parties and may be altered, amended or modified only by a writing executed
by both of the parties hereto. This Agreement supersedes all prior agreements
and understandings by and between the
8
<PAGE>
Employer and the Employee relating to the Employee's employment. In the event
any part or provision of this Agreement shall be found to be invalid or
unenforceable, such invalidity or unenforceability shall attach to only such
part or provision and shall not in any way affect or render invalid or
unenforceable any other part or provision of this Agreement, and the remaining
parts and provisions of this Agreement shall nevertheless be binding and
enforceable with the same effect as though the invalid or unenforceable part or
provision was deleted and not contained herein.
14. APPLICABLE LAW. This Agreement and the rights and liabilities of
the parties hereto shall be interpreted under, and governed and enforced by, the
laws of the State of Florida.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.
16. GENDER. Wherever in this Agreement the masculine gender is used, it
shall be deemed to include the feminine or neuter; and the use of the singular
or plural shall be deemed to include the other.
17. ATTORNEYS' FEES AND COSTS. In the event that either of the parties
to this Agreement institutes suit against the other party to this Agreement to
enforce any of his or its rights hereunder, the prevailing party in such action
shall be entitled to recover from the other party all reasonable costs thereof,
including reasonable attorneys' fees.
9
<PAGE>
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the
Employer has caused this Agreement to be executed by its duly authorized
officers on the day and year first above written.
SOUND ADVICE, INC.
By:__________________
_____________________
CHRISTOPHER O'NEIL
_____________________
Address
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> JUL-31-1999
<CASH> 1,217,228
<SECURITIES> 0
<RECEIVABLES> 5,141,104
<ALLOWANCES> 502,400
<INVENTORY> 29,283,079
<CURRENT-ASSETS> 35,640,942
<PP&E> 38,819,828
<DEPRECIATION> 24,126,531
<TOTAL-ASSETS> 51,203,786
<CURRENT-LIABILITIES> 28,792,978
<BONDS> 793,025
0
0
<COMMON> 37,389
<OTHER-SE> 17,531,583
<TOTAL-LIABILITY-AND-EQUITY> 51,203,786
<SALES> 80,367,686
<TOTAL-REVENUES> 80,367,686
<CGS> 52,815,150
<TOTAL-COSTS> 52,815,150
<OTHER-EXPENSES> 25,364,571
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 706,428
<INCOME-PRETAX> 1,501,886
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,501,886
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,501,886
<EPS-BASIC> .40
<EPS-DILUTED> .36
</TABLE>
