EXHIBIT 10.16

CONFIDENTIAL SEVERANCE AGREEMENT AND RELEASE

This CONFIDENTIAL SEVERANCE AGREEMENT AND RELEASE (this "Agreement"), dated January 8, 2004, by and between (i) J. Edward McEntire ("Employee") and
(ii) Ultimate Electronics, Inc. (the "Company"). Employee and the Company are referred to collectively as the "Parties" and individually as a "Party."

In
consideration of the mutual promises and undertakings contained herein, the sufficiency of which is acknowledged by the Parties, the Parties to this Agreement agree as follows:

TERMS

1.Resignation and Effective Date. Employee voluntarily resigned his employment with the Company effective
December 31, 2003 (the "Resignation Date"). This Agreement shall become effective (the "Effective Date") on the eighth day after Employee's execution of this Agreement, provided that employee
has not revoked Employee's acceptance pursuant to Section 7(g) below.

2.Payments.



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3.General Release.



4.Unknown Facts. This Agreement includes claims of every nature and kind, known or unknown, suspected or unsuspected.
Employee hereby acknowledges that he may hereafter discover facts different from, or in addition to, those which he now knows or believes to be true with respect to this Agreement, and he agrees that
this Agreement and the release contained herein shall be and remain effective in all respects, notwithstanding such different or additional facts or the discovery thereof.

5.No Application. Employee agrees not to apply for any job or position as an employee, consultant, independent contractor,
or otherwise, with the Company. Employee understands that the Company will not consider, and is under no obligation to consider, any such application submitted by Employee.

6.No Admission of Liability. The Parties agree that nothing contained herein, and no action taken by any Party hereto with
regard to this Agreement, shall be construed as an admission by any Party of liability or of any fact that might give rise to liability for any purpose whatsoever.

7.Warranties of Employee. Employee warrants and represents as follows:



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8.Non-Competition; Non-Solicitation; Anti-Raiding. Without the prior written approval of
the Chairman of the Board of Directors of the Company, Employee shall not, directly or indirectly, for a period of two (2) years from the Resignation Date:



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9.Confidentiality.



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10.Non-Disparagement. Employee agrees not to make to any person any statement that disparages the Company or any
of its Affiliates or reflects negatively on the Company or any of its Affiliates, including, but not limited to statements regarding the Company's or any of its Affiliate's financial condition,
employment practices, or its officers, directors, board members, employees, attorneys, customers, or vendors.

11.Acknowledgments. Employee acknowledges that the covenants contained in Sections 8, 9, and 10, including those
related to duration, geographic scope, and the scope of prohibited conduct, are reasonable and necessary to protect the legitimate interests of the Company. Employee acknowledges that during the
course of his employment he was among the Company's executive personnel. He further acknowledges that the covenants contained in Sections 8, 9, and 10 are designed, intended, and necessary to
protect, and are reasonably related to the protection of, the Company's trade secrets, to which he was exposed and with which he was entrusted during the course of his employment. Employee understands
that any breach of Section 9 will also constitute a misappropriation of the Company's proprietary rights, and may constitute a theft of the Company's trade secrets under applicable local,
state, and federal statutes, and will result in a claim for injunctive relief, damages, and/or criminal sanctions and penalties against Employee by the Company, and possibly others.

12.Forfeiture of Severance Payments and COBRA Payments. If Employee breaches Sections 8, 9, or 10 of this Agreement,
Employee shall pay back to the Company all Severance Payments and COBRA Payments received by or made on behalf of Employee through the date of breach and Employee shall not be entitled to any further
Severance Payments or COBRA Payments. Nothing contained in this Section 12 shall be construed as prohibiting the Company from pursuing any other remedies available to it in the event of the
breach of Sections 8, 9, or 10, including the equitable remedies set forth in Section 15.

