Exhibit 10.4
Execution Copy
THIS
EMPLOYMENT AGREEMENT (this “ Agreement ”) is
dated as of July , 2005 and
is between A-MARK PRECIOUS METALS, INC., a New York
corporation (“ Company ”), and THOR C.
GJERDRUM, an individual (“ Mr. Gjerdrum
”), and is made with reference to the following
facts.
A. Mr. Gjerdrum
is currently employed by Company as its Chief Financial Officer and
Chief Administrative Officer pursuant to that certain letter of
employment dated August 29, 2002 between Company and
Mr. Gjerdrum (the “ Existing Agreement
”).
B. Company
now wishes to continue to employ Mr. Gjerdrum, and
Mr. Gjerdrum wishes to continue to be so employed, on the
terms and conditions set forth in this Agreement. The Existing
Agreement is hereby superceded and replaced in its
entirety.
NOW,
THEREFORE, Company and Mr. Gjerdrum hereby agree as
follows:
1.
Employment; Term . Company hereby employs Mr. Gjerdrum,
and Mr. Gjerdrum hereby accepts employment with Company, in
accordance with and subject to the terms and conditions set forth
in this Agreement. The initial term of this Agreement (the “
Initial Term ”) commences on the date of this
Agreement and, unless earlier terminated in accordance with
Section 6, will terminate on the fifth anniversary of the date
of this Agreement. Company and Mr. Gjerdrum may extend the
term of this Agreement for one or more additional one (1) year
periods by written agreement signed by them prior to the end of the
Initial Term or the then current extension thereof, as applicable
(the Initial Term and any extensions thereof, the “
Term ”).
2.
Duties . (a) During the Term, Mr. Gjerdrum shall
serve as Chief Financial Officer and Chief Administrative Officer
of Company and shall report to the Chief Executive Officer of
Company. Mr. Gjerdrum will have such duties and
responsibilities as are customary for Mr. Gjerdrum’s
positions and any other duties or responsibilities he may be
reasonably assigned by Company’s Chief Executive
Officer.
(b) During
the period Mr. Gjerdrum is employed by Company,
Mr. Gjerdrum shall be required to devote his full business
time and best efforts exclusively to the business and affairs of
Company and will not directly or indirectly engage in any other
business or competitive activity which has not been disclosed to
and approved in writing by Company.
(c) Except
in the ordinary course of performing his duties hereunder, in
accordance with Company’s annual business plan and any other
guidelines or policies approved by Company’s Chief Executive
Officer or Board of Directors, Mr. Gjerdrum shall not have the
authority to create or execute any contract or obligation, either
express or implied, on behalf of or in the name of Company or any
of its affiliates, which is intended to be binding upon Company or
for which Company would be liable without the prior written consent
of the Company’s Chief Executive Officer.
3.
Compensation . (a) Company shall pay Mr. Gjerdrum
a salary of One Hundred Sixty-Five Thousand Dollars ($165,000.00)
per annum (the “ Base Salary ”). In
addition,
Mr. Gjerdrum
will receive a one-time signing payment in the amount of Twenty
Thousand Dollars ($20,000.00) (“ Signing Payment
”) upon execution of this Agreement and a year-end
performance bonus provided he is continuously employed by Company
through and until June 30 th of
each year (the “ Vesting Date ”) during the Term
(“ Percentage Compensation ”). Percentage
Compensation is not pro-rated and will be paid in respect of a
particular year only if Mr. Gjerdrum is employed by Company on
the Vesting Date for such year. Percentage Compensation will be
calculated as described below. Payment of the Base Salary, Signing
Payment and Percentage Compensation will be in accordance with
Company’s standard payroll practices and subject to all
legally required or customary withholdings.
(b) For
each fiscal year of employment in which Company’s shareholder
equity is in excess of Ten Million Dollars ($10,000,000.00),
Company shall pay to Mr. Gjerdrum, within ninety (90) calendar
days from the close of that fiscal year, Percentage Compensation
equal to three and three-fourths percent (3 3/4%) of its Net
Pre-Tax Annual Income (as defined below), but in no event less than
Thirty Thousand Dollars ($30,000.00). For this purpose the
Company’s “shareholder equity” shall only be
reduced by losses from its business operations as determined by the
independent certified accountants regularly retained by Company, in
accordance with consistently and conservatively applied generally
accepted accounting principles. Nothing herein prevents the Company
from paying Mr. Gjerdrum additional bonus amounts.
(c) Subject
to the provisions of this Section 3(e), the “Net Pre-Tax
Annual Income” as used in this Agreement, shall mean the
pre-tax operating income, before bonuses are paid, as per the books
and records for a fiscal year, as determined by the independent
certified accountants regularly retained by Company, in accordance
with consistently and conservatively applied generally accepted
accounting principles, adjusted for (i) any and all
compensation paid, or accrued and payable, to other employees and
independent contractors of Company, including, without limitation,
any and all bonuses due other employees, and (ii) any other
amounts payable to Mr. Gjerdrum pursuant to this Agreement. In
determining the Net Pre-Tax Annual Income all interest on loans
accrued or paid by Company, whether to third parties, shareholders
of Company or to affiliated entities, shall be deducted from
Company’s gross income prior to arriving at the Net Pre-Tax
Annual Income. No increase in historical amortization of goodwill,
if any, nor any direct cost incurred in connection with the
consummation of the transactions contemplated by the Stock Purchase
Agreement, dated as of the date hereof, by and among [Acquisition
Company], A-Mark Holding, Inc. and Steven C. Markoff shall be
deducted from Company’s gross income prior to arriving at the
Net Pre-Tax Annual Income.
