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Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is entered into as of October 19,
2004 between Gregg Appliances, Inc., an Indiana corporation (the
"Company"), and Jerry W. Throgmartin ("Executive").
W I T N E S S E T
H
WHEREAS, in connection with a recapitalization of
the Company, the Company and Executive have entered into various
agreements concerning the Company and its stockholders, including a
Stockholders Agreement, a Registration Rights Agreement, and the
Merger Agreement (as defined below);
WHEREAS, pursuant to the transactions
contemplated by the Agreement and Plan of Merger dated as of
October 19, 2004 (such Agreement and Plan of Merger is referred to
herein as the "Merger Agreement") by and among the Company, Gregg
Investment Corporation, LLC, a Delaware limited liability company
("Investor"), and GIC Corporation, a Delaware corporation ("Merger
Sub"), it is currently contemplated that Merger Sub will merge with
and into the Company, with the Company to be the surviving
corporation (the "Merger");
WHEREAS, Executive has served as Chairman of the
Board and Chief Executive Officer of the Company, and it is the
desire of the Company and Investor, following the Effective Time of
the Merger (as such term is defined in the Merger Agreement) to
continue to have the benefit of Executive’s experience and
loyalty, and Executive is willing to provide his services on the
terms and conditions set forth herein; and
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WHEREAS, it is agreed by the parties hereto that
this Agreement shall only be effective as of the Effective Time and
solely upon the condition that the Merger becomes effective in
accordance with applicable law.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants herein contained, the parties hereto agree
as follows:
1. Employment and Duties .
(a) General . The Company hereby employs
Executive, and Executive agrees, upon the terms and conditions
herein set forth, to serve as the Company’s Chief Executive
Officer. In such capacity, Executive shall perform such duties as
may be delineated in the by-laws of the Company, and such other
duties as may be assigned to Executive from time to time by the
Company’s Board of Directors. During the Period (as defined
in paragraph 2 below), if Executive also serves as a member of the
Company’s Board of Directors he shall not be entitled to
additional compensation for his service as a member of the
Board.
(b) Full-Time Service . Throughout the
Period, Executive shall, except as may from time to time be
otherwise agreed in writing by the Company and unless prevented by
ill health, devote his full-time working hours to his duties
hereunder, shall in all respects conform to and comply with the
lawful and reasonable directions and instructions given to him by
the Company’s Board of Directors and shall use his best
efforts to promote and serve the interests of the
Company.
(c) No Other Employment . Throughout the
Period, Executive shall not, directly or indirectly, render
services to any other person or organization for which he receives
compensation without the explicit written consent of the
Company’s Board of Directors or otherwise engage in
activities which would interfere with his performance of his
duties
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hereunder. The activities described on Schedule
A, attached hereto and incorporated by this reference, shall for
this purpose be deemed to have been approved by the Company’s
Board of Directors so long as such activities do not interfere with
Executive’s performance of his duties hereunder.
(d) Other Benefits . Executive shall have
twenty (20) vacation days per year. The Company shall reimburse
Executive for his reasonable business expenses incurred in
connection with his employment with the Company or his service on
the Company’s Board of Directors so long as Executive
complies with the Company’s general policies and guidelines
with respect to such expenses. Executive shall be entitled to use
the airplane leased by the Company from Throgmartin Leasing, LLC
for up to twenty (20) hours per year for personal purposes at the
Company’s expense. In the event Executive’s usage of
such airplane exceeds twenty (20) hours in any year during the
Term, Executive shall reimburse the Company for its actual costs in
connection with any hours of use in excess of twenty (20)
hours.
2. Term and Period of Employment . The
Company shall retain Executive and Executive shall serve in the
employ of the Company for a period of two (2) years commencing at
the Effective Time and extending through and including the second
anniversary of the Effective Time (the "Term"), unless earlier
terminated pursuant to the provisions of this Agreement. In
addition, on the last day of each calendar month during the period
of Executive’s employment hereunder, the Term shall be
automatically extended by one month unless either party has given
prior written notice to the other that the Term is not to be
further extended ( i.e. , that the Term is to expire two
years after the giving of such notice). Notwithstanding such Term
and any extension thereof, the period of Executive’s
employment with the Company shall be subject to earlier termination
during the Term — during both the initial Term and any
extended
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Term — pursuant to the provisions of this
Agreement. The period of Executive’s employment by the
Company, whether terminated due to expiration of the Term or
terminated earlier during the Term pursuant to the provisions of
this Agreement, is hereinafter referred to as the
"Period."