13.Return of Company Property and Information. Employee represents and warrants that, prior to his execution of this
Agreement, he will return to the Company any and all property, documents and files, including any documents (in any recorded media, such as papers, computer disks, copies, photographs, maps,
transparencies, and microfiche) that relate in any way to the Company or the Company's business whether or not developed, produced, or conceived, in whole or in part, by Employee during the term of
his employment with the Company. Employee agrees that, to the extent that he possesses any files, data, or information relating in any way to the Company or the Company's business on any personal
computer, he will delete those files, data, or information (and will retain no copies in any form). Employee also will return any Company tools, equipment, calling cards, credit cards, access cards or
keys, any keys to any filing cabinets, vehicles, vehicle keys, and all other Company property in any form prior to the date he executes this Agreement. Employee hereby expressly acknowledges that the
foregoing steps are necessary to protect the Company's proprietary interests in its trade secrets, confidential information, and copyrights, and that Employee is not entitled to use, disclose, or
otherwise benefit from the Company's proprietary interests. Employee understands that any breach of this Section 13 will also constitute a misappropriation of the Company's proprietary

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rights,
and may constitute a theft of the Company's trade secrets under applicable local, state, and federal statutes, and will result in a claim for injunctive relief, damages, and/or criminal
sanctions and penalties against Employee by the Company, and possibly by others.

14.Director and Officer Insurance. The Company will use its best efforts to maintain in full force and effect director and
officer liability insurance in an amount not less than the amount in effect as of the Resignation Date. The Company will include Employee has a named insured if and to the extent necessary to maintain
coverage for Employee under the Company's director and officer liability insurance policy or policies.

15.Equitable Remedies. The Confidential Information entrusted to Employee during the course of his employment by the Company
is of a unique and special character, and any breach of Sections 8, 9, or 10 will cause the Company immediate and irreparable injury and damage, for which monetary relief would be inadequate or
difficult to quantify. The Company will be entitled to, in addition to all other remedies available to it, injunctive relief and specific performance to prevent a breach and to secure the enforcement
of Sections 8, 9, or 10. Employee acknowledges that injunctive relief may be granted immediately upon the commencement of any such action without notice to Employee and in addition may recover
monetary damages. In the event a court requires posting of a bond, the parties agree to a maximum $5,000 bond. Employee further acknowledges that his duties under this Agreement continue until the
Company consents in writing to the release of Employee's obligations under this Agreement. The parties further agree that the provisions of Sections 8, 9, and 10 are separate from and
independent of the remainder of this Agreement and that these provisions are specifically enforceable by the Company notwithstanding any claim made by Employee against the Company.

16.Severability. If any provision of this Agreement is held illegal, invalid, or unenforceable, such holding shall not
affect any other provisions hereof. In the event any provision is held illegal, invalid or unenforceable, such provision shall be limited so as to affect the intent of the Parties to the fullest
extent permitted by applicable law. Any claim by Employee against the Company shall not constitute a defense to enforcement by the Company.

17.Assignment. The Company may assign its rights under this Agreement. Employee cannot assign his rights under this
Agreement without the prior written consent of the Company.

18.Enforcement. The releases contained herein do not release any claims for enforcement of the terms, conditions or
warranties contained in this Agreement. The Parties shall be free to pursue any remedies available to them to enforce this Agreement.

19.Entire Agreement. This Agreement and the Indemnification Agreement, dated October 15, 1993 (the "Indemnification
Agreement"), by and between the Company and Employee, constitute the entire agreement between the Parties with respect to the matters covered by such Agreements. The Indemnification Agreement shall
control all issues related to the Company's indemnification of, and advancement of expenses to, Employee, notwithstanding any contrary or conflicting provision of the Company's articles of
incorporation or bylaws currently in effect or as may be amended in the future. Employee acknowledges that he has not relied on any promise, representation, or statement other than those set forth in
this Agreement. This Agreement cannot be modified except in writing signed by all Parties.

20.Venue and Applicable Law. This Agreement shall be interpreted and construed in accordance with the laws of the State of
Colorado, without regard to its conflicts of law provisions. Venue shall be in the federal or state courts in Denver, Colorado.

[SIGNATURE
PAGE FOLLOWS]

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IN
WITNESS WHEREOF, the Parties have executed this Agreement on the dates written below.

|EMPLOYEE:                                                                            |  |                    
|------------------------------------------------------------------------------------ |  | -------------------
|/s/J. EDWARD MCENTIREJ. EDWARD MCENTIRE                                              |  | January 8, 2004Date
|THE COMPANY:                                                                         |  |                    
|ULTIMATE ELECTRONICS, INC.                                                           |  |                    
|/s/DAVID J. WORKMANBy: David J. Workman
Title: President and Chief Executive Officer |  | January 8, 2004Date

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