4. Stock
Appreciation Rights . Concurrently with execution and delivery
of this Agreement, Greg Manning Auctions, Inc.
(“GMAI”), the indirect 80% parent of Company, shall,
pursuant to a Stock Appreciation Right Agreement between GMAI and
Mr. Gjerdrum in the form of Exhibit A attached
hereto, grant to Mr. Gjerdrum a stock appreciation right with
respect to Twelve Thousand Five Hundred (12,500) shares of common
stock of GMAI.
5.
Benefits . (a) Upon submission by Mr. Gjerdrum of
vouchers in accordance with Company’s standard procedures,
Company shall reasonably promptly reimburse
Mr. Gjerdrum
for all
reasonable and necessary travel, business entertainment and other
business expenses incurred by Mr. Gjerdrum in connection with
the performance of his duties under this Agreement.
(b) Mr. Gjerdrum
is entitled to participate in any and all medical insurance, group
health, disability insurance, employee bonus compensation programs
and other benefit plans that are made generally available by
Company to employees of Company. Company shall pay all premiums
payable in connection with medical insurance provided for
Mr. Gjerdrum. Additionally, Mr. Gjerdrum is entitled to
receive four (4) weeks paid vacation a year and paid holidays
made available pursuant to Company’s policy to all employees
of Company. Company, in its sole discretion, may at any time amend
or terminate any such benefit plans or programs.
6.
Termination . Mr. Gjerdrum’s employment hereunder
may be terminated prior to the end of the Term under the following
circumstances:
(a) Mr. Gjerdrum’s
employment hereunder will terminate upon Mr. Gjerdrum’s
death.
(b) Except
as otherwise required by law, Company may terminate
Mr. Gjerdrum’s employment hereunder at any time after
Mr. Gjerdrum becomes Totally Disabled. For purposes of this
Agreement, Mr. Gjerdrum will be “ Totally
Disabled ” as of the earlier of (1) the date
Mr. Gjerdrum becomes entitled to receive disability benefits
under Company’s long-term disability plan, or (2) Mr.
Gjerdrum’s inability to perform the duties and
responsibilities contemplated under this Agreement for a period of
more than ninety (90) consecutive days due to physical or
mental incapacity or impairment.
(c) Company
may terminate Mr. Gjerdrum’s employment hereunder for
Cause at any time after providing written notice to
Mr. Gjerdrum. For purposes of this Agreement, “
Cause ” means any of the following:
(1) Mr. Gjerdrum’s
neglect or failure or refusal to perform his duties under this
Agreement (other than as a result of total or partial incapacity
due to physical or mental illness);
(2) any
wrongful act by or omission of Mr. Gjerdrum that materially
injures the reputation, business, or business relationship of
Company or any of its affiliates, or that that in the good faith
judgment of the Company, constitutes fraud or intentional
misconduct;
(3) Mr. Gjerdrum’s
conviction (including conviction on a nolo contendere plea)
of a felony or any crime involving, in the good faith judgment of
Company, fraud, dishonesty or moral turpitude;
(4) the
breach of an obligation set forth in Section 8, 9 or
10;
(5) any
other material breach of this Agreement; or
(6) upon
the sale of all or substantially all of the stock or assets of
Company or the shutdown of its operations.
In the cases of
“neglect or failure” to perform his duties under this
Agreement as set forth in 6(c)(1) above, or material breach as set
forth in 6(c)(5) above, a termination by Company with Cause shall
be effective only if, within thirty (30) days following
delivery of a written notice by Company to Mr. Gjerdrum that
Company is terminating his employment with Cause (which notice
shall set forth the basis of the alleged neglect, failure or
breach), Mr. Gjerdrum has failed to cure the circumstances
giving rise to such Cause.
(d) Company
may terminate Mr. Gjerdrum’s employment hereunder for
any reason, upon thirty (30) days’ prior written
notice.
(e) Mr. Gjerdrum
may terminate his employment hereunder for “Good
Reason” if Company decreases or fails to pay
Mr. Gjerdrum’s Base Salary or Percentage Compensation as
provided in Section 3 or the benefits described in
Section 5 above, or if Company makes a material change in
Mr. Gjerdrum’s job description or duties. A termination
by Mr. Gjerdrum shall be effective only if, within thirty
(30) days following delivery of a written notice by
Mr. Gjerdrum to Company that Mr. Gjerdrum is terminating
his employment (which notice shall set forth in reasonable detail
the alleged decrease or failure by Company), Company has failed to
cure the circumstances giving rise to the termination.
7.
Compensation Following Termination Prior to the End of the
Term . In the event that Mr. Gjerdrum’s employment
hereunder is terminated prior to the end of the Term,
Mr. Gjerdrum will be entitled only to the following
compensation and benefits upon such termination:
(a) In
the event that Mr. Gjerdrum’s employment hereunder is
terminated prior to the expiration of the Term by reason of
Mr. Gjerdrum’s death or if he becomes Totally Disabled
pursuant to Sections 6(a) or 6(b), respectively, Company shall pay
the following amounts to Mr. Gjerdrum (or to
Mr. Gjerdrum’s estate, as the case may be):
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