3. Compensation and Other Benefits .
Subject to the provisions of this Agreement, the Company shall pay
and provide the following compensation and other benefits to
Executive during the Period as compensation for services rendered
hereunder:
(a) Base Salary . The Company shall pay to
Executive an annual base salary (the "Base Salary") at the rate of
$300,000 per annum, payable in accordance with the Company’s
then current payroll practice. The Base Salary shall be reviewed
annually and may be increased in the sole discretion of the
Compensation Committee of the Company’s Board of Directors
(the "Compensation Committee"). The Company shall be entitled to
deduct or withhold all taxes and charges which the Company may be
required to deduct or withhold therefrom.
(b) Bonus . Executive shall be entitled to
participate in bonus programs of the Company — which programs
shall, during the Term, be the same as or substantially similar to
the bonus programs of the Company in existence at the time of the
Merger — and any bonuses granted to Executive shall be in
addition to the compensation provided for in Section 3(a)
hereof.
(c) Employee Benefit Plans . At all times
during the Period, Executive shall be provided the opportunity to
participate in pension and welfare plans, programs and arrangements
(the "Plans") that are generally made available to executives of
the Company, and such other Plans, if any, as may be deemed
appropriate by the Compensation Committee acting in its sole
discretion.
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4. Termination of Employment .
(a) Termination for Cause .
(i) If, prior to the expiration of the Term,
Executive’s employment is terminated by the Company for
Cause, as defined in subparagraph 4(a)(ii), Executive shall not be
eligible to receive Base Salary under subparagraph 3(a) or to
participate in any Plans under subparagraph 3(c) with respect to
the remainder of the Term or any other future periods after the
date of such termination except for the right to receive benefits
which have become vested under any Plan in accordance with the
terms of such Plan. In addition, Executive shall not be eligible to
receive any bonus described in subparagraph 3(b) for the
Company’s fiscal year during which the date of termination
occurs and any later year.
(ii) Termination for "Cause" shall mean
termination of Executive’s employment with the Company by the
Company’s Board of Directors because of (a) Executive’s
repeated failures to perform his duties in a manner reasonably
consistent with the criteria established by the Board of Directors
of the Company and communicated to Executive; provided, however,
that the termination pursuant to this clause shall be preceded by a
written notice providing a reasonable opportunity for Executive to
correct his conduct, if the conduct in question can be corrected,
(b) conduct on the part of the Executive that constituted a breach
of any statutory, contractual, or common law duty of loyalty or
care owed to the Company, or other conduct on the part of the
Executive that demonstrated dishonesty or deceit in his dealings
with the Company, (c) misconduct by Executive which was material to
the performance of his duties to the Company, including, without
limitation, the disclosure of Confidential
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Information or a breach of noncompetition or
non-solicitation obligations, including a breach of
Executive’s obligations under Section 7.02 of the Merger
Agreement, (d) conduct causing or aiding a breach by the Company of
Section 9 (pertaining to the hiring of auditors or accountants) of
the Stockholders Agreement, or (e) the commission by Executive of
any crime involving moral turpitude or any felony.
(iii) The date of termination of employment by
the Company under this paragraph 4(a) shall be the date specified
in a written notice of termination (which date shall be no earlier
than the date of furnishing such notice), or if no such date is
specified therein, the date of receipt by Executive of such written
notice of termination.
(b) Termination Without Cause .
(i) Subject to the provisions of subparagraph
4(b)(ii) and subparagraph 4(b)(v), if, prior to the expiration of
the Term, Executive’s employment is terminated by the Company
without Cause, Executive shall generally be entitled to receive, as
"Severance Benefits", (A) for the remainder of the Term his then
current Base Salary and continued coverage under health and
insurance plans or, if any such plan does not permit continued
coverage of Executive, the Company shall arrange to provide a
benefit substantially similar to and no less favorable than the
benefits he was entitled to under such plan, and (B) for the year
in which such termination occurs, a pro-rated bonus for the portion
of such year during which Executive was employed by the Company.
Notwithstanding the foregoing, if Executive becomes employed
by
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